Internet Banking System is a system that has been developed in order to help clients with the day-to-day transactions. Internet banking allows customers of a financial institution to conduct financial transactions on a secure website operated by the institution, which can be a retail or virtual bank.

1. PROBLEMS AND
PROSPECTS OF
INTERNET BANKING IN
INDIA
Sudipta Saha Roy
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2. INTRODUCTION
Internet Banking System is a system that has been developed in order to
help clients with the day-to-day transactions. Internet banking allows
customers of a financial institution to conduct financial transactions on a
secure website operated by the institution, which can be a retail or virtual
bank.
India is on the threshold of a major banking revolution with the
introduction of ‘Net-banking’. As a tool of modern living and as a
lifestyle aid, it is absolutely indispensable. The fact is that many services
like online ticket booking, online payment of taxes and online payment of
bills of telephone, electricity, insurance, etc. that are now being offered
with internet banking are absolutely impossible to avail in regular
banking. This holds even truer for developments that the future of online
banking will bring.
This study is undertaken to provide a systematic analysis on: (i) why
internet banking has not yet been popular in India and (ii) to trace the
optimistic prospects of internet banking in India which may show an
illuminated path of the use of internet in Indian banks in the days to come. 2
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3. SURVEY OF LITERATURE
SOURCE FOCUS
Abu Bakar Munir- Internet
Banking: Law & Practice-
Published by Lexis Nexis,2004
Assesses the practices of the banks
providing internet banking services
in U.K., Australia and Malaysia.
Greg Chapman-Internet Banking
and Shopping for the Older
Generation-Published by Barnard
Babani,2003
Examines how we can experiment
with the internet banking and
shopping without the need to buy a
computer.
Solomon Okhiria- Internet
Banking in Sweden-VDM
Publishing,2009
Written in the light of growing
importance of the use of internet
banking as another service delivery
channel by banks to their customers.
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4. OBJECTIVES OF THE STUDY
The objectives of my study are as follows:-
 To explain the concept of internet banking and its importance to bank
as well as to customers.
 To identify and discuss the various aspects of internet banking.
 To study the nature, growth and extent of internet banking services in
the Indian banking sector.
 To assess the impact of internet banking in a global perspective.
 To assess the impact of internet banking on service quality in the
banking sector in India.
 To examine the impact of internet banking on customer satisfaction by
analyzing the problems faced by customers.
 To identify the various problems of using internet banking and
recommending solutions for some of those problems.
 To identify the various prospects of internet banking over traditional
banking.
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5. METHODOLOGY OF THE STUDY
 DATA SOURCES: Mainly secondary data sources are used. In
order to achieve the objective, I have collected the data related to
Internet Banking from the different banks.
 METHODS OF ANALYSIS:
STASTICAL ANALYSIS- Statistical analysis has been done by using
data tables and graphs.
TIME PERIOD OF STUDY- The time period of study is about 2
months and 15 days.
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6. PROBLEMS OF INTERNET BANKING IN INDIA
 Low Broadband Internet Penetration: India has one of the lowest
broadband connectivity penetration rates in Asia as compared to Japan,
Taiwan, Korea and Singapore.
 Customers’ Preference for Traditional Branches: Most customers prefer
the personal touch and customized service offered by staff in brick-and-
mortar bank branches.
 Fear of Online Threats/ Scams: Ubiquitous and prevalent online threats
about hackers, identity theft, stolen passwords, viruses, worms and spyware
tend to make customers wary just like in any other country.
 High rate of poverty: Large scale poverty does not allow the service of
internet banking to reach among the poor sections as they cannot afford it.
 Banks’ Ambivalent Commitment Levels: Banks' ambivalent commitment
levels and their reluctance to allocate huge budgets for net banking branding
initiatives, have resulted in poor acceptance levels of Internet banking by
customers.
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7. PROSPECTS OF INTERNET BANKING IN INDIA
 Convenience: Making transactions and payments right from the
comfort of home or office at the click of a button.
 Better Rates: The cost of acquiring larger spaces for offices and
employing numerous staff is significantly reduced.
 Services: The services include online ticket booking of railway, air
and bus, online payment of taxes, etc.
 Mobility: Customers who can now handle financial transactions
even while on the move.
 Other Benefits: It cuts down the usage of paper, reduces pollution
as people do not have to travel physically.
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8. PRESENTATION OF DATA AND ANALYSIS ON
INTERNET BANKING IN INDIA
INTERNET BANKING USERS IN INDIA (BY
INCOME SEGMENTS)
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9. YEARLY GROWTH OF INTERNET
BANKING USAGE IN INDIA
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10. PERCENTAGE OF INTERNET BANKING
USERS IN INDIA WITH AGE AND SEX
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11. FINDINGS OF THE STUDY
 Internet banking is mostly used in India by young and middle aged people
(aged between 18-49 years) having a decent household income of $41000 to
$59000 and above. It shows that internet banking has started becoming popular
in recent years in India.
 Despite many hurdles, internet banking has rapidly expanded in India with a
high growth rate of 50% in 2010 from 9% in 2003.
 Due to low internet penetration (only 7% have access to internet) the usage of
internet banking in India is much lower than many other developing countries.
 Most Indian customers still prefer the personal touch and customized service
offered by traditional banks and thus internet banking has not been popular as
yet.
 Internet banking services is becoming popular as the service is available 24
hours in all the 7 days and also because it saves time.
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12. LIMITATIONS OF THE STUDY
 The study is based on secondary data because of time and cost
constraints.
 The data presented in this project is illustrative only and not exhaustive.
 Due to paucity of time, more data and detailed analysis on them could
not be produced.
 Primary data and findings from field work have not been obtained for
time and cost constraints.
 A larger time horizon of analysis would be more informative.
 Detailed data regarding several public and private sector banks on
internet banking was not possible as most of the available data covered
entire e-banking. 12
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13. SCOPE OF FURTHER STUDY
The present study is basically concerned with internet banking in
India. I could not explore many important aspects of internet
banking in India because of paucity of information and time. I would
like to identify the following aspects of the aforesaid topic for
further study and research.
 Contribution of internet banking in Indian economy.
 Study of different segments of internet banking in India.
 Comparative analysis of various banks providing internet banking services.
 Indian banking industry in the context of global banking services.
 Indian Customer’s perception on the use of Internet Banking.
 Nature of the Indian consumers using Internet Banking.
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14. CONCLUSION
The use of Internet banking is confined to a few consumer segments.
The risks associated with Internet banking are many, which the
banks have to model using sophisticated systems and extensive use
of technology.
The experiences of the global economies suggest that banks cannot
avoid the Internet banking phenomenon, but to gain a competitive
advantage, they must structure their business models to suit to Indian
conditions. Creation of awareness about the perceived utility of
internet banking can spread its use even among the people who are
inclined towards manual banking. If a consumer sees most of their
colleagues or friends who surround him using Internet banking then
it may influence his decision follow Internet banking option.
In the aforesaid ways it is hoped that the existing problems of using
internet banking in India can be eliminated and so a bright future for
internet banking in India can be created.
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15. BIBLIOGRAPHY
PRESS RELEASE, REPORTS, JOURNALS, BROCHURS, ETC.
 Dasgupta, P. (2002) Future of e-banking in India available at
www.projectship.com.
 Gupta, D (1999), “Internet Banking: Where does India Stand?”,
Journal on Contemporary Management, December, Vol. 2, No.1.
 Internet & Mobile Association of India (2011) “Report on Internet in
India (I-cube) 2011” available at http:// www. iamai.in.
WEBSITES
 www.arraydev.com.
 www.banknetindia.com.
 www.iamai.in.
 www.rbidocs.rbi.org.in.
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