Ruby Manchanda

2011
6/3/2011

SUBMITTED TO: Roll No. 2326 / 1447, MBA 4th Sem, 2009 Professor (Dr.) Pawan 2011, HPUBS, HP University, Shimla Garga Marketing MBA, M.Phil, Ph. D. HPUBS, HP University Shimla

CONSUMER ATTITUDE TOWARDS INTERNET BANKING

DECLARATION
It is hereby declared that all the work presented in this project report Consumer Attitude towards Internet Banking, to be submitted in fulfilment of the requirements of the award of the degree of MBA in IT and HR by Ruby Manchanda, Roll No. 2326 / 1447, is an authentic record of her own work carried out under the guidance of Professor (Dr.) Pawan Garga, Marketing, HPUBS, HP University, Shimla.

6/3/2011

Ruby

Manchanda

CERTIFICATE
This is to certify that project report entitled Consumer Attitude towards Internet Banking, which is submitted by Ruby Manchanda, Roll No. 2326 / 1447, MBA (IT and HR), HPUBS, HP University, Shimla, is an authentic record of the candidates work carried out by her under our guidance. This project report or any part thereof has not been submitted to any university or institution for the award of any other degree or diploma.

Dr. Pawan Garga Professor, Project Guide, Marketing, HPUBS, HP University, Shimla
6/3/2011

ACKNOWLEDGEMENT
I take the great pleasure to recall with gratitude the people who have been instrumental for the successful completion of this project work. I would like to express deep sense of gratitude to my project guide, Dr. Pawan Garga, Professor, Marketing, HPUBS, HP University, Shimla for his valuable guidance without which the project would not have been accomplished. The project has provided me with an opportunity to understand the fundamentals of research and to understand the attitude of people toward internet banking, how they perceive the emergence of this new style and how it is changing the environment of banking sector. I am also indebted to all the teachers of HPUBS, HP University, Shimla who have helped me directly or indirectly in accomplishing this task. I would also like to record my deep sense of gratitude to my entire family and friends, ex-colleagues, without whose blessings and encouragement the project would not have seen the daylight. I would also like to thank all my respondents heartily for giving me their valuable time and providing me with the information needed to carry out the research successfully. Anand, Rajpal, Rattan, Amandeep and Aman Pal deserve a special mention for helping me find interested respondents. May God bless them all in all their endeavours.

6/3/2011

Ruby

Manchanda

CONTENTS Contents
DECLARATION........................................................................................................2 CERTIFICATE..........................................................................................................3 ACKNOWLEDGEMENT............................................................................................4 CONTENTS.............................................................................................................5 TABLE OF FIGURES................................................................................................7 EXECUTIVE SUMMARY............................................................................................8 INTRODUCTION....................................................................................................10 TYPES OF INTERNET BANKING..........................................................................15 CHOOSING AN INTERNET ACCOUNT.................................................................16 BUSINESS CONSIDERATIONS IN INTERNET BANKING........................................17 CLIENT FOCUS...............................................................................................18 COST REDUCTION..........................................................................................18 MARKET EXPANSION......................................................................................18 ADVANTAGES OF INTERNET BANKING..............................................................19 ADVANTAGES TO THE CUSTOMER.................................................................19 ADVANTAGES TO THE BANK..........................................................................21 DISADVANTAGES OF INTERNET BANKING.........................................................22 RISKS ASSOCIATED WITH INTERNET BANKING.................................................24 PRECAUTIONS FOR INTERNET BANKING...........................................................28 SWOT ANALYSIS OF INTERNET BANKING..........................................................30 INTERNET BANKING IN INDIA............................................................................32 PRODUCTS AND SERVICES OFFERED.............................................................32 THE FUTURE SCENARIO OF INTERNET BANKING IN INDIA..............................33 CUSTOMER ATTITUDE TOWARDS INTERNET BANKING......................................35 LITERATURE SURVEY...........................................................................................39 OBJECTIVE............................................................................................................43 RESEARCH METHODOLOGY.................................................................................44 DATA COLLECTION METHOD.............................................................................44 SAMPLING.........................................................................................................45 5

SAMPLING DESIGN.........................................................................................45 SAMPLING FRAME..........................................................................................45 DATA COLLECTION AND ANALYSIS......................................................................46 RESULTS AND CONCLUSIONS..............................................................................66 LIMITATIONS........................................................................................................68 BIBLIOGRAPHY.....................................................................................................69 ANNEXURE...........................................................................................................70 ANNEXURE

TABLE OF FIGURES
Figure 1 TYPES OF INTERNET BANKING...............................................................15 Figure 2 BUSINESS CONSIDERATIONS IN INTERNET BANKING.............................17 Figure 3 RISKS ASSOCIATED WITH INTERNET BANKING.......................................26 Figure 4 FACTORS CONTRIBUTING TOWARDS ADOPTION OF INTERNET BANKING ............................................................................................................................37 Figure 5 ATTITUDE TOWARDS INTERNET BANKING..............................................38 Figure 6 GENDER WISE DISTRIBUTION OF SAMPLE POPULATION.........................46 Figure 7 AGE WISE DISTRIBUTION.......................................................................47 Figure 8 EDUCATION WISE DISTRIBUTION...........................................................47 Figure 9 OCCUPATIONAL DISTRIBUTION OF POPULATION....................................48 Figure 10 VISIT TO BANK BRANCH.......................................................................49 Figure 11 REASONS TO VISIT BANKS...................................................................50 Figure 12 e-BANKING FACILITIES AVAILABLE.......................................................50 Figure 13 COMPARISON OF AVAILABLE AND AVAILED FACILITIES........................51 Figure 14 e-BANKING FACILITIES AVAILED BY INDIVIDUALS................................52 Figure 15 ADOPTION OF INTERNET BANKING IN NEAR FUTURE...........................52 Figure 16 FACTORS PREVENTING USE OF INTERNET BANKING............................53 Figure 17 REASON TO ADOPT INTERNET BANKING..............................................55 Figure 18 USAGE FREQUENCY.............................................................................56 Figure 19 FAVOURED ONLINE BANKING FACILITIES.............................................56 Figure 20 ASPECTS OF INTERNET BANKING SERVICES.........................................57 Figure 21 PREFFERED BANKS..............................................................................58 Figure 22 SOURCE OF INFLUENCE.......................................................................58 Figure 23 SATISFACTION OF USERS WITH INTERNET BANKING...........................59 Figure 24 PREFERRED PLACE OF ACCESS FOR INTERNET BANKING....................59 Figure 25 ISSUES ENCOUNTERED IN INTERNET BANKING....................................60 Figure 26 FACTORS AFFECTING POPULARTIY OF INTERNET BANKING.................61 Figure 27 AVAILABILITY OF MOBILE PHONES AND WEB BROWSING FACILITIES ON MOBILE PHONES WITH USERS.............................................................................62 Figure 28 PERCENTAGE OF RESPONDENTS AVAILING MOBILE BANKING SERVICES ............................................................................................................................62 Figure 29 FREQUENCY OF USAGE OF MOBILE BANKING......................................63 Figure 30 PREFERENCE TOWARDS MOBILE BANKING..........................................63 Figure 31 REASONS TO OPT FOR MOBILE BANKING.............................................64

Figure 31 REASONS TO OPT FOR MOBILE BANKING

EXECUTIVE SUMMARY
Banking has always has been a highly information intensive activity that relies heavily on information technology (IT) to acquire, process, and deliver the information to all relevant users. Not only is IT critical in the processing of information, it provides a way for the banks to differentiate their products and services. Banks find that they have to constantly innovate and update to retain their demanding and discerning customers and to provide convenient, reliable, and expedient services. Driven by challenge to expand and capture a larger share of the banking market, some banks invest in more bricks and mortar to enlarge their geographical and market coverage. Others have considered a more revolutionary approach to deliver their banking services via a new medium: the Internet. With the rapid diffusion of the Internet, banking in cyberspace is fast becoming an alternative channel to provide banking services and products. The Internet is now being considered as a strategic weapon and will revolutionize the way banks operate, deliver and compete against one another, especially when competitive advantages of traditional branch networks are eroding rapidly. Indeed, the emergence of Internet banking has prompted many banks to rethink their IT strategies in order to stay competitive. Customers today are demanding much more from banking services. They want new levels of convenience and flexibility on top of powerful and easy to use financial tools and products and services that traditional retail banking could not offer. Internet banking has allowed banks and financial institutions to provide these services by exploiting an extensive public network infrastructure. Online banking was, therefore, introduced as a channel where banks customers could perform their financial transactions electronically via their banks Web sites. An online banking user is expected to perform at least one of the following transactions online: Checking account balance and transaction history Paying bills Transferring funds between accounts Requesting credit card advances
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 Ordering checks Managing investments and stocks trading Using the Internet is more efficient than using other distribution mediums because banks are looking for an increased customer base. Internet also offers the delivery of customized services to suit the needs and the likes of each user. It reduces cost and allows for spending time effectively on business. It also provides for a convenient and effective way to manage finances that is easily accessible 24 hours a day, seven days a week. In addition, information is up to date. Despite the many potential benefits, many teething problems need to be addressed before Internet banking can become widely adopted. These include problems like teaching staff and customer how to work with technology, set-up costs, legal issues, and lack of personal contact with customers. And from customers stand point, there are security and privacy issues. Through this research, an attempt has been made to find out the attitude of the customers towards Internet banking. An analysis of the perception of the customers towards Internet banking revealed the various considerations that are prime factors in determining the adoption and acceptance of this new system of banking. The report is initiated with the understanding of the Internet banking, followed by the literature survey, and detailed analysis of the data collected and interpretation of the results of analysis.

INTRODUCTION
A big revolution in the financial market, rapid revolutions in communication market, evolution of Internet and allied technologies, and all the recent modern, sophisticated state-of-the-art technology based services have led to the banks adopting modern systems. Traditional paper-based banking had started becoming inefficient, dissatisfying for customers and restricting global presence. For many consumers, electronic banking means 24-hour access to cash through an automated teller machine (ATM) or Direct Deposit of pay-cheques into checking or savings accounts. Electronic banking, also known as electronic fund transfer (EFT), uses computer and electronic technology as a substitute for cheques and other paper transactions. EFTs is initiated through devices like cards or codes that let you, or those you authorize, access your account. Many financial institutions use ATM or debit cards and Personal Identification Numbers (PINs) for this purpose. Some use other forms of debit cards such as those that require, at the most, your signature or a scan. EFT is defined as any transfer of funds initiated through an electronic terminal, telephonic instrument, or computer or magnetic tape or so as to order, instruct, or authorize a financial institution to debit or credit an account. It utilizes computer and telecommunication components both to supply and to transfer money or financial assets. The trends in electronic banking system can be divided into categories: Technology oriented trends Customers trends in adoption of electronic banking Work on EFT can be segmented into three broad categories:
Banking and Financial systems

a Large scale or wholesale payments (bank to bank transfer) b Small scale or retail payments (automated teller machines and cash dispensers) c Home banking (bill payment) Retailing payments a Credit cards (VISA or MasterCard) b Private label credit / debit cards (J.C. Penney Card) c Charge cards (American Express) On-line electronic commerce payments
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a Token based payment systems i Electronic cash (DigiCash) ii Electronic cheques (NetCheque) iii Smart cards or debit cards b Credit card based payment systems i Encrypted credit cards (World Wide Web form based ecryption) ii Third party authorization numbers (First Virtual) Thus, EFT offers several services that consumers may find practical. A few distribution channels for electronic banking are discussed as follows:
Automated Teller Machines or 24-hour Tellers (ATMs) are electronic

terminals that let a person bank almost any time. To withdraw cash, make deposits, or transfer funds between accounts, one has to generally insert an ATM card and enter the PIN. Some financial institutions and ATM owners charge a fee, particularly to consumers who dont have accounts with them or on transactions at remote locations.
Direct Deposit lets one authorize specific deposits, such as pay-

cheques and Social Security cheques, to his / her account on a regular basis. One also may pre-authorize direct withdrawals so that recurring bills, such as insurance premiums, mortgages, and utility bills, are paid automatically.
Pay-by-Phone Systems allow a person to call a financial institution

with instructions to pay certain bills or to transfer funds between accounts. One must have an agreement with the institution to make such transfers.
Personal

Computer Banking allows handling many banking transactions via a personal computer. For instance, one can use his computer to view the account balance, request transfers between accounts, and pay bills electronically.

The credit cards are the electronic cards used to obtain credit at the time of purchasing articles or services. It is widely believed by the customers that the interest rates on credit cards are very high and as a result their use by general public is limited.
Debit Card Purchase Transactions are carried out by making

purchases with a debit card, which also may be an ATM card. This could occur at a store or business, on the Internet or online, or by phone. The process is similar to using a credit card, with some important exceptions. While the process is fast and easy, a debit card purchase transfers money - fairly quickly - from the bank account to the companys account. So its important to have funds
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in ones account to cover the purchase. This requires the keeping of accurate records of the dates and amounts of the debit card purchases and ATM withdrawals in addition to any cheques one writes. The debit card information should be accessed or used only at safe known stores, to avoid the possible loss of funds through fraud. The ATM cum debit card service is the prime facility being availed by many customers.
Electronic Cheque Conversion converts a paper cheque into an

electronic payment in a store or when a company receives a cheque in the mail. In a store, when customer gives his cheque to a cashier, the cheque is run through an electronic system that captures the banking information and the amount. The customer is asked to sign a receipt and get a copy for his records. When the cheque has been handed back, it should be voided or marked by the merchant so that it cant be used again. The merchant electronically sends information from the cheque (but not the cheque itself) to the bank or other financial institution, and the funds are transferred into the merchants account. When the customer mails-in a cheque for payment to a merchant or other company, they may electronically send information from the cheque (but not the cheque itself) through the system, and the funds are transferred into their account. For a mailed cheque, a customer should still receive advance notice from a company that expects to send the cheque information through the system electronically. The merchant or other company might include the notice on monthly statements or under its terms and conditions. The notice also should state if the merchant or company will electronically collect a fee from the account like a bounced cheque fee if the funds are insufficient to cover the transaction.
The Internet Banking Service is also emerging as one of the most

popular channel. This medium provides the banking services through the medium of Internet. Sometimes, the services are provided through a web-page, sometimes by installing the software on the customers system and sometimes by accessing the services through mobile phones. Thus, banks have traditionally been in the forefront of harnessing technology to improve the products, services and efficiency. They have, over a long time, been using electronic and telecommunication networks for delivering a wide range of value added products and services. The delivery channels include direct dial up connections, private networks, public networks etc and the devices include telephone, Personal Computers including the Automated Teller Machines, etc. With the popularity of PCs, easy access to Internet and World Wide Web (WWW), Internet is increasingly used by banks as a channel for receiving instructions and delivering their products and services to their customers. This form of banking is generally referred to as Internet Banking, although
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the range of products and services offered by different banks vary widely both in their content and sophistication. Broadly, the levels of banking services offered through Internet can be categorized in to three types:
The Basic Level Service is the banks websites which disseminate

information on different products and services offered to customers and members of public in general. It may receive and reply to customers queries through e-mail. In the next level are Simple Transactional Websites which allow customers to submit their instructions, applications for different services, queries on their account balances, etc, but do not permit any fund-based transactions on their accounts. The third level of Internet banking services are offered by Fully Transactional Websites which allow the customers to operate on their accounts for transfer of funds, payment of different bills, subscribing to other products of the bank and to transact purchase and sale of securities, etc. The above forms of Internet banking services are offered by traditional banks, as an additional method of serving the customer or by new banks, who deliver banking services primarily through Internet or other electronic delivery channels as the value added services. Some of these banks are known as virtual banks or Internet only banks and may not have any physical presence in a country despite offering different banking services. Thus, Internet banking means that the banking services such as services introduction, loan application, account balance enquiry, fund transfer and so forth are provided by a bank through the Internet. Internet banking has evolved into a one step service and information unit that promises great benefits to both banks and consumers. According to Michael Karlin, the President and Chief Operation Officer of the worlds first virtual bank, Security First Network Bank, the idea of Internet Banking is as follows One does not have to purchase any software, store any data on computer or back up any information, since all the transactions occur on the bank server over the infrastructure of the Internet. One can conduct the banking services anywhere one likes but needs to have a computer and a modem. The banking facilities will be available 24 hours a day, 7 days a week, and 365 days a year. One does not have to reconcile bank statements or track manually the ATM or paper cheques.
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From the perspective of banking products and services being offered through Internet, Internet banking is nothing more than traditional banking services delivered through an electronic communication backbone, viz, Internet. But, in the process it has thrown open issues which have ramifications beyond what a new delivery channel would normally envisage and, hence, has compelled regulators world over to take note of this emerging channel. Some of the distinctive features of internet banking are:
It removes the traditional geographical barriers as it could

reach out to customers of different countries / legal jurisdiction. This has raised the question of jurisdiction of law / supervisory system to which such transactions should be subjected. It has added a new dimension to different kinds of risks traditionally associated with banking, heightening some of them and throwing new risk control challenges. Security of banking transactions, validity of electronic contract, customers privacy, etc., which have all along been concerns of both bankers and supervisors have assumed different dimensions given that Internet is a public domain, not subject to control by any single authority or group of users. It poses a strategic risk of loss of business to those banks who do not respond in time, to this new technology, being the efficient and cost effective delivery mechanism of banking services. A new form of competition has emerged both from the existing players and new players of the market who are not strictly banks.

Internet Banking is a product of e-commerce in the field of banking and financial services. In what can be described as B2C domain for banking industry, Internet Banking offers different online services like balance enquiry, requests for cheque books, recording stop-payment instructions, balance transfer instructions, account opening and other forms of traditional banking services. Mostly, these are traditional services offered through Internet as a new delivery channel. Banks are also offering payment services on behalf of their customers who shop in different eshops, e-malls etc. The transfer of customers funds inter-branch, intrabranch, inter-bank level forms the core and life of Internet banking. The customisation in Internet banking allows the changes in formats of dates, currency, colour schemes etc. Further, different banks have different levels of such services offered, starting from level-1 where only information is disseminated through Internet to level-3 where online transactions are put through.

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There are factors like availability of electronic and internet banking services, convenience, prompt banking services, location, and wider network are the prime factors that would help in selection of Internet banking services. Internet banking is still in nascent and infantile stage and is being availed by relatively few customers. Various studies and researches have revealed that majority of customers are IT savvy and usually well educated. The customers have to be encouraged to use this costeffective, user-friendly delivery channel. All categories of customers desire convenient, prompt and user-friendly modern banking services. The more advanced electronic and Internet based banking services like core banking solutions, real time gross settlement system allow ondemand availability of computerised banking services; user-friendliness of banks website; promptness in issue of passbooks, chequebooks; updating of passbook; quickness in issue of demand drafts; clearance of outstation cheques; generation of financial statements; availability of information; transfer of funds from one account to another; time taken to respond customers queries; transaction completion time; availability of alerts to users; adoption of security measures. This also helps to ascertain the satisfaction level of a customer. Internet security measures are very essential for secure transactions between customer and main bank services. These cover both the access level and application level security and include passwords, digital signatures, socket layers, management of session times. This is essential to boost the confidence level of customers and needs proactive support from financial as well as government ends to bridge the digital gap. Credibility (trustworthy source, authors credentials, evidence of quality control, respected authority, organizational support), accuracy (up to date, factual, detailed, exact, comprehensive, completeness, accuracy), reasonableness (fair, balanced, objective, no conflict of interest, absence of fallacy,), support (listed sources, contact information, available corroboration, claims supported, documentation supplied), challenge (who says so, why should I believe, who are the target audience), adapt (find robust evidence before adapting to the information), file (file information and gain knowledge), evaluate (as circumstances change) are the check points for any internet banking system. The goal of this checklist is to provide a quality internet banking facility to customers.

TYPES OF INTERNET BANKING

According to Aladwani (2001) different forms of online banking are webbased banking where a customer can access his or her account(s) when he or she uses the Internet; second form of online banking is where a
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bank customer uses a modem to dial-up to a banks server to access his or her bank account(s). The later type of online banking is known as dialup banking. A special type of dial-up banking is called an Extranet, a private network between a bank and its corporate customers. Thulani et al (2009), Yibin (2003) and Diniz (1998) identify three functional level/kinds of internet banking that are currently employed in the market place and these are: Informational, Communicative and Transactional.

Figure 1 TYPES OF INTERNET BANKING

Informational (Websites) - This has been identified as the first

level of internet banking. Typically the bank has the marketing information about the banks products and services on a standalone server. The risk is very low as informational systems typically have no path between the server and the banks internal network. Informational Internet banking simply means the bank provides
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basic information about its products and services, much like a brochure. This is meant for marketing purposes only, and there is no connection to the bank's main computer systems. This level of Internet banking can be offered by the bank or outsourced. While the risk to a bank is rather low, the server or Web site may be susceptible to adjustment. To prevent unauthorized alterations to the bank's server or web site, appropriate controls therefore must be in place.
Communicative/Simple transactional (Websites) - This type of

internet banking allows some interaction between the banks systems and the customer. The interaction is limited to e-mail, account inquiry, loan application or static file updates (name and address). It does not permit any funds transfers. Communicative online banking allows for some communication between the patron and bank. However, this is typically limited to fundamental interactions such as account inquiries, new account updates, loan or mortgage applications, contact information updates and balances. Communicative online banking may connect with the bank's main computer systems. The risk is higher with this configuration than with informational systems since these servers may have a path to the bank's internal networks. To prevent, monitor, and alert management of any illegal attempt to access the bank's internal networks and computer systems, appropriate controls required to be in place. In this environment, virus controls also become much more critical.
Advanced Transactional (Websites) - This level of internet

banking allows bank customers to electronically transfer funds to/from their accounts, pay bills and conduct other banking transaction online. The most popular online banking type, transactional Internet banking offers all of the benefits of a traditional brick-and-mortar institution. This includes full control over your accounts - deposits, withdrawals, transfers, updates and online payments. Increased security measures now make Internet banking safe, secure and convenient, especially in the case of mobile online banking. This is the highest risk architecture and must have the strongest controls, since a path normally exists between the server and the bank's or outsourcer's internal network.

CHOOSING AN INTERNET ACCOUNT

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Security is an important issue for internet accounts. Internet banking can be highly secure but you need to be aware of safety precautions to take. Always take the time to read the small print too it takes a few minutes, but it should help you understand the service. Types of internet bank accounts and services include: Current Accounts All the conveniences of a regular current account, including credit and debit cards, cheque books and regular statements Current Accounts with specific benefits (for instance, roadside recovery) and a small monthly fee to pay All in one and off-set accounts Student accounts Loan approval Savings Accounts Favourable interest rates because the overheads are reduced. Savings Accounts Including those with tiered rates depending on the savings amount ISAs and mini-ISAs Mortgages Share Trading Ethical Investments Insurance Services Business Bank Accounts

BUSINESS CONSIDERATIONS IN INTERNET BANKING

Internet banking can open a Pandoras Box of opportunities for financial institutions. As soon as one bank begins Internet banking, other banks face the following quandary, You are either on the Web, or you are risking being on the Way. Business considerations in Internet banking can be divided into three important factors: Client focus, cost reduction and market expansion.

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Figure 2 BUSINESS CONSIDERATIONS IN INTERNET BANKING

CLIENT FOCUS

Increase Customer Satisfaction Internet banking allows customers to access banking services 24 hours a day, 7 days a week. Like ATMs, Internet banking empowers customers to choose when and where they conduct their banking. A Dynamic net report came to the conclusion that, the more delivery channels a bank offers and the more functions available on an Internet site, the more convenient it becomes for customers to conduct business and the higher the rate of customer acquisition that a bank is likely to experience. Increase Customer Retention One of the important advantages of Internet banking is its ability to increase customer retention. Online branches have been shown to dramatically reduce the loss of customers due to relocation needs.

COST REDUCTION

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A study by Booz Allen & Hamilton, analyzed the transaction cost reductions that U.S. Internet banks gain. According to this study, the cost per bank transaction for the customer varies from $1.07 for full service branch transactions, to $0.54 for telephone transactions, and $0.01 for transaction via the Internet. Lowered transaction costs are primarily due to two factors: widespread Internet access and its low cost in the U.S. which minimizes transaction processing costs, and the reduction of the number of brick and mortars branches required to service an equivalent number of customers, which dramatically lowers overhead costs.

MARKET EXPANSION

Internet banking will allow credit institutions to make further inroads into new fields. Indeed by co-operating for example with IPS, telecom or software, Internet banks can take advantages of cross-selling effects, to offer personalized services to their customers and potentially win new customers. In this context, the financial supermarket concept has arisen, by which Internet banks, have horizontally integrated with other financial services to provide their services on its platform and sometimes expanded horizontally to include non-financial services such as online shopping.

ADVANTAGES OF INTERNET BANKING

In recent time internet banking has spread rapidly all over the globe. All Banks are making greater use of internet banking facilities to provide better service and to excel in competition. The spread of internet banking has also greatly benefited the ordinary customer in general and corporate world in particular. The following points summarize benefits of Internet based e-banking.

ADVANTAGES TO THE CUSTOMER

Internet banking does offer many benefits for both banks and their customers. So the banks are doing what they can to encourage customers to try it.

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I.

II.

III.

IV.

V.

VI.

An internet banking account is simple to open and use, just by entering a few answers to the questions in a form while sitting comfortably in home or office. To access the account, various security measures are established such as usernames and passwords. To complete the set up of the account, one just prints, signs and sends in the form. Internet banking costs less. Because there are fewer buildings to maintain, and less involvement by salaried employees, there is a much lower overhead with online banks. These savings allow them to offer higher interest rates on savings accounts and lower lending rates and service charges. Even traditional brick and mortar banks offer better deals such as free bill paying services to encourage their customers to do their banking online. Comparing internet banks to get the best deal is easy. In a short time, one can visit several online banks to compare what they offer, savings and checking account deals as well as their interest rates. Other things one can easily research are what credit cards are available, credit card interest rates, loan terms and the banks own rating with the FDIC. Bouncing a cheque (accidentally) should be a thing of the past because one can monitor the account online any time, day or night. One can track the balance daily, see what cheques have cleared and when and know when automatic deposits and payments are made. This is all possible by simply going online to the banks website and logging into ones account. One can keep his/her account balanced using personal computer and monthly statement. The bank account information can be downloaded into software programs; making is easy to reconcile the account with just a few mouse clicks. The convenience of the data capture online makes it much easier to budget and track where the money goes. The internet bank account even allows one to view copies of the cheques one has written each month. With the ability to view the account at anytime, it is easier to catch fraudulent activity in the account before much damage is done. As soon as one logs into the account, one will quickly see whether there is anything amiss when one checks on the deposits and debits. If anyone writes a cheque or withdraws funds from the account, one will see it right away. This lets one to get started on correcting the problem immediately rather than having to wait to receive a clue that it is happening as would be the case with a traditional bank.

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VII. Internet banking offers a great deal more convenience than one

could get from a conventional bank. One is not bound by 'banker's hours' and physical presence is not required. Time is not wasted when one has work to do because one can do the banking without leaving the office. No matter where one is or what time it is, one can easily manage the money. It reduces the pressure to stand in long queues and is very time saving. VIII.Convenience. Unlike any normal physical bank, online banking sites never close. They're available 24 hours a day, seven days a week, 365 days a year and they're only just a mouse click away. IX. Ubiquity. If one is out of station or even out of the country on a tour or on an official trip, and suddenly a money problem arises, all one has to do is log on to the internet and transfer funds from one account to another and take care of personal needs and business 24 /7. X. Transaction speed. Online banking initiates speedy transactions and they are very cost effective and are generally quicker than the transactions conducted at the ATMs or at the bank. XI. Efficiency. Free to access, manage and control all the bank accounts, including Individual Retirement Accounts, CDs, even securities, from one secure site, the individuals can efficiently manage their money. XII. Effectiveness. Managing the money, investment, bank accounts without even going to the bank, getting email and wireless alerts on various transactions, getting the statements online, making bill payments on-line and transferring funds, all for free, has made the banking highly effective. General consumers have been significantly affected in a positive manner by internet banking. Many of the ordinary tasks have now been fully automated resulting in greater ease and comfort.
Customers account is extremely accessible with an online account. Customer can withdraw can at any time through ATMs that are now

widely available throughout the country. Besides withdrawing cash customers can also have mini banks statements, balance inquiry at these ATMs. Through Internet Banking, customer can operate his account while sitting in his office or home. There is no need to go to the bank in person for such matter. Internet banking has also greatly helped in payment of utility bill. Now there is no need to stand in long queues outside banks for this purpose.
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 All services that are usually available from the local bank can be

found on a single website. The growth of credit card usage also owes greatly to internet banking. Now a customer can shop worldwide without any need of carrying paper money with him. Banks are available 24 hours a day, seven days a week and they are only a mouse click away.

ADVANTAGES TO THE BANK

Banking industry has also received numerous benefits due to growth of internet banking infrastructure. There are highlighted below:
The growth of internet banking has greatly helped the banks in

controlling their overheads and operating cost. Many repetitive and tedious tasks have now been fully automated resulting in greater efficiency, better time usage and enhanced control. The rise of internet banking has made banks more competitive. It has also led to expansion of the banking industry, opening of new avenues for banking operations. Internet banking has greatly helped the banking industry to reduce paper work, thus helping them to move the paper less environment. Internet banking has also helped bank in proper documentation of their records and transactions. The reach and delivery capabilities of computer networks, such as the Internet, are far better than any branch network.

Banks have quickly leveraged the capabilities of the Internet and Web 2.0 technologies and adopted the online banking model. Every mainstream bank now offers a host of banking services and products to an ever increasing base of customers. Through online banking, banks have been able to reach out to millions of customers not in their geographical area of operations and offer more products and a relatively better, convenient and flexible banking experience than that prevalent in traditional, fixedlocation branches. The benefits can be studied in the following broad categories: More Customers - Through online banking, better service levels and strategic marketing initiatives, banks are able to reach out to more customers than possible through traditional banking through physical location branches.

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 Online Only Products and Services - Leveragability and amenability of new technologies, tools and widespread broadband Internet acceptance, has made it possible for banks to offer a whole host of online only products and services to customers, such as CDs, e-bank statements, financial calculators, and personal finance news feeds. Broader Customer Base - Banking online has afforded customers user-friendly features of Websites, robust security technologies, privacy protection measures, and mainstream Internet acceptance. Banks can reach out to a broader customer base beyond the geographical confines of their locations or base operations. Attractive Rates and Incentives - Better management practices, consolidated operations and streamlined savings from managing and delivering online banking services allow banks to offer attractive rates and other incentives to customers. Cost Savings - Banks save a significant amount of operational capital from not having to open brick and mortar branches in new locations and far-flung areas. These savings are passed onto the consumer in the form of reduced or no fees for inter-bank and even intra-bank money transfers, no fees for online payment of utilities' bills, and cash-back options on frequent use of online-applied bank credit cards. There are sound reasons why internet banking is growing. The economic advantages have encouraged banks to provide an increasing range of easy to use services via the internet. Customers have found doing business online simple and speedy and have become very comfortable with the arrangement. Internet banking gives people more control over their money in a very convenient way that they find enjoyable and reassuring.

DISADVANTAGES OF INTERNET BANKING

Internet banking services provide a number of benefits to consumers. But while it has its advantages, customers wishing to join the trend need to know its disadvantages as well. Despite the growing popularity of internet banking, it cannot be denied that some people still remain hesitant doing transactions online especially where money is concerned. Amidst the aggressive marketing made by the numerous financial institutions that have gone online, some sectors of society are still doubtful about this type of banking notably on the aspect of security. Major disadvantages can be listed as follows:
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 Identity Confirmation - Federal regulations require that financial

institutions confirm each customer's identity. This may present a logistical issue, as copying and faxing documents is sometimes necessary. Security Concerns - With hacking and identity theft on the rise, Internet banking customers have to place a certain amount of trust in the bank that their account information and personal information are safe. Customer Service - If you bank at a traditional bank, you can go to the bank and speak to someone face to face about your problem but, with an Internet bank, you will likely spend a lot of time on the phone being passed around and placed on hold. Accessibility - If the Internet goes down in your area or the area of the banking office, you will be unable to access your accounts. This includes being unable to withdraw money from ATMs or to use your debit card. Fees - Many Internet banks don't have ATMs, which means you will have to pay ATM fees. This can cost you more money than paying the regular monthly fees at a brick and mortar bank. Technical problems - Some people avoid using Internet banking services because they find it difficult to understand how it works. Also, the fact that a wrong click can cause monetary losses may be a deterrent. Proxy websites - A few cases of forgery have been reported in online banking. There are some fraudulent or proxy websites, which can hack information (user name and password) entered by a person for some transaction, and later misuse it. In such cases, people lose their money without knowing and by the time, they get the bill, huge losses may have been incurred. Impersonal - Doing transactions on the internet can be very impersonal. In other words, you only do business with the use of a computer. No individual to receive and check your money or correct some wrong information that you might have written on a certain form. And so for people comfortable dealing with real people who provide personalized services and using paper and money, internet banking is not ideal. Lack of trust - Many people still don't trust the internet. For the new users who have performed financial transactions for only a few times, they may still have this doubt whether or not they did the right thing such as clicked the right button and so on. They can only be comfortable once they print the transaction receipt and the transaction appeared on the bank statement.
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 Difficult for first timers - For a first time user, navigating through

a website of an internet bank may be hard and may take some time. Opening an account could also take time as some sites ask for numerous personal details including a photo identification which can cause inconvenience to the potential customer. Because of this complexity, they may be discouraged to use this internet banking service. Bank site changes - Most banks upgrade their online programs on a periodic basis sometimes adding new features and products. When this happens, the bank may ask customers to re-enter account information which can be a cause of worry.

RISKS ASSOCIATED WITH INTERNET BANKING

Since its debut nearly two decades ago, online banking has become one of the fastest-growing Internet activities. But that growing popularity has also brought increasing anxiety over whether something as private and personal as a bank account can be fully protected in the relatively unregulated and un-policed world of the Internet. Without doubt, using internet banking is usually an excellent decision but as with any type of service, it would be important to understand any potential risks associated with internet banking. The greatest potential when banking online has to do with identity theft. For your identity to be stolen, hackers use a variety of different ploys such as pharming, phishing, hacking, viruses, fraudulent transactions, and unauthorized access. What happens is that once you have been targeted, not only your personal information would be stolen but also your financial information. From there, these thieves can do serious damage by emptying your bank accounts, making purchases on credit under your name, etc. Unfortunately, trying to find the responsible parties is extremely difficult and once identity has been stolen, it takes many years to recover. Therefore, when choosing internet banking, the greatest risk is theft and most important decision has to do with online security. Although all ploys are used, phishing is the most common, especially when it comes to internet banking. Typically, you would receive an email that looks like an official notice coming from your bank. The banks letterhead might be used, actual names of bank executives, etc. Within the email, you would be notified of some reason that you must immediately provide confidential details or connect to a provided link. For instance, the message may state that someone was trying to access your account and to protect your assets, immediate action is required.
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Unsuspecting people will gladly provide the information being requested or follow the link where they are required to complete a form that also gives the crooks sensitive information. At home, you have virus protection and a secured hosting service but when public computers are used, they go through open or public routers, which means anyone could gain access to that same connection and start capturing information, often through keystroke software. In no time, these criminals would know where you bank, your account number, logon ID, PIN, etc. Finally, pharming is also very dangerous when it comes to internet banking. In this case, crooks will compromise a non-secure online financial institution so when a customer logs in to manage finances, they are quickly and without knowing redirected to a bogus site that looks identical to the real bank. Of course, as information is entered and money transactions completed, all the information is collected. Keystroke logging is another common method of perpetrating online banking theft. This literally involves the users keystrokes being recorded, in a number of ways, and then using this information to access accounts without authorisation and make fraudulent transactions. To do this, the fraudsters may use software, hardware, keyboard sniffers, keyboard overlays or even optical surveillance like video cameras. The information, revealed in the above specified manners, is then captured by the fraudsters and used to make unauthorised transactions on an account. Banks and service providers require guarding against various types of online attacks. The purpose of an attack may vary. In operating systems of particular kind, attackers may try to exploit known vulnerabilities. During a short time frame, they also may try to make an unauthorized entry into a Web site repeatedly thus denying service to other customers. Types of attacks may include:
Sniffers - Also familiar as network monitors, this software is used to

capture keystrokes from a specific PC. Logon Ids and passwords may be captured with this software. Guessing Passwords - We can test all possible combinations to enter into a network using this software. Brute Force - A technique to capture encrypted messages then using software to break the code and gain access to messages, user ID's, and passwords. Random Dialling - To dial every number on a known bank telephone exchange, this technique is used. The purpose is to find a modem connected to the network. This could then be used as a point of attack.

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 Social Engineering - To gain information about the system along

with changing password, an attacker calls the bank's help desk impersonating an authorized user. Trojan horse - A programmer can insert code into a system that will let the programmer or another person illegal entrance into the system or network. Hijacking - Attempting to deduce information from them there by intercepting transmissions. Internet traffic is particularly susceptible to this threat. While these threats are real and pose a serious risk to users of internet banking, it cannot be denied that online banking has benefits that outweigh the issues. As long as users are aware of potential problems that may compromise their accounts, and take security seriously, these threats can be avoided and users can enjoy the convenience of online banking without falling victim to frauds. Because of rapid changes in information technology, there is no finality either in the types of risks or their control measures. Both evolve continuously. The thrust of regulatory action in risk control has been to identify risks in broad terms and to ensure that banks have minimum systems in place to address the same and that such systems are reviewed on a continuous basis in keeping with changes in technology. In the following paragraphs a generic set of risks are discussed:

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Figure 3 RISKS ASSOCIATED WITH INTERNET BANKING

Operational

risk - Operational risk, also referred to as transactional risk is the most common form of risk associated with Internet banking. It takes the form of inaccurate processing of transactions, non enforceability of contracts, compromises in data integrity, data privacy and confidentiality, unauthorized access / intrusion to banks systems and transactions etc. Such risks can arise out of weaknesses in design, implementation and monitoring of banks information system. Besides inadequacies in technology, human factors like negligence by customers and employees, fraudulent activity of employees and crackers / hackers etc. can become potential source of operational risk. Often there is thin line of difference between operational risk and security risk and both terminologies are used interchangeably. Security risk - Security risk arises on account of unauthorized access to a banks critical information stores like accounting system, risk management system, portfolio management system, etc. A breach of security could result in direct financial loss to the bank. For example, hackers operating via the Internet could access, retrieve and use confidential customer information and also can implant virus. This may result in loss of data, theft of or tampering with customer information, disabling of a significant portion of banks internal computer system thus denying service, cost of
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repairing these etc. In addition to external attacks banks are exposed to security risk from internal sources e.g. employee fraud. Employees being familiar with different systems and their weaknesses become potential security threats in a loosely controlled environment. They can manage to acquire the authentication data in order to access the customer accounts causing losses to the bank. System architecture and design - Choice of appropriate technology is a potential risk banks face. Technology which is outdated, not scalable or not proven could land the bank in investment loss, a vulnerable system and inefficient service with attendant operational and security risks and also risk of loss of business. Reputational risk - Reputational risk is the risk of getting significant negative public opinion, which may result in a critical loss of funding or customers. Such risks arise from actions which cause major loss of the public confidence in the banks' ability to perform critical functions or impair bank-customer relationship. It may be due to banks own action or due to third party action. The main reasons for this risk may be system or product not working to the expectations of the customers, significant system deficiencies, significant security breach (both due to internal and external attack), inadequate information to customers about product use and problem resolution procedures, significant problems with communication networks that impair customers access to their funds or account information especially if there are no alternative means of account access. Such situation may cause customerdiscontinuing use of product or the service. Directly affected customers may leave the bank and others may follow if the problem is publicized. Legal risk - Legal risk arises from violation of, or non-conformance with laws, rules, regulations, or prescribed practices, or when the legal rights and obligations of parties to a transaction are not well established. Given the relatively new nature of Internet banking, rights and obligations in some cases are uncertain and applicability of laws and rules is uncertain or ambiguous, thus causing legal risk. Money laundering risk - 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. Cross border risk - It includes legal and regulatory risks, as there may be uncertainty about legal requirements in some countries and jurisdiction ambiguities with respect to the responsibilities of different national authorities. Such considerations may expose banks to legal risks associated with non-compliance of different national laws and regulations, including consumer protection laws,

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record-keeping and reporting requirements, privacy rules and money laundering laws. Outsourcing risk - The outsourcing of banking services / operations contains certain elements of operational risks. The dependence on third parties for business operations also increases operational risks. The operational risks also tend to increase when banks choose different IT partners. Strategic risk - This risk is associated with the introduction of a new product or service. Degree of this risk depends upon how well the institution has addressed the various issues related to development of a business plan, availability of sufficient resources to support this plan, credibility of the vendor (if outsourced) and level of the technology used in comparison to the available technology etc. Network risk - Network security is related to the securing of infrastructure used for storage and transmission of information. It depends on the type of the data being transmitted. Personal data is considered extremely critical and companies expect adequate security measures to protect this. So proper documentation, design and implementation of the network, firewalls, password protection, antivirus on all the network, measures to prevent unauthorized access, secure connections, adequate encryption techniques, inbuilt security mechanisms in operating systems and locked rooms for servers etc. are part of network security measures. There is use of hardware and software, certain policies on control and authentication. Physical security - It involves securing of building, work areas, devices and data in the form of documents through multiple-level access control systems, security guards, clear disk and clear screen policies, file suppression systems, temperature sensors, smokedetectors, dedicated and isolated work areas, visitors policy, random bag checks, closed circuit television cameras (CCTV) etc. Personnel security - It is the arrangement made to address the potential threat arising from the employees of offshore vendors. Maintaining confidentiality and non-disclosure of agreements, terms and conditions of employment, policies regarding use of mobile phones, pens, papers etc., background screening, training of information security, defined user access rights, policies and procedures, e-mail and internet access controls, extensive log monitoring form a part of personnel security measures. Other risks - Traditional banking risks such as credit risk, liquidity risk, interest rate risk and market risk are also present in Internet banking. These risks get intensified due to the very nature of
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Internet banking on account of use of electronic channels as well as absence of geographical limits. Credit risk is the risk that a counter party will not settle an obligation for full value, either when due or at any time thereafter. Banks may not be able to properly evaluate the credit worthiness of the customer while extending credit through remote banking procedures, which could enhance the credit risk. Another facility of Internet banking is electronic money. It brings various types of risks associated with it. Liquidity Risk arises out of a banks inability to meet its obligations when they become due without incurring unacceptable losses, even though the bank may ultimately be able to meet its obligations. Similarly banks dealing in electronic money face interest rate risk because of adverse movements in interest rates causing decrease in the value of assets relative to outstanding electronic money liabilities. Banks also face market risk because of losses in on-and-off balance sheet positions arising out of movements in market prices including foreign exchange rates. Risk of unfair competition is also there. The open nature of Internet may induce a few banks to use unfair practices to take advantage over rivals. Any leaks at network connection or operating system etc., may allow them to interfere in a rival banks system.

PRECAUTIONS FOR INTERNET BANKING

Customers should never share personal information like PIN numbers, passwords etc with anyone, including employees of the bank. PIN or password mailers should not be stored, the PIN and/or passwords should be changed immediately and memorised before destroying the mailers. Change your password regularly. Keep your password a combination of alphabets, special characters and numbers. It is important that documents that contain confidential information are safeguarded. Customers are advised not to provide sensitive information over unsecured e-mails or over the phone. account-related

Take simple precautions like changing the ATM PIN and online login and transaction passwords on a regular basis. Also ensure that the logged in session is properly signed out.

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Customers should never access their Internet banking accounts through hyperlinks embedded in e-mails, suspicious pop-up windows, or Internet search engines. They should instead access their bank accounts by typing the website addresses at the address bar of the browser, or by bookmarking the genuine website and using that function to access their accounts. Log on to banks only from a secure computer. Never log on from a public computer in a hotel or cafe, and be careful when logging on to unknown networks with a laptop. A more secure URL will begin with "https://" and be followed by the bank name. Make sure the bank's padlock is displayed in a corner of the site before you log on. Icons for security companies would be visible on the home page. While there are many, the most popular and effective is VeriSign. An icon, statement, or the actual company name would be clearly visible. Customers should be wary of opening unexpected e-mails with attachments, and should think twice before visiting suspicious websites.
Customers should install personal firewall software and anti-virus software, and should regularly download the latest updates available. This software will help ward off attempts by fraudsters to plant harmful viruses or worms in personal computers. Keep anti-virus and anti-spyware software up to date.

Given that passwords are commonly used as the basic factor of authentication, we recommend that banks adopt a second factor, which cannot be easily stolen by fraudsters, for customer authentication. Examples of second-factor authentication include digital certificates, onetime passwords generated by a security device and SMS-based one-time passwords. In addition, high-risk retail Internet banking transactions should at least include unregistered third-party fund transfers and payments, and change requests concerning customers' sensitive information (for example a correspondence address). Use keypad for logging when you are not using your own PC. There might be a risk of capturing your key stokes. Don't click on website links/attachments in un-known/ suspicious emails. These links may take you to replica of bank's website and ask for keying in your user-id & password(s). If you get a warning e-mail, call your bank -- don't click on any provided links. If your computer is acting strangely -- for instance, reacting slowly or getting pop-ups -- avoid using it for online banking until you can get it checked out.
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Be leery of fly-by-night, Internet-only banks with high interest rates on savings or checking accounts. Make sure the bank is certified and is insured. And, most importantly, use a different user name and password for each financial account. Educate yourself about the various ways in which information is captured. Being aware and recognizing a ploy puts you in control. It is necessary to check your internet banking account at regular intervals. The intervals can be every two or three days or at the most one or two weeks. If you do not check your account for a long time, you may not come to know of what is happening to it. If you find any discrepancy, inform the bank authorities at once. Many banks send their account holders SMSs regarding any activity taking place at their account. SMS alerts are also an important tool since any transaction carried out on account is reported to the account holder through as SMS. Put password on your computer as well and also the screen saver password.

SWOT ANALYSIS OF INTERNET BANKING

Strengths of Internet banking lie in the following areas Larger network area for banks Private data communication for internal use of banks Greater reach to customers On-demand service for the customers Time saving access to bank services Uniform, cost-effective services Standardization of working procedures Enables to receive feedback Provides competitive edge in the banking world Brings out transparency in the system Increased customer satisfaction (24 hours, 7 days convenience) Increased customer acquisition Increased customer retention (less loss of customers due to relocation needs)

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 Cost reduction (reduced transaction costs, lower transaction processing costs, reduction in number of branches, lower overhead costs) Helps in market expansion Customization or personalization of services for customers Quicker time to market Ability to introduce new products and services quickly and successfully Ability to understand its customers needs Access to information easily across any location Easy online application for all accounts, personal loans, mortgages Weaknesses in this system Missing personal human touch Requirement of huge investments for implementation Need of expert staff Rapid advancements in technology render existing systems obsolete easily High risk vulnerability Availability of low potential customers Low awareness among customers Obsolescence of technology in terms of security on Internet Lack of knowledge Implementation of newer technology is little complicated

Opportunities available in this field Providing value added, user-friendly and convenient banking system Core competency can be developed Concentration and integration of various service delivery channels Gain of efficiency and profitability Standardising services Faster flow and access of information Develop data warehouses and customer support services Provisions for feedback Multi channel Internet banking to increase cost efficiency in transaction costs Lower entry barriers Leapfrogging low PC penetration Development of mobile internet banking solutions Disintermediation and commoditisation Evolving customer efficient frontier Integrating emerging technologies
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 Greater customer loyalty Three T strategy talent, technology, traffic Quality customer service with personal attention Threats and challenges to the system Maintaining business edge over competitors in the context of sameness in IT infrastructure Multiple vendor support Maintaining alternative in case of failure of system Shorter life of technology Lack of technical expertise Outsourcing, organisational, reputational, supervisory, location, operational, information security, systematic systemic and legal risks Digital divide Decreased volume of some products because of commoditisation Diverse, conflicting national regulations Maintaining secured IT infrastructure for business operations Promotion and advertisement

INTERNET BANKING IN INDIA

Internet banking, which has gained wide acceptance internationally, both as a medium of delivery of banking services and as a strategic tool for business development, is fast catching up in India with more and more banks entering the fray. India can be said to be on the threshold of a major banking revolution with net banking having already been unveiled. Out of the 46 banks surveyed by RBI, 11 banks are providing Internet banking services at different levels, 22 banks proposed to offer Internet banking in near future while the remaining 13 banks have no immediate plans to offer such facility. The number of Internet users is growing every year exponentially. The growth potential is, therefore, immense. Further incentives provided by banks would dissuade customers from visiting physical branches. The facility of accessing their accounts from anywhere in the world by using a home computer with Internet connection, is particularly fascinating to Non-Resident Indians and high net worth Individuals having multiple bank accounts. Costs of banking service through the Internet form a fraction of costs through conventional methods. The cost-conscious banks in the country have therefore actively considered use of the Internet as a channel for providing services. Fully computerized banks, with better management of their customer base are in a stronger position to cross-sell their products through this channel.

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PRODUCTS AND SERVICES OFFERED

Banks in India are at different stages of the web-enabled banking cycle. With the adoption of information technology, the banks put up a web-site that provides a general information on the banks, its location, services available e.g. loan and deposits products, application forms for downloading and e-mail option for enquiries and feedback, request for opening of accounts, requisition for cheque books, stop payment of cheques, viewing and printing statement of accounts, movement of funds between accounts within the same bank, querying on status of requests, instructions for opening of Letters of Credit and Bank Guarantees etc., facility of review, receipt and payment of bills on-line, transactional facilities, online real time shopping etc. Some banks have tied up with computer training companies, computer manufacturers, Internet service providers and portals for expanding their Net banking services, and widening their customer base. Setting up of Internet kiosks and permeation through the cable television route to widen customer base are other priority areas in the agendas of the more aggressive players. Banks providing Internet banking services have been entering into agreements with their customers setting out the terms and conditions of the services. The terms and conditions include information on the access through user-id and secret password, minimum balance and charges, authority to the bank for carrying out transactions performed through the service, liability of the user and the bank, disclosure of personal information for statistical analysis and credit scoring also, nontransferability of the facility, notices and termination etc. Leading banks have announced the launch of mobile banking services. Under Mobile Banking services, customers can scan their accounts to seek balance and payments status or instruct banks to issue cheques, pay bills or deliver statements of accounts. Gradually, the cellular phones will become the premier Internet access device. Mobile banking will further minimise the need to visit a bank branch.

THE FUTURE SCENARIO OF INTERNET BANKING IN INDIA

Indian banks offering online services still have a long way to go. For online banking to reach a critical mass, there has to be sufficient number of users and the sufficient infrastructure in place. Various security options like line encryption, branch connection encryption, firewalls, digital
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certificates, automatic signoffs, random pop-ups and disaster recovery sites are in place or are being looked at. There is as yet no Certification Authority in India offering Public Key Infrastructure which is absolutely necessary for online banking. The customer can only be assured of a secured conduit for its online activities if an authority certifying digital signatures is in place. The communication bandwidth available today in India is also not enough to meet the needs of high priority services like online banking and trading. Banks offering online facilities need to have an effective disaster recovery plan along with comprehensive risk management measures. Banks offering online facilities also need to calculate their downtime losses, because even a few minutes of downtime in a week could mean substantial losses. Some banks even today do not have uninterrupted power supply unit or systems to take care of prolonged power breakdown. Proper encryption of data and effective use of passwords are also matters that leave a lot to be desired. Systems and processes have to be put in place to ensure that errors do not take place. The contract details are often one-sided, with the bank having the absolute discretion to amend or supplement any of the terms at any time. For these reasons domestic customers for whom other access points such as ATMs, telebanking, personal contact, etc. are available, are often hesitant to use the Internet banking services offered by Indian banks. The Internet is in the public domain whereby geographical boundaries are eliminated. Cyber crimes are therefore difficult to be identified and controlled. In order to promote Internet banking services, it is necessary that the proper legal infrastructure is in place. Notwithstanding the above drawbacks, certain developments taking place at present, and expected to take place in the near future, would create an environment conducive for online banking to flourish. For example, Internet usage is expected to grow with cheaper bandwidth cost. The Department of Telecommunications (DoT) is moving fast to make available additional bandwidth, with the result that Internet access will become much faster in the future. This is expected to give a fillip to Internet banking in India. Collecting and sharing credit information on borrowers of lending institutions online would give a fillip to electronic banking. Banks are moving in for technological up gradation on a large scale. Internet banking is expected to get a boost from such developments. Reserve Bank of India has taken the initiative for facilitating real time funds transfer through the Real Time Gross Settlement (RTGS) System. Under the RTGS system, transmission, processing and settlements of the instructions will be done on a continuous basis. Gross settlement in a real time mode eliminates credit and liquidity risks. Any member of the system will be able to access it through only one specified gateway in order to
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ensure rigorous access control measures at the user level. The system will have various levels of security, viz., Access security, 128 bit cryptography, firewall, certification etc. Further, Generic Architecture, both domestic and cross border, aimed at providing inter-connectivity across banks has been accepted for implementation by RBI. Banks have been advised to develop domestic generic model in their computerization plans to ensure seamless integration. The above mentioned efforts would enable online banking to become more secure and efficient. With the process of dematerialisation of shares having gained considerable ground in recent years, banks have assumed the role of depository participants. In addition to customers deposit accounts, they also maintain demat accounts of their clients. Online trading in equities is being allowed by SEBI. This is another area which banks are keen to get into. Transfer of funds can be made through credit/debit/ smart cards and cheques, with the central payment switch enabling the transactions. Banks are showing interest in this new concept, which will facilitate interbank funds transfers and other e-commerce transactions, thus highlighting the role of banks in e-commerce as intermediaries between buyers and sellers in the whole payment process. WAP (Wireless Application Protocol) telephony is the merger of mobile telephony with the Internet. It offers two-way connectivity, unlike Mobile Banking where the customer communicates to a mailbox answering machine. Users may surf their accounts, download items and transact a wider range of options through the cell phone screen. WAP may provide the infrastructure for P2P (person to person) or P2M (person to merchant) payments. It would be ideal for transactions that do not need any cash backup, such as online investments. Use of this cutting edge technology could well determine which bank obtains the largest market share in electronic banking. Keeping in view all the above developments, Internet banking is likely to grow at a rapid pace and most banks will enter into this area soon. Rapid strides are already being made in banking technology in India and Internet banking is a manifestation of this. Every day sees new tie-ups, innovations and strategies being announced by banks. A sea change in banking services is on the cards. It would, however, be essential to have in place a proper regulatory, supervisory and legal framework, particularly as regards security of transactions over the Net, for regulators and customers alike to be comfortable with this form of banking.

CUSTOMER ATTITUDE TOWARDS INTERNET BANKING

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Research on consumer attitude and adoption of internet banking showed there are several factors predetermining the consumers attitude towards online banking such as persons demography, motivation and behaviour towards different banking technologies and individual acceptance of new technology. It has been found that consumers attitudes toward online banking are influenced by the prior experience of computer and new technology. The adoption of electronic banking forces consumers to consider concerns about password integrity, privacy, data encryption, hacking, and the protection of personal information. Electronic banking requires perhaps the most consumer involvement, as it requires the consumer to maintain and regularly interact with additional technology (a computer and an Internet connection). Consumers who use e-banking use it on an ongoing basis and need to acquire a certain comfort level with the technology to keep using it. Several studies have investigated why individuals choose a specific bank. Important consumer selection factors include convenience, service facilities, reputation and interest rates. Customers have less time to spend on activities such as visiting a bank and therefore want a higher degree of convenience and accessibility. The service-quality attributes that the Internet banks must offer to induce consumers to switch to online transactions and keep using them are perceived usefulness, ease of use, reliability, responsiveness, security, and continuous improvement. The individual expectations regarding accuracy, security, network speed, userfriendliness, and user involvement and convenience were the most important quality attributes in the perceived usefulness of Internet-based e-retail banking. The crucial factors that affect an individuals decision to use or not to use online services the individuals age, the difficulties of using the Internet, the fear of changes in the banking sector due to technological development and the lack of information concerning products and services provided to customers through electronic delivery channels. Factors such as the speed of transactions or the cost of using the Internet have little impact on an individuals final decision. The six composite dimensions of electronic service quality, including the provision of convenient/accurate electronic banking operations; the accessibility and reliability of service provision; good queue management; service personalization; the provision of friendly and responsive customer service; and the provision of targeted customer service are important in revealing customer attitude towards Internet banking. Perceived usefulness, security and privacy (i.e. perceived credibility), perceived ease of use and computer self-efficacy are the main perusing factors to accept
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online banking system. Perceived usefulness is the extent to which a person believes that using a particular system will enhance his or her performance, while perceived ease of use is the extent to which a person believes that using a particular system will be free of effort. Adoption is the acceptance and continued use of a product, service or idea. The consumers go through a process of knowledge, persuasion, decision and confirmation before they are ready to adopt a product or service. The adoption or rejection of an innovation begins when the consumer becomes aware of the product. For adoption of Internet banking, it is necessary that the banks offering this service make the consumers aware about the availability of such a product and explain how it adds value relative to other products of its own or that of the competitors. Consumers must become aware of the new brand or technology. The amount of information consumers have about online banking has been identified as a major factor impacting the adoption. The use of online banking services is fairly new experience to many people and low awareness of online banking is a major factor in causing people not to adopt online banking.

Figure 4 FACTORS CONTRIBUTING TOWARDS ADOPTION OF INTERNET BANKING

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Perceived Risk reflects an individuals subjective belief about the possible negative consequences of some type of planned action or behaviour, due to inherent uncertainty. The Perceived Risk associated with online transactions may reduce perceptions of behavioural and environmental control, and this lack of control is likely to negatively influence internet banking intentions. Owing to the open Internet technology infrastructure and lack of sufficient laws concerning internet banking activities, the trust and trust related-concepts (that is, perceived risk, credibility, image and reputation) have been integrated with the adoption models to explain the adoption behaviour. Web quality attributes for measuring perception towards Internet banking, falls into four broad categories: information quality, transaction speed, user-friendliness, and security. Four web quality attributes were introduced to improve the understanding of consumer attitudes and adoption intentions.

Figure 5 ATTITUDE TOWARDS INTERNET BANKING

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LITERATURE SURVEY
Rahmath Safeena, Abdullah and Hema Date (2010) believe that the evolution of e-banking started from the use of ATMs (automatic teller machines) and telephone banking (tele-banking), direct bill payment, electronic fund transfers etc. They conducted a study to determine the consumers perspective on adopting Internet banking. Their study revealed that perceived usefulness, perceived ease of use; consumer awareness and perceived risk are the important determinants of online banking adoption. They also concluded that majority of customers are accepting online banking because of many favourable factors. However, since the sample size is limited, the results cannot be generalized and might vary according to location and demography of the people. Joseph et al. (1999) investigated the influence of internet on the delivery of banking services. They found six underlying dimensions of ebanking service quality such as convenience and accuracy, feedback and complaint management, efficiency, queue management, accessibility and customization. Jun and Cai (2001) identified 17 service quality dimensions of internet banking service quality. These are reliability, responsiveness, competence, courtesy, credibility, access, communication, understanding the customer, collaboration, continuous improvement, content, accuracy, ease of use, timeliness, aesthetics, security and divers features. They also suggested that some dimensions such as responsiveness, reliability and access are critical for both traditional and internet banks. Jayawardhena (2004) transforms the original SERVQUAL scale to the internet context and develops a battery of 21 items to assess service quality in e-banking. By means of an Exploratory Factor Analysis (EFA) and a Confirmatory Factor Analysis (CFA), these 21 items are condensed to five quality dimensions: access, website interface, trust, attention and credibility. From the provider perspective, there are target quality and delivered quality. The focus of process or supply-led quality definition is rather internal than external, and it is defined as conformance to requirements. It lays emphasis on the importance of the management and the supply-side quality, and there is an important role of the process in determining the quality of outcome (Ghobadian, 1994). Achieving the quality of conformance between the planned (target) quality level and the real quality delivered to customers depends on the service quality management system in an organization.
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Members of Department of Information Technology, Members of Department of Banking Supervision, Members of Legal Department, Members of Department of Banking Operations and Development of Reserve Bank of India consider Internet Banking as another way of delivering traditional banking services through an electronic communication backbone. They have also provided certain distinctive features attributed to internet banking. It removes the traditional geographical barriers as it could reach out to customers of different countries / legal jurisdiction. This has raised the question of jurisdiction of law / supervisory system to which such transactions should be subjected. It has added a new dimension to different kinds of risks traditionally associated with banking, heightening some of them and throwing new risk control challenges. Security of banking transactions, validity of electronic contract, customers privacy, etc., which have all along been concerns of both bankers and supervisors have assumed different dimensions given that Internet is a public domain, not subject to control by any single authority or group of users. It poses a strategic risk of loss of business to those banks who do not respond in time, to this new technology, being the efficient and cost effective delivery mechanism of banking services. A new form of competition has emerged both from the existing players and new players of the market who are not strictly banks. The report also covers legal and regulatory issues, security and technology issues and supervisory and operational issues. Legal issues are related to jurisdiction of laws, validity of electronic contracts etc. Security issues include questions of adopting the technology standards for access control, encryption / decryption, firewalls, digital signatures, public key infrastructures etc. The supervisory and operational issues include risk control measures, advance warning system, information technology audit and re-engineering of operational procedures etc. The report states that the cost of delivery of banking services through this medium is several times less than that incurred through traditional methods and that is why more and more banks are adopting the medium of Internet to deliver their services. The report also mentions the risk of survival the banks face if they do not adopt this medium. The report also discusses the scenario of Internet banking in India.

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Justin Robinson and Winston Moore carried out a study to see the attitudes and preferences in relation to the Internet Banking in the Caribbean. Their study revealed that only a relatively modest population of Caribbean still preferred to use the Internet banking and that too mainly for checking balances and making bill payments. Their study revealed that there is still a lot of insecurity regarding this medium in the minds of people. Their study also brought forth the finding that debit / ATM card users are 20% more likely to adopt the Internet Banking. The study of customer attitude towards Internet Banking was also carried out by Ya-Yueh Shih in the ChungHua University, Taiwan. This study is based on the Theory of Planned Behaviour. The research has mainly focussed on the adoption of Internet banking in relation to the individual beliefs, individual attitudes, subjective norms, and perceived behavioural controls. The theory of planned behaviour states that the behavioural intention is a function of attitude and subjective norms. Bandura (1977) applied this concept to Internet Banking where this refers to the knowledge of being able to perform banking through the medium of Internet, knowledge about resource constraints like time, money etc. Ajzen (1991) discovered that these factors reflect the perceived ease and difficulty with which the behaviour is affected. The extended theory of TPB has brought forward four broad categories of attributes that help to understand the customer attitude and adoption intentions about Internet banking, shopping and services: information quality, transaction speed, user-friendliness and security. Their study concluded that information quality (complete, correct, and rapidly updated), transaction speed, security concerns positively influence the customer attitude towards Internet banking. User-friendliness (clear and easy to-follow instructions, HELP menus, simple operating procedures) does not influence the attitude towards Internet banking positively. It was also concluded that attitudinal belief has significant impact on the attitude, normative belief has a significant impact on the subjective norms, control belief on perceived behavioural control, subjective norms and perceived behavioural control on behavioural intentions and finally the behavioural intentions have a significant impact on the actual usage. Daniel (1999) and Karjaluoto (2003) have identified the following delivery platforms for electronic banking: Type of Service PC banking (private dial up) Description Proprietary software, distributed by the bank, is installed by the customer on their PC. Access to

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bank via a modem linked directly to the bank. Internet banking Managed network Access their bank via Internet. The bank makes use of an online service provided by another party. The use of satellite or cable to deliver account information to the TV screens of customers (Also Internet based) Customers access their bank via telephone (Own personal ID and password required) Access with text messages (SMS), Internet connection (WAP), or high speed 3rd generation mobile connection (also Internet based)

TV based

Telephone banking

Mobile phone banking (SMS, WAP, 3rd generation)

According to Rogers and Shoemaker (1971), consumers go through a process of knowledge, persuasion, decision and confirmation before they are ready to adopt a product or service. According to Sara Naimi Baraghani (2007), the technological innovations pass through the following stages: Knowledge Persuasion Decision Implementation Confirmation

Trust as defined by Mayer (1995) is the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party. According to Sara Naimi (2007), making a banking transaction on the Internet is a form of trusting behaviour, since a consumer makes him/her vulnerable to the actions to the Internet. She further added that the customer willingly becomes dependent on the Internet and expect the Internet to perform whatever the consumer wants it too. Her study revealed that both technological and trust-based issues are important to influence a
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customers behavioural intention to use Internet banking and that to attract the customers to use Internet banking, the Internet banking sites have to be designed according to both the aspects. She also explained that the new users base their attitude more on perceived ease of use and usefulness, privacy protection, accuracy to declaration and unauthorized access etc. Tan and Teo identified social indicators, understanding, communality, and personal experience as important factors that help to develop trust in Internet banking. She has also discussed the early adoption stage strategies of internet banking, usually the push strategy where the internet banking service providers use all forms of media advertising to provide knowledge about these services to wider audiences. The information should include reference to time saving, convenience, low costs, and information availability etc. The customer should not be made to undergo drastic changes in behaviour and the information and instructions should be made available to him in the languages he is comfortable with. The basic steps involved in push strategy are outlined as follows: Build customers recognition of internet banking Attract customers to the web site Attract customers by ease of access Build customers confidence Offer incentives

The other strategy available is pull strategy where the diffusion is increased amongst the internet users and effective co-operation between various channels has to be arrived at. Support from industry regulators and the government should be increased to make the growth more effective. So the pull strategies can be easily summed up as: increasing service value by collaboration with internet service providers, free internet access, expanding banking services and increasing linkages; being proactive, educating people about internet banking, supporting the government, working with industrial regulators.

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OBJECTIVE
With cyber-cafes and kiosks springing up in different cities access to the Net is going to be easy. Internet banking (also referred as e-banking) is the latest in this series of technological wonders in the recent past involving use of Internet for delivery of banking products & services. Even the Morgan Stanley Dean Witter Internet research emphasised that Web is more important for retail financial services than for many other industries. Internet banking is changing the banking industry and is having the major effects on banking relationships. Banking is now no longer confined to the branches were one has to approach the branch in person, to withdraw cash or deposit a cheque or request a statement of accounts. In true Internet banking, any inquiry or transaction is processed online without any reference to the branch (anywhere banking) at any time. Providing Internet banking is increasingly becoming a "need to have" than a "nice to have" service. The net banking, thus, now is more of a norm rather than an exception in many developed countries due to the fact that it is the cheapest way of providing banking services. Hence, the objective that was sought to be accomplished through this research was to: Determine attitude of people towards Internet banking Which customers are using Internet banking and which are not using Why the customers are not using Internet banking What other e-banking facilities are more popular?

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RESEARCH METHODOLOGY
Any systematic research begins with the problem formulation or defining of the problem of research. The term problem means any question or issue to be examined. Here the issue to be examined has been defined as determining the Consumer Attitude towards Internet Banking. The next step involved is the literature review. Literature review is defined as the documentation of the comprehensive review of the published and unpublished work from secondary sources of data in the areas specific interest to the researcher. The next step entails designing of a descriptive and exploratory research in order to understand the problem and carry out the research in a lucid manner. Descriptive research is also called Statistical Research. The main goal of this type of research is to describe the data and characteristics about what is being studied. The idea behind this type of research is to study frequencies, averages, and other statistical calculations. Although this research is highly accurate, it does not gather the causes behind a situation. Exploratory research is used to obtain information concerning the current status of the phenomena to describe "what exists" with respect to variables or conditions in a situation. Here it was attempted to find out the main factors affecting the attitude customers towards Internet banking.

DATA COLLECTION METHOD

The primary research was carried out through questionnaire method. The questionnaire was structured in such a manner to avoid ambiguous responses and to aid analysis of the collected data. The questionnaire was then circulated among the chosen population in two manners:
Mail - enabled questionnaire This questionnaire was circulated via

mail among the respondents who filled in the answers and then mailed it back to us. Web - enabled questionnaire This questionnaire was administered to the respondents by hosting the questionnaire at a website http://www.eSurveysPro.com/Survey.aspx?id=2adad196-8ec8-45ccbc85-3d787e14fade . The chosen population was taken randomly
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from across the net users and allowed the sample population to be fairly even. The questionnaire administered to respondents is available for reference at ANNEXURE. The secondary data collection was carried out by studying online database, journals and surveys. The data collected is then organized, compiled, analyzed and interpreted.

SAMPLING
The sampling technique followed is convenience sampling. The sample size chosen is 100. The sample area is not limited to any particular geographical location. The sample unit is Internet users of various areas.

SAMPLING DESIGN

The targeted population was chosen in an unstructured manner on convenience basis on as is, when is available manner. The convenience method allows using members on relative ease. This method is difficult to be treated by statistical techniques but is most commonly employed in practical purposes. Co-workers, friends, internet users, members of various forums all form a part of the population in this technique.

SAMPLING FRAME

In the person assisted convenience random sampling, every person has an equal chance of being selected. The responses were collected from the people who were willing to participate in the survey. To some extent, judgement sampling was applied when the mails or links were sent out.

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DATA COLLECTION AND ANALYSIS

The primary research was conducted from 7th May, 2011 to 16th May, 2011. The survey targeted a total of 100 individuals but in all 128 people participated in the survey. The data was obtained through the use of structured questionnaires and convenience sampling. In relation to background information on gender, age etc., the first block deals with awareness regarding internet banking. The second block covers the attitude for the non-Internet banking customers. The third block covers the attitude of the customers who use Internet banking. The fourth and final block is for all the customers to get the feedback on internet banking services and mobile banking services. The first section provides the background details of the population and sets the environment for the rest of the survey. The analysis of the responses of the first section revealed the following characteristics of the population A total of 128 participants responded to the survey. Out of these 83 were males and 45 females. So the gender wise distribution can be studied as

Figure 6 GENDER WISE DISTRIBUTION OF SAMPLE POPULATION

Most of the respondents were in the age group 20 30 years but an overall distribution can be shown as follows:

Figure 7 AGE WISE DISTRIBUTION

This diagram indicates that maximum respondents are young people in the age group 20 30 years followed by less than 20 years. This is because the convenience sampling was carried out and the most easily available sample was student and young working population. If we see the
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educational qualifications of this population, the highest category is that of graduates forming a 57% chunk followed by post graduates at a decent 36%.

Figure 8 EDUCATION WISE DISTRIBUTION

This shows that population is educated enough to understand the intricacies involved with Internet banking and can be an active participant in this field. Also the population is intelligent enough to understand the questions being posed to them and respond correctly. So, judgemental analysis will be used rarely only. The next analysis of the sample population will be done on the basis of the occupation or their area of work. This lets us decide which target population finds it more convenient to use Internet banking.

Figure 9 OCCUPATIONAL DISTRIBUTION OF POPULATION

As is obvious from the above diagram, most of the population consists of working professionals who form a mighty 55% of the sample. This is because the survey was carried out by online circulation and this population has easy access to Internet at workplace as well as homes. The homemakers were not able to participate in this survey due to lack of reach. However, students have shown a fairly decent participation in the survey and that is mostly because all institutes have internet facilities and various students are linked to one another either through their online student associations or through social media. So, the above analysis reveals that mainly male graduate working professionals in the age group 20 30 years participated in the survey. Having discussed the demographical distribution, requirements and availability can be discussed. the banking

Nearly 59 60 % of people visit the bank branch only once in a few months and the main reason for visiting the bank is to make deposits and
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discuss loans and investments some things that are not so easily done over any other medium. With the coming of ATMs and Internet banking most of the transactions take place outside the four walls of a bank branch. However, 19% people still visit the bank once a month and this is closely followed by a 1 5 times visit made by 15% people. Rarely does a person feel the need of making a visit > 10 times a month to his bank branch now-a-days.

Figure 10 VISIT TO BANK BRANCH The surveyed population was also asked about the main reason that necessitated this visit to the branch. And for nearly 47% people, the need was accentuated by the requirement of making deposits. However, 26% people favoured reasons other than making deposits or withdrawals, inquiring balances or discussing investment options. These reasons primarily figured: To update the passbook To open fixed deposits To make general inquiries Loan related discussions To redress the discrepancies Things that have to be done manually like closing an account, requesting branch change, opening a new account, requesting for a locker etc. To get foreign exchange To discuss queries, complaints and problems If the net banking is not working due to some reasons ATM related queries To reset passwords or to generate passwords To take care of ad-hoc things like submitting documents To cash cheques and to request chequebooks For matters concerning PF and PPF

Figure 11 REASONS TO VISIT BANKS 14% people still visit bank branches to withdraw cash, 9% to get firsthand advice. Merely 4% people visit for mundane purpose like inquiring balances.
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The following figure discusses the e-Banking facilities provided by banks:

Figure 12 e-BANKING FACILITIES AVAILABLE The ATM and Internet banking services follow each other at heels standing at 27% and 26% respectively. Together, for 53% of the surveyed population these e-Banking services are available. The relatively new entrants in the field of e-banking like Telephone banking, Mobile banking and SMS banking are also being widely distributed to the customers. But it is observed that the mobile banking services have greater penetration than telephone banking and nearly 18% people can avail these services. Similarly, 15% people can avail SMS banking whereas only 14% people can avail the telephone banking. This shows that the banks are trying their level best to make the various e-banking facilities popular and these figures are bound to rise drastically in near future.

Figure 13 COMPARISON OF AVAILABLE AND AVAILED FACILITIES It can be seen that all those people for whom the ATM facility is available avail it. But that is not the case with Internet banking. And also, though, telephone banking, mobile banking and SMS banking are available to a wider section, only a handful of these people avail these services. Clearly, ATM is still a leader when it comes to e-banking but Internet banking is trying to bridge the gap rapidly. If we see the facilities availed chart individually, we will find that there is a constant decrease in the users of the e-banking services with the crest being observed for ATM services and the trough for telephone banking services. The curve starts rising slightly again for mobile and SMS banking. The facilities availed are plotted against the percentage of the users of the respective service. While 45% people use ATM services, only 33% of the surveyed population uses Internet banking. SMS banking is used by 8% of people, followed by mobile banking that attracts 7% people and last of all comes Telephone banking with 6.96% users. This can help the bank to identify the area where it needs to push its business. There is still a lot of potential untapped in Internet banking and mobile banking and the banks can benefit from this, if they seize the opportunity timely. The individual usage chart is shown as follows:

Figure 14 e-BANKING FACILITIES AVAILED BY INDIVIDUALS

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The section 2 of the questionnaire was meant for only those customers of the bank who did not use Internet banking. This section helps us to find out the reasons why people do not prefer to use Internet banking and whether they have any intention of using Internet banking facility in future. Nearly 68% of the users, who are currently not using Internet banking, are planning to use this facility in near future. Another 14% are inclined towards Internet banking usage and nearly 8% of the population is not likely to use this facility. 4% of the population is still undecided whether it should take up Internet banking or not. Thus, we can safely infer that the idea of Internet banking is fast catching up and people are very likely to use it for future banking transactions. In big cities, Internet banking has already made great forays into the lives of the people.

Figure 15 ADOPTION OF INTERNET BANKING IN NEAR FUTURE

The main factor that prevented the people from using Internet banking was the concern about security. 51% of the population stated this intention unequivocally. So clearly, if this aspect of Internet banking is addressed, the usage will increase greatly. Banks can strengthen the security provided for online transactions, adopt new technologies, and educate their customers thereby building their confidence in these services. People are always resistant to change and this reflects in adoption of Internet banking also. 33% of the respondents feel comfortable with the traditional banking and hence, do not find any motivation in adopting Internet banking. Change will come slowly and steadily. The Internet banking will have to be eulogized and people made aware of the benefits that can be derived from these services. Once people realize that all their banking services are available at just the click of the mouse, they might change their mindset but this attitudinal change cannot be done overnight. Few sporadic incidences of under age, never heard of internet banking, service charges on visiting bank branch, not being much involved with banking services and less support for online services were also mentioned by surveys but these were individually spread out reasons.

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So, it can be safely determined that it is mainly the security concern that prevents the bank customers from adopting Internet banking. The diagrammatic representation of this is as follows:

Figure 16 FACTORS PREVENTING USE OF INTERNET BANKING This completes the analysis of the section 2 which reveals that the users are willing to take up internet banking in future, if the banks improve upon the security services provided for the Internet banking and addresses the concerns of people in this regards. The next section of the questionnaire was meant for those customers of the bank who used Internet banking. This section deals with aspect what facilities people prefer to avail online, frequency of usage, possible factors and preferred services that favour the use of Internet banking, relied banks, satisfaction derived by the customers, issues faced while using these services, and factors contributing towards the encouragement and popularity of Internet banking. The prime reason for taking up Internet banking is attributed to the convenience derived by the user i.e. the 24 hours service 365 days a year, anywhere connectivity and hassle free transactions. The benefits derived in terms of convenience are the major reason as to why nearly 76% people opened an Internet account. The second position here is bagged by quick service delivered to the customer as the wait period is eliminated and one does not have to stand in long queues and wait for his turn. 55% people quoted this as the major reason to open an Internet banking account. Easy to maintain banking transaction activity prompted 53% people to use Internet banking. All the database handling is done online and all the information is catalogued systematically. Though curiosity about this emerging field also led 39% people to start using Internet banking but this reason is of least importance as compared to other factors. 35% people felt strongly about the geographical constraints as being a major factor for adopting Internet banking services and for 33% people online shopping was the driving factor. The other factors that led to the adoption of the Internet banking can be listed as follows
Safe and secure A compelling motive for 32.5% people and has an overall moderate priority Integrated value added services Availability of various services along with banking facility is also a strong motivator as felt by 31% people.

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 Better rate and lower service charges This has strong potential for high banking activity areas. 28% population stated this as an important consideration while adopting Internet banking. Variety of features and services offered This is favoured by 26.5% people as being of prime importance when opening an Internet banking account.

The priority wise distribution of the reasons is shown in the stacked columnar chart where the reasons have been plotted against the percentage of response received in each section of priority. This will help us to see clearly what importance is imparted to what reason by the customers.

Figure 17 REASON TO ADOPT INTERNET BANKING Even though the Internet banking has been decently adopted, still the frequency of usage is restricted to only 1 5 times a month. From amongst the surveyed population, 37% people use this facility for 1 5 times a month. 24% people use this facility 5 10 times a month and since the use is ever increasing, it comes as no surprise that 21% people prefer to use it for more than 15 times a month. 18% people prefer accessing their internet bank accounts 10 15 times in a month.
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Figure 18 USAGE FREQUENCY The next question analyzed the most popular facilities that are used online. And in response to this, it was observed that account inquiry was clearly the most favoured facility among the respondents. This was closely followed by online bill payments and transfer of funds between accounts. While the former was favoured by 23.2%, the latter two were favoured by 22.57% and 22.26% respectively, the difference being marginal only. 19% people use internet banking for retrieving bank statements. Only handful of people use this facility for processing payrolls, loan payments, applying for consumer loans and credit cards, booking movie and flight tickets, online shopping, retrieving credit card statements, opening deposits etc. The total number of respondents for these uses put together account for 13% of the total surveyed population.

Figure 19 FAVOURED ONLINE BANKING FACILITIES The respondents were asked to rate various aspects of Internet bank services provided by the bank. This will provide an idea about how to improve the internet banking facilities, what the customers look for and various other clues as to how the bank should go about designing its Internet banking programme.

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Figure 20 ASPECTS OF INTERNET BANKING SERVICES From the above diagram, it is clear that when users think of Internet banking, convenience rules their minds, hearts, thoughts and actions. A staggering 56% people think that convenience is the first aspect that should be addressed by the banks. Account security is also important considering that Internet can make banking vulnerable to many risks and as a result a solid 51% people feel that it is a crucial for the Internet banking facility. 48% people also feel that the bank services go a long way in deciding which Internet services are to be preferred. Accessibility and user friendliness rank next with a 44% population feeling that this aspect determines the success of Internet banking. The banks cannot overlook the efforts to make Internet or rather e-banking popular, providing encouragement to use these facilities as nearly 34% people are influenced by these initiatives alone. And lastly, customer bases his decision on the customer care facilities. It was also noted that all these aspects are of equal and very high importance as far as the consumers are concerned and this makes the designing and provision of Internet banking services slightly tricky and complicated.
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Based on the research survey, it was observed that State banks were most favoured with respect to Internet banking followed by ICICI and HDFC. Citibank stood fourth in terms of attracting customers. Customers also use the Internet banking services provided by PNB, Axis and Yes banks. The reason of preferring a particular bank is beyond the scope of this research.

Figure 21 PREFFERED BANKS The survey also tried to figure out the source of encouragement that led the respondents to use Internet banking. Mainly the media and friends suggested the option to respondents. In some cases, the family was influencing factor.

Figure 22 SOURCE OF INFLUENCE Nearly all the users were satisfied by the Internet services provided to them and rarely a non-satisfied respondent was encountered. The satisfaction level runs really high amounting to a staggering 96% with only 4% of the users being dissatisfied. Further research has shown that this dissatisfaction may be caused due to issues in Internet connectivity etc.

Figure 23 SATISFACTION OF USERS WITH INTERNET BANKING And also while considering the Internet banking, the place of access is also of prime importance because this goes a long way in determining the physical, operational and security risks to the customers account. But it was observed that users were conscientious enough to use these services in the protected environment of their homes and work places. Some users availed the internet facilities even at their mobiles thereby becoming mobile banking customers. Rarely did people use public cyber caf for operating their Internet banking accounts.

Figure 24 PREFERRED PLACE OF ACCESS FOR INTERNET BANKING The satisfaction derived from the Internet banking has already been discussed in preceding pages. In continuation with the same, respondents were asked if they had faced any issues while using Internet banking.
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Most of the users have been able to perform hassle free transactions but some users did encounter certain problems while operating their Internet bank accounts. Some of the issues that were faced can be discussed as: Sometimes due to server maintenance or slow network, the internet banking facility is not available. Slow speed may affect the quality of transaction. Money transfer issues like sometimes the amount gets debited from the account, but is not credited to the merchant account. Such issues are also faced in ticket bookings and reservations. Only limited features are available and for other purposes, a bank visit is necessitated. The transactions in countries not registered with the bank are a little problematic to carry out. But these are few and far spread incidences and it can still be inferred that people are by and large satisfied by their Internet banking facilities.

Figure 25 ISSUES ENCOUNTERED IN INTERNET BANKING The respondents were then asked to identify the factors contributing the most to the popularity of the Internet banking on a 5 point scale. Convenience is of utmost importance in this regards getting the highest priority (62%) from amongst all the factors. The next factor promoting Internet banking is user friendliness of the banking site with 44% respondents giving it the highest ranking. For 38% users, transaction speed goes a long way to make the Internet banking popular and another 34% set of respondents feel that it is the security features taken up by the bank to make transactions secure that contribute towards the popularity of Internet banking. The information quality (timely access to correct, complete, updated information) comes at last place with 33.6% users in its favour. Again, as it was observed earlier also, the users consider all these factors to be equally important. This makes it a little difficult to understand the psychology behind the Internet banking.

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Figure 26 FACTORS AFFECTING POPULARTIY OF INTERNET BANKING The last section deals with a general outlook on Mobile banking. Since Mobile banking is closely related with the Internet banking, it was thought appropriate to gather the views of people regarding this new mode of banking. With rare exceptions, nearly all the respondents use mobile phones. Also, for 72% of the respondents, we browsing and Internet surfing support is available on their mobile phones itself. These general pointers indicate that, if channelized properly, there is a lot of potential for mobile banking. The following charts show the statistics for the availability of mobile phones and web browsing support on mobile phones available with the respondents respectively.

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Figure 27 AVAILABILITY OF MOBILE PHONES AND WEB BROWSING FACILITIES ON MOBILE PHONES WITH USERS Despite the widespread availability of mobile phones and web browsing facilities, it was observed that very few people preferred to use mobile banking services. Of all the respondents, a mere 29% of the respondents carried out banking through mobile phones. Rest all either preferred traditional or some other mode of banking.

Figure 28 PERCENTAGE OF RESPONDENTS AVAILING MOBILE BANKING SERVICES And again the frequency of usage of these services stands at 1 5 times a month. There are some users who prefer to use it 10 15 times and rarely does a respondent use this facility for more than 15 times a month.

Figure 29 FREQUENCY OF USAGE OF MOBILE BANKING Despite all the inhibitions in the minds of the respondents regarding the mobile or e-banking in general, a fairly considerable number (71%) of people believe that they would prefer mobile banking over traditional banking.

Figure 30 PREFERENCE TOWARDS MOBILE BANKING

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Finally, the respondents were asked to choose reasons that make them opt mobile banking and ease of access was the prime reason for choosing this facility. It was favoured by 32% of people. The time saving aspect also gained favour among 24% of the respondents. Since, the users are familiar with the functioning of the mobile phones, so ease of use is in good books of 21% respondents. The safety and risk free use and service quality are at the tail ends of the list with 12% and 11% votes.

Figure 31 REASONS TO OPT FOR MOBILE BANKING In the end, the users were asked to provide some suggestions that will help us to promote the use of Internet Banking. The following suggestions were received from the users: To give proper information about it to the customers By telling the benefits to the friends / good word of mouth By concentrating on making it more secure and convincing people about its security Advertisements on popular TV channels, bank branches, ATMs, popular Internet sites and social media Through encouragement drives initiated by bank In person demos for people that still visit the bank in order to show how easy it is and how to operate it on phone / demo kiosks in the branch Direct marketing to the customers not availing themselves of the service / door to door marketing While opening the bank account, the service provider must give full and accurate information regarding the service and provided with the credentials required for Internet Banking Promotion by bank staff User friendly sites / improving GUI to make it more friendly and quick Convenience and comfort of the user By giving the information in ATM receipts and passbooks Educating the customers Internet safety seminars, e-learning Incentives for using Internet Banking services Internet Banking awareness canopies at various prime locations Providing local language support for the convenience of the customer Service improvement in field of Internet Banking Some of these suggestions might already be in practice and some of these can be incorporated in order to promote the Internet Banking. These will help increase the awareness regarding the Internet banking and will help promote this new channel of banking.
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Internet banking has revolutionized the lives of people as well as method of banking. People have developed a positive attitude towards Internet Banking and believe that it has taken away the pressure from lives. It has reduced the need to stand in long queues and is quite time saving. This is the prime reason why people these days prefer to use Internet banking. However, positive and negative go hand in hand. There are people who believe that Internet banking can be availed only by Internet addicts and that mobile banking is better proposition than Internet banking considering the wider reach of mobiles than Internet. And in order to promote mobile and SMS banking, the service charges should be lowered. Those who favour mobile banking feel that provision of faster net access on mobiles will promote this facility further. Yet another group believes that Internet is an integral part of our economy now and banking integration with Internet should be definitely encouraged. And if some efforts are made to make it more users friendly and secure, people will definitely prefer this medium. They strongly advocate the idea that Internet banking is the need of hour. However, security with regards to Internet banking is of major concern. Also, there should be provision to customize the Internet banking facilities according to the individual requirements of the users. This will allow them to use the facility without any hesitation. Also various advanced banking features should also be handled in future. The users also feel that the complaint resolution is not efficient in case of net banking and this aspect should be improved by the banks. Timely resolution of transaction related problems will further promote Internet banking.

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RESULTS AND CONCLUSIONS

The use Internet in banking represents the leveraging of an incredibly efficient medium to provide a very cost and time efficient distribution channel. This is not to discount the large, nascent opportunity for growth in this industry. As commerce continues to increase, and increasing amounts of people embrace wireless financial service products, there is fertile ground that can be reaped for great profits, by banks that maintain a presence on the Internet. In the preceding sections, we analyzed the attempts to understand the customer attitude towards Internet Banking. The results from the survey suggest that nearly 33% of individuals indicated that they utilize Internet banking services. The highest utilization rates were amongst the young working professionals. In terms of frequency of use, most people (37%) indicated that they tend to access online banking services 1 5 times every month. The result of this study also shows that account inquiry and on-line bill payment are two most favoured Internet banking activities. The study also reveals that convenience and security are two most crucial aspects to determine how efficient any Internet banking activity is, though, other aspects like overall bank services, accessibility, user friendliness, encouragement to use e-banking and customer care cannot be ruled out. The satisfaction level among the users from these services runs very high. Most users were conscientious enough to use these services in the protected environments of their homes and work places so as to mitigate some of the risks observed in Internet banking. Customer convenience, user friendliness and transaction speed are some factors that go a long way in determining the popularity of a given Internet banking service. The survey analysis has revealed that people have positive but cautious attitude towards Internet banking. They have started accepting it and are mainly satisfied but as they say a burnt child dreads the fire. People are wary in making the use of this new medium. It is the young population in 20s 35s that have accepted this medium with least resistance but others are fast catching up. It was also aimed to find out the main reason why customers are not using Internet banking. The major reason is the concern about security, the various risks associated with the Internet which do not let the ties of trust be knit between the bank and customer. It was observed that ATMs are the most popular e-banking facilities, followed by Internet banking. The next preference is given to mobile banking. SMS banking is also picking up but telephone based banking is the least preferred of all.
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As far as user attitude towards Mobile banking is concerned, it can be said that ease of access and time saving facility will help it to grow by leaps and bounds. But this field is still in budding stages and is still too early to draw any conclusions. But people, by and large have a positive attitude towards this new medium and that might just turn the table in its favour. The relatively small size of population and concentration of the survey to a particular environment does not guarantee standard results. Similar studies can be conducted elsewhere and the results compared. But despite these limitations, it can be stated fairly confidently that the field of Internet banking is no longer considered a taboo and is creeping into the society silently and slowly. It is revolutionizing the way we perceive the banking around us. People have welcomed Internet banking with open arms and are adventuring into the fields of SMS and mobile banking also. The study has found answers to most of the objectives and has opened some areas where more research can definitely be taken up. We can see that the times are changing and with the passage of time, people have started accepting Internet banking for all the potential that it holds. However, there are still some perceptual blockings that have to be addressed carefully by the banks by giving proper training about Internet banking, by making it more secure, safe and risk free, by promoting this medium of banking and providing convenient, user friendly services.

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LIMITATIONS
The study was conducted to see how the customers perceive the Internet banking. There is still room for further investigation into the adoption of this mode of banking. There are certain limitations with the research carried out. The participants comprised a small sample, only 100 and assumed to be homogeneous and enough to carry out the research. Most of the respondents are either students or working professionals. So, the results cannot be generalized in the wake of this limitation. The underlying assumption is that the survey conducted in limited area represents the general psyche of the users. The analysis also takes some judgemental nature. The concept of internet banking is still in budding stages. The expertise of the questionnaire design is limited. More research would be useful in understanding the role of trust, security measures in the adoption of Internet banking and also in enhancing the use of internet banking. More researches can be carried out in terms of distinction of public and private sector banks, individual customers and corporate customers etc in terms of the factors influencing their adoption decisions, the criterion for selecting online banking services, the products and services perceived to be useful. The research has been carried out with time and budgetary constraints.

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BIBLIOGRAPHY
1. Internet Banking: Disruptive or Sustaining Technology, Professor Lynda Aplegate, Paul Hazell, Ziad Raphael, 7th May, 2001 2. Attitudes and Preferences in Relation to Internet Banking in the Caribbean, Justin Robinson and Winston Moore 3. Customer Perspectives on E-business Value: Case Study on Internet Banking, Journal of Internet Banking and Commerce, April 2010, Vol. 15, No. 1, Rahmath Safeena, Abdullah, Hema Date 4. Report on Internet Banking, Reserve Bank of India 5. Factors Influencing the Adoption of Internet Banking, Sara Naimi Baraghani, Supervised by Dr. Seyed Hessameddin Zegordi and Dr. Mohammed Khalifa, January, 2007 6. The study of customer attitude towards Internet Banking based on the Theory of Planned Behaviour, Ya-Yueh Shih, 2007 7. Customer perception towards Internet Banking w.r.f. to private and foreign banks in India (use of MDS), Siddharth Agarwal, 2009 8. Progress, Trends, and Management in e-Banking A Case Study of Banks in Himachal Pradesh, Vikas Sharma, 2008 9. http://www.banknetindia.com/banking/ibkgintro.htm 10.http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre14.shtm 11.http://correctbanking.com/ 12.http://webinternetbanking.com/disadvantagesinternetbanking.html 13.http://www.buzzle.com/articles/disadvantages-of-internet-banking.html 14.http://www.ehow.com/facts_4743500_disadvantages-internetbanking.html 15.http://articles.moneycentral.msn.com/Investing/StockInvestingTrading/how -dangerous-is-online-banking.aspx#pageTopAchor 16.http://corvuswire.com/banking/potential-risks-associated-with-internetbanking/ 17.http://www.itnewsafrica.com/2009/11/internet-banking-know-the-risks/ 18.http://e-bankingservise.blogspot.com/2008/09/security-precautions.html 19.http://www.info.gov.hk/hkma/eng/viewpt/20040715e.htm 20.https://netbanking.netpnb.com/bayimgs/pnbibs/helpfile/safeguard.htm 70

21.http://www.articlesbase.com/online-business-articles/precautions-aboutnet-banking-820608.html#ixzz1K2HHkzt1 22.http://finance778.com/Online-Banking/20080122/329.html 23.http://www.banking-guide.org.uk/internet-banking.html

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24.http://www.ehow.com/list_6949866_types-internet-banking.html

ANNEXURE
Questionnaire Customer Attitude towards Internet Banking ACADEMIC PROJECT _ HPUBS, HP University, Shimla This survey is a part of the academic project. The information provided here will be treated completely confidential and not be misused. 1. Name 2. Gender ______________________________________________________________

Male Less than 20years

3. Age

Female 20 - 30 years

30- 40years

40- 50years

>50years

Secondary
4. Education

Senior Secondary Post Graduation or more Homemaker Business Other

Graduation Student
5. Occupation

Working Professional Service

If other, please specify, ________________________________________________________ 6. How often do you visit the bank branch in a month?

Once a month

1- 5times a month

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5 - 10 times a month

>10times a month

Once in a few months

7. The main reason to visit the bank branch is . (please choose a single most important reason)

To make deposits

To withdraw cash

To get advice for investment options

To inquire balance

Other
If other, please specify, ______________________________ 8. What are the e-banking facilities provided by your bank? (Mark all that apply)

ATM

Internet banking

Telephone banking

Mobile banking

SMS banking

9. Which of the e-banking services provided by your bank are used by you? (Mark all that apply)

ATM Telephone banking SMS banking

Internet banking Mobile banking

For the users who do not use Internet banking 10.Do you plan to use the internet banking in near future?

Very Unlikely

Somewhat Unlikely

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Neither likely nor unlikely Very likely

Somewhat likely

11.What are the main reasons that you have not preferred Internet banking? (Mark all that apply)

Under age

Never heard of Internet banking

Concerned about security

Little knowledge about internet

Comfortable with traditional banking

Others

If others, please specify, __________________________________________________________ For the users who use Internet banking 12.What is the most important reason you opened an Internet account? (Prioritize according to the order of importance 1 being least important and 5 being most important) a. Convenience (24hrs. service, anywhere connectivity) _____ b. Curiosity about Internet banking _____ c. Safe and secure _____ d. Easy to maintain banking transaction activity _____ e. Online shopping _____ f. Better rate and Lower service charges _____ g. Geographical constraints _____ h. Quick service _____ i. Variety of features and services offered _____ j. Integrated value added services _____ 13.How many times a month do you use Internet banking facility?

1- 5 times a month 10 - 15 times a month

5 - 10 times a month Over 15times

14.What are the various banking facilities that you use online?

On-line Bill payment Transfer funds between accounts

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Account Inquiry Retrieving bank statements

Applyingfor consumer loans and credit cards Loan payments and loan applications

Process payrolls Other

If other, please specify, ________________________________________________________ 15.Rate the following aspects of internet services provided by your bank on the scale from 1 to 5 (1 being the lowest and 5 being the highest degree) Bank service _____ Account security _____ Convenience_____ User friendliness _____ Accessibility _____ Customer care _____ Encouragement to use e-banking _____ 16.Would you like to disclose the name of the bank with which you have Internet account? ___________________________________________________________________________ 17.Who suggested the option of Internet banking to you?

Friends

Media

Family

18.Are you satisfied by your Internet banking services?

Yes

No

19.Where do you access the Internet banking facility?

At home Public place

At office / workplace Through mobile phone

If any other, please specify,_____________________________________________________ 20.Did you encounter any issues while using Internet banking?

Yes

No

If yes, please specify, __________________________________________________________ For all the customers 21.Rank the following according to the perceived contribution in making Internet banking popular? (1 being the lowest and 5 being the highest value) a. The information quality (providing correct, complete and updated information timely) _____ b. The transaction speed _____ 75

c. User friendliness _____ d. Security _____ e. Convenience _____ 22.Do you have a mobile phone?

Yes

No

23.Does your mobile phone have web browsing or internet facility?

Yes
24.Do you avail mobile banking services?

No

Yes

No

25.If the answer to above question is yes, how often do you use such services in a month?

1 - 5 times 10 - 15 times

5 - 10times >15 times

26.Would you prefer mobile banking services over traditional banking method?

Yes

No

27.What are the reasons to opt for mobile banking? If you do not use mobile banking, please answer on the basis of your expectations. (Mark all that apply) Highly time saving Ease of access Safe and risk free Service quality Ease of use 28.How do you think the awareness about the internet banking can be increased? ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ 29.Any other comments? 76

___________________________________________________________________________ ___________________________________________________________________________

Thanking you for sparing some time for this survey. Have a great day ahead

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