A

PROJECT REPORT
ON
IMPACT OF SERVICE QUALITY
ON CUSTOMER SATISFACTION
IN BANKING SECTOR

Abstract of The Economic Effects of

Technological Progress: Evidence
from the Banking Industry

This paper examines technological progress and its effects in the banking
industry. Banks are intensive users of both IT and financial technologies, and
have a wealth of data available that may be helpful for the general
understanding of the effects of technological change. The research suggests
improvements in costs and lending capacity due to improvements in back-
office technologies, as well as consumer benefits from improved front-
office technologies. The research also suggests significant overall
productivity increases in terms of improved quality and variety of banking
services. In addition, the research indicates that technological progress likely
helped facilitate consolidation of the industry.

Key Words:technological progress, productivity, banks, mergers,

efficiency.
Abstract of The Impact of Information
Technology Adoption on the Customers
of Bank of India, Bangalore Urban An
Evaluative Study
Today, banking is becoming increasingly complex and banks which fail to use
technology to take their services to the common man and tap the potential of the
rural sector will stand to lose. Ultimately, technology would be the key enabler and
differentiator in accomplishing this objective. When we look at technology, the
scope for innovation is immense in the field of financial inclusion itself, right from
biometric based systems to mobile based to simple Interactive Voice Response
based applications. But it cannot be aonesize-fits-all approach. Recent years have
witnessed phenomenal transformations in the operations of many businesses due to
the immense advances in Information, Communication Technology (ICT). Banks
have accordingly introduced web-based services, appropriately called Internet
Banking. Many studies have looked at different aspects of this phenomenon, and
their impact on the banking sector. In this context, an attempt is made to examine
the impact of Information Technology (IT) adoption on the selected bank customers
of Bank of India, Bangalore Urban. The study is carried out with the help of a
structured questionnaire administered to 100 selected customers and with the help
of their responses analysis is made thereafter, which is followed by findings of the
study with few suggestions.

Key Terms: Information Technology, Internet Banking, Mobile

Banking, Banking Technology, Banking services.
Introduction of The Economic
Effects of Technological Progress:
Evidence from the Banking Industry

This paper examines the available evidence on technological progress and its
effects in the banking industry. Innovations in information processing,
telecommunications, and related technologies known collectively as
information technology or IT are often credited with helping fuel strong
growth in the U.S. economy, although questions remain about the relative
importance of IT versus other factors. The extensive research on the banking
industry may help in the general understanding about the effects of
technological change. The category of Depository and Nondepository
Financial Institutions of which banking is an integral part is the most IT-
intensive industry in the U.S. as measured by the ratio of computer
equipment and software to value added (Triplett and Bosworth 2002, Table
2). Banks are also significant users of financial technologies that employ
economic and statistical models to create and value new securities, estimate
return distributions, and make portfolio decisions based on financial data.
Examples include financial engineering used to create new financial
derivatives, credit risk and market risk models employed to improve portfolio
management, and modern credit scoring and discriminant analysis used to
evaluate credit applications. These financial technologies often depend
heavily on the use of IT to collect, process, and disseminate the data, as well
as on economic and statistical models to evaluate the data. Technological
progress in the banking industry is also important because of the key roles of
banks in providing financing, deposit, and payments services to other sectors
of the economy. We assess the effects of technological progress on
productivity growth in the banking industry and on the structure of this
industry. The use of a single industry with relatively homogenous inputs and
outputs may help mitigate problems of combining data from heterogeneous
industries. Research on banking benefits as well from detailed data on
individual firms to specify cost and profit functions and control for differing
business conditions when measuring productivity change, scale economies,
and other performance indicators. Some special banking data sets also allow
for observation of specific technological changes and measurement of some
of their effects. In addition, detailed information on the scale, geographic
spread, and merger and acquisition (M&A) activity of individual banks aid in
evaluating the effects of technological progress on the structure of the
industry, i.e., the extent to which technological progress facilitates industry
consolidation. Study of the banking industry also demonstrates some of the
general problems in measuring the effects of technological progress and how
these problems might be addressed. For example, to the extent that markets
2 are competitive, the benefits from technological advances in an industry
may be competed away and passed through to customers or factors of
production and not measured as productivity increases in that industry. As
shown below, banks may have essentially given away the benefits from
the ATM technology in the 1980s as the industry became more competitive
due to deregulation and rents from market power shifted to consumers. It
has been shown elsewhere how new products and quality improvements
from technological progress are often neglected in government statistics and
may lead to overstatements of inflation and understatements of productivity
growth. In banking, there are many new products and quality improvements
that are not easily captured in standard productivity measures, and we show
how some may be measured in alternative ways.
Introduction of The Impact of
Information Technology Adoption
on the Customers of Bank of
India, Bangalore Urban An
Evaluative Study
Information and Communication Technology is playing a vital role across many
industries and sectors, resulting in a positive impact on economic development
cutting across the geographical barriers. It is important to note that the financial
sector in general and banking sector in particular was one of the very first to utilize
information technology way back in 1960s, and has thus the record of influencing
the development process through technology. The banking sector is an example in
which information technology infrastructures have had implications on the
economic development of many nations across jurisdictions. Studies show that
information technology coupled with knowledge management hold much potential
for propelling the development process (Okpaku, 2003).

Computers are getting more sophisticated. They have given banks a potential they
could only dream about and have given bank customers high expectations. The
changes that new technologies have brought to banking and their impact on
officers, employees, and customers of banks are enormous. Advances in technology
are allowing for delivery of banking products and services more conveniently and
effectively than ever before - thus creating new bases of competition. Rapid access
to critical information and the ability to act quickly and effectively will distinguish
the successful banks of the future. The bank gains a vital competitive advantage by
having a direct marketing and accountable customer service environment and new,
streamlined business processes.

The adoption of Electronic Payment Systems such as the National Electronic Fund
Transfer (NEFT) and Real Time Gross Settlement System (RTGS) has also enhanced
efficiency of banks. In terms of volume, the share of electronic transactions, as a
percentage of total transactions, was 40% in March 2010, as compared to 32.8% in
March 2009. By transaction value, this share increased to 89% in March 2010, over
83.9% in March 2009. The number of RTGS transactions that the Reserve Bank of
India (RBI) settles per day has increased from 6,000 in 200405 to 100,000,
currently. The number of NEFT transactions that the RBI settles per day has
increased from 270,000 in 2005 to 4,000,000.
 Currently, 98% of public sector bank branches are fully computerized, IT
adoption continues to grow at a rate of nearly 14.2% in the period 2011-
2012 was driven primarily by the implementation of core banking, financial
inclusion projects, guidelines on operational automation mandated by RBI
and other niche applications like centralised pricing management, global risk
management, analytics and mobility-driven applications.
The current level of IT spend by an Indian bank ranges between 0.2% to 5.0%
of its total annual revenue depending on its size, banking segment and
category of classification.
IT spend by an Indian bank has been calculated to be typically close to 20%
of Information Technologies total expenditure in 2011. Nationalized banks
which form chunk of the banking sector continues to spend approximately
62% of the total spend on technology (when all banks are calculated
together).
The current times are set to witness momentous developments in terms of IT
automation of co-operative and rural banking segments, extension of
banking facilities to the remotest villages and increased penetration ratios of
bank branches and ATMs across the span of the country.

Review of Literature
Review of a few important works is made in the following paragraphs with an
important objective to identify the research gap that exists at present.
RahmathSafeena et.al, (2011)1 in their work Internet Banking Adoption in an
Emerging Economy: Indian Consumers Perspective anlysed the factors influencing
the consumers adoption of internet banking in India and hence investigates the
influence of perceived usefulness, perceived ease of use and perceived risk on use
of Internet Banking. RahmathSafeena et.al, (2012)2 in his study Technology
Adoption and Indian Consumers: Study on Mobile Banking identified that the
evolution of e-banking started from the use of Automatic Teller Machines (ATMs)
and telephone banking (tele-banking), direct bill payment, electronic fund transfer
and the revolutionary online banking transformation from the traditional banking to
e-banking has been a 'leap' change. Tavishi and Santosh Kumar, (2013)3 in their
study An Empirical Study on Technology Adoption by Indian Banks studied the
factors influencing the customers for the adoption of internet banking and mobile
banking in India and hence investigates the influence of perceived usefulness,
perceived eases of use and perceived risk on use of internet banking and mobile
banking. Sabita Paul, (2013)4 in his work The Adoption of Electronic Banking (E-
Banking)in Odisha, India described the current and prompt technological revolution
altering the whole world which has crucial impact on the banking sector based on
data, collected from customers of different commercial banks of Odisha.
RupanjaliNath et.al, (2013)5 in their research paper Factors influencing IT Adoption
by Bank Employees: An Extended TAM described the Factors influencing IT Adoption
by Bank Employees: An Extended TAM Approach. The TAM model identifies
perceived usefulness (PU), and Perceived Ease of Use (PEU) as impacting attitude
towards IT and behavioural intention. Jamila et.al, (2013)6 in their work Info-Tech
Adoption in Banks in Yemen: A Case Study of YBRD investigated the general impact
of Information Technology (IT) on the banking industry in Yemen and discusses the
response of Yemeni banks to these technological developments.Yogesh Jain (2013)7
in his work Mobile Banking: A Study on Adoption and Challenges in Southern
Rajasthan, India identified that the Information technology has basically been used
under two different avenues in banking vi., communication and connectivity and
other is business process. Prema C., (2013)8 in her research article Factors
Influencing Consumer Adoption of Internet Banking in India, examined the process
of internet banking services and stresses that marketing experts should emphasize
these benefits and its adoption provides and awareness can also be improved to
attract consumers attention to internet banking services. Mohamed Gamal
Aboelmaged et.al, (2013)9 in their study Mobile Banking Adoption: An Examination
of Technology Acceptance Model and Theory of Planned Behavior investigated the
adoption of mobile banking through integrating Technology Acceptance Model (TAM)
and Theory of Planned Behavior (TPB). Analyzing survey data from 119 respondents
yielded important findings that partially support research hypotheses. The results
indicated a significant positive impact of attitude toward mobile banking and
subjective norm on mobile banking adoption.
Methodology
This is totally based on complete survey and research. This survey is aiming to extract knowledge
and information from customer in respect of technological advancement. The research was also conducted
to collect some personal information of the respondents .

1. Questionnaire Development:
For making the research, 22 items of SERVQUAL model has been modified in order to suit
BANKING sector. Along with the 5 dimensions of technological services i.e. RATER (Tangibility,
Reliability, Responsiveness, Assurance and Empathy, the dimension was also taken into consideration as
it is very important in banking sector.

2 .Research And Survey Taken:

Exploratory research design is used to collect data & questionnaires are provided to the customers
of HDFC bank at Meerut.
Secondary data is also collected from the official websites of the banks and the articles from
various search engines like Google, yahoo search and answers.com.
The survey was conducted in two branches of HDFC Bank Meerut, with 50 customers as
respondent.
In research 5 point LIKERT SCALE has been used

3.Sample:
A sample was conduct to show the impact of technology on customer satisfaction in banking
sector in India
Total sample size 160 to be considered
Convenience sample size is taken.
Sample include response from friends and family

4. Hypothesis Testing:

H0 = NULL HYPOTHESIS in which all the variables are positively related with
customer satisfaction.

H1= TANGABILITY is positively related with customer satisfaction level.

H2= RELIABILITY is positively related with customer satisfaction level.

H3= RESPONSIVENESS is positively related with customer satisfaction level.

H4= ASSURANCE is positively related with customer satisfaction level.

H5= EMPATHY is positively related with customer satisfaction level.

H6= bank technology is positively related with customers personal attention.
Analysis
We used T- TEST and CORRELATION in order to analyze the impact Technological
Advancement Dimensions on Customer Satisfaction in Banking Sector. A five point Likert scale
was used in order to create response from the customers. In order to develop T-TEST and
CORREALTION. we used SPSS software for analysis. We had taken into consideration of
Technological Dimension as variables for analysis.

T test
One-Sample Statistics

N Mean Std. Deviation Std. Error Mean

Tangibility 100 3.0100 1.12362 .11236

Reliability 101 3.0891 1.12505 .11195
Responsiveness 101 2.8812 1.19457 .11886
Awareness 101 2.8738 1.25630 .12501
Empathy 100 2.9400 1.27250 .12725
Bank_technology 101 2.9208 1.50122 .14938

One-Sample Test

Test Value = 0

95% Confidence Interval of the

Difference

t df Sig. (2-tailed) Mean Difference Lower Upper

Tangibility 26.788 99 .000 3.01000 2.7870 3.2330

Reliability 27.595 100 .000 3.08911 2.8670 3.3112
Responsiveness 24.239 100 .000 2.88119 2.6454 3.1170
Awareness 22.989 100 .000 2.87376 2.6258 3.1218
Empathy 23.104 99 .000 2.94000 2.6875 3.1925
Bank_technology 19.553 100 .000 2.92079 2.6244 3.2172
Hence, NULL HYPOTHESIS IS ACCEPTED

CORRELATION- ANALYSIS

Correlations

Responsivene Bank_technolo
Tangibility Reliability ss Awareness Empathy gy

Tangibility Pearson Correlation 1 .882** .882** .864** .875** .759**

Sig. (2-tailed) .000 .000 .000 .000 .000

N 100 100 100 100 100 100

** ** ** **
Reliability Pearson Correlation .882 1 .854 .860 .838 .650**
Sig. (2-tailed) .000 .000 .000 .000 .000
N 100 101 101 101 100 101
Responsiveness Pearson Correlation .882** .854** 1 .932** .886** .707**
Sig. (2-tailed) .000 .000 .000 .000 .000
N 100 101 101 101 100 101
Awareness Pearson Correlation .864** .860** .932** 1 .875** .709**
Sig. (2-tailed) .000 .000 .000 .000 .000
N 100 101 101 101 100 101
** ** ** **
Empathy Pearson Correlation .875 .838 .886 .875 1 .678**
Sig. (2-tailed) .000 .000 .000 .000 .000
N 100 100 100 100 100 100
** ** ** ** **
Bank_technology Pearson Correlation .759 .650 .707 .709 .678 1
Sig. (2-tailed) .000 .000 .000 .000 .000

N 100 101 101 101 100 101

**. Correlation is significant at the 0.01 level (2-tailed).

Null hypothesis is accepted.

Here, we used different analysis tests in order to analyze the impact Technological Advancement
Dimensions on Customer Satisfaction in Banking Sector. A five point Likert scale was used in
order to create response from the customers. We had taken into consideration of Technological
Dimension as variables for analysis. We have chosen five variables awareness,
intagiblity,realiblity,responsiveness.
THANKYOU.