CHAPTER - 1 INTRODUCTION

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INTRODUCTION: The service industries are mostly customer driven and their survival in competitive environment largely depends on quality of the service provided by them. In this context, quality of service furnished by banking sector is very important and profitability of their business is closely connected to the quality of service they render. Businesses seeking to improve profitability are, thus, advised to monitor and make improvements to their service quality on an ongoing basis. Technology plays a vital role in improving the quality of services provided by the business units. One of the technologies which really brought information revolution in the society is Internet Technology and is rightly regarded as the third wave of revolution after agricultural and industrial revolution. Advent and adoption of internet by the industries has removed the constraint of time, distance and communication making globe truly a small village. Financial sector being no exception, numerous factors such as competitive cost, customer service, increase in education and income level of customers, etc. influence banks to evaluate their technology and assess their electronic commerce and internet banking (i-banking) strategies. Internet banking allows banking from anywhere, anytime and is used for transactions, payments, etc. over the internet through a bank, a credit union or societys secure website. So, basically, in i-banking a client has one-to-one interaction with the banks website, and in such a situation it is essential on the part of bank to provide high quality services over the internet. So, in contrast to traditional banking, i-banking involves non-human interactions between customers and online bank information system.
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Customer satisfaction, customer retention and new customer acquisition are the key factors in i-banking system. This becomes more important since the acquisition costs in online banking exceed that of traditional offline business by 20%40%. Providing i-banking is increasingly becoming a need to have than a nice to have service. The i-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. Internet banking is a new delivery channel for banks in India. The i-banking channel is both an informative and a transactional medium. However, i-banking has not been popularly adopted in India as expected. Banks with lower market share also perceive i-banking technology as a means to increase the market share by attracting more and more customers through this new channel of delivery. However, the service quality in i-banking from customers needs thorough analysis to find out the determinants for success and growth of new channel of delivery in India. This study aims at determining the service quality of banks operative in India with regards to i-banking and identifying the important parameters crucial for service quality from customers perspective.

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Marketing Marketing starts with the identification of a specific need on the part of the customer and ends with the satisfaction of that need by the delivery of a usable product at the right time, at the right place and at an acceptable price. Marketing is so basic that it cannot be considered a separate function. It is really the whole business seen from the point of view of the customer. It is a view point, which looks at the entire business process as highly integrated efforts to discover, create course and satisfy consumer needs. What is customer satisfaction? Customer satisfaction depends on products perceived performance in delivering value relative to buyers expectations. If the products performance falls short of the customers expectations, the buyer is dissatisfied. If performance matches expectations, the buyer is satisfied. If performance matches expectations the buyer is satisfied. If performance exceeds expectations, the buyer is delighted. Outstanding marketing companies go out of their way to keep their customers satisfied. Satisfied customers make repeat purchases and they tell others about their good experiences with the product. The key is to match customer expectations with company performance. Smart companies aim to delight customers by promising only what they can deliver, then delivering more than they promise. Customer satisfaction is closely linked to quality. In recent years, many companies have adopted Total Quality Management (TQM) programs, designed to constantly improve the quality of their products,
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services and marketing processes. Quality has a direct impact on product performance and hence on customer satisfaction. Customer satisfaction is the understanding and analysis of the needs of the customer and making sure that his needs are met so that the customer will come back for more of the products and patronize it. The organization must have a broad based, long term commitment to understanding and delivering the benefits that their customers value the most. Satisfaction is the level of the person felt resulting from comparing a products perceived performance in relation to the persons expectation. When a customer enters an establishment it is with the desire to satisfy his needs knowing that the particular establishment will be able to do so. The organization has to pay careful attention to its customers and their needs and ensure that it doesnt fail in it. Measuring customer satisfaction teaches an organization where to focus resources in order to improve quality and market performance and in the process effectively strengthens customer loyalty. Understanding market needs is a starting point for customer satisfaction. There is a direct impact on the segmentation, on the vision, on the organization, on the product, on the distribution channels and on the technologies. Satisfaction surveys are of course a must, by analyzing them in a good way is as much critical. A difference has to be made between satisfied customers, and totally satisfied customers and the way in which they have to be handled. Satisfaction analysis when linked with the profitability analysis help the organization to know how much more they can earn with totally satisfied customers and help the companies to

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determine how much they can invest to increase the member of totally satisfied customers. Service quality from a Marketing Perspective Everyone agrees that to deliver quality is to deliver what the customer requires, or believes he/she requires. This constitutes an approach to doing business that equates with the marketing concept of identifying and meeting customer requirements at a profit. The ideas being developed in services marketing see quality from a customer perspective and recognize that the only arbiter of quality is the customer. Customers buy benefits not products. Quality is concerned with applying superior benefits based on the opinion of the customers. The pursuit of quality is the pursuit of greater customer benefits. Life would be easier if customer expectations remained static, unfortunately they do not. Rising consumer expectations in an economic and social phenomenon where consumers are more demanding because they are constantly being educated to be more sophisticated, and thus are able to make better judgments. The essence of service marketing is service. The marketing textbooks stress the four Ps of marketing: Product, Price, Place and Promotion. In a service business the most important competitive weapon is the fifth P- Performance. It is the performance of the service which separates one service from others, it is the performance of the service which creates true customers who buy more, are more loyal and who spread favorable word of mouth. Competing services firms often provide similar facilities, equipment and services, but the way the services provider performs the service to its customers can make one firm seem very different from its competitors.
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CHAPTER - 2 RESEARCH DESIGN

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RESEARCH DESIGN To analyze this research are using various methods, tools and techniques to come up with actual findings. STATEMENT OF PROBLEM Online banking or internet banking allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank. The newest distribution channel for banking services is electronic banking. E-banking is defined as several types of services through which a banks customers can request information and carry out most retail banking services via computer, television or mobile phones. We have observed a considerable growth of internet based services. Managing service quality while using internet as a distribution channel is a challenge for the service provider, the purpose of the research is to identify the customer preferences towards online banking and to find out the various service quality dimensions that affect customer satisfaction in internet banking. OBJECTIVES OF THE STUDY To identify customer preferences towards online banking. To find out various service quality dimensions that affect customer satisfaction. To find the relationship between the various demographic variables and satisfaction level of customers. To advice which of the online banks is easy to operate.

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METHODOLOGY The methodology that would be followed is Exploratory and Descriptive Research. This helps to obtain an in-depth understanding of the problem stated above. The process of exploratory research can be done as follows Selection of the sample. Formulation of a questionnaire. Collection of data using questionnaire. Analysis of the data. Methods of data collection The data is collected using primary and secondary sources: Primary Source: Primary Data will be collected from Internet banking users of public and private banks. Secondary sources: Secondary data is collected from websites, records, books and magazines. Sampling: Sampling Unit: Internet banking users of public and private banks. Sampling Size: A sample of 100 respondents who actually are using Internet banking. Sampling Methodology: The sampling method used is Convenience sampling technique. Sampling Area: The sample area is limited to Bangalore City only.

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Plan of analysis: The data collected through questionnaire would be analyzed using the following methods Use of graphs and charts. Literature review. Hypothesis testing. Limitation 1. As it is an academic project, time constraint is there. 2. Opinion which is collected is limited in large population. 3. Some respondents give vague information. 4. Disinterest shown by few respondents to give response to the questionnaire. 5. Inability to meet the right and the concerned person at times. 6. The survey was limited only to Bangalore city.

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CHAPTER 3
COMPANY PROFILE

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STATE BANK OF INDIA State Bank of India (SBI) was nationalised in July 1955 under the SBI Act of 1955. Seven banks of SBI formed subsidiary and was nationalised on 19th July, 1960. The State Bank of India is India's largest commercial bank and is ranked one of the top five banks worldwide. It serves 90 million customers through a network of 9,000 branches and it offers -- either directly or through subsidiaries -- a wide range of banking services. SBI has acquired local banks in rescues. For instance, in 1985, it acquired Bank of Cochin in Kerala, which had 120 branches. SBI was the acquirer as its affiliate, State Bank of Travancore, already had an extensive network in Kerala. Subsidiary of State Bank of India State Bank of Bikaner & Jaipur. State Bank of Hyderabad. State Bank of Indore. State Bank of Mysore. State Bank of Saurastra. State Bank of Travancore. The services of SBI Bank Personal Banking Gold Banking NRI Banking International Banking Corporate Banking Small Scale Industries
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 Small Business Finance Rural Banking Government Business Home Loans

VIJAYA BANK.
Vijaya Bank started its operation in 1931 to promote banking habit, thrift and entrepreneurship among the farming community of Dakshina Kannada district in Karnataka. It became a scheduled bank in 1958. It merged with nine smaller banks during 1963-68 and grew as All India Bank and was nationalised on 15th April 1980. It has 910 computerized branches all over India, 19 of them having ATM facilities. The services of Vijaya bank are Vijaya Bank Deposit Scheme V-Star Savings Scheme Term Deposits Vijaya Bank Credit Cards Vijaya Bank offers the following types of Credit Cards to its customers : Vijaya Classic Visa/Mastercard Vijaya Gold Visa/Mastercard Vijaya Corporate Cards Vijaya International Visa Gold Cards Vijaya Global Cards Vijaya Bank NRI Services The following deposit scheme is provided by Vijaya Bank for NRIs :
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 NRE FCNR(B) Ordinary Non Resident A/c Resident Foreign Currency Deposit a/c (RFC) The following types of loans are available for NRIs : Housing Loan Loans Against Shares, Securities or Immovable Properties

HDFC Bank.
HDFC Bank was amongst the first to receive an 'in-principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector from Housing Development Finance Corporation Limited (HDFC), in 1994 during the period of liberalisation of the banking sector in India. HDFC India was incorporated in August 1994 in the name of 'HDFC Bank Limited'. HDFC India commenced operations as a Scheduled Commercial Bank in January1995. HDFC India deals in varieties of products like home loan, standard life insurance, mutual fund, securities, credit cards, etc. HDFC has branch offices in all major cities in India like Calcutta, Chennai, Delhi, Bangalore, Hyderabad, Ahmedabad apart from HDFC Mumbai. Network : More than 468 branches over 212 cities across the country. ATMs : The ATMs of HDFC India can be accessed by all domestic and international Visa/Master Card, Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders.

HDFC Product Range HDFC Bank India provides the following range of products:
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Savings Account HDFC Bank Preferred Sweep-In Account Super Saver Account HDFC Bank Plus Demat Account HDFC Mutual Fund HDFC Standard Life Insurance

HDFC India innovative services

HDFC Phone Banking HDFC ATM HDFC Inter-city/Inter-branch Banking HDFC Net Banking HDFC International Debit Card HDFC Mobile Banking HDFC Bill Pay

HDFC Bank Loans

HDFC Personal Loan HDFC New Car Loan and Used Car Loan HDFC Loan Against Shares HDFC Two Wheeler & Consumer Loan HDFC Home Loan

ICICI BANK. ICICI Limited, was established in 1955 by the World Bank, the Government of India and the Indian Industry, for the promotion of industrial development in India by giving project and corporate finance to the industries in India. ICICI Bank has grown from a development bank to a financial conglomerate and has become one of the largest public financial institutions in India. ICICI Bank has financed all the major sectors of the economy, covering 6,848 companies and 16,851 projects.
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As of March 31, 2000, ICICI had disbursed a total of Rs. 1,13,070 crores, sinceinception. CANARA BANK. Canara Bank in India has a history of nine decades and is the largest public sector banks in India. Canara Bank India has a deposit advance base of Rs.640 bn and Rs 332 bn (figure in the year 2002). Canara Bank of India has a total of 47,843 employees and is spread with 2409 branches throughout the country. Canara Bank India has an exposure to petroleum, engineering, infrastructure, factoring, investment management, venture capital, home finance and securities. Canara Bank entered Forex arena in 1953 with the opening of its first Foreign Exchange Department in Mumbai. The Bank has 5 forex dealing rooms located in Mumbai, New Delhi, Calcutta, Chennai and Bangalore in India and one in London branch. Canbank provides a wide range of services and products like sale and purchase of 7 world currencies, swap currency and forward bookings. Canara Bank Loan Canara Bank provides provides loans to almost every section of the society. Some of the loans are mentioned as under: Agriculture & Rural Credit Kisan Credit Loans for AgriClinic Minor Irrigation Loans Farm Machinery Loans
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 Farm Development Loans Vehicle Loan for Agriculturists Loan for Plantation Crops Loan for Marine Fisheries Loan for Inland Fisheries Loan for Sericulture Loan for Purchasing Agricultural Land Loan for Poultry Export Credit for Agro Products Other Agricultural Loans Loans to SSIs Charter for SSIs STATEBANK OF MYSORE State Bank of Mysore was established in the year 1913 as Bank of Mysore Ltd. under the patronage of the erstwhile Govt. of Mysore, at the instance of the banking committee headed by the great Engineer-Statesman, Late Dr. Sir M.Visvesvaraya. Subsequently, in March 1960, the Bank became an Associate of State Bank of India.State Bank of India holds 92.33% of shares. The Bank's shares are listed in Bangalore, Chennai, and Mumbai stock exchanges. Branch Network The Bank has a widespread network of 682 branches(as on 30.09.2009) and 20 extension counters spread all over India which includes 5 specialised SSI branches, 4 Industrial Finance branches, 3 Corporate Accounts Branches, 4 specialised Personal Banking Branches, 10 Agricultural Development Branches, 3 Treasury
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branches, 1 Asset Recovery Branch and 8 Service Branches, offering wide range of services to the customers.

CHAPTER - 3
INDUSTRY PROFILE

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LIBERALISATION Liberalization (or liberalisation) refers to a relaxation of previous government restrictions, usually in areas of social or economic policy. In some contexts this process or concept is often, but not always, referred to as deregulation. Liberalization of autocratic regimes may precede democratization. In the arena of social policy it may refer to a relaxation of laws restricting. In the banking sector, which dominates Indias financial system, the financial liberalization has involved three major sets of initiatives. First, those aimed at increasing the credit creating capacity of banks through reductions in the statutory liquidity and cash reserve ratio, while offering them greater leeway in using the resulting liquidity by drastically pruning priority sector lending targets. The second was to increase competition through structural changes in the financial sector. While the existing nationalized banks were permitted to sell equity to the private sector, private investors were permitted to enter the banking area. In addition, foreign banks were given greater access to the domestic market, both as subsidiaries and branches, subject to the maintaining of a minimal assigned capital and being subject to the same rule as domestic banks. Further, a degree of broad banding of financial services was permitted, with development finance institutions being allowed to set up mutual funds and commercial banks, and banks themselves permitted to diversify their activity into a host of related areas. The broad trend is towards a form of universal banking.

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Thirdly, to render this competition effective in influencing bank functioning, banks have been provided with greater freedom in determining their asset portfolios. They were permitted to cross the firewall that separated the banking sector from the stock market and invest in equities, provide advances against equity provided as collateral, and offer guarantees to the broking community. THE IMPACT All these initiative had an immediate impact on the functioning of banks, which choose to modify their credit portfolio and diversify out of their overwhelmingly dominant role as credit-providing intermediaries. To start with, non-food credit itself was increasingly being diverted away from the priority sectors (such as agriculture and small scale sector), industry and the wholesale trade, to other areas such as provision of loans to individuals for purchases of consumer durables and investment in housing, and towards lending against real estate and commodities. While this shift increased the interest incomes that could be garnered by the banks, it also increased their exposure to the euphemistically-termed sensitive sectors, where speculation is rife and returns volatile. Secondly, investment in securities of various kinds gained in importance, bringing in its wake a greater exposure to stock markets. This was indeed a part of the reform effect. As an RBI-SEBI joint committee on bank exposures to the stock market noted: Globally, there is a shift in the asset portfolio of banks from credit to investments keeping in view the fact that investments are liquid and augment the earnings of banks. The committee feels that banks participation would also promote stability and orderly growth of the stock market. The impact of this on scheduled commercial banks in India is visible from a rise in investments by

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banks, which to a significant extent is due to bank preference for credit substitutes. Initially, the investments were in large government and other approved securities, but over the last few years there has been a sharp increase in investments in non-SLR securities wit the share within such investments accounted for by loans to corporate against shares, investments in private equity and in private bonds, debentures and preference shares also increasing over time. These trends however are based on aggregate and average figures that conceal the differential distribution of such exposure across different kinds of banks. Such differentials have been substantial. Consider, for example, bank lending to sensitive sectors such as commodities, the real estate and the capital market. While, the sum total of such lending is small, there are some segments of the banking sector especially the old and new private sector banks that are characterized on average by a much higher degree of such exposure. Taking the exposure of banks to the stock market alone, it can be seen to occur I three forms: First, it takes the form of direct investment in shares, in which case the impact of stock price fluctuations directly impinge on the value of the banks assets; Secondly, it takes the form of advances against shares, to both individuals and stock brokers. Any fall in stock market indices reduces, in the first instance, the value of the collateral. It could also undermine the ability of the borrower to clear his dues. To cover the risk involved in such activity banks stipulate a margin, between the value of the collateral and the amounts advanced, set largely according to their discretion.

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Third, it takes the form of non-fund based facilities, particularly guarantees to brokers, which renders the bank liable I case the broking entity does not fulfill its obligation.

Processes of Banking Reform The processes adopted for bringing about the reforms in India may be of some interest to this audience. Recalling some features of financial sector reforms in India would be in order, before narrating the processes. First, financial sector reform was undertaken early in the reform-cycle in India. Second, the financial sector was not driven by any crisis and the reforms have not been an outcome of multilateral aid. Third, the design and detail of the reform were evolved by domestic expertise, though international experience is always kept in view. Fourth, the government preferred that public sector banks manage the over-hang problems of the past rather than cleanup the balance sheets with support of the government. Fifth, it was felt that there is enough room for growth and healthy competition for public and private sector banks as well as foreign and domestic banks. The twin governing principles are nondisruptive progress and consultative process. In order to ensure timely and effective implementation of the measures, RBI has been adopting a consultative approach before introducing policy measures. Suitable mechanisms have been instituted to deliberate upon various issues so that the benefits of financial efficiency and stability percolate to the common person and services of the Indian financial system can be benchmarked against international best standards

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in a transparent manner. Let me give a brief account of these mechanisms. First, on all important issues, workings group are constituted or technical reports are prepared, generally encompassing a review of the international practices, options available and way forward. The group membership may be internal or external to the RBI or mixed. Draft reports are often placed in public domain and final reports take account of inputs, in particular from industry associations and self-regulatory organizations. The reform-measures emanate out of such a series of reports, the pioneering ones being: Report of the committee on the financial system in 1991; Report of the high level committee on balance of payments in 1992; and the report of the committee on banking sector reforms in 1998. Second, resource management discussions meetings are held by the RBI with select commercial banks, prior to the policy announcements. These meetings not only focus on perception and outlook of the bankers on the economy, liquidity conditions, credit flow, development of different markets and directions of interest rates, but also on issues relating to developmental aspects of banking operations. Third, they have formed a Technical Advisory Committee on Money, Foreign Exchange and Government Securities Market (TAC). It has emerged a key consultative mechanism amongst the regulators and various market players including banks. The committee has been crystallizing the synergies of experts across various fields of the financial market and thereby acting as a facilitator for the RBI in steering reforms in money, government securities and foreign exchange markets. Fourth, in order to strengthen the consultative process in the regulatory domain and to place such a process on a continuing basis, the
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RBI has constituted a Standing Technical Advisory Committee on Financial Regulation on the lines similar to the TAC. The committee consists of experts drawn from academic, financial markets, banks, nonbank financial institutions and credit rating agencies. The committee examines the issues referred to it and advises the RBI on desirable regulatory framework on an on-going basis of banks, non-bank financial institutions and other market participants. Fifth, for ensuring periodic formal interaction, amongst the regulators, there is a High Level Co-ordination Committee on financial and Capital Markets (HLCCFCM) with the governor, RBI as the chairman, and the heads of the securities market and insurance regulators, and the secretary of the Finance Ministry as the members. This Coordination Committee has authorized constitution of several standing committees to ensure co-ordination in regulatory frameworks at an operational level. Sixth, more recently a Standing Advisory Committee on Urban Co-operative Banks (UCBs) has been activated to advise on structural, regulatory and supervisory issues relating to UCBs and to facilitate the process of formulating future approaches for this sector. Similar mechanisms are being worked out for non-banking financial companies. Seventh, the RBI has also instituted a mechanism of placing draft versions of important guidelines for comments of the public at large before finalization of the guidelines. To further this consultative process and with a specific goal of making the regulatory guidelines more userfriendly, a users consultative panel has been constituted comprising the representatives of select banks and market participants. The panel provides feedback on regulatory instructions at the formulation stage to avoid any subsequent ambiguities and operational glitches.
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Eighth, an extensive and transparent communication system has been evolved. The annual policy statements and their mid-term reviews communicate the RBIs stance on monetary policy in the immediate fixture of six months to one year. Over the years, the reports of various working groups and committees have emerged as another plank of twoway communication from RBI. An important feature of the RBIs communication policy is the almost real time dissemination of information through its website. The auction results under Liquidity Adjustment Facility (LAF) of the day are posted on the website by 12.30 pm the same day, while by 2.30 pm the reference rates of select foreign currencies are also placed on the website. By the next day morning, the press release on money market operations is issued. Every Saturday, by 12 noon, the weekly statistical supplement is placed on the website providing a fairly detailed recent database on the RBI and the financial sector. All the regulatory and administrative circulars of different departments of the RBI are placed on the website within half an hour of their finalization. Ninth, an important feature of the Indian Financial System has been the intent of the authorities to align the regulatory framework with international best practices keeping in view the developmental needs of the country and domestic factors. Towards this end, a Standing Committee on International Financial Standards and Codes was constituted in 1999. The standing committee had set up ten Advisory groups in key areas of the financial sector whose reports are available on the RBI website. The recommendations contained in these reports have either been implemented or are in the process of implementation. I would like to draw your attention to two reports in particular, which have a direct bearing on the banking system, viz., Advisory Group on Banking
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Supervision

and

advisory

Group

on

Corporate

Governance.

Subsequently, in 2004, we conducted a review of the recommendations of the Advisory Groups and reported the progress and agenda ahead.

Table 1: TOP 20 COUNTRIES WITH HIGHEST NUMBER OF INTERNET USERS # Country or Population, Region 2009 Est Users Latest Data % Population Growth % of 2000World

1 China 2 United

1,338,612,968 360,000,000 307,212,123 127,078,679 227,719,000 95,979,000

(Penetration) 2009 Users 1,500.0 26.9 % 20.8 % % 74.1 % 75,5 % 7.0 % 34.0 % 65.9 % 76.4 % 32.3 % 69.3 % 77.3 % 138.8 % 13.1 % 103.9 % 5.5 % 1,520.0 4.7 % % 1,250.2 3.9 % % 126.0 % 3.1 % 203.1 % 2.7 % 1,359.7 2.6 % % 407.1 % 2.5 % 96.8 % 2.2 %
27

States 3 Japan 4 India 5 Brazil 6 Germany United 7 Kingdom 8 Russia 9 France Korea 10 South
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1,156,897,766 81,000,000 198,739,269 82,329,758 61,113,205 140,041,247 62,150,775 48,508,972 67,510,400 54,229,325 46,683,900 45,250,000 43,100,134 37,475,800

11 Iran 12 Italy

66,429,284 58,126,212

32,200,000 30,026,400 30,000,000 29,093,984 27,600,000 26,500,000 25,086,000 24,000,000 21,963,117 20,020,362

48.5 % 51.7 % 12.5 % 71.8 % 24.8 % 34.5 % 74.9 % 24.5 % 24.8 % 52.0 %

12,780.0

13 Indonesia 240,271,522 14 Spain 15 Mexico 16 Turkey 17 Canada 40,525,002 111,211,789 76,805,524 33,487,208

18 Philippines 97,976,603 19 Vietnem 20 Poland TOP 20 Countries Rest of the World Total World Users 88,576,758 38,482,919

1.9 % % 127.5 % 1.7 % 1,400.0 1.7 % % 440.0 % 1.7 % 917.5 % 1.6 % 1,225.0 1.5 % % 97.5 % 1.4 % 1,100.0 1.4 % % 10,881.6 1.3 % % 615.0 % 1.2 % 359.9 % 76.4 % 461.5 % 23.6 % 380.3 % 100.0 %

4,374,577,583 1,325,437,422 30.3 % 2,393,227,625 408,556,319 17.1 %

6,767,805,208 1,733,993,741 25.6 %

Development of i-banking in India

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The financial reforms that were initiated in the early 1990s and the globalization and liberalization measures brought in a completely new operating environment to the banks. The bankers are now offering innovative and attractive technology-based services and products such as Anywhere Anytime Banking, Tele-Banking, Internet Banking, Web Banking, etc. to their customers to cope with the competition. The process started in the early 1980s when Reserve Bank of India (RBI) set up two committees in quick succession to accelerate the pace of automation of operations in the banking sector. A high-level committee was formed under the chairmanship of Dr. C. Rangarajan, then Governor of RBI, to draw up a phased plan for computerization and mechanization in the banking industry over a five-year time frame of 19851989. The focus by this time was on customer service and two models of branch automation were developed and implemented. Having gained experience in the earlier mode of computerization, the second Rangarajan committee constituted in 1988 drew up a detailed perspective plan for computerization of banks and for extension of automation to other areas such as funds transfer, e-mail, BANKNET, SWIFT, ATMs, i-banking, etc. The Government of India enacted the Information Technology Act, 2000 (generally known as IT Act, 2000), with effect from 17 October 2000 to provide legal recognition to electronic transactions and other means of electronic commerce. RBI had set up a Working Group on i-banking to examine different aspects of i-banking. The Group had focused on three major areas of i-banking such as (1) Technology and security issues, (2) Legal issues and (3) Regulatory and supervisory issues.

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RBI had accepted the recommendations of the Working Group, and accordingly issued guidelines on internet banking in India for implementation by banks. The Working Group has also issued a report on i-banking covering different aspects of i-banking. Internet banking in India is currently at a nascent stage. While there are scores of companies specializing in developing i-banking software, security software and website designing and maintenance, there are few online financial service providers. ICICI bank is the first one to have introduced i-banking for a limited range of services such as access to account information, correspondence and, recently, funds transfer between its branches. ICICI is also getting into e-trading, thus offering a broader range of integrated services to the customer. Several finance portals for provision of non-banking financial services, e-trading and ebroking have come up. Commercial applications such as Electronic Bill Presentment (EBP) and Procurement systems may not be introduced in India immediately, but are likely to have a greater impact than the retail applications. The corporate sector is adequately computerized and has already recognized the important role of e-commerce in future. Increasingly, companies are setting up websites even where there are no immediate tangible benefits to them from doing so.

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Status of i-banking in India In Indian context, many publications throw light over the importance of i-banking and also its prospects for the Indian banking industry. Unnithan and Swatman (2001) studied the drivers for change in the evolution of the banking sector, and the move towards electronic banking by focusing on two economies, Australia and India. The study found that Australia is a country with internet-ready infrastructure as far as telecommunication; secure protocols, PC penetration and consumers literacy are concerned. India, by comparison, is overwhelmed by weak infrastructure, low PC penetration, developing security protocols and consumer reluctance in rural sector. Although many major banks have started offering i-banking services, the slow pace will continue until the critical mass is achieved for PC, internet connections and telephones. However, the upsurge of IT professionals with growing demands is pressuring the government and bureaucracy in the country to support and develop new initiatives for a faster spread of i-banking. For online banking to reach a critical mass, there has to be sufficient number of users and the sufficient infrastructure in place. Various authors have found that i-banking is fast becoming popular in India. However, it is still in its evolutionary stage. By the year 2006 2007, a large sophisticated and highly competitive i-banking market will develop. Almost all the banks operating in India are having their websites, but only a few banks provide transactional i-banking. In India, comparatively less number of studies have been conducted on the current status of i-banking and customer satisfaction compared to other countries. Thus, there is a lot of scope for the research to present new ideas concerning i-banking in India which may be useful to the Indian banking industry. There are a series of papers that observe
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that i-banking has revolutionized the banking industry and the banking industry is under pressure to offer new products and services. However, to succeed in todays electronic markets a strategic and focused approach is required. Service quality in the context of i-banking The definition of quality is contextual one and differs from person to person. In general, the quality is basically classified into five categories, viz. transcendent, product led, process or supply led, customer led and value led. The definition of service quality is based on customerled quality definition where quality is defined as satisfying customers requirements, relying on the ability of the organization to determine customers requirements and then meet these requirements. Basically, service quality in i-banking can be viewed from two perspectives: Customer perspective Bank perspective Customer perspective From the perspective of the customer, the service quality differentiates sought quality and perceived quality. Sought quality is the level of quality customers explicitly or implicitly demand and expect from service providers. The sought quality (customer expectations) is created due to several factors primarily, the expectations are formed during a previous personal experience of a customer with a service, and the customer is influenced by the experiences of the other users and by the image of an organization. Perceived quality means the overall impression a customer has and experiences about the level of quality after service realization. The potential difference between the sought quality and the perceived quality gives the service provider an opportunity to
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measure customer satisfaction based on formulating the precise and actual criteria according to which the customers are assessing the services. Providers perspective 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. 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. Growth in Internet Banking Numerous factors including competitive cost customer service and demographic considerations are motivating banks to evaluate their technology and assess their electronic commerce and Internet banking strategies. Many researchers expect rapid growth in customers using online banking products and services. The challenge for national banks is to make sure the savings from Internet banking technology more than offset the costs and risks associated with conducting business in cyberspace. Marketing strategies will vary as national banks seek to expand their markets and employ lower cost delivery channels. Examiners will need to understand the strategies used and technologies employed on a
MSRCASC-MBA 33

bank-by-bank basis to assess the risk. Evaluating a banks data on the use of their Web sites may help examiners determine the banks strategic objectives, how well the bank is meeting its Internet banking product plan, and whether the business is expected to be profitable. Some of the market factors that may drive a banks strategy include the following: Competition Studies show that competitive pressure is the chief driving force behind increasing use of Internet banking technology, ranking ahead of cost reduction and revenue enhancement, in second and third place respectively. Banks see Internet banking as a way to keep existing customers and attract new ones to the bank. Cost Efficiencies National banks can deliver banking services on the Internet at transaction costs far lower than traditional brick-and-mortar branches. The actual costs to execute a transaction will vary depending on the delivery channel used. Geographical Reach Internet banking allows expanded customer contact through increased geographical reach and lower cost delivery channels. In fact some banks are doing business exclusively via the Internet they do not have traditional banking offices and only reach their customers online. Other financial institutions are using the Internet as an alternative delivery channel to reach existing customers and attract new customers. Branding Relationship building is a strategic priority for many national banks. Internet banking technology and products can provide a means for national banks to develop and maintain an ongoing relationship

MSRCASC-MBA

34

with their customers by offering easy access to a broad array of products and services. By capitalizing on brand identification and by providing a broad array of financial services, banks hope to build customer loyalty, crosssell, and enhance repeat business. Customer Demographics Internet banking allows national banks to offer a wide array of options to their banking customers. Some customers will rely on traditional branches to conduct their banking business. For many, this is the most comfortable way for them to transact their banking business. Those customers place a premium on person-to-person contact. Other customers are early adopters of new technologies that arrive in the marketplace. These customers were the first to obtain PCs and the first to employ them in conducting their banking business. The demographics of banking customers will continue to change. The challenge to national banks is to understand their customer base and find the right mix of delivery channels to deliver products and services profitably to their various market segments. Types of Internet Banking Understanding the various types of Internet banking products will help examiners assess the risks involved. Currently, the following three basic kinds of Internet banking are being employed in the marketplace: Informational This is the basic level of Internet banking. Typically, the bank has marketing information about the banks products and services on a stand-alone server. The risk is relatively low, as informational systems typically have no path between the server and the banks internal network. This level of Internet banking can be provided
MSRCASC-MBA 35

by the bank or outsourced. While the risk to a bank is relatively low, the server or Web site may be vulnerable to alteration. Appropriate controls therefore must be in place to prevent unauthorized alterations to the banks server or Web site. Communicative this type of Internet banking system allows some interaction between the banks systems and the customer. The interaction may be limited to electronic mail; account inquiry, loan applications, or static file updates (name and address changes). Because these servers may have a path to the banks internal networks, the risk is higher with this configuration than with informational systems. Appropriate controls need to be in place to prevent, monitor, and alert management of any unauthorized attempt to access the banks internal networks and computer systems. Virus controls also become much more critical in this environment. Transactional This level of Internet banking allows customers to execute transactions. Since a path typically exists between the server and the banks or outsourcers internal network, this is the highest risk architecture and must have the strongest controls. Customer transactions can include accessing accounts, paying bills, transferring funds, etc. Internet Banking Risks Internet banking creates new risk control challenges for national banks. From a supervisory perspective, risk is the potential that events, expected or unexpected, may have an adverse impact on the banks earnings or capital. The OCC has defined nine categories of risk for bank supervision purposes. The risks are credit, interest rate, liquidity, price, foreign exchange, transaction, compliance, strategic, and reputation. These categories are not mutually exclusive and all of these risks are associated with Internet banking.
MSRCASC-MBA 36

Credit Risk Credit risk is the risk to earnings or capital arising from an obligors failure to meet the terms of any contract with the bank or otherwise to perform as agreed. Credit risk is found in all activities where success depends on counterparty, issuer, or borrower performance. It arises any time bank funds are extended, committed, invested, or otherwise exposed through actual or implied contractual agreements, whether on or off the banks balance sheet. Interest Rate Risk Interest rate risk is the risk to earnings or capital arising from movements in interest rates. From an economic perspective, a bank focuses on the sensitivity of the value of its assets, liabilities and revenues to changes in interest rates. Interest rate risk arises from differences between the timing of rate changes and the timing of cash flows (reprising risk); from changing rate relationships among different yield curves affecting bank activities (basis risk); from changing rate relationships across the spectrum of maturities (yield curve risk); and from interest-related options embedded in bank products (options risk). Evaluation of interest rate risk must consider the impact of complex, illiquid hedging strategies or products, and also the potential impact that changes in interest rates will have on fee income. Liquidity Risk Liquidity risk is the risk to earnings or capital arising from a banks inability to meet its obligations when they come due, without incurring unacceptable losses. Liquidity risk includes the inability to
MSRCASC-MBA 37

manage unplanned changes in funding sources. Liquidity risk also arises from the failure to recognize or address changes in market conditions affecting the ability of the bank to liquidate assets quickly and with minimal loss in value. Price Risk Price risk is the risk to earnings or capital arising from changes in the value of traded portfolios of financial instruments. This risk arises from market making, dealing, and position taking in interest rate, foreign exchange, equity, and commodities markets. Banks may be exposed to price risk if they create or expand deposit brokering, loan sales, or securitization programs as a result of Internet banking activities. Appropriate management systems should be maintained to monitor, measure, and manage price risk if assets are actively traded. Foreign Exchange Risk Foreign exchange risk is present when a loan or portfolio of loans is denominated in a foreign currency or is funded by borrowings in another currency. In some cases, banks will enter into multi-currency credit commitments that permit borrowers to select the currency they prefer to use in each rollover period. Foreign exchange risk can be intensified by political, social, or economic developments. The consequences can be unfavorable if one of the currencies involved becomes subject to stringent exchange controls or is subject to wide exchange-rate fluctuations. Transaction Risk Transaction risk is the current and prospective risk to earnings and capital arising from fraud, error, and the inability to deliver products
MSRCASC-MBA 38

or services, maintain a competitive position, and manage information. Transaction risk is evident in each product and service offered and encompasses product development and delivery, transaction processing, systems development, computing systems, complexity of products and services, and the internal control environment. Compliance Risk Compliance risk is the risk to earnings or capital arising from violations of, or nonconformance with, laws, rules, regulations, prescribed practices, or ethical standards. Compliance risk also arises in situations where the laws or rules governing certain bank products or activities of the banks clients may be ambiguous or untested. Compliance risk exposes the institution to fines, civil money penalties, payment of damages, and the voiding of contracts. Compliance risk can lead to a diminished reputation, reduced franchise value, limited business opportunities, reduced expansion potential, and lack of contract enforceability. Strategic Risk Strategic risk is the current and prospective impact on earnings or capital arising from adverse business decisions, improper implementation of decisions, or lack of responsiveness to industry changes. This risk is a function of the compatibility of an organizations strategic goals, the business strategies developed to achieve those goals, the resources deployed against these goals, and the quality of implementation. The resources needed to carry out business strategies are both tangible and intangible. They include communication channels, operating systems, delivery networks, and managerial capacities and capabilities. The organizations internal characteristics must be evaluated
MSRCASC-MBA 39

against the impact of economic, technological, competitive, regulatory, and other environmental changes. Reputation Risk Reputation risk is the current and prospective impact on earnings and capital arising from negative public opinion. This affects the institutions ability to establish new relationships or services or continue servicing existing relationships. This risk may expose the institution to litigation, financial loss, or a decline in its customer base. Reputation risk exposure is present throughout the organization and includes the responsibility to exercise an abundance of caution in dealing with customers and the community. Issues in Internet Banking Financial institutions, their card associations, and vendors are working to develop an Internet payment infrastructure to help make electronic commerce secure. Many in the banking industry expect significant growth in the use of the Internet for the purchase of goods and services and electronic data interchange. The banking industry also recognizes that the Internet must be secure to achieve a high level of confidence with both consumers and businesses. Sound management of banking products and services, especially those provided over the Internet, is fundamental to maintaining a high level of public confidence not only in the individual bank and its brand name but also in the banking system as a whole. Key components that will help maintain a high level of public confidence in an open network environment include: Security Authentication
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 Trust Non repudiation Privacy Security is an issue in Internet banking systems. The OCC expects national banks to provide a level of logical and physical security commensurate with the sensitivity of the information and the individual banks risk tolerance. Some national banks allow for direct dial-in access to their systems over a private network while others provide network access through the Internet. Although the publicly accessible Internet generally may be less secure, both types of connections are vulnerable to interception and alteration. For example, hardware or software sniffers can obtain passwords, account numbers, credit card numbers, etc. without regard to the means of access. Authentication is another issue in a Internet banking system. Transactions on the Internet or any other telecommunication network must be secure to achieve a high level of public confidence. In cyberspace, as in the physical world, customers, banks, and merchants need assurances that they will receive the service as ordered or the merchandise as requested, and that they know the identity of the person they are dealing with. Banks typically use symmetric (private key) encryption technology to secure messages and asymmetric (public/private key) cryptography to authenticate parties. Asymmetric cryptography employs two keys a public key and a private key. These two keys are mathematically tied but one key cannot be deduced from the other.

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41

Trust is another issue in Internet banking systems. As noted in the previous discussion, public and private key cryptographic systems can be used to secure information and authenticate parties in transactions in cyberspace. A trusted third party is a necessary part of the process. That third party is the certificate authority. Non repudiation is the undeniable proof of participation by both the sender and receiver in a transaction. It is the reason public key encryption was developed, i.e., to authenticate electronic messages and prevent denial or repudiation by the sender or receiver. Although technology has provided an answer to non repudiation, state laws are not uniform in the treatment of electronic authentication and digital signatures. Privacy is a consumer issue of increasing importance. National banks that recognize and respond to privacy issues in a proactive way make this a positive attribute for the bank and a benefit for its customers. Public concerns over the proper versus improper accumulation and use of personal information are likely to increase with the continued growth of electronic commerce and the Internet. Providers who are sensitive to these concerns have an advantage over those who do not. Availability is another component in maintaining a high level of public confidence in a network environment. All of the previous components are of little value if the network is not available and convenient to customers. Users of a network expect access to systems 24 hours per day, seven days a week.

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CHAPTER - 4 DATA ANALYSIS AND INTERPRETATION

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Demographic Variables: Table 2: Demographic variables. Demographic Profile of Respondents Demographic Variables Freque Age Less than 30 ncy 60 20 18 2 100 66 34 100 50 25 25 100 8 8 44 40 100 Percenta ge 60.0 20.0 18.0 2.0 100.0 66.0 34.0 100.0 50.0 25.0 25.0 100.0 8.0 8.0 44.0 40.0 100.0

years 31-40 years 41-50 years Above 50 years Total Gender Male Female Total Profession Service Business Not working Total Status of usage From past 2 months From past 6 months From past 1 year From past 2 years Total

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44

Graph 1: Different age groups.

Ag e
L e ss tha n 3 0 y e ar s - 40 y e a r s41 -5 0 y e a rsA b ove 5 0 y e a rs 31
2% 18%

20%

60%

Graph 2: Gender percentage.

Gender

Female 34%

M ale 66%

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45

Table 3: Different banks and its usage. Different banks and its usage. Bank Name SBI HDFC Canara Bank ICICI SBM Vijaya Bank Total Frequenc y 28 20 18 16 10 8 100 Percentage 28.0 20.0 18.0 16.0 10.0 8.0 100.0

Graph 3: Division of banks based on usage.

Banks
SBI HDFC Canara Bank 8% ICICI SBM Vijaya Bank

10%

28%

16%

20% 18%

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46

HYPOTHESIS TESTING: a) ANOVA and F-test for age and customer preference of bank. H1: There is no significant relation between age and preference of bank. Table 4: Cross- Tabulation between Age and Customers preference of Bank. Age (Years) (%) Less 31-40 41-50 Bank Name SBI HDFC Canara Bank ICICI SBM Vijaya Bank Total 60 20 18 2 100 than 30 16 12 10 10 6 6 6 6 3 3 1 1 5 2 5 3 3 0 Total Above 50 1 0 0 0 0 1 (%) 28 20 18 16 10 8

Step 1: Calculate the mean within each group.

MSRCASC-MBA 47

Y1 = 1/6(y1i) = (16+12+10+10+6+6)/6 = 10. Y2 = 1/6(y2i) = (6+6+3+3+1+1)/6 = 3.33. Y3 = 1/6(y3i) = (5+2+5+3+3+0)/6 = 3. Y4 = 1/6(y4i) = (1+0+0+0+0+1)/6 = 0.33. Step 2: Calculate the overall mean: Y = (i Yi)/a = (Y1+Y2+Y3+Y4)/a = (10+3.33+3+0.33)/4 = 4.165. Where a is number of groups. Step 3: Calculate the between groups sum of squares. SSB = n(Y1-Y)+ n(Y2-Y)+ n(Y3-Y)+ n(Y4-Y) = 6(10-4.165) + 6(3.33-4.165) + 6(3-4.165) + 6(0.33-4.165) SSB = 304.84. Where n is number of data values per group. The between group degrees of freedom is one less than the number of groups. Dfb = 4-1 = 3. So the between-group mean square value is
MSRCASC-MBA 48

MSB= 304.84/3 = 101.61. Step 4: Calculate the within groups sum of squares. Begin by centering the data in each group. Age less than 30 16-10=6 12-10=2 10-10=0 10-10=0 6-10=-4 6-10=-4 31-40 6-3.33=2.67 6-3.33=2.67 3-3.33=-0.33 3-3.33=-0.33 1-3.33=-2.33 1-3.33=-2.33 41-50 5-3=2 2-3=-1 5-3=2 3-3=0 3-3=0 0-3=-3 Above 50 1-0.33=0.67 0-0.33=-0.33 0-0.33=-0.33 0-0.33=-0.33 0-0.33=-0.33 1-0.33=0.67

The within group sum of squares is the sum of squares of all 24 values in this table: SSW = 116.656. Thus within group degrees of freedom is Dfw = a(n-1) = 4(6-1) = 20. Thus the within group mean square value is MSW = SSW/dfw = 116.656/20 = 5.832.

Step 5: The F-ratio is

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F = MSB/MSW = 101.61/5.832 = 17.42. Fcrit(3,20) = 3.10 at = 0.05. Hence Null Hypothesis is rejected (17.42>3.10). There is significant relation between age and preference of bank. b) ANOVA and F-test for Profession and customer preference of bank. H1: There is no significant relation between profession of customer and preference of bank. Table 5: Cross Tabulation between Profession and Customers Preference of Bank. Profession (%) Service Busines Bank Name SBI HDFC Canara Bank ICICI SBM Vijaya Bank Total 50 25 25 100 15 10 5 10 5 5 s 7 5 4 3 3 3 Total Not (%) 28 20 18 16 10 8

Working 6 5 9 3 2 0

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50

Step 1: Calculate the mean within each group. Y1 = 1/6(y1i) = (15+10+5+10+5+5)/6 = 8.33. Y2 = 1/6(y2i) = (7+5+4+3+3+3)/6 = 4.16. Y3 = 1/6(y3i) = (6+5+9+3+2+0)/6 = 4.16. Step 2: Calculate the overall mean: Y = (i Yi)/a = (Y1+Y2+Y3)/a = (8.33+4.16+4.16)/3 = 5.55. Where a is number of groups. Step 3: Calculate the between groups sum of squares. SSB = n(Y1-Y)+ n(Y2-Y)+ n(Y3-Y) = 6(8.33-5.55) + 6(4.16-5.55) + 6(4.16-5.55) SSB = 69.55. Where n is number of data values per group. The between group degrees of freedom is one less than the number of groups. Dfb = 3-1 = 2. So the between-group mean square value is MSB= 69.55/2 = 34.775.

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Step 4: Calculate the within groups sum of squares. Begin by centering the data in each group. Service 15-8.33=6.67 10-8.33=1.67 5-8.33=-3.33 10-8.33=1.67 5-8.33=-3.33 5-8.33=-3.33 Business 7-4.16=2.84 5-4.16=0.84 4-4.16=-0.16 3-4.16=-0.16 3-4.16=-0.16 3-4.16=-0.16 Not Working 6-4.16=1.84 5-4.16=0.84 9-4.16=4.84 3-4.16=-0.16 2-4.16=-2.16 0-4.16=-4.16

The within group sum of squares is the sum of squares of all 18 values in this table: SSW = 142.93. Thus within group degrees of freedom is Dfw = a(n-1) = 3(6-1) = 15. Thus the within group mean square value is MSW = SSW/dfw = 142.93/15 = 9.52. Step 5: The F-ratio is F = MSB/MSW = 34.775/9.52 = 3.65. Fcrit(2,15) = 3.68 at = 0.05. Hence the Null Hypothesis is accepted (3.65<3.68). There is no significant relation between profession and preference of bank

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1. The speed of login of your account is fast. Table 6: Depicting speed of login of account. Strongly Disagree 0 Disagree 2 Neutral 26 Agree 62 Strongly Agree 10

Graph 4: Speed of login of your account.

Speed of login of your account is fast .

Strongly Disagree Disagree Neutral 10% 0% 2% Agree Strongly Agree

26%

62%

Analysis: It is clear from the chart that 62% of the customers have agreed, 26% are neutral, 10% strongly agree and 2% disagree that the speed of login of their account is fast. Inference: Majority of the customers have agreed that the speed of login of their account is fast.

2. It is easy to find all information from the website. Table 7: Depicting easy to find all the information.
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Strongly Disagree 2

Disagree 6

Neutral 4

Agree 78

Strongly Agree 10

Graph 5: Easy to find all information from the website.

Easy to find all information from the website .
Strongly Disagree Disagree Neutral 10% 2% Agree 6% 4% Strongly Agree

78%

Analysis: It is clear from the chart that 78% of the customers have agreed, 10% strongly agree, 6% disagree, 4% are neutral and 2% strongly disagree that it is easy to find all information from the website. Inference: Based on the research conducted, majority of the SBI customers have agreed that it is easy to find the information from the website whereas the customers of other banks are uncertain.

3. The Banks site is easy to navigate and simple to use. Table 8: Depicting the respondents who say that banks site is easy to navigate and simple to use.
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Strongly Disagree 0

Disagree 4

Neutral 6

Agree 76

Strongly Agree 14

Graph 6: Banks site is easy to navigate and simple to use.

Bank's site is easy to navigate and simple to use .
Strongly Disagree Disagree 14% Neutral Agree 0% 4% 6% Strongly Agree

76%

Analysis: It is clear from the chart that 76% of the customers have agreed, 14% strongly agree, 6% are neutral and 4% disagree that the banks website is easy to navigate and simple to use. Inference: SBI customers accept that its website is easy to navigate and simple to use whereas the customers of other banks are uncertain.

4. The policy and notice statement are easy to find on the website. Table 9: Depicting the respondents who say that the policy and notice statement are easy to find.
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Strongly Disagree 8

Disagree 14

Neutral 34

Agree 38

Strongly Agree 6

Graph 7: Policy and notice statement are easy to find.

Policy and notice statement are easy to find

Strongly Disagree Disagree
6%

Neutral
8%

Agree

Strongly Agree

14% 38%

34%

Analysis: It is clear from the chart that 38% of the customers have agreed, 34% are neutral, 14% disagree, 8% strongly disagree and 6% strongly agree that the policy and notice statement are easy to find. Inference: SBI, SBM, Canara and Vijaya banks customers agree that it is easy to find the policy and notice statement on the website whereas HDFE and ICICI customers are uncertain.

5. The speed of logout/signoff is fast. Table 10: Depicting the respondents indicating that speed of logout is fast.
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Strongly Disagree 6

Disagree 8

Neutral 32

Agree 50

Strongly Agree 4

Graph 8: Speed of logout/signoff is fast.

Speed of logout/signoff is fast .
Strongly Disagree Disagree Neutral Agree 4% 6% 8% Strongly Agree

50% 32%

Analysis: It is clear from the chart that 50% of the customers have agreed, 32% are neutral, 8% disagree, 6% strongly disagree and 4% strongly agree that the speed of logout/signoff is fast. Inference: All the customers accept that the speed of logout/ signoff of their account is fast. SBI and HDFC customers are more satisfied whereas the customers of Canara bank, Vijaya bank, SBM and ICICI are uncertain. . 6. You can rely on bank web pages functioning properly. Table 11: Depicting the respondents indicating that they can rely on bank web pages.
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Strongly Disagree 6

Disagree 18

Neutral 30

Agree 42

Strongly Agree 4

Graph 9: Rely on bank web pages functioning properly.

Rely on bank web pages functioning properly.
4% 6% 18%

42%

Strongly Disagree Disagree Neutral Agree Strongly Agree

30%

Analysis: It is clear from the chart that 42% of the customers have agreed, 30% are neutral, 18% disagree, 6% strongly disagree and 4% strongly agree that the customer can rely on bank pages functioning properly. Inference: The customers of SBI agree that they can rely on the bank web pages functioning properly whereas the customers of other banks are uncertain. 7. The banks website is running all the time. Table 12: Depicting the respondents who say that the banks website is running all the time. Strongly
MSRCASC-MBA

Disagree

Neutral

Agree

Strongly
58

Disagree 0

10

30

50

Agree 10

Graph 10: Banks website is running all the time.

Bank's website is running all the time .
Strongly Disagree Disagree Neutral 10% 0% Agree 10% Strongly Agree

30% 50%

Analysis: It is clear from the chart that 50% of the customers have agreed, 30% are neutral, 10% disagree and 10% strongly agree that the website is running all the time. Inference: All the customers using the banks website are satisfied. The banks have to ensure that the website is running all the time so that the customers can use the website. 8. The banks website does not freeze after you put in all the information. Table 13: Depicting the respondents who say that the website does not freeze. Strongly Disagree
MSRCASC-MBA

Disagree

Neutral

Agree

Strongly Agree
59

2 16 48 28 6 Graph 11: Banks website does not freeze after you put in all the information.

Strongly Disagree

Disagree

Neutral 6% 2%

Agree 16%

Strongly Agree

28%

48%

Analysis: It is clear from the chart that 48% of the customers are neutral, 28% agree, 16% disagree, 6% strongly agree and 2% strongly disagree that the banks website does not freeze after you put in all the information. Inference: HDFC, ICICI, Canara and Vijaya banks have a good website which does not freeze after the customer puts all information whereas the other banks do freeze only some times and not all the time. 9. Web pages download quickly. Table 14: Depicting the respondents indicating web pages download quickly. Strongly Disagree 2 Disagree 12 Neutral 36 Agree 42 Strongly Agree 8

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Graph 12: Web pages download quickly.

Web pages download quickly .
Strongly Disagree Disagree Neutral 8% 2% Agree 12% Strongly Agree

42% 36%

Analysis: It is clear from the chart that 42% of the customers have agreed, 36% are neutral, 12% disagree, 8% strongly agree and 2% strongly disagree that the web pages download quickly . Inference: SBI, HDFC, ICICI and SBM customers accept that the web pages download quickly when compared to other banks. Customers want to use i-banking to save time, so the banks have to adopt new technology so that the web pages download quickly. 10. Information provided on website is accurate. Table 15: Depicting the respondents indicating the information provided is accurate. Strongly Disagree 2 Disagree 10 Neutral 30 Agree 56 Strongly Agree 2

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Graph 13: Information provided on website is accurate.

Information provided on website is acurate
2% 2% 10%

30% 56%

Strongly Disagree Disagree Neutral Agree Strongly Agree

Analysis: It is clear from the chart that 56% of the customers have agreed, 30% are neutral, 10% disagree, 2% strongly disagree and 2% strongly agree that the information provided on website is accurate. Inference: All the customers using the services of different banks accept that the information provided in the website is accurate. The customers are dependent on the information that is provided in the website.

11. Language and information content are easy to understand. Table 16: Depicting the respondents indicating language and information content are easy to understand. Strongly Disagree 4 Disagree 4 Neutral 20 Agree 66 Strongly Agree 6

Graph 14: Language and information content are easy to understand.

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Language and information content are easy to understand

Strongly Disagree Disagree Neutral Agree 6% 4% 4% Strongly Agree

20%

66%

Analysis: It is clear from the chart that 66% of the customers have agreed, 20% are neutral, 6% strongly agree, 4% strongly disagree and 4% disagree that the language and information content are easy to understand. Inference: SBI, SBM, Canara bank and Vijaya bank have information content and language used in the website are easy to understand whereas the customers of HDFC and ICICI are not sure about the information.. 12. When any problem occurs, the bank provides accurate and immediate information to solve the problem. Table 17: Depicting the respondents indicating the bank to solve the problem. Strongly Disagree Neutral Agree Strongly Disagree Agree 0 20 42 30 8 Graph 15: When any problem occurs, the bank provides accurate and immediate information to solve the problem.
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Strongly Disagree

Disagree Neutral 8% 0%

Agree 20%

Strongly Agree

30%

42%

Analysis: It is clear from the chart that 42% of the customers are neutral, 30% agree, 20% disagree and 8% strongly agree that when any problems occur, the bank provides accurate and immediate information to solve the problem. Inference: HDFC and ICICI are good at providing solution to the customer whenever a problem occurs. The other banks such as SBM, SBI, Canara and Vijaya banks customers are uncertain about the solution provided by the customer service representative. 13. Bank is willing to help the customer in providing a solution for problems. Table 18: Depicting the respondents indicating the bank will help the customer in solving the problem. Strongly Disagree 4 Disagree 4 Neutral 32 Agree 48 Strongly Agree 12

Graph 16: Bank is willing to help the customer in providing a solution.

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64

Bank is willing to help the customer in providing a solution.

Strongly Disagree Disagree 12% Neutral Agree 4% 4% Strongly Agree

32% 48%

Analysis: It is clear from the chart that 48% of the customers have agreed, 32% are neutral, 12% strongly agree, 4% strongly disagree and 4% disagree that the bank is willing to help the customer in providing a solution. Inference: All the banks are willing to help the customer in providing a solution to the problem. All the banks do have customer service representatives who are always willing to give suggestions to the customers.

14. If any error happens by the bank, they will compensate. Table 19: Depicting the respondents indicating the bank will compensate if any error occurs. Strongly Disagree 2 Disagree 24 Neutral 46 Agree 22 Strongly Agree 6

Graph 17: Error happens by the bank, they will compensate.

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65

Error happens by the bank, they will compensate.

Strongly Disagree 22% 24% Disagree Neutral 6% 2% Agree Strongly Agree

46%

Analysis: It is clear from the chart that 46% of the customers are neutral, 24% disagree, 22% agree, 6% strongly agree and 2% strongly disagree that if any error happens by the bank, they will compensate. Inference: The customers are uncertain about the compensation that is provided by the banks when an error occurs however customers of ICICI and HDFC think otherwise.

15. You can talk to customer service representative by online chat. Table 20: Depicting the respondents indicating online chat with customer service representative. Strongly Disagree 4 Disagree 24 Neutral 42 Agree 26 Strongly Agree 4

Graph 18: You can talk to customer service representative by online chat.

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You can talk to customer service representative by online chat.

4% 4%

26%

24%

Strongly Disagree Disagree Neutral Agree Strongly Agree

42%

Analysis: It is clear from the chart that 42% of the customers are neutral, 26% agree, 24% disagree, 4% strongly disagree and 4% strongly agree that you can talk to customer service representative by online chat. Inference: Only HDFC and ICICI are the banks which provide good customer service representative to solve the problems encountered while doing a transaction..

16. The confirmation of service ordered is provided by website. Table 21: Depicting the respondents indicating the confirmation of service ordered is provided. Strongly Disagree 4 Disagree 6 Neutral 28 Agree 58 Strongly Agree 4

Graph 19: Confirmation of service ordered is provided by website.

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Confirmation of services ordered is provided by website.

Strongly Disagree Disagree Neutral Agree 4% 4% 6% Strongly Agree

28% 58%

Analysis: It is clear from the chart that 58% of the customers have agreed, 28% are neutral, 6% disagree, 4% strongly disagree and 4% strongly agree that the services ordered are provided by the banks website. Inference: All the banks give details of the transaction done by the customer and they do confirm the service ordered is done.

17. The bank website performs the service right the first time. Table 22: Depicting the respondents indicating the service is performed right the first time. Strongly Disagree 2 Disagree 10 Neutral 34 Agree 48 Strongly Agree 6

Graph 20: Banks website performs the service right the first time.

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Bank's website performs the service right the first time.

Strongly Disagree Disagree Neutral 6% 2% Agree 10% Strongly Agree

48% 34%

Analysis: It is clear from the chart that 48% of the customers have agreed, 34% are neutral, 10% disagree, 6% strongly agree and 2% strongly disagree that the banks website performs the service right the first time. Inference: SBI, HDFC, ICICI, Canara and SBM performs the service right the first time. The customers using the service of above banks are satisfied when they start using it right from the first time.

18. Quick confirmation is provided by the banks website. Table 23: Depicting the respondents indicating quick confirmation is provided. Strongly Disagree 0 Disagree 6 Neutral 28 Agree 58 Strongly Agree 8

Graph 21: Quick confirmation is provided by the banks website.

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Quick confirmation is provided by the bank's website..

Strongly Disagree Disagree Neutral 8% 0% Agree 6% Strongly Agree

28%

58%

Analysis: It is clear from the chart that 58% of the customers have agreed, 28% are neutral, 8% strongly agree and 6% disagree that quick confirmation is provided by the banks website. Inference: SBI, HDFC, ICICI, Vijaya, SBM and Canara bank provide quick confirmation of service once done. Once the transaction is done quick confirmation is given to the customer.

19. The bank carefully collects personal information. Table 24: Depicting the respondents indicating that the bank carefully collects personal information. Strongly Disagree 2 Disagree 8 Neutral 16 Agree 60 Strongly Agree 14

Graph 22: The bank carefully collects personal information.

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The bank carefully collects personal information.

Strongly Disagree Disagree 14% Neutral 2% Agree 8% Strongly Agree

16%

60%

Analysis: It is clear from the chart that 60% of the customers have agreed, 16% are neutral, 14% strongly agree, 8% disagree and 2% strongly disagree that the bank carefully collects personal information. Inference: All the banks collect personal information carefully. Different banks have different methods of collecting personal information as they dont want the customers to predict the information. 20. The banks website is completely secure for credit card information. Table 25: Depicting the respondents indicating that the website is secure for credit card information. Strongly Disagree Neutral Agree Strongly Disagree Agree 2 12 26 40 20 Graph 23: Banks website is completely secure for credit card information.

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Bank's website is completely secure for credit card information.

2% 20% 12%

26%

Strongly Disagree Disagree Neutral Agree Strongly Agree

40%

Analysis: It is clear from the chart that 40% of the customers have agreed, 26% are neutral, 20% strongly agree, 12% disagree and 2% strongly disagree that the banks website is completely secure for credit card information. Inference: HDFC and ICICI banks are completely secure for credit card information. SBI, Canara, Vijaya and SBM banks are also secure but most of the customers are uncertain. 21. You can rely on the bank that they will not misuse your personal information. Table 26: Depicting the respondents indicating that the customer can rely on bank that they will not misuse personal information. Strongly Disagree Neutral Agree Strongly Disagree Agree 2 6 24 56 12 Graph 24: Rely on the bank that they will not misuse your personal information.

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Rely on the bank that they will not misuse your personal information.
Strongly Disagree Disagree 12% Neutral 2% Agree 6% Strongly Agree

24%

56%

Analysis: It is clear from the chart that 56% of the customers have agreed, 24% are neutral, 12% strongly agree, 6% disagree and 2% strongly disagree that the customer can rely on the bank that they will not misuse personal information. Inference: All the banks are keen on maintaining the secrecy on the personal information provided by the customers. All the banks used in the research do maintain secrecy, SBI tops with all its customers accepting that the bank will safeguard the information provided.

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CHAPTER 5
FINDINGS AND SUGGESTIONS

FINDINGS: There is specific preference of a particular bank by the customers, as different age group customers have their own preferences based on the service charge provided. There is significant relation between different demographic variables such as age, profession, gender etc.

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 There is no significant relation between profession and preference of bank by the customer. Most of the customers using internet banking do not know the option of online chat with customer service representative if there is any query or problem. The customers below the age group of 30 years use internet banking more than all the other age groups. Most of the customers above the age group of 40 do not prefer using internet banking as the customers of that age group are not aware of online banking. The personal information of the customer collected by the bank is kept secretly as the information is important from the banks perspective. The banks provide all the services that are promised to the customers as there is stiff competition between the banks. The login and logoff of the account used by the customers is fast in all the banks. The banks customer service representative is always willing to help the customer while doing online transaction. The personal information of the customer collected by the bank should not be disclosed. The customers rely on the bank that they will not misuse the personal information.
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 The usage of internet banking is increasing because students are using more and more of internet banking. The customers using internet banking are more in SBI because it has highest number of account holders and it is the oldest bank, then comes HDFC and the third is Canara bank. The services provided by these banks have reached the customer expectations. The language and information content that is displayed in the website is easy to understand without any discrepancies. The information given by the bank is in simple words. Most of the customers do not read the policy statement given by the bank, on what are the charges collected for each and every transaction and what are the rules and regulations that are to be followed while using i-banking. Based on the research conducted most of the customers using SBI are happy and say that it is easy to operate and all the information required is found on the website.

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SUGGESTIONS: All the banks should concentrate on attracting customers who are into business and those who are not working such as students. Banks should take feedback from customers on how to build the website as per the requirement. The customer should be subjected to using i-banking and thorough analysis should be done on what are the things that the customer first looks for on opening the website.
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 The bank should solve the problems of the customers as fast as possible, based on the requirement. If there is any misplacement of money while a transaction is going on then the bank should be willing to provide proper solution. More and more services have to be incorporated by the banks through i-banking to attract customers. The policy statement should be easy to understand and simple in words as most of the customers are not aware of the rules and regulations that the customer has to follow while doing a transaction. The banks should appoint technical specialist to maintain the website so that there are no problems when the customer is using ibanking. The service charge which is induced on transactions should be reduced so that more customers are attracted towards i-banking. Customers who have a busy schedule and who are not whiling to stand in long lines for money transactions have to be advised to go for i-banking. SBI is good at most of the services provided by them, HDFC and ICICI are good at providing solutions to the customers through customer service representative, SBM has different range of
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services but they are not good at providing it whereas Vijaya bank and Canara bank have to improve a lot in providing solution to the problem when an error occurs, the website should be made easy to navigate and website should not freeze when the customer puts all the information, to give tough competition to the competitors and to attract more and more customers.

CONCLUSION: The present study was aimed to identify customer preferences towards online banking. For this purpose, the perception of internet banking users was studied through the relationship between different demographic characteristics of users. Different customers have different preferences towards the banks based on the services provided by the banks.

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From the research conducted it is clear that most of the customers using online banking services felt a need that the service quality had to be raised to a higher level , however it was found that the customers of SBI were comparatively much happier and satisfied with the services provided by them. The other banks are not too far away from SBI, as there is heavy competition all the other banks should improve their service quality. Internet banking will play a major role in the future to come. With the use of new technology there is a drastic change in its usage.

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ANNEXURE

Questionnaire

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I am Praneeth.D, currently pursuing MBA in M S Ramaiah College, Bangalore. As part of my academic curriculum, I have undertaken a research project on Managing Service Quality in Internet banking. The following is the questionnaire for the survey. I request you kindly to spare your valuable time and give responses to the questionnaire. I must state that your responses are of immense use to my research project. I assure you that your responses will be kept strictly confidential.

Personal Profile: Name (optional): Age: Gender: Profession:

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Male.

Female.

Bank Name: ICICI. HDFC. State Bank of India. Vijaya Bank.

State Bank of Mysore. Canara Bank. Status of Usage: From past 2 months. From past 1 year.

From past 6 months. From past 2 years.

Number of banking services currently being used: One bank. More than one.

1) The speed of login of your account is fast Strongly Disagree. Agree. Disagree. Strongly Agree. Neutral.

2) It is easy to find all information from the website Strongly Disagree.

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Disagree.

Neutral.
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Agree.

Strongly Agree.

3) The banks site is easy to navigate and simple to use Strongly Disagree. Agree. Disagree. Strongly Agree. Neutral.

4) The policy and notice statement are easy to find on the website Strongly Disagree. Agree. Disagree. Strongly Agree. Neutral.

5) The speed of logout/signoff is fast Strongly Disagree. Agree. Disagree. Strongly Agree. Neutral.

6) You can rely on bank web pages functioning properly Strongly Disagree. Agree. Disagree. Strongly Agree. Neutral.

7) The banks website is running all the time Strongly Disagree.

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Disagree.

Neutral.
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Agree.

Strongly Agree.

8) The banks website does not freeze after you put in all the information Strongly Disagree. Agree. Disagree. Strongly Agree. Neutral.

9) Web pages download quickly. Strongly Disagree. Agree. Disagree. Strongly Agree. Neutral.

10) Information provided on website is accurate Strongly Disagree. Agree. Disagree. Strongly Agree. Neutral.

11) Language and information content are easy to understand Strongly Disagree. Agree. Disagree. Strongly Agree. Neutral.

12) When any problems occurs, the bank provides accurate and immediate information to solve the problem

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Strongly Disagree. Agree.

Disagree. Strongly Agree.

Neutral.

13) Bank is willing to help the customer in providing a solution for problems Strongly Disagree. Agree. Disagree. Strongly Agree. Neutral.

14) If any error happens by the bank, they will compensate Strongly Disagree. Agree. Disagree. Strongly Agree. Neutral.

15) You can talk to customer service representative by online chat Strongly Disagree. Agree. Disagree. Strongly Agree. Neutral.

16) The confirmation of service ordered is provided by website Strongly Disagree. Agree. Disagree. Strongly Agree. Neutral.

17) The bank website performs the service right the first time Strongly Disagree.
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Disagree.

Neutral.
86

Agree.

Strongly Agree.

18) Quick confirmation is provided by the banks website Strongly Disagree. Agree. Disagree. Strongly Agree. Neutral.

19) The bank carefully collects personal information Strongly Disagree. Agree. Disagree. Strongly Agree. Neutral.

20) The banks website is completely secure for credit card information Strongly Disagree. Agree. Disagree. Strongly Agree. Neutral.

21) You can rely on the bank that they will not misuse your personal information Strongly Disagree. Agree. Disagree. Strongly Agree. Neutral.

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THANK YOU

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BIBILOGRAPHY

REFERENCES

C Bhattacharjee Service Marketing, Anurag Jain for excel books, 2006 first edition.

S N Murthy, U Bojanna- Business Research methods, Excel books, 2008, second edition R S Bhardwaj- Business Statistics, Excel books, 2008, second edition.

www.google.com
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www.canarabank.in www.statebankofindia.com www.statebankofmysore.co.in www.hdfcbank.com www.icicibank.com www.vijayabank.com

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