UNIVERSITY OF MUMBAI

PROJECT REPORT ON
“IMPACT OF E-BANKING ON SERVICE QUALITY OF
BANKS”

IN PARTIAL FULFILLMENT FOR BACHOLAR OF

COMMERCE
(ACCOUNTING AND FINANCE)
(SEMESTER VI)

PROJECT GUIDE
PROF.DR. NILESH EKNATH KOLI
SUBMITTED BY:
GORAKSHNATH BHASKAR PALAVE

J.B.S.P. SANSTHA‟S

CHANGU KANA THAKUR ARTS, COMMERCE AND SCIENCE

COLLEGE(AUTONOMOUS), NEW PANVEL (W) 410 206.

REACCREDITED WITH „A+‟ GRADE BY NAAC (3 RD CYCLE- CGPA 3.61)

 March 2020

CERTIFICATE

This is to certify that Mr. Gorakshnath Bhaskar Palave has worked and duly
completed his project work for the degree of B.Com. (Accounting and Finance) under
the faculty of Commerce in Changu Kana Thakur Arts, Commerce and Science college,
New Panvel in the subject of project work and his project is entitled ―” Impact of e-
banking on service quality of banks”. A study of selected companies .‖ under my
supervision. I further certify that the entire work has been done by the learner under my
guidance and no part of it has been submitted previously for any degree or diploma of
any university.

It is his own work and facts reported by his personal findings and investigations.

Seal of
the
College

Dr.Nilesh Eknath Koli.

Name and Signature of

guiding teacher

Date of submission:
 DECLARATION BY LEARNER

I the undersigned MR. Gorakshnath Bhaskar Palave here by, declare

that the work Embodied in this project work titled ― Impact of e-banking on
service quality of banks, forms my own contribution to the Research work

carried out under the guidance of Dr. Nilesh Ekanath Koli is a Result of
my own research work and has not been previously submitted to any Other
University for any other Degree/Diploma to this or any other University.
Whenever reference has been made to previous works of others, it has been
Clearly indicated as such and included in the bibliography.
I, here by further declare that all information of this document has been
obtained and presented in accordance with academic rules and ethical
conduct.

MR. Gorakshnath Bhaskar Palave

Certified by

Dr. Nilesh Ekanath Koli

 ACKNOWLEGEMENT

I would like to acknowledge the following as being idealistic channel sand

Fresh dimensions in the completion of this project.
I take this opportunity to thank the University of Mumbai for giving me
chance to do this project.
I would like to thank my Principal, Prof. Dr. Vasant Barhate for
providing the
Necessary facilities required for completion of this project.

I would like to take this opportunity to thank our Coordinator Dr. Nilesh
Ekanath Koli, for his moral support and guidance.

I would also like to express my sincere attitude towards my project guide

Dr.Nilesh Ekanath Koli, whose guidance and care made this project
successful.
I would like to thank my College Library, for having provided various
reference
Books and magazines related to my project.

Lastly, I would like to thank each and every person who directly or
indirectly helped me in the completion of the project especially my
Parents and Peers who supported me throughout my project.
 EXCEUTIVE SUMMARY

The use of E-Banking in urban areas in India is ahead compared to mobile banking.
Increased use of E-Banking will enhance customer expectations and perceptions
regarding the quality of this new delivery channel. In this regard, it is important to
understand xiii how to measure the service quality of and customer satisfaction with
EBanking. In India, E-Banking was used by seven percent of account holders in 2010–
11, according to a report by global management consultancy McKinsey & Company
(2011). Considering this low adoption rate of E-Banking, it is necessary to measure
customers’ level of satisfaction with this channel, along with their intentions to switch
to any other alternative channels, like mobile banking. Awareness of how customers
perceive service quality is essential to understanding what customers value in an online
transaction, to attracting new customers, and to retaining existing customers.
Understanding the factors that influence the adoption of mobile banking among current
E-Banking customers is important because these customers have a preference to use
multiple channels to obtain their banking services.

The objectives formulated for the current study were (1) identify the various factors
influencing the adoption of E-Banking in India, (2) to develop and empirically validate
a model explaining behavioral intention to use mobile banking in the context of Indian
banking, (3) to study the influence of demographic factors, such as gender and age, on
the adoption of E-Banking services by Indian bank customers, (4) to study the
perceptions of service quality and satisfaction level of Internet-banking customers in
India, (5) to explore the e-service quality dimensions of E-Banking customers in India,
and (6) to examine the perceptions of current online-banking customers in India
regarding the adoption of E-Banking. The results obtained will help both academic
researchers and practitioners of technological adoption to explain, understand, and
elucidate the status of E-Banking in India and to formulate strategies to expedite the
use of E-Banking
 INDEX
Sr.No Particulars Pg.No

CHAPTER 1. INTRODUCTION 1

1.1 Electronic Banking 2

1.2 Electronic Banking and Its Evolution 3

1.3 Service quality and E-Service Quality Dimension 4

1.4 Key E-Services quality factors 5

1.5 Impact of E-Banking on traditional services 8

1.6 Global Scenario of E-Banking 10

1.7 Indian Scenario of E-Banking 11

1.8 E-Banking Products and Services 12

1.9 Risks In E-Banking 20

1.10 Principle To Manage Risks of E-Banking 26

CHAPTER 2. RESEARCH METHODOLY 27

2.1 Objective of the study 27

2.2 Scope of the study 27

2.3 Sample size of the study 27

2.4 Signification of the study 27

2.5 Limitation of the study 28

2.6 Data Collection (Primary and Secondary Data) 29

2.7 Sample unit 29

2.8 Sampling method 29

2.9 Sampling Design 29

2.10 Sample size 29

2.11 Sample research place 29

CHAPTER 3. REVIEW OF LITERATURE 30

CHAPTER 4. CONCEPTUAL STUDY 36

4.1 Growth and Extent of E-Banking Services in India 36

4.2 E-Banking services through websites of the banks 36

4.3 Key E-Banking Services 38

4.4 Impact E-Banking on service quality of banks 41

4.5 Service quality:- Conceptualization & Operationalization 42

4.6 Measuring the service quality 43

4.7 Measuring services quality in banking sector 44

4.8 E-Banking and Service quality 45

4.9 Servqual scale 46

4.10 Exploring relationship between Service quality & E 52

Banking

4.11 Service quality level of banks using serqual model 54

4.12 Identification of 5 Service quality factors 56

4.13 Level of E-Banking services offered by different banks 61

4.14 Expert Interview 66

CHAPTER 5. DATAANALYSIS,INTERPRETATION 69
PRSENTATION

CHAPTER 6. CONCLUSION AND SUGGESTION 84

BIBLOGRAPHY AND WEBBLOGRAPFY 86

APPENDIX 87
 CHAPTER 1: INTRODUCTION

Banking system plays an important role in every country economy. It is important for
an provide need of credits for all the sector of the society. India is not only the world
but it is also emerging economic giant a country depends on its banking. Banking in
our country is gone through a long journey. several of change in banking du innovation.
Technology has become the part of our life in almost all sector and even in banking.
The use of technology have so increased in across all areas of banking business. E-
banking have an immense growth in India since past years. Anywhere and anytime
banking has became reality. E-banking is the most easiest way of banking. E-banking
is considered to have a substantial impact on bank performance. The success of this is
that it can provide numerous benefits to banks as well as to customers. E- banking is
growing because more and more people are adopting this system of banking. In simple
words banking means any user with a personal computer and a browser his bank’s
website to perform any of the banking function. Or accessing banking function through
internet is also e-banking. E-banking provides no. of benefits to customers in terms of
ease and cost of transactions, either through Internet, telephone or other electronic.
.
1.1 Electronic Banking
Electronic banking is the access of the customers to bank services by secure
intermediaries without any physical presence ( Daniel et al., 2004). Electronic banking
is optimal integration of all the activities of a bank via using modern IT that all the
required services can be given to the customers ( Blunt et al., 2005).Internet banking is
developed to help banks deliver services and products preferable, faster, and cheaper.
It enables customers to browse principal bank products and services seven days a week
through their personal computers ( Polatoglu & Ekin, 2001). It allows customers to
carry out banking transactions over the Internet anywhere and anytime ( Polatoglu &
Ekin, 2001).Banks are starting to deliver quality online experience for customers and,
as a result, online banking adoption continues to grow and has become an increasingly
main competitive agent for banks in attracting and retaining customers ( Keynote,
2008). Online banking has changed the nature of the industry significantly in terms of
channel usage especially between youthful people ( Leichtfuss, 2007). E-banking is a
new way for customers to access their account, to pay their bills, to take control of their

1
money and to make use of the various services. Indeed, the ultimate aim of organizing
the electronic banking system is to minimize all references to the location of bank
branches to do banking services and if possible remove them all. Electronic banking
allows bank customers with convenient access to manage their financial affairs to put
them to the least inconvenience possible, so that a quick and convenient way was
provided to perform a variety of banking transactions through the Internet Banking
website, from the house, office, or elsewhere that is available ( Faziharrowdin, 2010).
According to Accenture ( 2005), Internet Banking was thought to signal a revolution in
banking distribution. Banks invested heavily in the development of the Internet channel.
Mols NP ( 1999) observed that Internet Banking has experienced explosive growth in
many countries and has transformed traditional banking practice inevitability.

1.2 Electronic Banking And its Evolution

In the modern times, banking occupies an important place in the financial part of every
economy. word „bank‟ is used in the sense of a commercial bank. It‟s of Germanic
origin though some persons trace its origin to the French word „Banqui‟ and the Italian
word „Banca‟. It referred to a bench for keeping, lending, and exchanging of money or
coins in the marketplace by moneylenders and money changers (Krishna and Gopal,
2008).Banking in India originated in the last decades of the 18th century. The first bank
was The General Bank of India which started in 1786, and followed by the
establishment of the Bank of Hindustan, both of which are now defunct. The oldest
bank in existence in India is the State Bank of India, which originated with the name of
the Bank of Calcutta in June 1806, which almost immediately became the Bank of
Bengal. This was one of the three presidency banks, the other two being the Bank of
Bombay and the Bank of Madras. All three were established under charters from the
British East India Company (Mumtaz, 2009). The business of these presidency banks
were initially confined to discounting of bills or other negotiable private securities,
keeping cash accounts, receiving deposits, and issuing and circulating notes
(Bhasin,2006). The three banks merged in 1921 to form the Imperial Bank of India
which became the State Bank of India after independence. Indian merchants in Calcutta
established the Union Bank in 1839, but it failed in 1848 as a consequence of the
economic crisis of 1848-49. The Allahabad Bank, established in 1865 and still

2
functioning today, is the oldest Joint Stock bank in India (Joint Stock Bank: A company
that issues stock and requires shareholders to be held liable for the company's debt). It
was not the first though. That honor belongs to the Bank of Upper India, which was
established in 1863, and which survived until 1913, when it failed, with some of its
assets and liabilities being transferred to the Alliance Bank of Simla. Foreign banks too
started to arrive, particularly in Calcutta, in 1860s. The Comptoired' Escompte de Paris
opened a branch in Calcutta in 1860, and another in Bombay in 1862 followed by
branches in Madras and Puducherry, then a French colony. HSBC established itself in
Bengal in 1869.Calcutta was the most active trading port in India, mainly due to the
trade with the British Empire, and so became a banking center. The first entirely Indian
joint stock bank was the Oudh Commercial Bank, established in 1881 in Faizabad. It
failed in 1958. The next was the Punjab National Bank, established in Lahore in 1895
which has survived to the present and is now one of the largest banks in India. The
period between 1906 and 1911, saw the establishment of banks inspired by the
Swadeshi movement. The Swadeshi movement inspired local businessmen and political
figures to found banks of and for the Indian community. A number of banks established
then have survived to the present such as Bank of India, Corporation Bank, Indian Bank,
Bank of Baroda, Canara Bank and Central Bank of India. The fervor of Swadeshi
movement lead to establishing of many private banks in Dakshina Kannada and Udupi
district which were unified earlier and known by the name South Canar (South Kanara
) district (Mumtaz, 2009). In spite of all these developments, independent India
inherited a rather weak banking and financial system marked by a multitude of small
and unstable private banks whose failures frequently robbed their middleclass
depositors of their life’s savings. After independence, the Reserve Bank of India was
nationalized in 1949 and given wide powers in the area of bank supervision through the
Banking Companies Act (later renamed Banking Regulations Act). The nationalization
of the Imperial Bank through the formation of the State Bank of India and the
subsequent acquisition of the state owned banks in eight princely states by the State
Bank of India in 1959 made the government the dominant player in the banking
industry. In keeping with the increasinglysocialistic leanings of the Indian Government,
14 major private banks, each with deposits exceeding Rs.50 crores, were nationalized
in 1969. This raised the proportion of scheduled bank branches in government control
from 31% to about 84%. In 1980, six more private banks each with deposits exceeding

3
Rs 200 crores were nationalized further raising the proportion of government controlled
bank branches to about 90%. As in other areas of economic policy-making, the
emphasis on government control began to weaken and even reverse in the mid-1980s
and liberalization set in firmly in the early 1990s (Chakrabarti, 2005).

1.3 Service Quality and E-Service Quality Dimension

It is important to differentiate traditional or physical services from e-services. In this

concern under the traditional services feature the followings as there is interaction
between customer and service providers considered crucial, service offering composed
of core services, facilitating services, supporting services, and complementary services
are available and quality defined as customer perceived service quality but in contrast
under the e-service features as interaction through the internet communication may be
highly personalized based on multiple source of information, customers are specific and
dynamic adjustment of service offering, service delivery is not restricted by opening
hours and distance, customers of e-banking are restricted by reviewing and hearing and
third dimension of virtual operation can be said to involve neither product nor
interaction in the context of e-service. In this way, E-service quality has been regarded
as possessing the potential to not only deliver strategic benefits but also to enhance
operational efficiency and profitability ( Cronin, 2003).The analysis of E-banking
quality becomes an area of growing interest to researchers and managers (
Jayawardhena, 2004). With the advancement in technology, sophistication of
customers’ needs and the environment becoming more competitive, the focus is towards
the quality of the website. The website functions as a window through which users have
their initial interaction with the organization ( Zhang & Von Dran, 2002). There are
many studies dealing with service quality related to traditional banking, but studies
investigating the service quality of E-banking websites are scarce in nature. In today’s
global environment, banks have realized the importance of service quality in order to
survive with the fierce competition. The financial sector is becoming more conscious
about the performance evaluation regarding the quality of products/services according
to customers’ expectations. Thus, it is important for the banks to know the factors that
influence the customer adoption of IB through focusing on improving their banking
service quality since they are the main sources of the competitive advantage (
Brahmbhatt et al., 2011) ( Hassan et al., 2012).

4
As per Fuentes-Blasco et al. ( 2008), they suggest that certain modifications of
SERVQUAL are required for application in various settings, including the e-banking
sector because e-service is different from traditional service in terms of three noticeable
aspects which are the absence of human interaction, the absence of traditional tangible
dimension, and the self-service of customers (Fuentes-Blasco et al., 2010).
Consequently, e-service quality is defined as a consumer’s overall evaluation and
judgment on the quality of the services that is delivered through the Internet ( Liao et
al., 2011). And also, Rolland and Freeman, ( 2010) suggested that the
conceptualizations of e-service quality must be expanded to the global level and
eservice quality needs consideration on all aspects of the transaction, including service
delivery, customer service and support.
The following previous empirical studies have suggested the more important &
dimensions & more focusing determinants by banks in delivering on line banking
services to their customers.

1.4 E-Service Quality Dimension Measurement in Internet Banking

As the channels of service delivery shifted from traditional to electronic, the need for a
scale to measure the e-service quality was felt. Researchers have developed many scales
to evaluate Web sites in the following ways.
Key e-service quality factors influencing e-banking success
1.Website design

The website design relates to the visual aesthetics of web pages (park et al 2007).
According to Bressolles, 2004, Cryr 2008, Moore et al 2005, Park et al 2007, graphics,
quality of images and videos, symbols, colors, animations are of a paramount
importance for the attractiveness and success of the website. Wang & Emurian ( 2005)
have defined that these can give the user a good impression on the website and may
have a significant impact on online satisfaction ( Chaung &Wary 2008, Shankar et al
2002, Young & Hyunjoo 2012). According to Chen & Dibb ( 2010), Cyr ( 2008),
Schlosser et al ( 2006), quality of design is an important factor for user’s trust. Cunliffe
( 2000) suggested that users do not appreciate the website design that will have negative
impact on the frequency of their visits to the website. Schlosser et al ( 2006) have
indicated that in e-commerce, customers tend to think that the company that has

5
invested in the design of their websites is likely to process electronic transaction
successfully. Further Rajaobecins ( 2011) found empirically that website’s design
positively influences customer’s online trust towards financial institutions.

2.Content
In online banking, website content is one of the most important factors impacts on
ebanking ( Mohd Khalaf Ahmad et al., 2011). In fact, it points out the desirability of
website information in customers’ viewpoints. Content impacts on customers’
behavior. Hence, many studies consider information content as a benchmark of website
quality ( Yoon, 2010). Websites should provide profitable information on the type of
provided services for facilitating users’ better conception ( La & Kandampully, 2002;
Cho & Park, 2001). Furthermore, users need to have supplementary Information on
banks, recommendations by experts, financial reports, relevant links and contact
information such as address and telephone number(s) ( Van Riel et al, 2001). Overall,
content profitability depends on value, confidence and correct information ( Yanga,
2005).
3.E-trust

Since conducting business through the internet always involves risk, the most important
aspect is the lack of trust between organization & the customer because of none
physically market place existence in every mutual relationship trust is considered as
first thing. In this way if an organization wants to be success in providing e-services it
needs to build-up trust with customers in a proper manner. According to Yap et al (
2010) the lack of trust can be overcome with a better understanding of factors that can
boost customers’ trust for e-banking. Kim ( 2005) has suggested e-trust itself is affected
by two indicators as fulfillment or reliability & security /privacy. Further, Ribbink et al
( 2004) has defined e-trust is the degree of customer security in online transactions.
According to Byoungho et al ( 2008) e-trust is the customer’s belief in an organization’s
word which can assure them that is credibility, that the organization would not misuse
customers’ vulnerable situation.

4. Fulfillment / reliability

6
Wolfingbarger & Gilly ( 2003) defined fulfillment is as a receiving appropriate service
in a specific time period and providing accurate information for inside website services

in a way that fulfills customers’ expectations. Gummerus et al ( 2008) identified an

important thing which can result in e-trust is fulfillment / reliability i.e. receiving the
right service at right time.

5. Security / Privacy

It refers to website security in its interactions with customers, credit & payments and
encrypting shared data. Guarantying privacy / security play a crucial role in building up
e-trust because it can reduce customers’ concern about any kind of personal information
abuse. In this way Kolsaker & Payne ( 2002), Dong-Her et al ( 2004) suggested that
security plays an important role in internet banking and so there are several protocols
for internet security of encrypted data packets & further said customers are not aware
of encryption, even though, only certain versions of popular internet browsers are
acceptable to some banks due to their security limitations. Kua et al ( 2009) identified
consumer needs for global electronics found out that there is quite a lot of attention by
customers to the issue of security while conduction their purchase and privacy with
regarding their personal information. The issue is that customers worry about when
conducting business online are faithfulness (security/privacy) especially with their
confidential personal information.

1.5 Impact of E-banking on traditional services:

7
 One of the issues currently being addressed is the impact of E-banking on
traditional banking players. After all, if there are risks inherent in going into Ebanking
there are other risks in not doing so. It is too early to have a firm view on this yet.
Even to practitioners the future of E-banking and its implications are unclear. It might
be convenient nevertheless to outline briefly two views that are prevalent in the
market. The view that the Internet is a revolution that will sweep away the old order
holds much sway. Arguments in favor are as follows:
➢ E-banking transactions are much cheaper than branch or even phone
transactions. This could turn yesterday’s competitive advantage - a large branch
network, into a comparative disadvantage, allowing e-banks to undercut bricks-
andmortar banks. This is commonly known as the "beached dinosaur" theory.
➢ E-banks are easy to set up so lots of new entrants will arrive. ‘Old-world’
systems, cultures and structures will not encumber these new entrants. Instead, they
will be adaptable and responsive. E-banking gives consumers much more choice.
Consumers will be less inclined to remain loyal.
➢ E-banking will lead to an erosion of the ‘endowment effect’ currently enjoyed
by the major UK banks. Deposits will go elsewhere with the consequence that these
banks will have to fight to regain and retain their customer base. This will increase
their cost of funds, possibly making their business less viable. Lost revenue may even
result in these banks taking more risks to breach the gap.
Portal providers are likely to attract the most significant share of banking profits.
Indeed banks could become glorified marriage brokers. They would simply bring two
parties together – e.g. buyer and seller, payer and payee.
The products will be provided by monoclines, experts in their field. Traditional banks
may simply be left with payment and settlement business – even this could be cast
into doubt.
Traditional banks will find it difficult to evolve. Not only will they be unable to
make acquisitions for cash as opposed to being able to offer shares, they will be
unable to obtain additional capital from the stock market. This is in contrast to the
situation for Internet firms for whom it seems relatively easy to attract investment.

There is of course another view which sees E-banking more as an evolution than a
revolution.E-banking is just banking offered via a new delivery channel. It simply

8
 gives consumers another service (just as ATMs did).Like ATMs, E-banking will
impact on the nature of branches but will not remove their value.Traditional banks
are starting to fight back.The start-up costs of an e-bank are high. Establishing a
trusted brand is very costly as it requires significant advertising expenditure in
addition to the purchase of expensive technology (as security and privacy are key to
gaining customer approval).E-banks have already found that retail banking only
becomes profitable once a large critical mass is achieved. Consequently many e-
banks are limiting themselves to providing a tailored service to the better off.Nobody
really knows which of these versions will triumph. This is something that the market
will determine. However, supervisors will need to pay close attention to the impact
of Ebanks on the traditional banks, for example by surveillance of:
➢ Strategy
➢ Customer levels
➢ Earnings and costs
➢ Advertising spending
➢ Margins
➢ Funding costs
➢ Merger opportunities and threats.

1.6 Global Scenario Of E-Banking

In 2001 , approx. 60% of e-business in the U.K. was concentrated on financial

services sector with zero fold increase of the British e-business. Round one-fifth of

9
Finnish and Swedish bank customer are using banking online, while in US online
banking is growing at an annual rate of 60 per cent and the number of online accounts
are expected to reach 15 millions by 2003.

In Europe, the interest is accerlating the reconfiguration of the banking industry

into three separate entities: production, distribution and advice. Several banks in Asia
have started offering E-Banking services, most of them are offering basic services like
developed countries in the US and European countries.

In Asia, many countries are concerned about security. Products available so far tend
to be unexciting and in the wake of Asia’s recent economic crisis, many similar banks
have been preoccupied with the more urgent issue of survival. However, if the banks
handle the basic features of online banking like fund transfer, balance enquiry, bill
payment then chances of success are there (Pasa and Sharman, 2002).

In 2001, over 50 per cent of the banks in US were offering e-banking services. In
spite of the rapid growth in the number of banks offering e-banking, only a minority of
banks in the US offered transactional e-banking. A bank is considered as offering
transactional e-banking if its customers can transact business over the interent. Thus,
every bank having a website is not deemed as offering e-banking. On the customers
side most customers prefer to use banks that offer e-banking, so usage pattern could
change suddenly (Furst et al..,2002).

In European countries, the local market is being intensified by globalization. In these

countries, the basic objective of banks is to position oneself as “state of the art factory”
capable of issuing high volume products and services to customers at best price. The
interent is making the market more transparent. Through online market places,
customers and bank can instantly obtain accurate information about the products and
services. New entrants do not possess bricks and mortar networks, butcan use direct
channels, such as internet to reach their target clients (Lange and Blandin, 2002).

1.7 The Indian Scenario Of E-Banking

• Internet Banking, both as a medium of delivery of banking services and as a

strategic tool for business development.

10
 • At present, the total internet users in the country are estimated at 9 lak. However,
this is expected to grow exponentially to 90 lakh by 2003. Only about 1% of
interent users did banking online in 1998. This is increased to 16.7% in March
2000.

-( Indian Research, May 29, 2000, Kotak Securities)

❖ Cost of banking service through the interent from a fraction of costs through
conventional methods. Rough estimates assume teller cost at Rs.1 per
transaction, ATM transaction cost at 45 paise, phone banking at 35 paise, debit
cards at 20 paise and interent banking at 10 paise per transaction.

1.8 Electronic Banking Products And Services

E-Banking has provided immense opportunities in offering goods and services to the
customers. These products are totally changing the outlook of banking sector. Now the

11
industry is shifting towards cashless society, where physical cash, notes and coins have
become a thing of the past, and digital cash and electronic purse have taken their place.
There are many non-cash payment methods which are in use. These are as follows:

1. Internet Banking:

12
 Internet Banking lets you handle many banking transactions via your personal
computer. For instance, you may use your computer to view your account balance,
request transfers between accounts, and pay bills electronically.
Internet banking system and method in which a personal computer is connected by a
network service provider directly to a host computer system of a bank such that
customer service requests can be processed automatically without need for intervention
by customer service representatives. The system is capable of distinguishing between
those customer service requests which are capable of automated fulfillment and those
requests which require handling by a customer service representative. The system is
integrated with the host computer system of the bank so that the remote banking
customer can access other automated services of the bank. The method of the invention
includes the steps of inputting a customer banking request from among a menu of
banking requests at a remote personnel computer; transmitting the banking requests to
a host computer over a network; receiving the request at the host computer; identifying
the type of customer banking request received; automatic logging of the service request,
comparing the received request to a stored table of request types, each of the request
types having an attribute to indicate whether the request type is capable of being
fulfilled by a customer service representative or by an automated system; and,
depending upon the attribute, directing the request either to a queue for handling by a
customer service representative or to a queue for processing by an automated system.

2. AUTOMATED TELLER MACHINES (ATM):

An unattended electronic machine in a public place, connected to a data system

and related equipment and activated by a bank customer to obtain cash withdrawals and
other banking services. Also called automatic teller machine, cash machine; Also called
money machine. An automated teller machine or automatic teller machine (ATM)
is an electronic computerized telecommunications device that allows a financial
institution's customers to directly use a secure method of communication to access their
bank accounts, order or make cash withdrawals (or cash advances using a credit card)
and check their account balances without the need for a human bank teller (or cashier
in the UK). Many ATMs also allow people to deposit cash or cheques, transfer money

13
between their bank accounts, top up their mobile phones' pre-paid accounts or even buy
postage stamps.
On most modern ATMs, the customer identifies him or herself by inserting a plastic
card with a magnetic stripe or a plastic smartcardwith a chip, that contains his or her
account number. The customer then verifies their identity by entering a passcode, often
referred to as a PIN Personal Identification Number) of four or more digits. Upon
successful entry of the PIN, the customer may perform a transaction. If the number is
entered incorrectly several times in a row (usually three attempts per card insertion),
some ATMs will attempt retain the card as a security precaution to prevent an
unauthorised user from discovering the PIN by guesswork. Captured cards are often
destroyed if the ATM owner is not the card issuing bank, as non-customer's identities
cannot be reliably confirmed.The Indian market today has approximately more than
17,000 ATM’s.

3.Tele-Banking:

Undertaking a host of banking related services including financial transactions

from the convenience of customers chosen place anywhere across the GLOBE and any
time of date and night has now been made possible by introducing on-line Telebanking
services. By dialing the given Telebanking number through a landline or a mobile from
anywhere, the customer can access his account and by following the user-friendly
menu, entire banking can be done through Interactive Voice Response (IVR) system.
With sufficient numbers of hunting lines made available, customer call will hardly fail.
The system is bi-lingual and has following facilities offered

• Automatic balance voice out for the default account.

• Balance inquiry and transaction inquiry in all

• Inquiry of all term deposit account

• Statement of account by Fax, e-mail or ordinary mail.

• Cheque book request

14
 • Stop payment which is on-line and instantaneous

• Transfer of funds with CBS which is automatic and instantaneous

• Utility Bill Payments

• Renewal of term deposit which is automatic and instantaneous Voice out

of last five transactions.

4.Smart Card:

A smart card usually contains an embedded 8-bit microprocessor (a kind of

computer chip). The microprocessor is under a contact pad on one side of the card.
Think of the microprocessor as replacing the usual magnetic stripe present on a credit
card or debit card. The microprocessor on the smart card is there for security. The host
computer and card reader actually "talk" to the microprocessor. The microprocessor
enforces access to the data on the card. The chips in these cards are capable of many
kinds of transactions. For example, a person could make purchases from their credit
account, debit account or from a stored account value that's reload able. The enhanced
memory and processing capacity of the smart card is many times that of traditional
magnetic-stripe cards and can accommodate several different applications on a single
card. It can also hold identification information, which means no more shuffling
through cards in the wallet to find the right one -- the Smart Card will be the only one
needed.
Smart cards can also be used with a smart card reader attachment to a personal computer
to authenticate a user. Smart cards are much more popular in Europe than in the U.S. In
Europe the health insurance and banking industries use smart cards extensively. Every
German citizen has a smart card for health insurance. Even though smart cards have
been around in their modern form for at least a decade, they are just starting to
takeoffintheU.S.

5.DebitCard:

15
 Debit cards are also known as check cards. Debit cards look like credit cards or
ATM (automated teller machine) cards, but operate like cash or a personal check. Debit
cards are different from credit cards. While a credit card is a way to "pay later," a debit
card is a way to "pay now." When you use a debit card, your money is quickly deducted
from your checking or savings account. Debit cards are accepted at many locations,
including grocery stores, retail stores, gasoline stations, and restaurants. You can use
your card anywhere merchants display your card's brand name or logo. They offer an
alternative to carrying a checkbook or cash.

6. E-CHEQUE:

• An E-Cheque is the electronic version or representation of paper cheque.

• The Information and Legal Framework on the E-Cheque is the same as that of
the paper cheque’s.

• It can now be used in place of paper cheques to do any and all remote
transactions.

• An E-cheque work the same way a cheque does, the cheque writer "writes" the
e-Cheque using one of many types of electronic devices and "gives" the
eCheque to the payee electronically. The payee "deposits" the Electronic
Cheque receives credit, and the payee's bank "clears" the e-Cheque to the paying
bank. The paying bank validates the e-Cheque and then "charges" the check
writer's account for the check

7. Mobile Banking:-

Cell Phone (Mobile) Banking Depending on the services offered by your financial
institution and your cell phone service provider, you may be able to conduct the
following banking transactions from your cell phone: • Receive text message alerts
when your account balance reaches a certain level, or when a certain transaction occurs.
Check with your cell phone service provider regarding fees for sending and receiving
text messages if they are not covered in your plan. • Access your online bank account

16
to check balances, pay bills, and transfer funds between accounts. • Locate your bank’s
closest ATMs. • Pay for purchases. As with a regular landline telephone, you can also
call your bank to conduct many transactions such as, check your account balance,
determine whether checks/transactions have cleared, and transfer money between
accounts.

8. Society For Worldwide Interbank Financial Telecommunication (SWIFT):-

The Society for Worldwide Interbank Financial Telecommunication

(SWIFT) provides a network that enables financial institutionsworldwide to send and
receive information about financial transactions in a secure, standardized and reliable
environment. SWIFT also sells software and services to financial institutions, much of
it for use on the SWIFTNet Network, and ISO 9362. Business Identifier Codes (BICs,
previously Bank Identifier Codes) are popularly known as "SWIFT codes".

The majority of international interbank messages use the SWIFT network. As of 2015,
SWIFT linked more than 11,000 financial institutions in more than 200 countries and
territories, who were exchanging an average of over 15 million messages per day
(compared to an average of 2.4 million daily messages in 1995).[1] SWIFT transports
financial messages in a highly secure way but does not hold accounts for its members
and does not perform any form of clearing or settlement.

SWIFT does not facilitate funds transfer: rather, it sends payment orders, which must
be settled by correspondent accounts that the institutions have with each other. Each
financial institution, to exchange banking transactions, must have a banking
relationship by either being a bank or affiliating itself with one (or more) so as to enjoy
those particular business features.

SWIFT is a cooperative society under Belgian law owned by its member financial
institutions with offices around the world. SWIFT headquarters, designed by Ricardo
Bofill Taller de Arquitectura are in La Hulpe, Belgium, near Brussels. The chairman of
SWIFT is Yawar Shah,[2] originally from Pakistan,[3] and its CEO is Gottfried
Leibbrandt, originally from the Netherlands.[4] SWIFT hosts an annual conference,
called Sibos, specifically aimed at the financial services industry.

17
9. E-Commerce

E-commerce (EC), an abbreviation for electronic commerce, is the buying and selling
of goods and services, or the transmitting of funds or data, over an electronic network,
primarily the internet. These business transactions occur either as business-to-business
(B2B), business-to-consumer (B2C), consumer-to-consumer or consumer-to-business.
The terms e-commerce and e-business are often used interchangeably. The term e-tail
is also sometimes used in reference to the transactional processes for online shopping.

10. Electronic Fund Transfer:-

Electronic Funds Transfer (EFT) is a system of transferring money from one bank
account directly to another without any paper money changing hands. One of the most
widely-used EFT programs is Direct Deposit, in which payroll is deposited straight into
an employee's bank account, although EFT refers to any transfer of funds initiated
through an electronic terminal, including credit card, ATM, Fedwire and point-of-sale
(POS) transactions. It is used for both credit transfers, such as payroll payments, and
for debit transfers, such as mortgage payments.

Transactions are processed by the bank through the Automated Clearing House (ACH)
network, the secure transfer system that connects all U.S. financial institutions. For
payments, funds are transferred electronically from one bank account to the billing
company's bank, usually less than a day after the scheduled payment date.

The growing popularity of EFT for online bill payment is paving the way for a paperless
universe where checks, stamps, envelopes, and paper bills are obsolete. The benefits of
EFT include reduced administrative costs, increased efficiency, simplified
bookkeeping, and greater security. However, the number of companies who send and
receive bills through the Internet is still relatively small.

11.Real Time Gross Settlement (RTGS)

Real-time gross settlement (RTGS) systems are specialist funds transfer systems
where the transfer of money or securities[1] takes place from one bank to any other bank

18
on a "real time" and on a "gross" basis. Settlement in "real time" means a payment
transaction is not subjected to any waiting period, with transactions being settled as
soon as they are processed. "Gross settlement" means the transaction is settled on oneto-
one basis without bundling or netting with any other transaction. "Settlement" means
that once processed, payments are final and irrevocable.

RTGS systems are typically used for high-value transactions that require and receive
immediate clearing. In some countries the RTGS systems may be the only way to get
same day cleared funds and so may be used when payments need to be settled urgently.
However, most regular payments would not use a RTGS system, but instead would use
a national payment system or automated clearing house that allows participants to batch
and net payments. RTGS payments typically incur higher transaction costs and usually
operated by a country's central bank.

RTGS systems are usually operated by a country's central bank as it is seen as a critical
infrastructure for a country's economy. Economists believe that an efficient national
payment system reduces the cost of exchanging goods and services, and is
indispensable to the functioning of the interbank, money, and capital markets. A weak
payment system may severely drag on the stability and developmental capacity of a
national economy; its failures can result in inefficient use of financial resources,
inequitable risk-sharing among agents, actual losses for participants, and loss of
confidence in the financial system and in the very use of money.[4]

1.9 THE Risks in E-Banking

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The growth of electronic banking has created a new basis with regard to the degree of
exposure to the risk and therefore consequently the need of not only a differentiated
regulating frame, but also mechanisms of monitoring to be formed, which has already
begun to be shaped in the fields of Basle Committee of Banking Supervision. The
business risk is the risk of not being able to achieve the business targets due to
inappropriate strategies, inadequate resources or changes in the economic or
competitive environment. It has to do with the ability the credit institution has in order
to achieve the operational objectives by exploiting the available opportunities in the
market. The big changes on the banking sector and the adoption of fast paced evolving
technology also change the traditional strategic risks. A bank that will rush into the
adoption of new technologies so that it is rendered pioneer is risking losing its
investment as information systems lose their value in very short time interval.
Moreover, there is the risk of extensive investment in particular products or services,
which will not become acceptable by the end users. On the other hand, if it maintains a
more conservative attitude there is the risk of becoming last, in an environment where
the competition is moving fast and strengthens its place in the market. Internet banking
may soon convert from a complementary to the main provider of financial services and
products. Consequently, a possible failure of a bank entering this sector, can have
various consequences on its future position in the market, especially when the
competition of the banks, which are clearly connected with the I-banking and do not
have any physical substance (virtual banks), is already given.

1. Strategic Risk –

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A financial institution’s board and management should understand the risks
associated with E-banking services and evaluate the resulting risk management costs
against the potential return on investment prior to offering E-banking services. Poor
E-banking planning and investment decisions can increase a financial institution’s
strategic risk. On strategic risk E-banking is relatively new and, as a result, there can
be a lack of understanding among senior management about its potential and
implications. People with technological, but not banking, skills can end up driving
the initiatives. E-initiatives can spring up in an incoherent and piecemeal manner in
firms. They can be expensive and can fail to recoup their cost. Furthermore, they are
often positioned as loss leaders (to capture market share), but may not attract the types
of customers that banks want or expect and may have unexpected implications on
existing business lines.

Banks should respond to these risks by having a clear strategy driven from the top
and should ensure that this strategy takes account of the effects of E-banking,
wherever relevant. Such a strategy should be clearly disseminated across the business,
and supported by a clear business plan with an effective means of monitoring
performance against it.

2. Business risks –

Business risks are also significant. Given the newness of E-banking, nobody knows
much about whether E-banking customers will have different characteristics from the
traditional banking customers. They may well have different characteristics. This
could render existing score card models inappropriate, this resulting in either higher
rejection rates or inappropriate pricing to cover the risk. Banks may not be able to
assess credit quality at a distance as effectively as they do in face to face
circumstances. It could be more difficult to assess the nature and quality of collateral
offered at a distance, especially if it is located in an area the bank is unfamiliar with
(particularly if this is overseas). Furthermore as it is difficult to predict customer
volumes and the stickiness of E-deposits (things which could lead either to rapid
flows in or out of the bank) it could be very difficult to manage liquidity.

Of course, these are old risks with which banks and supervisors have considerable
experience but they need to be watchful of old risks in new guises. In particular risk
models and even processes designed for traditional banking may not be appropriate.

21
3. Transaction/operations risk –

Transaction/Operations risk arises from fraud, processing errors, system disruptions,

or other unanticipated events resulting in the institution’s inability to deliver products
or services. This risk exists in each product and service offered. The level of
transaction risk is affected by the structure of the institution’s processing
environment, including the types of services offered and the complexity of the
processes and supporting technology.

In most instances, E-banking activities will increase the complexity of the

institution’s activities and the quantity of its transaction/operations risk, especially if
the institution is offering innovative services that have not been standardized. Since
customers expect E-banking services to be available 24 hours a day, 7 days a week,
financial institutions should ensure their E-banking infrastructures contain sufficient
capacity and redundancy to ensure reliable service availability. Even institutions that
do not consider E-banking a critical financial service due to the availability of
alternate processing channels, should carefully consider customer expectations and
the potential impact of service disruptions on customer satisfaction and loyalty.

The key to controlling transaction risk lies in adapting effective polices, procedures,
and controls to meet the new risk exposures introduced by E-banking. Basic internal
controls including segregation of duties, dual controls, and reconcilements remain
important. Information security controls, in particular, become more significant
requiring additional processes, tools, expertise, and testing. Institutions should
determine the appropriate level of security controls based on their assessment of the
sensitivity of the information to the customer and to the institution and on the
institution’s established risk tolerance level.

4. Credit risk –

Generally, a financial institution’s credit risk is not increased by the mere fact
that a loan is originated through an E-banking channel. However, management should
consider additional precautions when originating and approving loans electronically,
including assuring management information systems effectively track the
performance of portfolios originated through E-banking channels. The following
aspects of on-line loan origination and approval tend to make risk management of the

22
 lending process more challenging. If not properly managed, these aspects can
significantly increase credit risk.

➢ Verifying the customer’s identity for on-line credit applications and executing
an enforceable contract;
➢ Monitoring and controlling the growth, pricing, underwriting standards, and
ongoing credit quality of loans originated through E-banking channels;
➢ Monitoring and oversight of third-parties doing business as agents or on behalf
of the financial institution (for example, an Internet loan origination site or
electronic payments processor);
➢ Valuing collateral and perfecting liens over a potentially wider geographic area;
➢ Collecting loans from individuals over a potentially wider geographic area;
➢ Monitoring any increased volume of, and possible concentration in, out-of-area
lending.
5. Reputational risks –

This is considerably heightened for banks using the Internet. For example the Internet
allows for the rapid dissemination of information which means that any incident,
either good or bad, is common knowledge within a short space of time. The speed of
the Internet considerably cuts the optimal response times for both banks and
regulators to any incident.

Any problems encountered by one firm in this new environment may affect the
business of another, as it may affect confidence in the Internet as a whole. There is
therefore a risk that one rogue E-bank could cause significant problems for all banks
providing services via the Internet. This is a new type of systemic risk and is causing
concern to E-banking providers. Overall, the Internet puts an emphasis on
reputational risks. Banks need to be sure that customer’ rights and information needs
are adequately safeguarded and provided for.

6. Security:

Security is one of the most discussed issues around E-banking.

E-banking increases security risks, potentially exposing hitherto isolated systems to
open and risky environments.

23
Security breaches essentially fall into three categories; breaches with serious criminal
intent (fraud, theft of commercially sensitive or financial information), breaches by
‘casual hackers’ (defacement of web sites or ‘denial of service’ - causing web sites to
crash), and flaws in systems design and/or set up leading to security breaches
(genuine users seeing / being able to transact on other users’ accounts). All of these
threats have potentially serious financial, legal and reputational implications.

Many banks are finding that their systems are being probed for weaknesses hundreds
of times a day but damage/losses arising from security breaches have so far tended to
be minor. However some banks could develop more sensitive "burglar alarms", so
that they are better aware of the nature and frequency of unsuccessful attempts to
break into their system.

The most sensitive computer systems, such as those used for high value payments or
those storing highly confidential information, tend to be the most comprehensively
secured. One could therefore imply that the greater the potential loss to a bank the
less likely it is to occur, and in general this is the case. However, while banks tend to
have reasonable perimeter security, there is sometimes insufficient segregation
between internal systems and poor internal security. It may be that someone could
breach the lighter security around a low value system.

It is easy to overemphasize the security risks in E-banking. It must be remembered

that the Internet could remove some errors introduced by manual processing (by
increasing the degree of straight through processing from the customer through
banks’ systems). This reduces risks to the integrity of transaction data (although the
risk of customer’s incorrectly inputting data remains). As E-banking advances,
focusing general attention on security risks, there could be large security gains.

Financial institutions need as a minimum to have:

A strategic approach to information security, building best practice security

controls into systems and networks as they are developed

A proactive approach to information security, involving active testing of system

security controls (e.g. penetration testing), rapid response to new threats and
vulnerabilities and regular review of market place developments.
sufficient staff with information security expertise

24
 Active use of system based security management and monitoring tools.
Strong business information security controls.
These are the issues line supervisors will be raising with their banks as part of their
on-going supervision.

7. Money Laundering Risk:-

Money laundering is the practice of engaging in financial transactions in order to
conceal the identity, source, and/or destination of money, and is a main operation of the
underground economy. Money laundering is called what it is because that perfectly
describes what takes place - illegal, or dirty, money is put through a cycle of
transactions, or washed, so that it comes out the other end as legal, or clean, money. In
other words, the source of illegally obtained funds is obscured through a succession of
transfers and deals in order that those same funds can eventually be made to appear as
legitimate income. Every financial institution is charged with the responsibility of
developing policies and procedures to combat money laundering, which includes the
duty to be aware of trends and adaptations in the methods by which money laundering
is carried out. The most difficult aspect of this responsibility is a financial
organization‟s ability to anticipate new criminal behavior and to proactively implement
protocols before the criminal behavior occurs.
As Internet banking transactions are conducted remotely banks may find it difficult to
apply traditional method for detecting and preventing undesirable criminal activities.
Application of money laundering rules may also be inappropriate for some forms of
electronic payments.
Thus banks expose themselves to the money laundering risk. This may result in legal
sanctions for non-compliance with “know your customer” laws. To avoid this, banks
need to design proper customer identification and screening techniques,develop audit
trails, and conduct periodic compliance reviews, frame policies and procedures to spot
and report suspicious activities in Internet transactions.

1.10 Principles To Manage Risks In E-Banking

The Electronic Banking Group on the Bsel Committee recommended certain principles
to manage the risks of electronic banking. The E-Banking risk management principles
identified in the report of EBG, fall into three board, and often overlapping categories

25
of issues. However, these principles zre not weighted by order of preference or
importance. It is so because such weighting might change over time. It is preferable to
remain neutral and avoid such prioritization.

A. Board and Management Oversight8 (Principles 1 to 3):

1. Effective management oversight of e-banking activities.
2. Establishment of a comprehensive security control process.
3. Comprehensive due diligence and management oversight process for outsourcing
relationships and other third-party dependencies.

B. Security Controls (Principles 4 to 10): 4.

Authentication of e-banking customers.
5. Non-repudiation and accountability for e-banking transactions.
6. Appropriate measures to ensure segregation of duties.
7. Proper authorisation controls within e-banking systems, databases and applications.
8. Data integrity of e-banking transactions, records, and information.
9. Establishment of clear audit trails for e-banking transactions.
10. Confidentiality of key bank information.

C. Legal and Reputational Risk Management (Principles 11 to 14):

11. Appropriate disclosures for e-banking services.
12. Privacy of customer information.
13. Capacity, business continuity and contingency planning to ensure availability of
ebanking systems and services.
14. Incident response planning.

CHAPTER 2:RESEARCH METHODOLY

2.1 OBJECTIVE OF THE STUDY:-

➢ To study the innovative banking services and its current trend.
➢ To evaluate customer prospective to the innovative banking services quality.
➢ To examine customer service and satisfaction level.
➢ To examine the relation with the demographic variable(Age, Gender, Income,

26
 Education, occupation, residential status and monthly
➢ income) and respondents perception about internet banking.
➢ To review the growth and development of bank
➢ To study the level of satisfaction of service users regarding E-banking services.

2.2 SCOPE OF THE STUDY:-

• It Provides a complete knowledge of various services and additional benefits

and their quality provided to its customer.
• It provides the complete knowledge of how it is beneficial to customers and
banks.

2.3 SAMPLE SIZE OF THE STUDY:-

The sample size considered for research work is of 100 customers.100 customer
were interviewed. All important demographic characteristic like age, level of
education, level of income, profession were noted during survey process.

2.4 SIGNIFICATION OF THE STUDY:-

The study is given a clear picture of customers prospective for innovative

banking services provided by their banks. It indicates whether, the customer is
satisfied with his or her bank or not. It is also pay an attention towards the
problem faced by the customers while using the internet banking services or
innovative banking services provided by the bank. It may help the bank to take
necessary action against the problem of their customers and to make the
innovative banking service more and more popular. The study gives an idea of
customer‟s mind set, their habit of using traditional banking services and the
awareness regarding modern and latest internet banking services.
Because of this study not only customer or bank got the idea for
improvement about innovative banking services or the customer‟s awareness regarding
the use of easy e-banking services but also it will guide the society, a lay man,
Government and future researcher for the tremendous modern way of thinking for better

27
innovative services and the implementation of the appropriate steps against the
difficulties of internet banking services. Banks can come to know the challenges of the
ebanking services and by this study; banks can convert the challenges into future
opportunities.

This research will definitely meet the need of maximum satisfaction of the
customers and this satisfaction make the internet banking service easy,
approachable, popular and available for each and every customer who wants to
use it.

2.5 LIMITATION OF THE STUDY:-

The study could not be made that comprehensive due to time constraints. Some
customers feel uncomfortable to reveal some personal information relating to
their income, etc. It might have happened that some more essential information
have been collected.
• The study is related to many more customers of cities of Navi Mumbai and the
Researcher doesn‟t include all the users of Ebanking services among these
cities.

• The study is limited to area of CBD Belapur region only.

• The awareness and popularity of E-banking focus only on the customer‟s

satisfaction. Other aspects are not covered. Only customer prospective studied
by the researcher.

• Limitation of primary data and sampling will remain with study.

• There are number of factors affect on the smooth any secure e-banking services
which are not covered.

• Only 100 customers are taken for the study of the project.

2.6 DATA COLLECTION:-

28
 1. Primary Data :- This is first hand information is collected from the respondents
associated with selected banks. Structured questionnaire prepared by the
researcher and it is filled up by 100 customers and 10 bank officers.
Respondents‘ responses are collected from CBD Belapur city.

2. Secondary Data :- It is collected to add value to the primary data. This shall be
collected by using a verity of sources. These sources are:

• Publications, Magazine
• RBI reports
• Journals Of banking and finance

• Reference book and newspapers

2.7 SAMPLE UNIT:-

For studying Impact Of E-Banking On Service Quality Of Banks, Sample were
selected from Navi Mumbai.

2.8 SAMPLING METHOD :-

Sampling methods fall under two broad categories-

- Non-Probability sampling methods
- Probability sampling methods
-
2.9 SAMPLE DESIGN :-
I have prepared this project as descriptive type, as the objective of the study.

2.10 SAMPLE SIZE:-100

2.11 RESEARCH PLACE :- CBD Belapur.

CHAPTER 3:REVIEW OF LITERATURE

Review of literature is concerned to the study of previous research work in the field of
chosen research problem and other problems related to E-banking services. This is one
of the most important components in the research process, which introduces research
gaps as well as the research process to a researchers. It also provides the researcher a
bird‘s eye view about the research done in that area so far. In order to get acquaintance
29
with the research process, to understand the research gaps in the chosen research study,
earlier research articles, published proceedings in national and international
conferences, references where reviewed. The presentation of review of literature is
grouped under the following headings:

• Review from national and international journals.

• Review from reference books.

• Review from National and International Journals

Hundal B S; Jain Abhay (2006), in their article “Adoption if Mobile Banking Service
in India” published in The ICFAI Journal of Systems Management, Vol.IV No.2, pp.
63-72, articulated the stimulating and inhibiting attributes on the adoption of mobile
banking services and outlines managerial implications.

Sharma S; S S Bhardwaj and Pratibha (2007), in their article “X-raying Service

Quality in Commercial Banks: A Case Study of SBi and HDFC”, published in Apeejay
Journal of Management and Technology, Vol.2 No.1, Jan2007, pp. 26-28, examined
and compared the perceptions of customers regarding SQ in public and private sector
banks. Structured questionnaire was prepared and 500 customers (400 from SBI and
100 from HDFC) have been selected. Percentage and weighted average scores were
used for data analysis. It is found that SQ was positively associated with customer
services and there was significant 12 difference in the quality of services provided by
selected banks. Banks located in small cities and towns were lagging behind their
counterparts in big and metropolitans cities

Migdadi Yazan K.A., PhD Student, Bradford University, School of Management,

United Kingdome, in this article ” The Quality of Internet Banking Service Encounter
in Jordan” , published in Journal of Internet Banking and Commerce, December 2008,
Vol. 13, pp. 2-7 has attempted to identify the service quality between Jorden and UK.
The evaluation of the banks web sites was conducted in March 2008 for 16 click-
andmorter retail banks in the UK and 6 dot com retail banks in UK. Result indicated
that, the internet banking service encounter quality of the click-and-morter in Jorden,
retail banks is very closed to the UK banks. Further quality of internet banking service
encounter quality of the click-and-morter retail banks in the UK which are very close
to the dot com and retail banks in the UK.

30
Ipshita Bansal & Kamal K. Gupta, (2012), in their article “Development Of An
Instrument To Measure Internet Banking Service Quality In India” published in Journal
of Arts, Science & Commerce, E-ISSN 2229-4686, ISSN 2231-4172 attempted to
develop a reliable and valid instrument of measuring Internet banking service quality
in India, and also analyses the impact of Internet banking service quality dimensions on
the Overall Internet Banking Service Quality and customer satisfaction. Results of
exploratory factor analysis (EFA) revealed five dimensions— Security/Privacy,
Reliability, Efficiency, Responsiveness, and Site Aesthetics. Findings indicate that all
dimensions carry significant impact on the Overall Internet Banking Service Quality
perceptions and customer satisfaction. However, Security/Privacy and Efficiency
dimensions carry the maximum impact on the Overall Internet Banking Service Quality
and satisfaction respectively.

Wong et. al. (2008), in their article ”Re-examining Traditional Service Banking in an
EBanking Era”, published in International Journal of Bank Marketing, Vol.26, No.7, 13
pp. 526-545, made a study to re-examine the role of traditional SQ in E-banking era in
Australia. 706 customers and a self-administered questionnaire (22 items to measure
SQ) was used for data collection. Quadrant analysis and Factor analysis techniques
were used. They concluded that electronic delivery of services continuously increased
the customers‘ expectations of SQ and performance; whereas traditional banking
services were misaligned to their current expectations and it caused dissatisfaction.

Kumar and Saini (2009) in their article “Adoption od Electronic Banking

Technologies by Indian Consumers: An Empirical Study”, published in BVIMSR
Management Edge, Vol.2, No.1 pp. 76-83, studied the adoption of electronic banking
technologies by Indian consumers. It has been observed in the findings that contextual
and demographic variables influence the adoption of new technology in banking sector.

Urban consumers are more confident than their rural counterparts in accepting the new
technology. Further younger consumers reveal more openness to change and more
familiar with the technology. Male consumers use technology more than the female and
well educated consumers use technology more easily than those with lower educational
status. Income has also been identified as an influence factor in the adoption of
electronic technologies. Consumers from high income group use it more than the low
income group.

31
Gupta P.K. (2008) in his article ”Internet Banking in India – Consumer Concerns and
Bank Strategies” published in Global Journal of Business Research, Vol. 2, No. 1,
pp.43-51, attempted to examine the customer‘s behaviors with respect to internet
banking vis-à-vis conventional banking. From major cities 2000 customers were
selected and collected opinion through questionnaire. He concluded that, internet
banking was found to be easier and speedier than conventional banking and trust was
found as most important factor followed by accuracy and confidentiality. But on safety
level, the rating in case of conventional banking system was found to rise with the
movement to higher income levels.

Mallya M D (2009), in his article “Role of Technology in Enhancing Quality of

Customer Service in Banks” published in Vinimaya, Vol. XXX No.3, Oct-Dec 2009
pp. 5-18, analyzed the role of IT in improving customer service. Bank customers can
look forward to more exciting, innovative and technology-based products. Customers
who can enjoy the use of computers can do most of the banking at home/office and
experience the benefits of virtual banking. The emerging pattern of banking can help
customers to manage their time better and banking can be an integral part of their
routine activities.

Kautish (2008) described the paradigm shift of banking sector from traditional banking
to online banking. The objective of the paper was to discuss the derivation of value
added tool of online banking system which was used to attract new customers and retain
the existing ones. It helped the banks to acquire more business from existing customers.
People preferred to use online banking because of its availability, better performance,
ubiquity, speed and its effectiveness. Further, the author discussed two bank models
integrated banking model where the banks provide internet banking services as an
extension to their basic services like ATM and phone banking. So, it is a kind of hybrid
approach and the other was stand alone internet banking model, where the banks totally
rely on the online channel. To improve the services through e-banking, banks should
think from the customers‘ perspective and there should be creativity and innovation in
designing and implementation of e-banking processes. The author concluded that as
ebanking was a relatively new concept in the global banking scenario so the best of this
concept was yet to come.

Review from Reference Books:

32
Seshadri, I.J.H. (1981) in his book “Banks Since Nationalisation”, Birla Institute of
Scientific Research, New Delhi has analyzed the achievements of the nationalized
banks with those that were left in the private sector. The progress achieved by these
banks in the sphere of branches, deposits, advances etc. were analyzed with secondary
data available from various banks, the Reserve Bank of India and so on. The efficiency
and profitability of the nationalized banks too were analyzed.

Agarwall, B.F.(1982) in his book “Commercial Banking in India After

Nationalisation A Study of their Policies and Progress”, Classical Publishing
Company, New Delhi, has analyzed the performance of commercial banks in India after
nationalization. It was neither an empirical study nor the study of a particular aspect of
commercial banking. It was only a study of banking development in the light of
nationalization. Annual reports of banks, periodical reports of the Reserve Bank of
India, personal discussion with bank officials and so on were the major sources relied
on for the study

Chawla, A.S.(1987) in his book “Nationalisation and Growth of Indian Banking”

published by Deep and Deep Publications , New Delhi, has investigated the
development and growth of banking activities in India with particular reference to the
state of Punjab. The analysis was carried out with the help of different types of growth
rates; indices of changes were also calculated. Certain statistical tools like co-efficient
of variation and rank correlation too were used in the study

Vishwanathan Bharathan (2008), has undertaken a study “Internet Banking

Multidimensional Perspective”, published by ICFAI, University Press, pp 3-18.
According to him, technology has made a tremendous impact in banking. ‗Anywhere,
Anytime banking‘ have become a reality. Also, it has thrown new challenges in the
banking sector and new issues started cropping up which is going to pose certain
problems in the near future. Author attempted to address the security and authentication
issues in an internet banking and reiterates the point that online banking becomes less
secure if users are careless, gullible or computer illiterate. With the globalization of
business and services, our country cannot lag behind in niche area of internet banking.

Nitsure Rupa Rege (2006) in her book “E-Banking: Challenges and

Opportunities”, EBanking in India The Paradigm Shift, The ICFAI University Press,
pp.3-16, she explained EBanking has the potential to transfer the banking business as it

33
significantly lowers the transaction and delivery costs. This book discussed about the
problems faced by developing countries, (which have a low penetration of information
and telecommunication technology), in realizing the advantages of E-banking
initiatives for examples : the different operational environments for public and private
sector banks, problems of security, authentication, management and regulation; also
inadequate financing of small and medium scale enterprises (SME) were highlighted.

Rajendran (1993) in his book “Comparative study of the public sector and private
sector banks during the year 1990-91” published by Kanishka Publishers and
Distributors, Delhi, chose three profitability ratios and six balance sheet ratios. He
brought eight scheduled private sector banks, three nationalized banks and the State
Bank of India within the purview of his study.

Prabhu (1991) in his book “Excellence Through People: The Canara Bank Way”,
Publishers Pvt. Ltd., New Delhi, explained how an organization can achieve its
changing goals from time to time by following the right type of policies. He made an
attempt to share his experiences, thoughts and views on creating and sustaining
organizational excellence through people

Dannenberg and Kellner (1998), in their study, overviewed the opportunities for
effective utilization of the Internet with regard to the banking industry. The authors
evaluated that appropriate application of today‘s cutting edge technology could ensure
the success of banks in the competitive market. They evaluated the services of banks
via internet as websites provide sophisticated line of products and services at low price.
The authors analyzed that 16 transactions via internet reduce the risk of data loss to
customers, chance to cut down expenses, higher flexibility for bank employees,
reshaping the banks‘ image into an innovative and technologically leading institutes,
etc. The researchers found that banks could move one step further by entering into a
strategic alliance with internet service provider. So, the bank of tomorrow stands to be
feasible with today‘s technology

Wenninger (2000) evaluated the emerging role of electronic commerce in banks.

Ecommerce had created new form of competition and compelled banks to make choices
about the services they offer, the size of their branch network and extent of their support
to interbank payments network. The main objective of the study was to understand the
changes that had taken place with the introduction of electronic commerce.

34
Development of e-banking products such as electronic billing, establishing internet
portals, electronic checks, ATM, etc. had provided additional services to customers‘.
The author also emphasized upon the strategic and operational risks which arise in
banking sector. These could be minimized with a cost efficient electronic process.

Singh and Malhotra (2007) made an attempt to discover factors affecting a bank‘s
decision to adopt internet banking in India. The study was based on 88 banks
comprising of public, private and foreign banks covering financial years from 1997 to
2005. The results of the study showed that large banks having high fixed expenses, high
income and expenditure tend to use more technology. Banks had used internet banking
as complementary channel to existing branch network. However, the private and
foreign banks were quick adopter to internet banking than public sector banks. The
adoption of this innovation by other banks increases the probability that a decision to
adapt will be made as it has increased the profitability and productivity of banks.

CHAPTER 4 :CONCEPTUAL STUDY

4.1 GROWTH AND EXTENT OF ELECTRONIC BANKING

SERVICES IN INDIA

A number of services are being offered through electronic banking. It is quite difficult
to measure the extent of such services, but an effort has been made by classifying these
services into two categories. Firstly, to judge the impact of e-banking through different
websites, services being offered by the banks have been categorized into informational
and transactional services. Secondly, the extent of these services has been measured
through ATM services offered by the banks. The study takes into consideration all the
public, private, SBI and nationalized banks to know the extent of ebanking services.
Hence, the chapter is divided into two parts: Part-I analyzes the extent of e-banking
through website analysis; and Part-II throws light upon the growth of ATM industry in
India. The data for the purpose of this study relates to the period 2003-04 to 2007-08.

4.2 E-banking Services through Websites of the Banks

35
The website technology has totally transformed the banking business. The success of
Internet banking depends upon the well designed website of a bank. It needs to be
informative and functional. So, the basic aim of a website is to make the electronic
banking services more functional, desirable, accessible and consumer friendly. Internet
banking can be provided by the banks in two ways. Firstly, an existing bank with its
physical offices can establish a website and offer the internet banking services as an
additional delivery channel. Secondly, the facility of e-banking can be provided solely
through the internet without having any physical office. The following diagram
highlights that accessibility, speed, navigability and content are the important factors
which make a website effective in its use.

Website Quality Assessment Model

Source: Mirando and Cortes (2006)
It is evident from the above diagram, if the website is easily accessible by its
users, it can increase its quality. The speed of a website enables its users to make their
transactions within a reasonable time. The linking of the website with another page is
called navigability. Each page of the website should be self-sufficient and provide link
to the main contents. Poor web design will result into loss of users. Further, content
means that website must have that required potential which satisfies the need of the
customers.
The website of a bank carries various features like product information, services
provided, information on location, contacts of the bank, history of the bank, security
issues, information regarding operation of different services, and details of various
transactions. On the basis of these features, a website can be classified into two
categories:
a) Informational websites
b) Transactional websites (a) Informational Websites:
Informational websites provide the general information about the bank and its
products. On such websites, customers can access all kinds of information but they
cannot transact.
(b) Transactional Websites:
These websites enable the customers to conduct any transaction through the website of
the bank. The website provides a wide range of services to the customers. These

36
services are classified into wholesale banking, retail e-banking services, personal
banking, etc. Some retail and wholesale e-banking services are commonly offered by
all 84 the financial institutions on their websites. The banks offer retail services like
account management, bill payment , new account opening, investment/ brokerage
services, loan application and approval, account aggregation, etc. Wholesale services
include cash management, small business loan applications, business to business
payments, employee benefit/ pension administration, etc. However, the services
provided through transactional websites are more risky than informational websites.
The reason being that transfer of money is involved in it. So, the following measures
are effective to curtail such a risk:
• Security control for safeguarding customer information.
• Liability for unauthorized transactions.
• Losses from fraud, if the institution fails to verify the identity.
• Security from violation of rules and regulations.
The present study is based upon two considerations; firstly, only those banks which are
providing services through transactional websites have been selected for the study; and
secondly, the extent to which these services are being provided by the banks. The
purpose of this chapter is to fill significant gaps related to electronic banking in India.
For the fulfillment of gap, a survey was conducted on the websites of banks to determine
the number of electronic banking services provided by the banks. To study the extent
of e-banking services, an attempt has been made to conduct ranking of electronic banks,
so that an approach can be developed to assess which of the banks are providing
qualitative services to the customers.

4.3 Key Electronic Banking Services

For the purpose of extent of e-banking services, 48 services have been considered.
These have been divided into four major categories, i.e., internet banking, phone
banking, mobile banking, and ATM. Table 4.2 give a brief description of these
services.
Service Electronic Banking Services Definition
Code
1 Balance enquiry and statement Check out transaction in bank
account with a real time balance
2 Transaction history Check out past transaction from
the date of account opening

37
3 Online transfer of funds Transfer of funds to any bank
account of that particular bank
or any other bank.
4 Prepaid mobile recharge Recharge pre-paid mobile
online anywhere, anytime in a
few minutes
5 Send money order anytime Get it door delivered to any
destination in India
6 Request of cheque book The cheque is delivered on the
address upon request.
7 Monthly Bank account Free statement of bank account
statement by E-mail on e-mail address
8 Change Password Change of log-in password and
transaction password
9 Demat holdings Provide to demat account details
and transactions
10 Loan Details View details related to loan
account like type of loan, date of
sanction, date of maturity,

rate of interest
11 Bills Payment Paying of bills of utility
(electricity and telephone), bank
credit, mobile bills, insurance
premium
12 Online shopping Pay e-shopping bills through
internet banking
13 Ticket Booking Booking of railway or air-ticket
online

14 Share Trading Trade in security market online,

through the unique three-in-one
account that integrate banking,
broking and demat account

15 Online tax payments Online payment of service tax,

income tax, central excise duty.

16 Corporate Internet Banking Internet banking services to

corporate customers
Phone Banking Services
17 Enquire your Account Get the details of savings,
balance current and fixed deposit
account balance

38
18 Statement of Account Get cheque book or latest
account statement delivered at
your door step
19 Request for Fund Transfer Transfer money from one
account to another. Both
accounts must be linked to
customer ID
Mobile Banking Services
20 Account Balance Get information of updated
balance without using internet
or phone banking
21 Making Payment Make payment of all bills via
mobile banking
22 Details of credit card balance Knowing the credit card balance
without making a phone call or
logging on the internet
23 Last three transactions One can check the balance of last
three transactions
ATMs
24 24 hours access to Cash Any time withdrawal of cash
25 Transfer fund between Transfer of funds from one
accounts account to another account in
the same branch
26 View account balances and Can view minimum last three
mini statement transactions and current balance
27 Pin change option Change the personal
identification number of ATM/
debit card
Extent of Electronic Banking Services among Top Ten Ranks
Name of Bank Category Rank Category
ICICI Bank New private Sector 1 95.8
HDFC Bank New private Sector 2 93.7
IDBI Bank Other public sector 3 75
Bank
Kotak Mahindra New private Sector 4 70.8
Bank
Punjab National Nationalized 5 64.5
Bank
Canara Bank Nationalized 6 64.5

39
 Bank of Nationalized 7 62.5
Maharastra
Corporation Bank Nationalized 8 56.2
Federal Bank Other public sector 9 48
Bank
Axis Bank New private Sector 10 48
Karnataka Bank Other public sector 11 48
Bank
Dena Bank Nationalized 12 45.8
Indian Bank Nationalized 13 45.8
Union bank of Nationalized 14 41.6
India
Table shows the extent of e-banking services. It is found that ICICI Bank offers as
high as 95.8 per cent e-banking services, followed by HDFC Bank with 93.7 per cent
of e-banking services. So, the top two positions of e-banking services are acquired by
new private sector banks. Third position is acquired is by a public sector bank, viz.
IDBI offering 75 per cent of services. Fourth position is again acquired by a new
private sector bank, viz. Kotak Mahindra offering 70.8 per cent of services. Fifth rank
is shared by Punjab National Bank and Canara Bank offering 64.5 per cent of
services. Sixth position is acquired by Bank of Maharashtra with 62.5 per cent
services, seventh by Corporation Bank with 56.25 per cent and eighth rank is shared
by three banks jointly with 48.00 per cent of each service, i.e., Federal Bank,
Karnataka Bank and Axis bank. Out of these three banks, two banks are old private
sector banks and one is a new private sector bank. Ninth position is jointly shared by
Dena Bank and Indian Bank with 45.8 per cent services. Both are nationalized banks.
Tenth rank is bagged by Union Bank of India with 41.67 per cent services which is a
nationalized one. The analysis depicts that new private sector banks and nationalized
banks have provided e- banking services. Old private sector banks and SBI banks are
in the early stage of development and introduction of early e-banking to their
customers.

4.4 IMPACT OF ELECTRONIC BANKING ON SERVICE QUALITY OF

INDIAN BANKS

40
The bank customers play a vital role in the banking sector. They are the key players of
the banking industry and all the efforts are made by the banks to satisfy the desirable
needs of the customers. In the present chapter, an attempt has been made to get the
opinion of the bank customers regarding electronic banking services. The chapter has
been divided into four sections. Section-I deals with the conceptual framework of
service quality with its meaning, various SERVQUAL dimensions, theoretical
framework and how electronic banking has improved the quality of service in the
banking sector. Section-II deals with the demographic information of the respondents.
Section-III examined the various service quality dimensions and the customers’
satisfaction towards electronic banking. Section-IV deals with comparative analysis of
public and private sector services to frame out an opinion as to which sector is providing
qualitative and efficient services to the customers.

The bank customers play a vital role in the banking sector. They are the key players of
the banking industry and all the efforts are made by the banks to satisfy the desirable
needs of the customers. In the present chapter, an attempt has been made to get the
opinion of the bank customers regarding electronic banking services. The chapter has
been divided into four sections. Section-I deals with the conceptual framework of
service quality with its meaning, various SERVQUAL dimensions, theoretical
framework and how electronic banking has improved the quality of service in the
banking sector. Section-II deals with the demographic information of the respondents.
Section-III examined the various service quality dimensions and the customers’
satisfaction towards electronic banking. Section-IV deals with comparative analysis of
public and private sector services to frame out an opinion as to which sector is providing
qualitative and efficient services to the customers.

4.5 Service Quality: Conceptualization and Operationalization

Quality is a concept which requires a concern both in products as well as in services.

Various experts have defined it as “fitness for use”, “conformance to
117 requirements”, “freedom from variation” etc. To market a product, quality plays a
pivotal role to sell a product. In fact, quality is considered as most important factor that

41
influence on the buying behavior of the customer. Now the question arises to measure
quality of service or a product. In tangible goods like products, quality can be measured
by its durability and number of defects, usage of product, packaging, handling etc.
However measuring the quality in intangible is a different one. As services are
intangible so they are very difficult to measure. Services have a lot of intangible
dimensions like communication, credibility, security, competence, reliability,
responsiveness which are qualitative by nature and their value is subjective. Service
quality is an abstract and elusive construct because of 4 unique features of services.
1. Intangibility (Bateson, 1977)
2. Heterogeneity (Booms and Bitner, 1990)
3. Inseparability (Carman & langeard, 1980)
4. Perishability(Stanton, J. William 2004)
Services are those economic activities that typically produce an intangible product such
as education, entertainment, food & lodging, transportation, insurance, trade,
government, financial, real estate, medical, repair & maintenance etc. Intensified
competition and deregulation has led many services and retail businesses to seek
profitable ways to differentiate them; one strategy that has been related to success in
these businesses is the delivery of high service quality (Rudie and Wansley 1985). So
service quality has become a significant research topic in past decade due to high
revenues, increased cross sell ratios, higher customer retention, purchasing behaviors
(Cronin and Taylor 1994) and expanded market share. An analysis of service quality
literature suggests four underlying themes:
(a) It is more difficult to evaluate than quality of tangible goods.
(b) Evaluation of quality is not made solely on the outcome service, they also involve
the evaluation of the process of service delivery (Parasuraman, Zeithamal & Berry
1985).
(c) Service cannot be separated from the creator of service. These are created,
consumed and dispensed at the same time.
(d) Although the services are intangible but through visualization, association, physical
representation and documentation; intangibility of the services can be improved.
So product and service quality, customer satisfaction and company profitability are
inter-related with each other. Higher the quality level, higher will be the customer

42
satisfaction which support high prices and low costs which in turn will help in
improving the company’s profit.

4.6 Measuring the Service Quality

Service providers must understand two attributes of service quality. Firstly, the
quality is defined by the customer and not by the product seller. Secondly, customers
assess service quality by comparing their expectations to their perception of how the
service is performed. In this process, there is no guarantee that expectations will be
reasonable, nor there is any assurance that a customers’ perception of performance will
be based on more than a single experience. However to deliver better quality services
to the customers, it is required that services must be standardized and for standardizing
the quality of a service, the delivery of the service must be substituted with machines
wherever possible. For example, ATM machines, websites and mobile banking gives
the same kind of services to all the customers irrespective of any human biasness in
delivering the service and at the same time the machine will not suffer from any fatigue,
forgetfulness and stress. But if the customer is not adapt at surfing the internet, forgets
the required ATM pin number and become impatient with the branch process on a
recorded telephone answering system than the quality of the service will hamper and
inconsistent. So, despite of standardization and reliability of machines, this is one fact
that may explain why internet shopping accounts for merely 2% of the total retail sales.
So, it could be judged that although quality could be standardized by using machines
but at the same time it depends upon the customers adaptation and willingness that how
much the customer is patient, aware and satisfied with the machines in place of humans.
This is one of the reason that despite of total automation in the banking sector still
human resource play a vital role in delivering and explaining the service.

4.7 Measuring Service Quality in Banking Sector

Customer is the kingpin for the development of trade, industry and service sector
particularly in financial services. So, the significance of customer service in the banking
sector came to force to compete in a market driven environment. Measuring service
quality in the service sector particularly in the banking sector is more difficult than

43
measuring the quality of manufactured goods. The service sector as a whole is very
heterogeneous and what is heterogeneous may hold true for one service and may not
hold for another service sector. For example, the nature of banking services is very
different provided by a hospital and hotel. In fact, in banking industry there are a variety
of services like retail banking, corporate banking, investment banking, commercial
banking, personnel banking, wholesale banking, internet banking etc. Each banking is
having a variety of services. Due to this differentiation, services in this industry could
not be standardized, moreover these services are intangible in nature which could not
be compared or seen. The concept of customer satisfaction and service quality is
interrelated with each other. Moreover satisfaction of customer depends upon service
quality and service quality is increasingly offered as a strategy by marketers to position
themselves more effectively in the market place (Parasuraman et.al 1988; brown and
Swartz 1989; Cronin and Taylor 1992). Due to the era of e-banking quality of service
has been improved a lot as compare to traditional banking services. Internet banking,
Mobile banking, automated teller machine, electronic fund transfer has totally changed
the way of providing services by the banks. However some banks like in private sector
are providing it in a very efficient way while others are making efforts to adopt it.

4.8 Electronic Banking and Service Quality

As customers become more sophisticated, therefore, it becomes essential to consider

the use of technology to respond to their continuously change. Banking is an industry
highly which is highly involved with the customers. Customers in developing
economies seems to keep the “technological factors” of services as the yardstick in
differentiating good & bad services and the human factor – the employees seem to play
a lesser role in discriminating the quality of service for banks. The variation in services
offered by the banks develops the excellence for service quality. Banking is no longer
regarded as a business dealing with money transaction alone, but it also seem as a
business related to information on financial transaction (Padwal 1995). Customers
whether at the corporate level or at retail level have always been important for the
banks. As electronic banking is becoming more prevalent, so level of customer
satisfaction is also changing the scenario of technological environment. Informational

44
technology in form of e-banking plays a significant role in providing better services at
lower cost. Several innovative IT based service such as Automated Teller Machine
(ATM), Internet banking, Smart cards, Credit Cards, Mobile banking, Phone banking,
Anywhere-Anytime banking have provided number of convenient services to the
customer So as the service quality improves, the probability of customer satisfaction
increases. Increase satisfaction in turn increase the mutual understanding, customer
retention and a bond of trust between customer and bank. The banks which are
providing these services at large extent to customers are more reputed in the eyes of
customers. But at the same time technology based product is different in public and
private sector banks. Bank automation and electronic banking is fast in private sector
comparative to public sector. E-banking is an improvement over traditional banking
system because it has reduced the cost of transaction processing, improve the payment
efficiency, financial services and improve the banker-customer relationship. The
relationship between ebanking and service quality can be studied with the level of
satisfaction. As the customer satisfaction is the function of customer expectation level
and service quality level provided by the organization. E-banking plays a pivotal role
in giving satisfaction to the customers because e-banking fills the gap between the
expected and perceived service quality. So in order to fill this gap, banks should find
ways of making electronic services more accessible and by allowing the customer to
verify the accuracy of the e-banking transactions. There are number of reasons due to
which customer satisfaction due to e-banking has improved.
1. Customer can withdraw funds, transfer funds anytime, anywhere they want.
2. Accessibility has been extended through technological development as it allows
customers to do business from their home and office.
3. It makes the banking activities and transaction very simplier to understand 4. There
is no requirement of direct control with bank, as services can be operated wherever
customer wants.
5. It has reduced the waiting time of the customer; no long queue standing is required.
6. Availability of employees at all times is not required as these services are provided
24 hours a day, seven days a week.
7. Internet based services has enabled the corporate and retail customers to transact
from home, office and traveling.

45
8. Online fund transfer enabled the customer to transfer funds from one bank to another
or within the same bank at same time.
9. Communication, interaction between the bank and customer has been improved due
to e-banking.
On the whole we can say that e-banking has become pre-imminent method of carrying
the banking transaction and to increase the customer satisfaction. With the present
chapter an effort has been made to analyze the impact of e-banking on customer
satisfaction with servqual dimension
.
4.9 SERVQUAL Scale

For the measurement of impact of e-banking on service quality, a model named

SERVQUAL was developed by Parasuraman (1988). The model consists of ten
components. SERVQUAL provides a technology for measuring and managing service
quality (SQ). When the technology was first published, its innovators Parasuraman,
Zeithamal and Berry have further promulgated and promoted the technology through a
series of publication (Parasuraman et. al.1988; 1991(a); 1991(b); 1994). Zeithamal et.
Al (1990; 1991;1993) (Buttle1995). Servqual fills a gap between what the customer
expect by way of SQ and what he is actually getting. SQ is presented as a multi
dimensional construct. In the original formulation Parasuraman et. al (1985) identified
ten components of SQ. Each dimension has further four-five dimensions

(1) Reliability involves consistency of performance and dependability. It also means

that the firm performs the service first time and honours its promises. Specifically, it
involves the following. • Accuracy in billing
• Keeping records correctly
• Performing the service at designated time
(2) Responsiveness concerns the willingness or readiness of employees to provide
service. It involves timeliness of service. • Mailing a transaction slip immediately
• Calling the customer back quickly
• Giving prompt service (e.g., setting of appointments quickly)
(3) Competence means possession of the required skills and knowledge to perform the
service. It involves:

46
• Knowledge and skill of the contact personnel • Knowledge and skill
of operational support personnel
• Research capability of the organization.
(4) Access involves approachability and ease of contact. It means :
• The service is easily accessible by telephone
• Waiting time to receive service at bank is not extensive
• Convenient hours of operation
• Convenient location of service facility
(5) Courtesy involves politeness, respect, consideration and friendliness of contact
personnel (including receptionists, telephone operators. It includes:
• Consideration for the consumer’s property
• Clean and neat appearance of public contact personnel
(6) Communication means keeping customers informed in language they can
understand and listening to them. It may mean that the company has to adjust its
language according to different customers-increasing the level of sophistication with a
well educated customer. It involves:
• Explaining the service itself
• Explaining how much the service will cost
• Explaining trade- off between service and cost
• Assuring the consumer that a problem will be handled
(7) Credibility involves trustworthiness, believability, honesty. It involves having the
customer’s best interests at heart contributing to credibility are:
• Company name
• Company reputation
• Personnel characteristics of the contact personel
(8) Security is the freedom from danger, risk or doubt. It involves:
• Physical safety
• Financial security
• Confidentiality
(9) Understanding involves making the effort to understand the customer’s needs. It
involves:
• Learning the customer’s specific requirement
• Providing individualized attention

47
• Recognizing the regular customer
(10) Tangibles include the physical evidence of the service. It includes
• Physical facilities
• Appearance personnel
• Tools or equipment used to provide the service
• Physical representation of the service, such as a plastic credit card or a bank statement
• Other customers in the service facility
(Modified from Buttle 1995.)
In their 1988 work these ten dimensions were reduced to five dimensions as follows
Dimensions Items in scale
(1) Reliability 4
(2) Assurance 5
(3) Tangibles 4
(4) Empathy 5
(5) Responsiveness 4
The above mentioned scale was originally developed by Parasuraman in 1985. But in
the present chapter, in order to have wide coverage of the study, the ten dimensions are
taken in to consideration. One of the dimension namely courtesy is having only one sub
dimension, so factor analysis and data reduction was not possible for single variable.
So, it was merged in to the main dimension of understanding. In order to know the
impact of electronic banking on service quality, a questionnaire has been developed. It
consists of 43 items related to service quality.

Various Dimensions of Service Quality for Drafting of Research Instrument

Reliability
1 It provides accuracy in billing
2 It helps in keeping records correctly.
3 It performs the service at designated time
Responsiveness
4 E-banking is very necessary for the development of new economy of India
5 It improves the quality of customer service
6 Response of service through e-banking is very prompt and quick.

48
7 Availability of service is faster in e- banking as compare to manual
banking.
Competence
8 Transfer of fund is easier through E-banking
9 E-Banking provides more punctuality, transparency, accountability
10 Transfer of funds is faster as compared to manual banking system.
11 It is trusted by young generation
Access
12 E-Banking services are accessible via Internet banking, Mobile banking,
EFT,
ECS, ATM
13 Online purchase of goods and services including online payment is easier
14 It provides convenient location of service facility(location of ATM, POS
terminals)

15 It reduces the waiting time to receive the service

Courtesy
16 It helps in better customer relationship, attracting and retaining them.
Communication
17 E-Banking explains the service itself.
18 It explains the cost of service being used.
19 It assures the customer that problem will be handled
20 It explains the trade off between service and cost
21 E-banking provides up to date information
22 It also provides information for well educated customers
23 E-banking provides effective medium of promotion of various schemes
Credibility
24 E-banking increases the reputation of the banks
25 It increases the believability, honesty and trustworthiness of the customers
in banks
26 It ensures the ability to fulfill the requirement
27 Degree of reliability involved in Interaction with customer is more in e-
banking.

28 It provides unlimited network to the banks to approach customers

49
 Security
29 E-banking ensures physical safety of the transaction
30 Password facility provides confidentiality to transaction.
31 It also increases the financial security.
32 Privacy can be easily maintained.
Understanding
33 It provides individualized attention to the customers.
34 It provides necessary information to the customers.
35 Website of the bank is designed according to the need of the customer.
36 It ensures to provide necessary information to the customer.
37 E-banking learns the specific requirement of the customer.
Tangibility
38 Banks use advanced Computer/IT to serve clients.
39 E-banking provides modern looking equipment.
40 Physical representation of service through plastic card, credit and debit card
is easy.
41 E-banking provides 24 hours, 365 days a year service to customers
42 It helps in reducing the no. of queues in the bank branches.
43 E-banking provides more physical facilities to the customers.

Items of Final Draft of the Research Instrument

S.No. Attitude Factor Item No. Total Items

1 Reliability 26,27,28 3
2 Responsiveness 29,30,31,34 4
3 Competence 13,23,24,25 4
4 Access 32,33,35,36 4
5 Courtesy 41 1
6 Communication 17,18,19,20,21,22,42 7
7 Credibility 37,38,39,40,43 5

50
8 Security 12,14,15,16 4
9 Understanding 7,8,9,10,11 5
10 Tangibility 1,2,3,4,5,6 6

51
4.10 Exploring the Relationship Between Service Quality and E-banking

This section deals with various dimensions of service quality studied to know electronic
banking impact on service quality. Various statistical tools are applied for the said
purpose like mean, standard deviation, factor analysis and t-test. Various dimensions of
service quality helps to clarify as to which particular factors or variables of electronic
banking has increased the level of service quality for the customers.

4.10.1 Mean Scores and Standard Deviation

Table reveals the mean and standard deviation for the individual factors of electronic
banking to measure the service quality, customer satisfaction and their response towards
the different dimensions. Amongst the various dimensions, the highest score was found
for ‘transfer of fund is faster as compared to manual banking’ (competence dimension)
followed by the ‘representation of service through plastic card’,‘credit card and debit
card ‘(tangible dimension) and same mean score for ‘transfer of fund through e-banking
is easier’(competence) and than by ‘bank use advanced computer/ IT to serve clients’.
Three of the four variables of responsiveness were also ranked highest. The scores in
all the dimension of communication are also high. The lowest score was to be found
regarding ‘ability to fulfill the requirement’ in credibility dimension. The standard
deviation is also low and high according to the respective mean scores.

Mean Scores and Standard Deviation for Individual Features of Quality,

Customer Satisfaction and Behavioural Response

Sr.No Statements Dimension Mean S.D.

1 Banks use advanced Tangibility 4.00 0.86
Computer/IT to serve clients.
2 E-banking provides modern Tangibility 3.92 0.86
looking equipment.
3 Physical representation of Tangibility 4.02 0.86
service through plastic card,
credit and debit card is easy.

52
4 E-banking provides 24 hours, Tangibility 3.99 0.96
365 days a year service to
customers.
5 It helps in reducing the no. of Tangibility 3.83 0.92
queues in the bank branches.
6 E-banking provides more Tangibility 3.73 0.89
physical facilities to the
customers.
7 It provides individualized Understanding 3.66 0.91
attention to the customers.
8 It provides necessary Understanding 3.78 0.87
information to the customers.
9 Website of the bank is designed Understanding 3.80 0.91
according to the need of the
customer.
10 It ensures to provide necessary Understanding 3.80 0.88
information to the customer.
11 E-banking learns the specific Understanding 3.63 0.95
requirement of the customer.
12 E-banking ensures physical Security 3.67 1.02
safety of the transaction.
13 It is trusted by Competence 3.86 0.87
young generation.

14 Password facility provides Security 3.82 1.04

confidentiality to transaction.
15 It also increases the financial Security 3.84 0.90
security.

16 Privacy can be Security 3.70 1.02

easily maintained.

17 E-Banking explains the service Communication 3.78 1.03

itself.

18 It explains the cost of service Communication 3.72 0.85

being used.

19 It assures the customer that Communication 3.74 0.72

problem will be handled.
20 It explains the trade off between Communication 3.77 0.77
service and cost.
21 E-banking provides up to date Communication 3.77 0.98
information.

53
 22 It also provides sophisticated Communication 3.83 0.80
information for well educated
customers.
23 Transfer of fund is easier Competence 4.02 0.84
through E-banking.

24 E-Banking provides more Competence 3.77 0.94

punctuality, transparency,
accountability.
25 Transfer of funds is faster as Competence 4.06 0.88
compared to manual banking
system.

4.11 Service Quality Level of Banks Using SERVQUAL Model

For the measurement of impact of e-banking on service quality, SERVQUAL
model developed by Parasuraman et,al.(1985) has been used. The data collected through
the questionnaire was analyzed by using factor analysis and other statistical techniques.
The first stage was to determine whether the nine dimensions could be viewed as
appropriate indicators of banking industry. The second stage was to assess the variables
underlying the various dimensions. Accordingly, 43 variables were developed to assess
the nine dimensions. This stage tests these variables as well as their relevance in
conceptualizing service quality.

The 43 service quality variables were factor analyzed to determine whether there
exists underlying dimensions of service quality. The objective of the analysis was to
summarize the information contained in the original 43 variables in to smaller sets of
newly correlated composite dimension or factors. Only variables with factor loading of
0.40 (Hatcher, 1994) were considered important for further analysis and data reduction
and other were excluded. Cronbach alpha and Kaiser-Meyer-Olkin (KMO) measure of
sampling adequacy and Bartlett’s test of sphercity was used to measure the reliability
of data. If the value of KMO and Cronbach alpha in any variable is greater than 0.50
than the data will be regarded as reliable for research. The factors with eigen value equal
to or greater than one were considered significant and chosen for interpretation.

In order to conduct factor analysis on 43 variables of service quality, the various

sub dimensions has been divided into 9 main dimensions namely Access,
Communication. Credibility, Competence, Reliability, Responsiveness, Security,
Understanding, Tangibility. Each dimension consists of 4-5 sub dimensions. But all

54
these dimensions are not equally important for measuring the service quality in banking
industry. So, factor analysis was used to extract those factors having eighen value
greater than 1. To study the impact of e-banking on service quality and to identify the
important factors for the customers to choose e-banking, Two assumptions have been
framed.

• To know the impact of e-banking on the level of customer satisfaction, all factors
are equally important.

• There is no correlation among the different factors to judge the level of customer
satisfaction.

Measuring the Reliability of Data

Variables Kaiser-Meyer- Bartlett’s Test of d.f. Significance

Olkin Sphericity Level
Measure(KMO) (Approx.Chisquare)

Access 0.507 179.659 6 0.000

Communication 0.520 171.384 21 0.000
Competence 0.663 206.790 6 0.000
Credibility 0.591 205.889 10 0.000
Reliability 0.581 74.399 3 0.000
Responsiveness 0.666 275.346 6 0.000
Security 0.666 154.181 6 0.000
Tangibility 0.742 332.709 15 0.000
Understanding 0.797 211.037 15 0.000

In order to know the various factors considered important for the customers, two
tests were conducted under the factor analysis to judge the reliability of data, i.e.,
KaiserMeyer-Olkin measure of sampling adequacy and Bartlett test of sphericity. The
results so obtained were subjected to both these tests. The value of KMO statistics in
all the factors is >0.5. Hence, all the factors are not considered equally important for
measuring the service quality of e-banking. Therefore, null hypothesis is rejected.

55
Bartlett’s test of sphericity shows the value of Chi-square which is significant at 0.000
levels in all the dimensions of service quality. These two tests show that the data is fit
for conducting the factor analysis.

4.12 Identification of Five Service Quality Factors

Principal Component Analysis with Varimax Rotation method was employed
for extracting the factors. All the variables with their factor loadings and percentage of
variance explained by each factor are given in the following tables used on forty-three
items of service quality.
Principal Component Factor Analysis with Varimax Rotation,
Percentage of Variance Explained and factor Loadings
Five factors have been extracted with the help of different dimensions of service quality.
The percentage of variance explained by the factors individually varies from 38.915 to
58.579 and the communalities vary from 0.460 to 0.778. All the factors have been given
appropriate names on the basis of various variables present in each case. The structure
of these five factors is discussed below

Factor 1

Access

Table 1

Analysis of Customers’ Perceptions Regarding Access Dimension

S. No. Variable Factor
Loading
1. E-banking service is accessible via Internet banking, mobile 0.467
banking, EFT, ECS, ATM.

2. Online purchase of goods and services including online 0.676

payment is easier.

3. It provides convenient location of service facility (location of 0.794

ATM, POS terminals)
4. It reduces the waiting time to receive the service. 0.659
Cronbach Alpha 0.556
Eigen value 1.740
Percentage of variance(sum of square loadings) 43.491

56
 Different dimensions of ‘Access’ under e-banking were studied and four factors
have been loaded on this factor. The factor loadings of all the statements were calculated
and it has been found that the loading of all the statements is greater than 0.4, thus, all
the statements will be accepted. The Eigen value and Cronbach alpha for this factor are

1.740 and 0.556 respectively. The Eigen value of the factor was greater than one and
indicates that it fits well with the data from all the respondents on all the statements.
The analysis shows that Eigen value explains 43.49 per cent of the variance from all the
respondents and there is only one factor extracted having the factor loading closer to 1.
This shows that customers do not agree that e-banking is easily accessible through
mobile, ATM, internet banking, EFT and ECS. Convenience is having high factor
loading which is 0.79 and as such this factor is extracted and retained. It implies that
ebanking provides convenient location of service by installing the onsite and offsite
ATMs and point of sale terminals .

Factor 2

Competence

Table 2

Analysis of Customers’ Perceptions Regarding Competence Dimension

S. Variable Factor Loading

No.
1. Transfer of fund is easier through E-banking. .418
2. E-banking provides more punctuality, transparency, .745
accountability.

3 Transfer of funds is faster as compared to manual .776

banking system.

4. It is trusted by young generation. .750

Eigen value 1.896
Cronbach alpha .614
% of variance(sum of square loadings) 47.393

57
 Table reveals that competence factor consisted of four variables and each of
these variables was analyzed using factor analysis. The analysis shows that the Eigen
value represents 47.39 percentage of the variance of data. There are three variables
having value closer to 1 and above 0.7. The variables extracted were ‘Easy’, ‘Trusted’
and ‘Punctuality’. These three factors explained that the transfer of funds due to RTGS,
ECS and EFT is easier and services provided through e-banking are adequate,
accountable, faster and transparent.

Factor 3

Credibility

Table 3

Analysis of Customers’ Perceptions Regarding Credibility Dimension

S. No. Variable Factor Loading
1. E-banking increases the reputation of the banks. 0.713
2. It increases the believability, honesty and trustworthiness 0.699
of the customers in banks.

3. It ensures the ability to fulfill the requirement. 0.701

4. Degree of reliability involved in interaction with customer 0.471
is more in E- banking.

5. It provides unlimited network to the banks to approach 0.346

customers

Cronbach Alpha 0.787

Eigen value 1.684, 1.254
Percentage of variance(sum of square loadings) 58.759

Table
Rotated Component Matrix of Credibility Dimension

Factor 1 Factor 2
Reputation 0.772 -0.343

58
 Trustworthy 0.823 0.147
Ability -0.151 0.828
Reliability 0.582 0.364
Network 0.205 0.552

The credibility factor consisted of four variables. In this factor two variables
have Eigen values greater than 1 and as such two factors will be extracted with rotated
component matrix and Kaiser Normalization. These are:

Component 1: Reputation, trustworthy

Component 2: Ability

In the first extraction, the variables named ‘reputation’ and ‘trustworthy’ are having
high loading closer to 1. It can be inferred that e-banking services increase the honesty,
reputation and trustworthiness of the banks by providing on time and desirable services.
In the next category, there is only one factor having a loading of 0.828. The factor so
called is ‘ability’ as e-banking enhances the ability to fulfil the requirement of the
customer that was earlier not possible by brick and mortar banking.

Factor 4

Responsiveness

Table 4

Analysis of Customers’ Perceptions Regarding Responsibility Dimension

S.No. Variable Factor Loading

1. E-banking is very necessary for the development of new 0.714

economy of India.

2. It improves the quality of customer service. 0.724

3. Response of service through e-banking is very prompt 0.798
and quick.

4. Availability of service is faster in e-banking as compared 0.617

to manual banking.

59
 Cronbach Alpha 0.679
Eigen value 2.051
Percentage of variance(sum of square loadings) 51.281

Table shows the statements under responsiveness dimension. The

responsiveness factor consisted of four variables and each of these variables were
analyzed using factor analysis. The factor loadings of all the statements were calculated
and it was found that the loadings of all the statements were greater than 0.4, and thus,
all were accepted. The Cronbach alpha and Eigen value are 0.679 and 2.051 respectively
which suggest a good consistency of the data. Their is only one Eigen value explaining
51.28 per cent of the data. The component matrix shows four variables and all the
variables having value greater than 0.4. Hence, no factor can be rejected but three
factors having loading greater than 0.7 and as such the following factors will be
combined. Component: Development, quality, quickness

These three out of four factors represent that e-banking is required for the
development of economy, improve the quality of service, and bring quickness in
response. This shows that e-banking is a major factor for the growth and expansion of
banking sector and the economy as a whole by reduction of wastage and less paper
involvement in electronic transactions.

Factor 5

Security

Table 5

Analysis of Customers’ Perceptions Regarding Security Dimension

S. No. Variable Factor
Loading
1. E-banking ensures physical safety of the transaction. 0.582
2. Password facility provides confidentiality to transaction. 0.752
3. It also increases the financial security. 0.687
4. Privacy can be easily maintained. 0.660
Cronbach Alpha 0.691
Eigen value 1.811

60
 Percentage of variance(sum of square loadings) 45.271

Table shows security dimension that consisted of four variables. The value of Cronbach
alpha and Eigen values are 0.691 and 1.811 respectively, which suggest a good
consistency of the data. Only one factor having Eigen value greater than 1 explained
45.271 per cent of the data.

One factor ‘confidence’ having loading of 0.752 shows that people are highly
satisfied with e-banking because the technology of banking is mainly operated through
password, be it internet banking or ATM processing. Password facility provides
confidentiality to all the transactions. So, much influence in security issue is of
password facility which provides immense help to the customers in maintaining secrecy
of their money as well as transactions.

4.13 Level of E-banking Services Offered by Different Banks

E-banking services are offered by public and private sector banks at different
levels. Table 1 to 5 reveals the satisfaction level of respondents, awareness about new
products and services, operational problems in the existing e-banking services.

Table 1

Satisfaction Level of Customers Regarding E-banking Services

E-banking Extremely Poor Average Very Weighted
Services Poor Good Good Average Rank
Score
Internet banking 17 19 88 200 76 3.74 4
services
Mobile banking 11 54 166 119 50 3.35 10
services
Phone Banking 8 57 178 108 49 3.33 11
services
Home banking 33 47 148 122 50 3.27 12
services
ATM facility 25 19 96 123 137 3.82 2
Credit card Facility 20 16 124 164 76 3.65 5

61
Debit card facility 9 23 92 185 91 3.81 3
Electronic fund 6 55 99 156 84 3.64 6
transfer
Bill Payment 32 30 131 156 51 3.41 9
service
Inter-Connectivity 3 53 141 139 64 3.52 7
of ATM’s

Request Facility 8 22 88 176 106 3.87 1

Information of New 23 29 141 152 55 3.46 8
Products and
Services.

Table 1 mentions the level of E-banking services offered by different banks. The
various e-banking services include Internet banking, Mobile banking, Phone banking,
Home banking, ATM, Credit cards, Debit cards, Electronic Fund Transfer, Bill Payment
etc. Regarding different services customer are having different opinions. Weighted
average scores are calculated for all the services. Majority of the respondents are
satisfied with the ‘request facility’ (3.87) which means the customer can easily ask for
any sort of information and can request for pass book, account information, balance
enquiry etc. through e-banking followed by ATM facility (3.82), debit card facility
(3.81), Internet banking services (3.74), credit card facility (3.65), Electronic fund
transfer(3.64), Inter-connectivity of ATMs (3.52), Information of new products and
services (3.46), bill payment service(3.41), mobile banking services (3.35), phone
banking services (3.33), home banking services (3.27). The respondents’ level of
satisfaction shows that banks up to some extent are satisfying the requirement of the
customers and fulfilling their diverse needs.

Table 2

Awareness Among Customers’ About New Products And Services

Cumulative
Percent
Frequency Percent Valid Percent
Advertisement 129 32.2 32.3 32.3

62
 Manager 67 16.7 16.8 49.0

Website 67 16.7 16.8 65.8

E-mail 51 12.7 12.8 78.5

Other Customers 63 15.7 15.8 94.3

Mobile Banking 23 5.7 5.8 100.0

Total 400 99.8 100.0

Table 2 shows the awareness about the banking products and services in the customers.
The majority of the respondents (32.2%) aware about e-banking products and services
from the advertisement in the newspapers, 16.8 per cent from their respective managers
and websites of the banks respectively, 15.7 per cent from the other customers, 12.7 per
cent from e-mail and 5.7 per cent from the mobile banking. So the mode of awareness
could be any as the customer of today’s world is competent and aware about the usage
of e-banking through different modes of communication.

Table 3
Operational Problems in the Use of Modern Technology
Nature of Problem Cumulative
Percent
Frequency Percent Valid Percent
Server down 31 7.7 7.8 7.8

Untrained Personnel 35 8.7 8.8 16.5

Non Working of ATM 75 18.7 18.8 35.3

Deposit of Cash 49 12.2 12.3 47.5

Ignorance of People 37 9.2 9.3 56.8

Low Response of 34 8.5 8.5 65.3

Phone Calls

Onsite and Offsite 44 11.0 11.0 76.3

Location of ATM

63
Availability of 50 12.5 12.5 88.8
Currency

Risk of Loss of 31 7.7 7.8 96.5

Currency

Delay in Services 14 3.5 3.5 100.0

Total 400 99.8 100.0

Table 3 encounters the nature of problem being faced by the respondents with
the usage of e-banking. The major problem arising in this is regarding the ATMs. 18.7
per cent respondents says that the ATMs of the bank does not either work properly or
having the shortage of cash in it. Further the respondents agree that in ATM also the
problem of queue is not solved, people still have to stand in queue to use their ATMs
and the reason may be some time technical difficulties or slow working of the
machines.12.5 per cent respondent says that availability of currency might be in the
bank premises or in the ATMs causes’ problem to them. For online deposit also, the
customers have to wait for long time in bank despite of electronic fund transfer system.
Thirdly comes the problem of depositing the cash that constitute 12.2 per cent of the
total problems. Customers can withdraw fast cash from ATM but to deposit the money
they still have to rely on bank employees. Fourthly 11 per cent respondents agree that
locations of ATMs are not adequate. Even if a large number of ATMs are being installed
still the customers have to move far off places from their home and offices for the
withdrawal of money. In rural areas number of ATMs are very less. Further 9.2 per
cent respondents encounter problem due to their ignorance regarding the use of new
technological methods as their are no training and orientation programs organized for
the customers to train and inform them about the usage of e-banking products. 8.7 per
cent perceive that they are facing some problems due to untrained personnel in the
organization, 8.5 per cent of the respondents perceive that they face the problems
because of non attending of the phone calls by the bank employees. 7.7 per cent are
facing the problem due to server down and 3.5 per cent due to delay in services.

Table 4

Problems in E-banking Services

64
 Frequency Percent Valid Percent Cumulative Percent
Yes 235 58.6 58.8 58.8
No 165 41.1 41.3 100.0
Total 400 99.8 100.0

The methods and techniques used in e-banking are quite different from
traditional banking. In the list of services mentioned above, 58.6 per cent respondents
agree that they encounter problems in e-banking services and 41.1 per cent admitted
that they have adjusted their requirements according to any problem.

Table 5

Filing of Complaint

Frequency Percent Valid Percent Cumulative

Percent
Yes 158 39.4 39.5 39.5
No 242 60.3 60.5 100.0
Total 400 99.8 100.0

Table 5 reveals whether the respondents lodged complaint to the banks or

not regarding their problem. Majority (60.3%) of the respondents formed an opinion
that although they have problems in e-banking services yet they don’t complaint
regarding it to their banks. The reason may be they are not familiar with the way to file
the complaint with the bank and 39.4 per cent respondents’ complaint regarding their
problems to the banks. It could be regarding usage of internet banking, mobile banking,
ATMs etc.

4.14 Expert Interview

65
KARNATAKA BANK (Belapur Branch)

E-Banking is a very effective banking method but it does not affect the reputation
of bank. The bank clears all the queries of their customer through E-Banking by using
informational website of the bank. Most of the customer are using E-Banking mostly
ATM, Interent Banking which gives more profit to the bank and reduces the operational
cost and time consuming process. Because of E-Banking the bank does not require to
keep their customer’s cheques or other documents carefully for many years because all
the transaction have done technically. The difficulties invovlves in E-Banking are
depends on knowledge of customer and employess. So it requires training.

Sachin Hari

Senior Manager of Karnataka Bank (Belapur Branch)

BANK OF INDIA (CBD BELAPUR BRANCH)

E-Banking is important but Bank Of India is a bank which mostly spread in rural
areas. It is for mass so they are more comfortable with manual banking because most
of the customers are belongs to rural area or middle class and most of them are illiterate
also. So, Bank Of India provides all the services effectively for their customer happiness
and the also provides various schmes in rural areas and senior citizens. So, Bank Of
India is more comfortable with manual banking than E-Banking. The bank realized to
old customer that they should use E-Banking. But it does not mean that they do not
comfortable with E-Banking the bank also have E-Banking and it get more profit
through transactional website.

66
 ATUL LOKHODE

Senior Manager Of Bank Of India (CBD Belapur Branch)

UNION BANK (LALBHAUG BRANCH)

E-Banking is suitable method than manual banking it does not affects on reputation
of bank. And in E-Banking method bank indirectly approach to the customer and can
give detailed information about schemes through their informational website than
traditional banking. Because of E-Banking cost of operation, cost of manpower get
reduce, it does not require more place also etc. it also saves times of both customers and
employess also. E-Banking gives lots of profit to the bank. The bank gets lots of profit
through RTGS, ATM, Fund Transfer. But in E-Banking bank cannot able tp satisfy all
the requirments of customer because as per Indian mentality customer believes on
manual banking when they are taking any new scheme and all. The bank getting positive
response for E-Banking. But it is still in primary stage in this bank.

S.R.DAVE

Senior Manager Of UNION Bank (Lalbhaug Branch)

CHAPTER 5:DATA ANALSIS, INTERPRETATION &

PRESENTATION

1. Do you have clear information about E-Banking ?

67
 Yes No
46% 54%

Table No:-1

Do you have clear information about E-

Banking ?

46%
54%

Yes No

Interpretation :-
By these chart we come to know that 46% people do not have clear information
and 52% people have clear information about E-Banking.

So, I find out that only 54% people knows about E-Banking means most of the
people only knows about E-Banking but they do not have clear information about it.

2. Do you use the E-Banking method ?

Yes No Sometimes
46% 55% 20%

68
 Table No:- 2

Do you use the E -Banking method ?

60% 55%

46%
50%

40%

30%
20%
20%

10%

0%
Yes No Sometimes

Series1

Interpretation :-
The above chart shows that 46% people use E-Banking methods. 55% people do
not use E-Banking and 20% people use but sometime.

By this we come to know that most of the people do not use E-Banking because of
lack of awareness and another reason is technology because they scares to use the
technology.

3. Which banking method you comfortable with ?

Traditional Banking E-Banking Both

55% 42% 5%

69
 Table No:-3

Which banking method do you comfortable

with ?

5%

41% 54%

Traditional banking E-Banking Both

Interpretation:-

By this chart we come to know that 55% of the people comfortable with traditional
banking methods only, 42% people comfortable with E-Banking and 5% people
comfortable with both the methods.

By conducting this survey I noticed that the people who are comfortable with
traditional banking are mostly belongs to the age group of above 45. And some feels
that E-Banking is a very complicated. Some feels that face to face contact is very good
to understand each other.

4. Which web site do you use mostly ?

Informational Transactional
72% 28%

Table 4

70
 Which web site do you use mostly ?

28%

72%

Informational Transactional

Interpretation :-

Above chart shows that 72% of the people use the informational website and only
28% people use the transactional website.

This shows that most of the people use the E-Banking to get information about the
various schemes or loan offered by bank. The do not use the E-Banking because they
feel that it is not safe to do a transaction they do not have faith on it.

5. Which E-Banking product or service do you ?

ATM Mobile Phone E- Electronic Internet

Banking Banking Commerce Fund Banking
Transfer
58% 25% 24% 5% 10% 10%

71
 Table No :- 5

WHICH E-BANKING PRODUCT OR

SERVICE DO YOU USE ?
58%
60%

50%

40%

30% 25% 24%

20%
10% 10%
10% 5%

0%

ATM Mobile Banking Phone Banking E-Commerce EFT Internet Banking

Interpretation :-

The above chart shows that 58% people use the E-Banking for ATM, 25% use
mobile banking, 24% use phone banking, 5% use the E-Commerce, 10% people use
internet banking, and for transferring the funds.

By conducting this survey I come to know that high range of people mostly use
ATM service, most of the people use another service along with ATM, but they mostly
use ATM.

6. For what purpose do you use the E-Banking mostly ?

Fund Withdrawing Balance Bill To get

Transfer money Enquiry Payment information
13% 38% 30% 11% 16%

Table No :- 6

72
 For what purpose do you the E-banking
mostly ?

15% 12%
Fund Transfer
10%
Withdrawing money

35% Balance Enquiry

Bill payment
28%
To get info

Interpretation :-

The above chart that 13% people use E-Banking for transferring the funds, 38%
people use E-Banking for withdrawing money and balance enquiry , only 11%
people use the E-Banking for bill payment, and 16% people use E-Banking for
getting information only.

By this I come to know that common people using E-Banking only for limited
purpose only for withdrawing money and balance inquiry. Other services are use
only by professionals or businessmens.

7. According to you which banking method satisfies your queries or fulfills your
need promptly ?

E-Banking Manual Banking

41% 69%

Table No:-7

73
 According to you which banking method
satisfies your queries or fulfills your need
promptly?

70%

60%

50%

40% 69%

30%
41%
20%

10%

0%
E-Banking Manual Banking

Series1

Interpretation :-

By above chart 41 % people feels that E-Banking satisfy their queries and fulfills
their need promptly. But most people 69% feels that only manual banking is able to
satisfy their need efficiently.

By conducting this survey I come to know that according to Indian mentality people
believes on face to face contact. They feels that by face to face contact we can
understand each other and our problems get easily. Thus, they are happy with manual
banking for their queries and to fulfilltheir needs.

8. Do you think banking provides more punctuality & transferancy ?

Yes No Cannot say
26% 30% 45%

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 Table No:- 8

Do you think Banking provides more

punctuality and transparency ?

26%

44%

30%

Yes No Cannot say

Interpretation :-

On the chart we can see only 26% feels that E-Banking provides punctuality and
transparency . and most of the people are not sure about it.

I feel that most of the people are not sure because of certain reasons but the bank
should find out that why people feels like that and should take corrective measures to
get faith of their customers.

9. Do you think that E-Banking is reliable ?

Yes No Cannot say
27% 30% 46%

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 Table No :-9

Do you think that E-Banking is

reliable ?

26%

45%

29%

Yes No Cannot say

Interpretation :-

Here we can see that less people 27% people says that E-Banking is reliable. 30%
says no it is not reliable and 46% people are not sure only.

By collecting this data I come to know that people who feels it is not reliable are
belongs to old generation. And the people who are not sure about it they does not have
clear and proper information about E-Banking. So I feels that banks should dp survey
on it and should find the reason behind it that why people feels that it is not reliable or
why people are not sure about it.

10. Do you think E-Banking have an ability to fulfill all the requirements ?

Yes No Cannot say

26% 30% 43%

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 Table No :- 10

Do you think E-Banking have an ability

to fulfill all the requirements ?

Yes
26%
Cannot say
44%

No
30%

Yes No Cannot say

Interpretation :-

The chart shows that 26% people are happy with the E-Banking for fulfilling their
requirements and 30% people are not. But 43% people are not sure.

I noticed that the people who says yes have knowledge about E-Banking and they
are using it for many purpose. And people who says no either they don’t have proper
knowledge or they might have faced any problem because of E-Banking. So, bank
should understand it and it should take corrective measures. And people who are not
sure for them bank have to come up with the new ideas for getting their customers faith.

11. Do you think E-Banking ensures physical safety of the transaction ?

Yes No Cannot Say
25% 30% 44%

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 Table No:- 11

Do you think E -Banking ensures

physical safety of the transaction?

44%

45%
40%
30%
35%
25%
30%
25%
20%
15%
10%
5%
0%
1

Yes No Cannot say

Interpretation :-

The chart shows that 25% people says yes means they feels that the bank ensures the
physical safety of transactions. 30% says, no and 44% says are not sure.

I feels that the people who says yes are businessmen’s or professionals because they
only use E-Banking for various purpose. And the people who says no are not using
EBanking. But the people who says cannot say are use the E-Banking for limited
purpose only for withdrawing money and so on.

12. Which service provides you good service quality ?

Mobile Banking Internet Banking Telephone ATM
Banking

78
 5% 25% 20% 50%

Table No:- 12

Which service provides you good

service quality ?

Mobile Banking
5%

Internet Banking
25%
ATM Mobile Banking
50%
Internet Banking
Telephone Banking

Telephone ATM
Banking
20%

Interpretation :-

Chart shows that hardly 5% people feels that mobile banking provides good service
quality. 25% people happy with the internet banking. 20% people are happy with the
phone banking. And more than 50% people are happy with the ATM service.

I feels that most of the people are happy with ATM because ATM is more convenient
as any person can use it does not require too much education and it makes money
available at any place and at any time. It is very easy to access than internet banking.

13. What was the reason behind the introduction of E-Banking ?

Because of Manpower Qualitative Faster transaction
competition from shortage customers and time saving
foreign banks services

20% 10% 25% 45%

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 Table No:- 13

What was the reason behind the introduction of

E-Banking ?

20%

Because of competition from

foreign banks
45% Manpower shortage

10%
Qualitative customers services

Faster transaction and time saving

25%

Interpretation :-

According to the table no.13 we comes to know thar 45% are the people reason
behind the introduction of E-Banking is faster transaction and time saving, 25% are for
qualitative customers services, 10% are for manpower shortage and 20% for
competition from foreign banks.

14. Customer benefit with E-Banking?

Minimizes cost of Saves times Provided upto Minimizes the
transaction date information risks of carrying
the cash

10% 30% 25% 35%

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 Table No:-14

Customer benefit with E -Banking ?

35%

35%
30%

30%
25%

25%

20%

15%
10%

10%

5%

0%
1

Minimizes cost of transaction Saves times

Provided upto date information Minimizes the risks of carrying the cash

Interpretation :-

According to the table no.14 we comes to know that 10% customers gets the benefit
with E-Banking are minimizes cost of transaction, 30% for saves the times , 25% for
provides upto date information and 35% minimizes the risks of carrying the cash.

15. Are you happy with E-Banking?

Yes No
46% 54%

81
 Table No:-15

Are you happy with E-Banking ?

46% Yes
54% No

Interpretation :-

By this chart comes to know that very less people 46% are happy with the E-Banking
and high range of people 54% are not happy with the E-Banking.

My opinion very less people are happy with E-Banking who must belongs to new
generation or they must be businessmen’s or professionals who are the users of the E-
Banking. And most of the people are not happy with E-Banking due to Indian
mentality as the believes on traditional banking.

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 CHAPTER 6: CONCLUSIONS AND SUGGESTIONS

CONCLUSION

By conducting the survey and study on “Impact of E-Banking on Service Quality

Of Banks”. I concluded that the E-Banking have very positive impact on service quality
of banks.

❖ Bank has improved their performance in E-Banking.

❖ As they are improving their quality of services.
i. The banks are more conscious about their internet banking i.e. they are
making their web sites very effective which are very easy and
comfortable to access and understandable to each and every person.
ii. Many banks have their call centers for tele-banking quickly through the
telephone.
iii. The banks have professional, trained and skilled staff who caters the
customers very effectively through E-Banking.
iv. The banks are also very comfortable with E-Banking as they do not have
to face many customers at a time.
❖ Now a days new generation is very happy and very comfortable with the E-
Banking. Because today’s generation is more familiar with the technology.
i. As they do not have to go to the bank and wait for many hours by
standing in lines.
ii. It saves the times. iii. As their problem get solved through E-
Banking by sitting at home.
iv. They can do their banking activities any time and from any places
because E-Banking provides services 24*7.
v. People get solution quickly for their problems.

But I also noticed that even E-Banking has positive impact on new generation. But the
old generation is not that much happy with E-Banking. In India old generation believes
on face to face contact rather than having a contact by any technology. So they always
go with the traditional banking. It means even E-Banking have positive impact but the
traditional banking is also doing the best and making their customers happy.

83
 SUGGESTION

By conducting this project and survey I come to know that in our country E-Banking
is not fully adopted by the peoples means it is very less. I want to Suggest to banks that
they should find out the reasons behind it, they should come up with the new ideas to
increase the use of E-Banking.

And I also want to suggest to the customers that they also give their co-operation
to the bank and if they have any queries, difficulties, or any problem regarding E-
Banking they should consult with the bank. And increasing the use of E-Banking.

Following are the suggestion that I recommend :-

❖ Awareness should be created among non-users towards E-Banking.

❖ After repairing the basic deficiency, banks must ensures that their services are
competitive by making more innovations in their services.

❖ Banks charges should be economical.

84
 BIBLOGRAPHY

1. E-Banking : The Global Perspective – Gupta Vivek

2. E-Commerce in Indian Banking – Bhasin

3. Banking and Finance – C.M. Chaudry

4. Banking in The New Millennium – Rajshekhar N.

WEBIBLOGRAPHY

❖ www.wikipedia.com

❖ www.Google.com

❖ www.Shodhganga.inflibnet.ac.in

❖ www.rbi.org.in

❖ www.thehindu.com

APPENDIX

Questionnaire For Customer

85
1. Do you have clear information about E-Banking?

 Yes

 No

2. Do you use the E-Banking method?

 YeS
 No
 Sometimes

3. Which banking method you comfortable with?

 Traditional Banking

 E-Banking

4. Which web site do you use mostly?

 Informational

 Transactional

5. Which E-Banking Product or service do you use?

 ATM

 Mobile Banking

 Phone Banking

 E-Commerce

86
  Electronic Fund Transfer

 Internet Banking

6. For what purpose do you use the E-Banking mostly?

 Fund Transfer

 Withdrawing money

 Balance Inquiry

 Bill Payment

 To get information about various schemes

7. According to you which banking method satisfies your queries or fulfills your
need promptly?

 E-Banking

 Manual Banking

8. Do you think banking provides more punctuality and transparency?

 Yes

 No

 Cannot say

9. Do you think that E-Banking is reliable?

87
  Yes

 No

 Cannot say

10. Do you think E-Banking have an ability to fulfill all the requirements?

 Yes

 No

 Cannnot say

11. Do you think E-Banking ensures physical safety of the transaction?

 Yes

 No

 Cannot say

12. Which service provides you good service quality?

 Mobile Banking

 Internet Banking

 Telephone Banking

 ATM

13. What was the reason behind the introduction of E-Banking?

88
  Because of competition from foreign banks

 Manpower shortage

 Qualitative customers services

 Faster transaction and time saving

14. Customer benefit with E-Banking?

 Minimizes cost of transaction

 Saves times

 Provided upto date information

 Minimizes the risks of carrying the cash

15. Are you happy with E-Banking?

 Yes

 No

89