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offices has been replaced by digital services (Tinnilä, 2011). As consumes are increasingly
using internet to purchase products and services, they need convenient, safe and familiar
payment and banking services. Due to increase of mobile devices, this trend of digital self-
services in banking, irrespective of time and place, can be expected to continue. Competition
and the constant changes in technology and lifestyles have changed the face of banking.
Nowadays, banks are seeking alternative ways to provide and differentiate amongst their
varied services. Customers, both corporate as well as retail, are no longer willing to queue in
banks, or wait on the phone, for the most basic of services. They demand and expect to be
able to transact their financial dealings where and when they wish to. Electronic banking is
the wave of the future. It provides enormous benefits to consumers in terms of the ease and
cost of transactions. Access is fast, convenient, and available around the clock, whatever the
customer's location plus, banks can provide services more efficiently and at substantially
lower costs. Electronic banking also makes it easier for customers to compare banks' services
and products, can increase competition among banks, and allows banks to penetrate new
markets and thus expand their geographical reach. Internet revolution is global phenomenon
and going by the current growth statistics, India expects a spurt in the Internet penetration in
coming years particularly in the electronic commerce. It is an obvious notion that electronic
(internet) banking and payments are likely to advance more or less in tandem with e-
commerce. Indian banks are realizing the importance of implementing customer relationship
management (CRM) for acquiring and retaining their customers. This clearly indicates the
need for identifying and addressing the major dimensions that plays a crucial role in the
effective implementation of E Banking among customers.
LITERATURE REVIEW:
The Internet, much like the ATM that came before it, is fundamentally a new
distribution channel through which banks can deliver traditional banking products and
services. Initially, banks promoted their core capabilities, namely, products, channels and
advice, through the Internet. Then, they entered the Internet commerce market as
providers/distributors of their own products and services. An extensive study conducted in
2001 by the Consumer Bankers Association indicates that Internet banking usage remained
stagnant from 1996 to 1998, with less than 10% of the market utilizing the service. This
characterizes the early adoption phase where the banking industry, in its striking
transformation, has embarked on an era of ‘anytime, anywhere’ banking. Conclusions of
study undertaken for European Commission on public perceptions (September, 2003) say that
lack of trust has been frequently cited to be one of the key factors that discourage customers
from participating in e-commerce, while cultural differences affect the formation of trust
Apart from trust, there are other variables which influence the usage of Internet banking They
are intention, beliefs, and subjective norms, trust in the bank, attitude, perceived usefulness
and perceived ease of use (Journal of Services Research, 2007). Demography may also affect
the usage pattern of Internet Banking. It is interpreted that the female respondents are yet to
get fully involved in Internet purchase (Journal of Internet Banking and Commerce, 2006).
Therefore, enhancing the level of service performance acceptance is the major issue to get
competitive advantages. Service quality has received much attention because of its obvious
relationship with financial performance, customer satisfaction and retentions (Al-Hawari et
al., 2005). Suganthi et al. (2001) conducted the review of Malaysian banking sites and
revealed that all domestic banks were having a web presence. Only 4 of the ten major banks
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had transactional sites. The remaining sites were at informational level. There are various
psychological and behavioral issues such as trust, security of Internet transactions, reluctance
to change and preference for human interface which appear to impede the growth of Internet
banking. Corrocher (2002) investigated the determinants of the Internet technology adoption
for the provision of banking services in the Italian context and also studied the relationship
between the Internet banking and the traditional banking activity, in order to understand if
these two systems of financial services delivery are perceived as substitutes or complements
by the banks. According to the results of the empirical analysis, banks seem to perceive
Internet banking as a substitute for the existing branching structure, although there is also
some evidence that banks providing innovative financial services are more inclined to adopt
the innovation than traditional banks. Earlier studies (Barczak et al., 1997; Danniel & Strong,
1997; Lia et al., 1999; Polatoglu & Ekin, 2001; Devlin & Yeung, 2003) report factors such as
convenience, flexibility, security concern, complexity, and responsiveness being associated
with a higher propensity to use internet banking. In the context of the above perspective, this
paper will make an attempt to analyze the evolving sphere of Internet banking and some of
the factors, which affect person's usage of Internet banking.
RESEARCH PROBLEM AND OBJECTIVES
The main questions addressed in the research are:
1. Which factors influence the customers' propensity to use electronic banking as a
primary banking channel. (The most important issue in exploring the first problem is
comparing the influence of demographic factors and attitudes towards banking-related
issues to the selection of the main banking channel.)
2. What are the critical success factors among users of the E banking?
3. What are the main characteristics of the non users of electronic banking and what are
the main obstacles for adoption of electronic banking.
RESEARCH METHODOLOGY
Qualitative research method was used in the first phase. Pilot testing with leading
banking professionals of questionnaire helps to get indepth response of target group. Based
on this we have used exploratory research methodology in the second phase. The working of
the research was started with the two questionnaires (one for users & the other for non users).
In this we have used screening criteria to identify the target group for our research.
Questionnaire used seven point scales to measure the opinion of different customers on
different parameters.
Target population: The first criterion to get the targeted samples was the bank customers
whose bank provides Internet banking services. The sample for conducting the survey
contains customers from Jaipur. The survey also focused on covering all the demographic
factors in the sample itself.
Sample size: We have surveyed 242 users of internet banking & 118 non users of internet
banking from different banks and from different locality. From these we got 200 replies from
users of internet banking & 100 replies from non users of internet banking, which fitted in
our criteria of target population. Our analysis is based on these 200 users & 100 non users of
internet banking.
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RESEARCH FINDINGS & DISCUSSION
The respondent profile who participated in the study is given in Table I. Table I
presents the demographic characteristics of the 200 respondents (users). About 67 percent of
the respondents (users) are males and 33 percent respondents are females. The highest
category using online banking services are in the age group of 20-30 years. Majority of the
users of e-banking services were graduates (45 percent). Table I also presents the
demographic characteristics of the 100 respondents (non users). About 57 percent of the
respondents (non users) are males and 43 percent respondents are females. The highest
category not using online banking services are in the age group of 40-50 years & above 50
years. The striking difference between the users & non users of online banking services is
the age factor. While the younger generation is responding well to technological innovations
the older generation is finding it hard to rely on new technology. Genders also affecting the
adoption of online banking services Females are low on side as compared to males when it
comes to online banking services.
Table: I Demographic profile of users & non users
Internet Banking Internet banking
Users non users
N=200 N=100
Undergraduate 47 37
Graduate 90 36
Postgraduate 63 27
Male 134 57
Female 66 43
Income above 2 Lacs/annum 102 54
Income below 2 Lacs/annum 98 46
AGE
16-20 2 3
20-30 78 18
30-40 60 16
40-50 40 39
Above 50 20 24
The survey conducted for research among 200 users of E banking addressed six different
issues influencing the adoption of Internet banking. The results are presented in Table II.
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Table II: Main factors in adopting E banking (200 respondents’ users of E Banking) Scale
ranking from 1 (Not important at all) to 7 (extremely important)
No.200 1 2 3 4 5 6 7
Not Extremely
important important
at all
Better Prices 1% 3.5% 8% 10.5% 51% 13.5% 12.5%
Recommendations 15% 13.5% 17.5% 14% 22% 12.5% 5.5%
Better Service 10% 10.5% 13.5% 11.5% 11.5% 25.5% 17.5%
Marketing Efforts 13.5% 17.5% 5.5% 16.5% 26.5% 11.5% 9%
Better Access 1% 2% 4.5% 9.5 11.5% 45.5% 26%
Higher Privacy 0% 1% 3.5% 15.5% 20% 43.5% 16.5%
The most important factors in starting to use Internet banking are first and foremost better
access to the services (convenience). This is the single most important benefits that outweigh
any shortcoming of internet banking. Making transactions and payments right from the
comfort of home or office at the click of a button without even having to step out is a facility
none would like to forego. Keeping a track of accounts through the internet is much faster
and convenient as compared to going to the bank for the same. Even non transactional
facilities like ordering cheque books online, updating accounts, enquiring about interest rates
of various financial products etc become much simpler on the internet. Higher Privacy &
better service (i.e. preferring self service over office service) are other relevant factors in
adopting E banking. Better prices were also of above the average importance. Two factors
that the respondents moderately consider relevant to their adoption decision were banks'
marketing activities and personal recommendations from friends and colleagues.
Table III: Main obstacles in adopting E banking (results of a study, 100 respondent’s non
users of E Banking) Scale ranking from 1 (unimportant reason) to 7 (important reason)
1 7
No.100 Unimportant 2 3 4 5 6 Important
reason reason
Computers are difficult 41% 17% 8% 13% 12% 7% 2%
No access to internet 0% 3% 5% 15% 21% 35% 21%
Internet banking is expensive 8% 5% 19% 17% 11% 25% 15%
Low security 7% 12% 8% 14% 21% 22% 18%
Have had no chance to try 4% 8% 5% 17% 15% 24% 27%
I prefer personal contact 11% 1% 3% 7% 3% 61% 14%
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The important factors discouraging the use of Internet banking are lack of Internet access and
not having a chance to try out Internet banking in a safe environment (Table III). The first
problem would be difficult for a bank alone to solve but banks have already responded by
creating possibilities for Internet bank access in their offices. Those customers who feel that
having no access is an unimportant reason have listed security concerns and lack of trying
possibilities as most important. Similar research in other countries has revealed that lack of
personal contact might be an obstacle in convincing people to use electronic channels; it is
obvious from the respondent data that large majorities of the population want to have
personal contact. The higher number (75%) of non users opting for personal contact could be
due to better service quality at manual banking.. Personal relationship with the staff at the
banks comes handy when requesting for faster loan approval or a special service which may
not be available to the public. The manager has many discretionary powers such as waiving
of penal interest or service fees which were often taken advantage of by better acquaintance
with the staff. Additionally personal contact also meant that the banker would provide
essential financial advice and insights which are beneficial to the customer. As found in
numerous other studies conducted (Polatoglu & Kin, 2001; Devlin & Young, 2003) ours also
revealed that security forms a major concern for using Internet banking facility. As high as
43% of non-users prefer manual banking due to high level of cyber crimes like phishing,
hacking, etc.,. This can be the reason why 17% of users do not prefer Internet banking for all
the transactions. This is the biggest pitfall of the internet banking scheme which needs to be
guarded against by the common customer. Non-user friendliness software is another crucial
issue which holds people back from using the facility. Fees charged for using Internet
banking facility also make consumers reluctant in exploiting such services. Almost 40% of
consumers who don’t use Internet banking feel that the charges are not reasonable. In fact
26% of users also share the same view. This shows that a little cut in these charges may
induce them to use this service.
CONCLUSION & RECOMMENDATIONS:
When investigating all the variables and the response by consumers, this study reveals that
the perception of the consumers can be changed by awareness program, friendly usage, less
charge, proper security, and the best response to the services offered. Demographics play an
important role in the adoption of E banking facilities as we have seen that age & gender
factor considerably affects the adoption. Also better access i.e convenience plays pivotal role
in enhancing the use of e banking facilities among users.
The study also provides the kind of correlation between different factors. In case of the
consumers who don’t use Internet banking services, having all facilities at their disposal,
technology was not the biggest issue. Some recommendations for the Banks on the basis of
this research are:
• Banks should ensure that online banking is safe and secure for financial transaction
like traditional banking.
• Banks should organize seminar and conference to educate the customer regarding
uses of online banking as well as security and privacy of their accounts.
• Some customers are hindered by lack of access to online banking. They should be
provided online banking facilities in the banks.
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• Banks must emphasize the convenience that online banking can provide to people,
such as avoiding long queue, in order to motivate them to use it by spreading
awareness about benefits of online banking.
• Banks must emphasize the cost saving that online can provide to the people, such as
reduce transaction cost by use of online banking.
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