Customers Perspectives Regarding e-banking:

Internet technology is rapidly changing the way personal financial services are designed and delivered. Hence, banks have found themselves at the forefront of technology adoption for the past three decades. Banks began to look at electronic banking (e-banking) as a means to replace some of their traditional branch functions. Although e-banking systems provide us with easy access to banking services, they have introduced new business challenges. The study of focused on the perceptions of customers regarding the use of Internet Banking (i-banking) services. A structured questionnaire will be administered to various target groups. Customers with at least six months/one year of experience in e-banking will be identified by visiting retail/ATM branches of different banks in LPU.

Introduction Innovations in information and communication technologies are incessant. Firms are increasingly turning to the Internet and related information technologies to improve business efficiency and service quality, and to attract new customers. The use of the Internet in the conduct of business is growing at a rapid pace, Technological development, particularly in the area of telecommunications and information technology, is revolutionizing the banking industry. With the development of this technology, electronic commerce is seen to hold a promise of new revolution. Literature review shows that much research was undertaken to study the development of electronic banking (e-banking) and its operations (Liao and Cheung, 2002; Agarwal et al., 2009; and Lee, 2009). It is widely believed that the impact of e-commerce enables banks to provide an inexpensive and direct way of exchanging information and to sell or buy products and services. Internet technology is rapidly changing the way personal financial services are designed and delivered; hence, banks have found themselves at the forefront of technology adoption for the past three decades. Banks began to look at e-banking as a means to replace some of their traditional branch functions. Although e-banking systems provide us with easy access to banking services, it has introduced new business challenges. E-banking is the use of computer technology to give option of bypassing the time-consuming, paper-based aspects of traditional banking; Whilst the packages differ, in its most basic form, it is a method of retrieving balance and statement information from your bankers via your desktop PC, along with the ability to generate payments, both domestic and international, from the same source. The Internet is being offered as an alternative in many cases, but surprisingly the service is sometime restricted, and a majority of business and corporate customers receiving electronic information from their bank still use a direct connection with the bank. There are several major challenges and issues facing the banking industry today. First and perhaps most important is the

security concern. Customers are certainly concerned about giving their bank account number online or paying an invoice through the Internet. Another challenge facing e-banking industry and the e-business in general is the quality of delivery service, including delivery speed (i.e., short advance time required in ordering), and delivery reliability (i.e., delivery of items/services on time), which caused many e-business failures in the earlier dot.com era. Limited online payment options have resulted in many customers dropping out in the last stage of the purchasing process due to dissatisfaction and inconvenience. Finally, the issue of customer unfamiliarity with the Internet, which is prominent among senior citizens, has recently caught some attention because these customers believe that they are left at a disadvantageous position and become very reluctant to transact business online.

The objectives of the study are: The main objective of this study is to know about the customer perception regarding the Usage of online banking. To identify the most important factor influencing customers awareness regarding ebanking. To study the influence of education profile of the respondent on the usage of e-banking.

Review of Literature Banking has never been more important to our society than it is today. The advance of communication and computer technology and the availability of the Internet have made it possible that can do most banking transactions from a remote location even without stepping into a physical financial structure. The emergence of e-banking has been viewed as a revolutionary progress in the banking industry.

1) Agarwal et al. (2009) have undertaken a study to understand the perception and attitude Indian customers and their satisfaction level with the various services offered services through the ebanking mode by banks in India. The study reveals that customer satisfaction with security and

trust provided by the e-banking site has the maximum impact on overall satisfaction of customers with e-banking, followed by customer satisfaction with convenience and ease of use. 2) Neha Dixit, Dr. Saroj K. Data (2010) studied the acceptance of i-banking among adult Customers, it investigates the factors which are affecting the acceptance of e-banking services among adult customers and also indicates level of concern regarding security and privacy issues in Indian context. The finding of this study showed that in spite of their security and privacy concern, adult customers are willing to adopt online banking if banks provide him necessary guidance. 3) Tahir Masood Qureshi, Muhammad Khaqan Zafar, Muhammad Bashir Khan (2008) undertook the study of Customer acceptance of online banking in developing economies, This research evaluated the customer acceptance of online banking & found almost 50% of the clients shifted from traditional banking to online banking system, followed by customer satisfaction with convenience and ease of use. 4) Abdullah Bin Omar, Naveed Sultan, Khalid Zaman, Nazish Bibi, Abdul Wajid, Khalid Khan (2011) have undertaken the study on customer perception towards online banking services. This study reveals that the major issues in the IB services are security, safety and the lack of trust especially on ATM machines. Fraudulent transactions, robbery, bad and unreliable ATM services (e.g. stuck-up the ATM card, incorrect Dr or Cr amount in the account etc) are the reasons which playing a vital role in reducing the trust of consumers on IB. 5) Rahmath Safeena, Abdullah, Hema Date (2010) focused on customer perspectives on ebusiness value, this study shows the transformation from the traditional banking to e-banking has been a 'leap' change. The evolution of e-banking begin from the use of Automatic Teller Machines (ATMs) and telephone banking (tele-banking), direct bill payment, electronic fund transfer and the revolutionary online banking. 6) ASLI YKSEL MERMOD et a1, (2011) the objective of this research was to examine the usage of Internet-banking in an emerging market, namely Turkey. The findings showed that the internet banking usage rates have increased in the last years, depending on the increase of educated users. The usage rate of the internet banking is significantly related with the education levels. Education and also income level makes an important difference in the usage of internet banking facilities. 7) Proenca et al. (2009) analyzed the impact of the use of Internet banking (i-banking) by customers on the relationship they develop with their main bank. The study made relationship between the dimensions: the use of i-banking as well as to the diversity of operations performed there. The study revealed a strong association between the duration and maintenance of relationship and the diversity of places of access to i-banking. 8) Muniruddeen Lallmahamood (2007) undertook an examination of individuals perceived security and privacy of the internet in malaysia and the influence of this on their intention to use e-commerce: using an extension of the technology acceptance model. It studied that Internet

security, Internet banking regulations and customers privacy remained future challenges of Internet banking acceptance. 9) Stamoulis et al. (2002) studied the challenges faced by banks in assessing the value of its main e-banking channel in operation. The study used a model which comprises five different perspectives each having a corresponding set of metrics. These were used to assess the business value along two viewpoints: (a) the internal view where the channel is considered as a resource whose utilization must be maximized; and (b) the external view where the channel is an interface to the banks customer base whose usage should directly support CRM. 10) Pikkarainen (2004) focused on the factors that influence online banking acceptance in the light of the technology acceptance mode. The study revealed that perceived usefulness and amount of information clearly have a positive effect of the use of online banking. The finding refers to the fact that consumers use online banking for the benefit it provides in comparison to other banking delivery channels. 11) Sohail and Shanmugham (2003) studied customers preference for e-banking and the factors which they considered influenced its adoption. The study revealed that accessibility of Internet, awareness of e-banking , and customers reluctance to change are the factors that significantly affected the usage of e-banking in Malaysia. The study indicated greater promotional effort on the part of banks to create greater awareness of e-banking and its benefits which is important for the success of e-banking services patronage. 12) Yang et al. (2009) described a comparative study the issues in the current e-banking services among the young consumers between two nations: China and USA. The attitude and usage of young consumers will be a good indicator for the trend of e-banking service in future. Different cultures and traditions play a role in the development of e-banking industry among different nations. This comparative study provides insightful guidelines for the development of e-banking industry worldwide. 13) Lee (2009) explored and integrated the various advantages of online banking to from a positive factor named perceived benefit. In addition, drawing from perceived risk theory, five specific risk facts- (1) Financial, (2) Security/privacy, (3) Performance, (4) Social, and (5) Time risk-were synthesized with perceived benefit, as well as integrated with the Technology Acceptance Model (TAM) and Theory of Planned Behavior (TPB) model to propose a theoretical model to explain customers intention to use online banking. The results indicated that the intention to use online banking is adversely affected mainly by the security/privacy risk, as well as financial risk, and is positively affected mainly by perceived benefit, attitude and perceived usefulness. 14) Yang et al. (2007) investigated the recent trend and development of the application of ebanking (banking through Internet) in rural areas and its economic impact on local financial institutions. The study investigated how those smaller and community banks located in rural

areas have attempted to catch up with their counterparts in larger cities in terms of the application of e-banking service will reduce banks operating cost and increase the degree of customer satisfaction. But small and local community banks should speed up their effort in using some recent new technologies like mobile banking (m-banking) and promotional efforts to increase their e-banking services. 15) Liao and Cheung (2002) measured consumer attitudes toward internet-based e-retail banking as a financial innovation and to explore its viability and prospects on the demand side. The study found that individual expectations regarding accuracy, security, transaction speed, userfriendliness, user involvement, and convenience were the most important quality attributes in the perceived usefulness of Internet-based e-retail banking. In the study, too much importance was attached to attributes like time and location convenience in promoting Internet e-retail banking in the beginning, to the extent that tangible safety symbols like bricks-and-mortar offices were neglected. 16) Fitzergerald (2004) choose to analyze four different research papers to identify current and potential customers perceptions on online banking. He concluded that there are common perceptions regarding online banking with disregard to demographic, geographic or psychographic characteristics. He argued that among the major non adoption areas are the security concerns and lack of awareness of online banking. 17) Cleaver (1999) reports an academic study that concluded that older users prefer internet sites that do not demand complicated manipulation of software and hyperlinks the equipment, simply in order to browse. They appreciate functions that make on-line navigation easier and more convenient; for instance, simple, clear, and polite messages. On the other hand, other studies have shown that older people want the same things as users in general: a site that is easy to use, fast, clear, and secure. On the whole, it seems that the expert majoritys opinion is that older people need separate internet sites, or at least modifications of existing ones (Judd, 2000), incorporating for instance larger font sizes and simpler graphics. Security and 18) A J Joshua, Moli P Koshy (2011) studied Usage Patterns of Electronic Banking Services by Urban Educated Customers: Glimpses from India. The findings show that though ATMs have been widely adopted, the level of adoption of other electronic banking means like internet banking, tele banking and mobile banking despite their potential are yet to pick in a big way. 19) Hanudin Amin, (2007) analyzed the Internet Banking Adoption among Young Intellectuals this study reflects the Internet banking understanding from the undergraduate point of view. They are selected because of their potency to become an active banking customers in the future, where all the services offered by banks are tend to be tested by them. 20) Loh and Ong (1998),examined the impact of users evaluation and their beliefs and attitudes, as well as their usage behaviour on adoption and acceptance of a new innovation. The study revealed that users concerns, expectations, perceived ease of use, and the real value added

of a new system as well as their trading behaviour were crucial determinants to the ultimate adoption of Internet stock trading. 21) Malhotra and Singh (2010) conduct an exploratory study and make effort to present the current status of Internet banking in India and the extent of Internet banking services offered by Internet banks. In addition, it seeks to examine the factors affecting the extent of Internet banking services. The results reveals that the private and foreign Internet banks have performed well in offering a wider range and more advanced services of Internet banking in comparison with public sector banks. He also highlighted the determinants affecting the extent of Internet banking services, size of the bank, and experience of the bank in offering Internet banking, financing pattern and ownership of the bank are found to be significant. 22) Rod. (2009) examine the relationships among three dimensions of service quality that influence overall internet banking service quality and its subsequent effect on customer satisfaction in a . The results show significant relationships among online customer service quality, online information system quality, banking service product quality, overall internet banking service quality and customer satisfaction. 23) Hasim & salman (2009) conducted a study to determine the factors that affect sustainability of internet usage by youth, in both a rural town and urban town. The researchers studied and concluded that there is sustainability of internet usage among youth. As far as factors that have positive effects on sustainability of internet usage is concerned, the results of the study showed that interpersonal and social network and perceived and realized benefits have significant positive effects on sustainability of internet usage by youth. 24) Chong. (2010) empirically examined the factors that affect the adoption decision of online banking in. Perceived usefulness, perceived ease of use, trust and government support was examined to determine if these factors are affecting online banking adoption. The results showed that perceived usefulness, trust and government support all positively associated with the intention to use online banking in. Contrary to the technology acceptance model, perceived ease of use was found to be not significant in this study 25) Lassar, et al. (2004), they highlighted the relationships between consumer innovativeness, self-efficacy on the internet, internet attitudes and online banking adoption, while controlling for personal characteristics. While results confirm the positive relationship between internets related innovativeness and online banking, they also surprisingly show that general innovativeness is negatively related to online banking.

Research Methodology One of the primary concerns of this study is to identify the important parameters that the customers adopting i-banking. Customers with at least 6 months/one year of experience in i-banking will be identified by visiting students using online/ATM of different banks in the university. A total of 150 valid questionnaires will be provided to the students or respondents. For the survey, questionnaires designed consisted of 5 likert scale point, 5 for strongly agree, 4 for agree, 3 for neutral, 2 for disagree and 1 for strongly disagree. Many a time, it may happen that the respondents may not be clear about the terminologies used in the questionnaire but this matter will be solved through detailed explanation and by one to one discussion.

Sample: The sample for this study will be the students from LPU. Convenience sampling method will be used. The reasons of using this sampling type will twofold. First, it will offer an easy way to obtain the raw data for the further analysis. Second, it saves times and costs since the respondents can be randomly selected. Although there are limitations of using students as subjects, they are appropriate in this study for several reasons. First they are good surrogate for banking customers, they are current bank customers have experience with traditional banking services and are most likely familiar with the IB. Second, student sample reflects current and future banking customers. Internet users are generally low with majority of them between 18- 25 ages. A total of 150 questionnaires will be distributed to student customers of the institute who use IB services in the university.

Limitation of the study: The study may suffer from setback as the sample is will be devoted to the student population situated in the university. The view of these students may differ from those customers who are staying in the other big cities such as metros & II, III tier cities. Thus, the results may be limited to the specific location, and may be hard to predict its usefulness to other users in other cities.

References:

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Tahir Masood Qureshi, Muhammad Khaqan Zafar , Muhammad Bashir Khan, Customer Acceptance of Online Banking in Developing Economies Journal of Internet Banking and Commerce, April 2008, vol. 13, no.1 A J Joshua, Moli P Koshy, Usage Patterns of Electronic Banking Services by Urban Educated Customers: Glimpses from India Journal of Internet Banking and Commerce, April 2011, vol. 16, no.1 Agarwal R, Rastogi S & mehrota A (2009) customers perspective regarding e-banking in an emerging Economy, journal of Retailing & consumer services, vol. No.5 Lee M C (2009), Factors influencing the adaption of Internet Banking: An Integration of TAM & TPB with perceived Risk & Perceived Benefit, Electronic commerce Research & Application, vol.8, No.3 Liao Z & Chengu M T (2002), internet based e-banking & customer Attitude: an Empirical study, Information & management, vol. 39, No 4 Pikkarainen T, Pikkarainen K, Karjaluoto H & Pahnilla S (2004), consumer Acceptance of online banking: An Extension of the Technology Acceptance model, Internet Research, vol. 14, No. 3

Proncea J F & Silva M M (2009), Banking Relationships & Internet Banking, IADIS International journal on computer science & Information system, vol.5, No.2 Sohail M S & Shanmugham B (2003), E-Banking & customer Preferences in Malaysia: An Empirical Investigation, Information sciences, vol. No. 3 & 4 Stamoulis D Kanellis P & Martakos D (2002), An Approach & Model for Assessing theBusiness value of E-banking Distribution channels: Evaluation as communication, International journal of Information management, vol. No.22, No.4 Yang J, cheng L & Luo X(2009), A comparative study on e-banking services in china & USA , International Journal of Electronic finance, vol. 3, No.3. Yang J, whitfield M & Boehme k (2007), New issues& challenges facing e-banking in Rural reas: An Emphirical study International journal of electronic finance, vol.1, No.3

Assignment -Research Methodology

Topic: Consumer perspective Regarding E-Banking Submitted toMiss. Neha Bhardwaj

Submitted by: NAME MOHIT KATARIA RAJIV SHARMA LOVELY SUNIL KUMAR BEDI VIVEK MOHAN MANJUNTAH KATTIMANI ROLLNO REGISTRATION NO A 53 A 13 A 44 A 19 B 29 A 45 11110890 11102360 11109150 11103568 11106706 11109210