Chapter – I

INTRODUCTION

Banking is becoming more of a game of ideas than any other business:

building new products that attract customers, creating new services and

learning new skills. It is also becoming an extensive marketing exercise as

much as journey up the technology ladder. In order to improve customer

service, increase volumes, reduce costs and justify their existence in the

market, banks are spending on information technology according to their

capacity and future growth plans.

IT has changed the paradigms of business in many service industries. One

industry that has really felt the impact of IT has been banking sector. Credit

card and ATMs were only the first step away from physical cash. The next

major step has been introduction of Internet and Mobile banking and that is

likely to be the most important of future. Technology is used in banking

business to lower costs, increase productivity, improve the way-service is

delivered, put more information in the hands of service representatives,

personalize the service, collect data on customer needs, add value for the

customer and build relationships with customer.

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 Banking in India has seen the induction of new technologies during the

decade, broadly computerization and networking. This has opened up new

avenues for diversification and augmenting revenues.

Coming time, ahead, will usher in electronic- banking at a truly national

level. Of late, the Indian banking industry has embraced information

technology not only as a means of automating manual operations but also as a

strategic weapon. The customer channel at bank branches 15 gradually

moving out of the confines of "brick and mortar banking" to "customer- centric

banking" and this is due to the induction of Electronic Clearing System (ECS),

Automated Teller Machine (ATM); and Credit cards / Debit cards. On the anvil

is Electronic Fund Transfer at point of sales (EFTOPS), Home Banking, Smart

card loaded with e-cash and the new revolutionary leader 'Internet Banking'.

Most of the banks are now networking their branches, Networking

service branches will permit the electronic communication between bank

branches across the country. BANK NET is to be domestic data

communication network for instant receipt and dispatch of information for

internal use as well as interbank communication. Installation of VSAT at

remote locations is a major step in ensuring communication link throughout the

net. Branches will have wide spread connectivity. Internationally through

SWIFT i.e. Society for Worldwide Inter-Bank Financial Telecommunication.

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 With the increasing and continued globalization of capital and financial

markets, banks can ill afford to be left behind. Worldwide banks are growing in

size by communication and technology, which has left other banks

uncompetitive in the market. Technology particularly computer; and

communication has generated economies of scale unthinkable a few years

ago. Banks have also begun spread to serve communities, continents apart.

So, technology will play a major role in increasing efficiency and

courtesy as also the speed of customer service. In the changing banking

scenario Tele banking, Credit card, ATM card, ECS, EFT will be dominated by

the customer on a aggressive scale. Infact, banks, which do not see the writing

on the wall and do not take pro-active steps, will be out of the race in an era of

competition.

There is a saying that "Nothing is permanent but change ". Certainly

world events and their impact on banking have proved this beyond doubt.

Through information technology India's banking system has changed and

improved its customer service, its product range and its general health

considerably over the last 7 or 8 years.

With globalization sweeping through the financial services industry,

intense competition, reduced margins and increased customer expectation will

be the key challenges facing by financial institutions. The growth of e-banking

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will make the banking essentially customer-centric. Most of. the banks will be

becoming increasingly reliant upon their information systems.

Increased competition and improvements in the information technology

front have necessitated the need for up gradation of the technology in the

banking sector. E-banking is the coming wave that banks are riding. E-banking

offers cost effective and convenient way to access the information related to

the accounts and transact business and exchange information globally. Banks

are making inroads into electronic-banking. It could be through internet based

banking, tele-banking, WAP enabled banking, ATM cards etc.

The fact that requisite infrastructure is also being put up by RBI in the

form of 438 VSAT Networks creating the environment under which e-banking

will have sound health, leading to real time transactions, lesser transaction

costs, better internal control, higher efficiency and productivity levels. This

could be shown from the fact that in India there are 3.5 lacks registered users

of internet banking, 1200 ATM booths.

The very concept of electronic banking or e-banking (also called internet

banking or banking on line) is more prevalent in the technologically developed

(also cash rich) parts of the world such as Europe and the US. Simply put: it

does not involve any physical exchange of money, but its all done

electronically, from one account to another, using the internet.

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 If we take Europe, the number of online bank has been mushroomed

there. In late 1998, there were only 863 internet-enabled banks. By mid 1999,

this number was 1,845 according to Blue Sky International Marketing, a US

based research agency. Of these the number of banks that allowed customer

to make online transactions has jumped from 448 to 1,245 in the same period,

The scene in the US is not different; A recent D3tc7qLle5t report2

forecast that the number of US households banking online will reach 24.2

million in 2004. Acceptance too seems to be quite high. About 57 percent of

those predicted to bank online (13.7) million households are expected to also

pay bills online. The US now has about 6.3 million people banking online,

according to a study by Cyber Dialogue, another US-based research firm.

The numbers are just too small to call this a revolution just yet. Only

about 2.2 percent of the world's population is net users and of these only a

tenth do banking online. But sales of retail banking products (schemes, for

instance) have shot up. IDC (International Data Corporation) reports that,

worldwide sales of internet banking application reached $ 326 million in 1999

(from $ 93 million in 1998).

The cost per transaction through the internet is 27 times less than that

through ATMs (Automatic Teller Machines), 54 times less than that of a

telephone transaction, and 107 times less than that a physical branch

transaction. For countries such as India this provides tremendous opportunity.

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In fact, a number of banks are working in this direction, notable among them

being ICICI, HDFC, Global Trust Bank and Citibank. And it is bound to change

the way banking is done in India.

Technology is now able to deliver the advantages of reach without the

attendant paraphernalia and costs associated with a limbering branch network.

As ATMs, Tele banking and more recently, Net-banking practices proliferate

and a bank will need fewer branches to achieve critical mass. Banks have now

clicks and bricks strategy. However brick and mortar branches will coexist with

electronic delivery channels to provide multiple options to its customers. ICICI

bank is already planning to provide web-banks at every ATMs outlet.

One way to support the cause of internet banking, would be through

cyber cafes, as they offer a cost-effective option to the middle class to become

netizens. ICICI is in the process of putting up about 250 centers for this across

India. In this way, e-banking growth is not restricted to the four million odd PC

owners in the country alone. In addition, ICICI is working with Satyam Infoway

to install ATMs in Satyam Cyber Cafes across the country.

Working professionals know what it's like to visit a bank on their way to

work, or sometime during the day. For many, that usually means spending an

hour or two attempting to 'check' out the various procedures and deal with the

familiar hassles. However, that may not be possible for most of us and we'd

usually get the office peon or family member to do a routine banking task. In

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this scenario, the concept of anytime, anywhere, anyplace banking is a big

convenience for all concerned. ATM machines and extended banking hours

enable us to perform certain transactions at convenient times. But it is Internet

banking that is really making anytime, anywhere, anyplace banking practical.

It clearly shows that need of an hour is e-banking. With the advent of

ebanking It-here will be a paradigm shift in banking processes leading to

greater customer satisfaction.

Significance of the study

Indian banking industry is in the midst of an IT revolution - A combination

of regulatory and competitive pressures have led to increasing importance of

total banking automation in the Indian banking industry. The Internet and its

underlying technology will change and transform not just banking, but also all

aspects of finance and commerce. Technology is playing a crucial role in the

day to day working of the banks, Banks that have harnessed and utilized

technology best have distinct and strategic advantage. It is likely that some of

the existing brick and mortar banks will go out of -business from failing to

respond to the challenge of technology. However, the future would belong to

those who would be able to offer excellent customer services by keeping pace

with changing technology. Liberalization and the entry of large MNCs into the

Indian economy was the trigger of IT adoption on Banks.

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 IT adoption has been rendered a priority during the past 2-3 yrs. In the

current promising economic scenario, adoption of IT could become key to

increase market share and profitability.

The focus of this research study is mainly around technology issues (e-

banking) in the banks, which are expected to change the way the banking has

been done before. Now in the fast changing world, banks are looking for those

kind of profitable opportunities through which they will be able to focus on the

customers to become 'Customer- Centric'. E-banking is becoming the way the

most of the banks are riding upon. It includes various services ranging from

stand alone ATMs, Net banking, Mobile banking, Tele banking, Credit/Debit

cards to Electronic Funds Transfer and Electronic Clearing System. The study

will throw light on the benefits of these services to the customers as well as to

the bank. The research will prove significant approach in the development of

banking sector.

1.1 Various services provided by Electronic-Banking

This section shows the various e-banking services providing through

different banks. These are discussed below:

1.1 Electronic Funds Transfer (EFT)

EFT is RBI sponsored payment system to facilitate inter-bank and

intercity funds transfer without the use of paper-based instruments such as

cheques, DDs etc.

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 Electronic Funds Transfer (EM is probably the safest and fastest way to

transfer money from your account to another individual in another city

regardless of which bank she uses. All transferor needs is her account

number. A maximum of Rs.0.1 million can be transferred for a flat fee of Rs.25.

The bank has discretionary powers to raise the limit for selected customers or

a customer can break up the transactions in the multiples of upto Rs.0.1million.

The money sent is credited overnight and can be withdrawn by the receiver the

day after transfer. The facility is only available in the four metros. Money sent

from abroad cannot be transferred through EFF. The facility can be availed of

even if the branch from where you are sending the amount is not fully

computerized. The details of the transfer have to be sent to the RBI, which in

turn notifies the receiving bank to credit the individual with the mentioned

amount. Most bank officials agree that publicizing and marketing these

facilities should be a priority since many customers are used to conventional

methods of transaction: telegraphic machinery or by the cheques.

At present various banks like ICICI bank, Syndicate bank, SBI, PNB etc.

are providing this facility.

(a) The salient features of the EIFT scheme are as follows:

 EFF operates at 4 metros and is likely to be extended to other

centers.

 Maximum amount of transfer is Rsl,00,000/-.

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  Credit on third day.

 Same commission as for DDs.

 Remittances can be by transfer or cash.

(b) Procedure of EFT

 Customer submits applications at the branch.

 Branch sends EFF schedules to CAO (Central Account Office).

 CAO conveys to local RBI through floppy or dial up.

 Local RBI communicates to destination RBI through RBI network.

 Credits passed on to destination branch through respective

service branch.

 Branch credits beneficiary's account on receiving advice from their

service branch. Accounts of respective banks with RBI

credited/debited.

1.2 Electronic Clearing System (ECS)

ECS is a RBI sponsored payment system for effecting bulk and

repetitive credits and debits without the medium of instruments.

Direct Credits

 Dividend income from investment in shares/debentures.

 Interest income from fixed deposits and bonds.

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  Commission and other regular incomes. Salary and Pension,

Income-Tax refund orders and other inward remittances.

Direct Debits

 Telephone and Electricity bills.

 Loan installments and Insurance premia.

 School, College and Club membership fees.

 Credit Card dues.

 Water taxes, Property taxes and other regular payments.

Electronic Clearing System is blessing for those make equity investment. It

helps them in getting dividend payments in less time. All a person has to do is

to provide the company with details about the bank where the deposits should

be made. The firm can then directly deposit the dividends into the

shareholder's account. The maximum that a company can deposit is Rs.0.1

million, though here too, the bank has the discretion to raise the ceiling. Apart

from being a free service, from four metros the facility can now be availed of in

15 cities (those that have regional RBI offices) including Ahmedabad, Pune,

Thiruvanathapuram and Nasik. This geographical spread, lacking in the EFF,

has led to the increasing popularity of ECS. By one estimate, the volume of

transactions has increased this year. Indian Banks' Association (IBA) recorded

Rs.2.3 million through ECS in Year 2000 and up to 31st march, 2001 the

transactions have already touched over Rs. 6 million. What stymies growth is

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the number of firms that use ECS. At present the facivy is available with 65

indian companies, like LM, LIC, Reliance Industries, IOC etc. Despite

assurances of speed and safety, there have been complaints of delay in

transfers to accounts. The facility is provided by various banks like SBI, ICICI

bank, HDFC bank, Syndicate bank etc.

(a) The ECS Scheme in Credits operates as follows:

 Corporates obtain the details of bank accounts of their customers to

which credits are to be sent.

 Corporates submit payment particulars such as beneficiary's name,

account no., bank/branch name, amount, etc., to RBI through their

banks. Credits are sent to the beneficiary's accounts through their bank

by the RBI.

 Available at various centers.

 Maximum amount is Rs l,00,000/- per transaction.

(b) Benefits of ECS are:

 Payment on due date.

 Eliminates the need to print the Interest/ Dividend Warrants.

 Prevents loss of interest in transit, fraudulent encashment, pilferage etc.

1.3 Tele banking

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Tele banking is a new concept of electronic- banking where a customer can

avail a number of services without actually visiting the branch. This interactive

voice response (IVR) facility enables the customer to get a variety of services,

round the clock, through a telephone call from home, office, telephone booth,

etc. Various banks are providing this facility like IDBI bank, ICICI bank, HDFC

bank, SBI, Citibank, Syndicate bank etc.

The facilities provided through Tele banking are as follows:

 Balance enquiry.

 Cheques enquiry.

 Registering request for a cheque-book.

 Registering request for a statement of account to be sent by mail.

 Statement of account over FAX at the customer's place.

 Prevailing rates of interest on deposit schemes.

 Prevailing exchange rates for main currencies.

The customer is provided with a personal identification number (PIN)

and this ensures secrecy of the facility as only an authorized customer can

enquire into his accounts. The Tele banking facility is made easy to use with

user-friendly menu driven simple instructions.

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 At the branch, the customer queries coming through Tele banking are

handled by the Tele-server (a PC) fetching information from the database on

the main computer system eliminating the need for any manual intervention.

It is possible to provide other services such as payment of bills for utility

services such as electricity, water, telephone, school fees etc. through Tele

banking.

Tele banking brings you a host of services at your fingertips, 365 days

through the automated Tele banking menu and speaking to customer service

officers.

Tele banking is convenient and secure. Your transactions are protected

by a T-PIN which is your personal password to your account.

For example ICICI Tele banking comes totally free of charge. With ICICI

Tele banking you can avail various services regarding:

Saving account

 Balance enquiry

 Statement of account

 Cheque status enquiry

 Stop payment

 Cheque book request

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  Dial-a-draft/pay order

 ATM lost card reporting

FIxed deposits

 Opening a fixed deposit

 Checking fixed deposit details

 Request of change in tenure

 Request for TDS statement

Credit Cards

 Balance and Account related  Payment instructions

inquires

 Statement of account  Card pin re-issue

 Lost/ Replacement card 

Others

 Standing Instructions  Complaints and Suggestions

 Inquire about the ICICI product

4.1.4 Net banking

Information technology introduced another convenient way to access

your bank account from around the world, through the internet. When you

register for Net banking, bank will issue you a password, which you can use

with your customer identification number to conduct transactions and get

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up-to-date information on the products and services of the bank, round the

clock.

With Net banking the custom& will be able to transact with the help of a mouse

and his visits to the neighborhood bank. will become a thing of the past.

Net banking makes it easy to transfer one's money from one branch in a

particular city to any other branch in another city. One can open a FD account

via the Net. One needs to provide data regarding the amount and term of the

deposit and also the branch in which the amount is to be opened. One can

order for an issue of a demand draft or a banker's cheque. However, the draft

can be delivered only to the customer's address and not to any other third

party. One can inquire on the balance in one's saving, current and FD account

and also on the tax deducted on one's FD account for the current and the

previous financial year. One can give instructions over the net for stopping

payment on cheques. You can request for a cheque book via the internet,

which will take a few days to come. One can view all the transactions

completed on an account for a specified period and get a copy via e-mail.

This facility is available in various banks like ICICI bank, HDFC bank,

Bank of Punjab, PNB and SBI etc.

Brief summary of various facilities provided through Net banking:

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 You can use the Net banking to avail various facilities like

 Available balance - The amount available to you for withdrawal.

 Uncleared Fund -The total amount of cheques deposited by you that are

yet to be cleared.

 Ledger balance - The closing balance as of the pervious day.

 Account statement inquiry - You can view a statement of the

transactions you have completed on your accounts for the current

period, or a specific period determined by you.

 Cheque status inquiry - You can use Net banking to view the status of a

specific cheque that you have issued on any of your accounts.

 Stop payment request - You can request stop payment on a cheque or

series of cheques online.

 Demand draft (DD) / Banker's Cheque (BC) Request - You can have a

Banker's Cheque or Demand Draft issued from your account. All you

have to do is to select the account to be debited, enter the location (in

case of DD), and enter the name of the beneficiary and the amount. The

DD/BC will be sent by courier to your mailing address on the records.

 Funds Transfer - Net banking makes it easy W transfer funds between

any of your accounts, even if they are in different branches.

 Cheque Book Request - You can request for a new dheque book online,

Your cheque book will be sent by courier to the address on the records.

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  FD Inquiry - You can use Net banking to access the details of your Fixed

Deposit Account such as : Principal Balance (Initial and Current), Tel m

of deposit, Rate of interest, Maturity date, Maturity amount, Instructions

for payment on maturity & Lien amount.

 New FD Request - You can open a fixed deposit account by following

simple steps.

 TDS Inquiry - You can access information on the tax deducted at source

for all your FDs held at any of the branches for the current or previous

financial year.

 Leave an instruction - You can leave any instruction not currently

included in Net banking service that you would like to perform on any of

your accounts.

ICICI bank with its Net banking service called 'Infinity' goes a step

forward by allowing the account holder to transfer funds into another person's

account within the bank. Also one can intimate about the loss of an ATM card

over the Net. More over, corporates can issue letters of credit and make

enquiry's regarding bills sent for collection via this service. A special feature on

Infinity is the facility for nicknaming all accounts to avoid remembering lengthy

account numbers. In terms of safety, HDFC bank allows one to have three

login attempts after which a new password is given while ICICI bank will

disable the password after five login attempts.

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 Considering the fact that these services are offered without charging a

fee, the effort is commendable.

ICICI bank takes utmost care to keep your account protected. A

multilayered security architecture comprising of firewalls, filtering routers,

encryption and digital certifications will provide you the confidence that your

account information is protected from unauthorized access. You can also

contribute to protect the confidentially of your logirt name and password;

 Make sure no one can see the account login name or password you're

entering when you log on to infinity.

 Logout of infinity before moving on to other websites.

 Before leaving the PC please "close" the browser.

 Do not write your infinity login name or password.

 Do not leave your login name and password such that someone sitting

at your computer could see them.

 Never reveal your infinity login name and password to anyone (No

representative of ICICI bank will ever ask you for your infinity password).

 Notify ICICI bank immediately if you notice any unusual account activity.

 Keep all documents that include your account information in a secure

location.

1.5 Mobile banking

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 Mobile banking is conducting banking transactions through the Mobile

Phone. To use Mobile banking, all you have to do is to open an account with

the bank and register for the Mobile banking. With Mobile banking the following

transactions are currently available

 Balance inquiry of all your savings and current accounts held with the

bank.

 Checking a few last transactions.

 Placing a stop payment on a cheque.

 Requesting a cheque-book.

 Requesting an account statement.

 Cheque status inquiry.

 Bill presentation.

 Bill payment.

 FD inquiry.

A help facility which allows you to check the text message required to

perform a particular transaction. There are many players in the banking sector

that are providing this facility like ICICI bank, HDFC bank, IDBI bank, Citibank,

Bank of Punjab etc.

1.6 ATM (Automated Teller Machine),

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 ATM is electronic terminal that let you bank almost anywhere. ATM

allows you to do a number of banking functions such as withdrawing cash from

one's account, making balance inquiries and transferring money from one

account to another - using a plastic, magnetic-strip card and personal

identification number issued by the financial institution.

Facilities provided through ATM:

Cash withdrawals/Fast Cash

You can withdraw cash on your ATM card. Moreover, if you need to

withdraw cash in a hurry, you can use fast cash option, which allows you to

withdraw money in multiples of Rs. 100

Deposits

ATMs enable you to deposit cash or cheques into your account at any

time. All you have to do is select the account into which you want to make your

deposit, fill out a deposit slip, put your cash or cheque into the envelope

provide c4t the ATM, and insert into the slot provided.

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Balance Inquiry

You can use your ATM card to check the balance in your account. Mini

statement request

You can use your ATM card to check a few last transactions done in

your account.

Funds Transfer

ATMs make transferring funds between two of your bank account easy.

All you have to do is select the account from which you want to transfer funds,

then indicate the amount of money you want to transfer, and the account into

which you want to make the transfer. Both accounts must be linked to your

ATM card.

PIN/ Charge

Using your ATM to change your personal identification number (PIN)

assures you complete security. Your PIN number is not displayed on the

screen, being replaced by crosses to ensure the secrecy of the transaction.

Cheque Book /Statement Requests

You can log a request book or account statement at the ATM booth and

it will be delivered to you and it will save you the trouble of visiting a branch.

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Product Information

If you want to know about any of product offerings, all you have to do is

select a banking product, and the information will be displayed on the ATM

screen,

ATM installation went up by almost 100 percent during the past two

years. India had 3000 ATMs by 2001 march- end and reports have suggested

that the figure may cross the 34000 mark within the next tour years. Almost all

the banks are providing this facility.

1.7 Credit/Debit cards

The Credit and Debit cards both are dramatically changing the way of

day- to- day transactions, like purchase of goods and payments of bills are

being conducted. Credit card a plastic card indicating that the holder has been

granted a line credit. It enables the holder to make purchase or withdrawal

cash up to a prearranged ceiling, the credit granted can be settled in full by the

end of a specified period or can be settled in part, with the balance taken as

extended credit. Interest is charged on the amount of any extended credit and

the holder is sometimes charged an annual fee. It is put into use by swiping it

through the machine at the purchase counter.

The Credit card allows you to 'buy now pay later' with quick and easy

access to funds, the least possible documentation, and, of course, no

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guarantors. The major advantage, you don't have to carry around loads of

cash and are equipped for emergencies.

At the point of purchase, a Debit card works much like a Credit card.

But, unlike a Credit card that extends credit, a Debit card debits money from

your account during a transaction. It means you can only spend as much

money as you have in your account, The Debit card is changing the way

people are banking and carrying cash. It provides customer with enhanced

access to his account.

A Debit card is for people who value the convenience of plastic, but

believe in using their own money (as opposed to credit from outside sources

as in the case of Credit cards). When a customer uses a debit card at an

outlet, the swipe of this card.automatically debits the payment from his bank

account.

(a) Benefits of Debit Card

 You can't spend what you don't have.

 No eligibility criteria for a card, save for an account with the issuing

bank.

 Your money earns interest till you spend it.

 No sign-up transaction or annual fees as in the case of credit cards.

(b) Flip Side of Debit card

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  Not all merchant establishments are equipped to accept debit cards.

 No grace credit period available.

1.8 New happenings in E-Banking

(a) Swadhan

Swadhan is the name given to the ATM Network of public sector banks

and some private banks. Over the past year upto 44 banks in Mumbai, Vashi

and Thane have become a part of Swadhan, a system of shared payments

network, introduced by the Indian Banks' Association (IBA). The 44 members

between them have 85 operational branches whose clients could swap the

existing ATMs card of one member bank for the Swadhan card to access the

teller machines of this retail chain. A self evident testimony to the demand for

ATMs from customers which was first triggered off over a decade ago in 1987

when the Hong Kong and Shanghai Bank first introduced ATMs in Mumbai.

With. Swadhan it was hoped that Indian bank's customers would be able to

benefit from an ATM pool that solved the problems of single - ATM outlet

banks and its attendant problems of limited access, distance and time.

The main features of this card are :

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 No exchange fee is charged to change an old ATM card for a Swadhan

card. Rs.3000 is fixed as the ceiling in withdrawal. Exception made for selected

customers who can withdraw upto Rs.10000 still this is lower than the average

withdrawal of Rs.15000 by regular ATMs. IBA gives banks the discretion to

decide a higher amount for withdrawal. Transaction conducted through any of

the member banks appear on a bank statement, which is given only by your

own bank. All transactions conducted in any of the member banks appear on

the bank statement, but only your own bank will provide this. However, no

overdraft works. A switch routes all information and transactions among

member institutions. It transmits the information, and / or data to the

card-issuing bank of its processor, which approves or declines the transaction

request and notifies the switch. The switch to the processor of the ATM, which

completes the transactions, then routs the card issuing bank's decision. At the

end of each day, accounts among members are settled and account balances

are transmitted to each member institutions.

(b) STEPS (State Bank Electronic Payment System)

State Bank of India (SBI) has drawn up an ambitious project for devising

a fully automated system for inter-branch transactions under its programme

STEPS (State Bank Electronic Payment System).

STEPS is aimed at providing same day credit/debits for telegraphic

transfers and collections between computerized branches. The bank proposes

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to set up a centralized server connected to all computerized branches through

VSAT/leased lines/ dialup lines and routing of all interbranch transactions

through this server. This project is expected to become shortly.

(c) RTGS (Real Time Gross Settlement)

In a key technology initiative, the Reserve Bank of India (RBI) has

shifted the entire clearing operations to the real-time online mode.

The RTGS interacts with the current account of the banks maintained

with RBI and settles the payment instructions across these RBI accounts on a

real time basis. The RBI promoted RTGS provides on-line fund settlement of

banking transactions on a real-time basis.

The proposed system allows clearing of transactions within a day,

against two days taken now for intra-city cheques and around a week for

outstation cheques.

The purpose for undertaking this exercise is to reduce the transaction

processing and clearing to the lowest possible time.

(d) Share trading

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 A number of banks have either set up or are in the process of setting up

Internet trading facilities for their customers. ICICI bank already offers its

customer e-broking services through a ICICI brokerage service. HDFC too

offers e-broking facilities through HDFC securities and e-Net facilities for equity

brokerages.

1.9 Security in e-banking

It has been observed that threat of security and large & continuous flow

of resources required for maintenance of error- free and secured transactions

in the E-banking / Commerce environment, has been one of major deterrents

for venturing into this field. Security is a key point to be addressed in the new

phase of cyber-banking. Internet banking and WAP-banking have opened up

the banks' network. In a real life environment, it might be tougher for a burglar

to burgle many branches of a bank. Whereas in the cyber-banking scenario, a

hacker has the whole bank on a platter in the absence of security. Many

security features like firewalls, encryption/clecryption, public key cryptography,

etc. are being put in place to effectively safeguard these networks. These

features safeguard us from threats, which have been perceived so far. But the

unperceived threats need to be addressed so. A constant R&D has to be in

place to ensure a safe banking over cyberspace. It is, therefore, essential that

adequate and redundant security layers should be in place to gain the trust of

the users of technology.

28
 The following basic security infrastructure should be made available for

operations. It is equally important that the security provision so put in place

initially should be upgraded on periodical intervals in time with emergence of

newer technologies so that the technology provides a safe to use the following

basic security features which must be in place,

Client Authentication

To ensure genuineness of the users.

Digital Certificate

It is an attachment to an electronic message to verify that users sending

a message is the same who he/she claims to be and to provide j ecerver with

the means to encode.

Encryption

This is technique of codification of the data of text into an up-readable

format called cypher text. Only those who possess secret key can decrypt the

message.

Fire Wall

This is a system designed to prevent un-authorised users accessing the

private network, which are connected to Internet, It is extremely necessary to

secure intranet data from being accessed by customers or business partners.

All messages entering or leaving intranet must pass through the fire wall which

29
scrutinizes each message and blocks those which do not meet the specified

security criteria.

Objectives of the study

The present study has the following objectives:

1. To check the awareness and usage of their services by the customer.

2. To determine customer view point regarding their services.

30
 Chapter - II

REVIEW OF LITERATURE

To formulate the problem and to point out the importance of undertaking

this study, it is essential to present a brief review of the researches and studies

on this subject. The relevant literature in this area is briefly reviewed

hereunder:

Singh (1999) found that the marriage of technology and banking has

changed the face of global banking like never before. Physical transaction

banking gave way to anytime banking and anywhere banking through ATMs,

Internet banking & Mobile banking. Thus depositor could access his account

from any part of the world. The paradigm of future is most likely to be anyhow

money, where the need for physical cash will be replaced by digital cash where

cash balance and assets will be held in the form of computer chips reducing

no. of transactions and cost substantially.,

Verma (1999) talked about trend in commercial banking that the market

has changed drastically that it has become largely customer- centric. The key

to success in the changed environment will be one's ability to reach the client

at his doorstep, and meet his requirement of products and services in a

customized manner. This development is indeed good as it has immense

potential for growth of a banking business in future.

31
 Cherian (2000) concluded that the heavy investments in technology

have enabled the banks to increase customer base without a proportionate rise

in expenditure. Technology will play a key role in pulling down the transaction

costs of banks but the real benefits will be derived when banks achieve the

critical mass. Banks have made huge investment in technology to offer quality

services to the customer. Technology is definitely going to play a dominant role

in the success of the banks. Transaction costs are expected to fall to a tenth of

what they are at present. According to statistics available, if a teller transaction

costs Re. 1, an ATM transaction is less than half this, at 45 paise. Tele banking

is still cheaper at 35 paise a transaction and a debit card transaction costs just

20 paise. But Internet banking would be the cheapest at 10 paise a

transaction.

Cresci (2000) found that you don't have to have a brick and mortar

presence to attract customers. As more and more people come to the internet

and it allows them to cut costs and charge less for the same services and

winwin situation for both banks and customers.

Goel (2000) talked about ATMs that banks are planning to turn its ATM

booths into profit center through innovative measures. Coming times ahead,

cinema tickets, railway tickets, deposits of bills etc. would be made possible

through ATM booths. This would make ATM booths a prominent place for

32
advertisement as well as earning fee based income and a good amount of float

for the banks.

Goerge (2000) investigated that the todays banking is no longer

confined to branches as the customers are being provided with additional

delivery channels which are more convenient to the customers and are most

effective to the banks. These delivery channels inter alia include ATM, Tele-

banking, Internet banking, Mobile banking etc. Out of various delivery

channels, the Internet banking is emerging as a most cost effective and

convenient delivery due to its inherent advantages.

Gopinath (2000) revealed that a transaction through a bank branch costs

about Rs.45-50. The same transaction done telephonically costs about

Rs.30-35, through an ATM it costs between Rs.17 to 25 and through the

Internet when the volumes are right, about Rs.1-4.

Joe et al. (2000) conducted a survey on e-banking and found that the

view is that e-banking would transform the economics of the banking industry

every one would be wired up, costs would disappear. Bricks have beaten up by

the clicks- for now "Bricks" or "brick and mortar" is the tag given to old

economy banks with large physical branch networks while "Clicks" refers to

new economy online banking where in theory at least, banks. could cut costs

by replacing "bricks" with cheaper new technology.

33
 Krishnamurthy (2000) revealed that banking is one sector that is rapidly

changing. ATM (automated teller machine) are now a necessity for banks and

for the customers and no more enjoy the status of being a value service. Most

banks also offer credit cards and dernat (dematerializations) accounts,

considering the large population of investors in the country. Now it is mobile

banking that is the largest rage in technology convergence, making the cellular

phone a prized possession for technology savvy users.

Prasad (2000) concluded that in the retail-banking arena the banks are

trying to become one-stop shops for all the financial services that the average

customer could look for. The idea is to increase the total revenues per

customer while reducing transaction cost and the technology is helping in

doing so.

Rao (2000) conducted survey on net banking and found that it firmly

unleashed tremendous change and upheaval in banking sector. "More people

than ever before are getting access to more information than ever before

thanks to the Net". The Net can help lower the cost of transactions, improve

customer data, increase cross-selling opportunities and integrate new financial

product.

Shapping (2000) talked about the effect of IT on cost impact that the

democratization of information will also push costs down. Those banks, which

are able to cut costs through technology, will alone be able to offer products

34
that suit the wallet of the customers. The internet will ultimately become the

largest channel, commanding 50% of all transaction worldwide and lower the

procession cost.

Shetty (2000) found that banks are repositioning the humble ATM from

being a cash dispenser to a visible effective marketing weapon. Banks are

looking at ATMs as outlets where a customer can conduct any transaction that

he can do in a bank.

Soldanha (2000) said that setting up an ATM network brings with it a

whole lot of intangible benefits as well - visibility, brand equity, the potential to

analyze trends such as how much of a bank’s deposits has come because of

this facility - all of which can be put to good use. But its time to look beyond

this.

Agnihotri (2001) in the article "IT way of getting cash" have described

that the IT revolution has permeated the global retail banking industry. It has

broken down business models and has given customers an unprecedented

position of power. In the space of a decade the internet as well as the intranet

have evolved into legitimate distribution channels for financial services. They

have become a major influencing factor on banking strategy overall.

Bhasin (2001) concluded that the brick and mortar branch continues to

be the predominant channel of old generation banks. They have a few online

ATMs, mostly located at a branch. Phone banking is making a limited

35
beginning, and some banks have plans to offer e-banking in due course time.

Customer interaction of old generation banks would continue to revolve around

the branch until they network all-or most of their fully computerized branches.

In contrast new generation banks started off with all branches fully networked.

Some banks now operate with fully centralized databases that optimize costs

compared to inter-connection of distributed databases.

Dhall (2001) talked about crime in banking sector with the use of

computer that widespread use of computer networks in the banking industry

worldwide has only made embezzlement easier-the criminals do not even have

to forge signatures or steal or alter cheque. All banks should recognize the

potential threat of computer frauds and crimes, and focus on its prevention, so

that the future of computerization becomes safe and sound.

The review of literature shows that a lot has been written on the concept

of Electronic Banking and the problem envisaged. It is dear from the type of

the studies reviewed that none of the studies has explained electronic-banking

in India. From this, need for my study arose.

36
 Chapter-III

RESEARCH METHODOLOGY

This chapter describes the research methodology of the present study.

The chapter is divided into different parts viz-Conceptual Framework of the

research problem, Definition of population, Sample selection, Collection of

data, Analysis of data & Interpretation of data.

3.1 Conceptual Framework

In this study on electronic-banking services -five banks were chosen to

study various e-banking services. Electronic-banking services include all those

services that are provided in the banking sector with the help of information

technology. It includes ATMs, Tele banking, Internet banking, Mobile banking,

Electronic Clearing System, Electronic Funds Transfer and Credit/Debit cards.

Every aspect of the e-banking services was minutely studied during the

research. Questionnaire was designed to gain information on customers'

awareness about e-banking services.

3.2 Definition of population

The population for the study comprises of all the banks providing e-

banking facilities and the customers of these banks in Ludhiana

3.3 Sample Selection

37
 A sample of all the banks providing e- banking like ATM, Mobile banking,

Internet banking, ECS etc was taken for the present study. The method

employed for the selection of these banks was judgment sampling. 100

customers from the banks were selected for gathering primary information.

Convenience sampling was used for the selection of respondents.

3.4 Collection of data

A non-disguised structured questionnaire was designed comprising all

relevant questions from all aspects of the study to extract the maximum and

the best possible information. The respondents were asked questions to know

their awareness of electronic-banking services, usage of electronic-banking

services, reasons for their use, purpose for using these services and their

experiences in using electronic banking services. The questions included were

open-ended, dichotomous, likert scale and multiple choices. Information from

Managers/Staff of the banks was collected through personal visits at the bank.

Secondary data to know the functioning of various e-banking services in

today's banking sector was collected from various newspapers, magazines,

bank journals, and bank manuals like IBA bulletin, The Economic Times etc.

3.5 Analysis & interpretation

Analysis of the questionnaires was done using simple statistical tools

like Percentage, Averages etc. Interpretation of likert scale was done as under:

38
 (a) + 2 score for strongly agree

(b) +1 score for agree

(c) 0 score for indifferent

(d) -1 score for disagree

(e) -2 score for strongly disagree

Scores were summed up and divided by no. of respondents.

In ranking questions mean rank accorded by the respondents was taken

for evaluation. To find out the mean rank, scores were given in reverse order,

lowest rank has been given highest score and vice versa. The total score was

thus calculated as follows;

Total score = Sn*Fn

Sn = Score awarded to nth rank

Fn = Frequency of the nth rank

The mean score was calculated by dividing the total score with sample

size. After all the mean scores were calculated, they were arranged in order of

descending order e.g. the highest mean score was given rank 1st and so on.

3.6 Limitations of the study

39
 This study is subjected to certain limitations. These are mentioned below

so that findings of the present study can be perceived in the correct

prospective.

(1) Owing to the paucity of time and lack of financial resources, the

research is concentrated only in Ludhiana. The gen6ralization made

on the basis of this study may not hold good for other parts of the

country.

(2) The selection of the respondents was based on convenience

sampling and it might not be true representation of the entire

universe.

(3) Due to busy schedule of Managers under study, researcher had to

resort to short interviews and only major points on the topic were

discussed so chances are that minute details may be missed.

(4) Although utmost care has been taken to get accurate results, yet,

because of the risk of ambiguities and misinterpretation on the part of

the respondents, some elements of inaccuracy could have crept in.

(5) Since a -small size sample has been taken, the possibility of

sampling errors can't be ruled out in research study,

(6) Not all the respondents were always forthcoming with their views on

certain questions.

40
Chapter - IV

RESULTS AND DISCUSSIONS

The chapter presents the results obtained after analysis of the primary

data collected from the questionnaires and secondary data obtained from

various secondary resources. The findings are presented according to the

objectives of the research. The chapter is divided into various sections. The

first part deals with the study of electronic- banking services provided through

various banks. The second part contains the data analysis and its

interpretation. The third part deals with suggestions to be made to improve the

electronic-banking Services.

4.1 DATA ANALYSIS

In this section data collected from questionnaire is analysed and its

interpretation is written.

4.1.1 Awareness of E-banking services

E-banking is the coming wave that most of the banks are riding upon.

Banks have started providing various types of e-banking services. The

respondents were asked about the various e-banking services. Table 4.1

shows the awareness of various e-banking services among respondents.

41
Table 4.1 Awareness of E-Banking Services

Services No. of respondents aware of Percentage

services
ATM 100 100
NET BANKING 78 78
TELE BANKING 60 60
MOBILE BANKING 52 62
CREDIT/DEBIT CARDS 96 96
ECS & EFT 28 28

On the basis of the responses, it has been found that ATMs and

Credit/Debit cards are very much in the awareness of respondents. 78% of the

respondents are aware of Net Banking, 62% respondents have shown their

awareness of Mobile Banking and 60% of Tele banking. Only 28 respondents

have shown the awareness of Electronic Clearing System and Electronic

Funds Transfer, clearly indicates that these facilities should be extended to

more places and more parties so that there should be more awareness of

these facilities.

4.1.2 Knowledge of E-banking through various sources

Nowadays customers are becoming more aware of e-banking services.

Table 4.2 illustrates the respondents' knowledge about e-banking services

from various sources.

42
Table 4.2 Knowledge of E-banking through various sources

Sources No. of respondents Percentage

PRINT MEDIA 72 72
INTERNET 28 28
TELEVISION 60 60
BANK REPRESENTATIVES 30 30
OTHERS (Friends etc.) 10 10

The above data shows that 72 respondents out of 100 have shown that

they have got the knowledge of e-banking services through Print Media.

Television has also played major role in spreading the knowledge of e-banking

services. 28% of respondents have come to know about e-banking services

-through Internet and 30% of respondents have got the knowledge of

e-banking services through bank representatives.

4.1.3 Various banks providing E-banking services

There are various banks providing e-banking services. Table 4.3 shows

the respondents' knowledge of various banks providing e-banking services.

Table 4.3 Various banks providing E-banking services .

Banks No. of respondents Percentage

43
ICICI 94 94
HDFC 90 90
IDBI 26 26
BANK OF PUNJAB 32 32
CITIBANK 30 30
SBI 26 26
PNB 22 22

It has been found from the table that ICICI and HDFC, banks have got

about 90%, responses showing that they are e-bank leaders. 30%

respondent’s shows that other private sector banks like Bank of Punjab, IDBI,

and Citibank are also in the race of e-banking. Public sector banks like SBI &

PNB have got less response. It can be well inferred from the table that private

sector banks provide many of the e-banking services.

4.1.4 Ownership of an ATM Card

The Table (4.4) given below describes the data on the ownership of an

out of 100 respondents studied, 76 owned an ATM card. This shows that ATM

is in very much use for banking transactions and customers have started

preferring the ATM card for most of the banking transactions.

44
Table 4.4 Ownership of an ATM

Yes/No No. of respondents Percentage

Yes 76 76
No 24 24
Chart 4.1

Out of 100 respondents studied, 76 owned an ATM card. This shows

that ATM is in very much use for banking transactions and customers have

started preferring the ATM card for most of the banking transactions.

4.1.5 Factors considered while going for an ATM card.

In order to find out the various factors which are responsible for

increasing use. of an ATM card, the respondents were asked to rank the

factors which they considered while going for an ATM card. Table 4.5 shows

the various factor considered while going for ATM card by respondents.

45
Table 4.5 Factors considered while going for an ATM card

Factors Mean score Mean Rank

24 hr Banking 5.375 1
Wider accessibility 4.2 2
Time saving 3.65 3
Speedier 3.35 5
Convenient 3.4 4
Others 1 6

Different respondents use ATM card for different reasons and out of the

various factors considered going for ATM, 24hr banking has got highest mean

rank. This reveals that respondents seek ATM as 24hr banking products.

Wider accessibility is another factor considered for using ATMs as it has got

second highest mean rank. Factors like time saving, speedier, convenience

are also considered while going for an ATM card but less than 24 hr banking

and wider accessibility.

4.1.6 Purpose for using an ATM card

ATM card helps in conducting many banking transactions. In order to

see for which purpose ATM card is mostly used, the respondents were asked

about the purpose for using an ATM card. Table 4.6 shows the various

purposes for which the respondents use an ATM card.

46
Table 4.6 Purpose for using an ATM card

Purpose No. of Percentage

respondents
Cash withdrawal 76 100
Deposit of cash / cheques 50 66
Balance inquiry 64 84
Transfer of funds 16 21
Account statement 48 63

From the table it is seen that cash withdrawal is the main purpose for

which ATM card is used. 64 respondents have shown that balance enquiry is

another purpose for which they use ATM. Deposit of cash/ cheques is done by

50 respondents.

4.1.7 Satisfied with withdrawal limit

There is limit set up by the bank on the withdrawal of amount through ATM

card. The respondents were then examined to see whether they were satisfied

with the withdrawal limit set up by bank. Table 4.7 throws the data on the

satisfaction of respondents about withdrawal limit set up by banks on ATM

card.

Table 4.7 Satisfied with withdrawal limit

47
 Yes/No No. of respondents Percentage
Yes 26 34
No 50 66
Chart 4.2

Yes
34%

No
66%

48
 From the table it is clear that 50 out of 76 respondents using ATMs have

shown that they are not satisfied with withdrawal limit set by bank through

ATM. This clearly indicates that banks should raise the withdrawal limit on

ATM card.

4.1.8 Usage of an ATM card in a month on an average

In order to examine the increasing use of ATM card, the respondents

were asked about their usage of an ATM card. Table 4.9 illustrates the usage

pattern of ATM cardholders.

Table 4.8 Usage of ATM card in a month on an average

Usage on average No. of respondents Percentage

0-5 times 4 5
5- 10 times 6 8
10-15 times 56 74
More than 15 times 10 13

From the table it is seen that 56 respondents use ATM card for 10-15

times in a month on an average. Out of 76, 6 respondents are using ATM card

for 5-10 times in a month. Only 10 respondents use ATM for more than 15

times on average in a month. As is clear from the table, it can be inferred that

customers have started preferring ATM for banking transactions.

4.1.9 Problems faced while using an ATM card

49
 In order to find out various problems in functioning of ATM, the

respondents were asked about the problems they experienced while using an

ATM card. Table 4.10 reveals the various problems faced by respondents

while using an ATM card.

Table 4.9 Problems faced while using an ATM card

Problem Respondents
a) Not connected to server 18
b) System does not allow to avail facilities when you 60

required
c) Unavailability of cash during festivals, seasons and 36

holidays
d) Machine itself is not working 72

It can be well visualized from the table that most of the respondents

about 75% have experienced the problem of not working ATM, as 60

respondents have faced problem of Unavailability of facilities when required by

them. 36 respondents have faced problem of unavailability of cash during

festivals, seasons & holidays. This reveals that different respondents have

faced different problems and too indicates that functioning of ATMs are not up

to the mark as ATM card holders are facing various kinds of problems.

4.1.10. Usage of Mobile phone for Banking Services

50
 Nowadays Mobile phone can be used to conduct banking transactions.

In order to find out use of mobile phone for the banking purposes, the

respondents were asked about the use of Mobile phone for banking purposes.

Table 4.11 shows the responses of the customers about the use of Mobile

phone for banking purposes.

Table 4.10 Usage of Mobile phone for Banking Services

Frequency No. of respondents Percentage

Often 20 20
Sometimes 36 36
Never 44 44

On the basis of responses, it has been found that 56 respondents use

mobile phone for the banking purposes and out of these 56, 20 respondents

often go for it. It shows that they perform most of the banking transactions

through mobile phone. The remaining 36 respondents are using mobile phone

for some banking purposes. 44 respondents have never availed this facility.

The reason was found that customers don't consider it very safe and also not

many mobile phone companies are giving this option to the mobile phone

users.

4.1.11 Purpose considered for using Mobile banking

51
 There are various purposes for which mobile banking is used. To see for

which purpose it is used mostly, the respondents were asked about the

purposes for which they use mobile banking. Table 4.12 shows the various

purposes for which respondents use mobile banking.

Table 4.11 Purpose considered for using Mobile Banking

Factors No. of respondents Percentage

Checking of accounts 56 100
Balance enquiry 34 61
Payment of bills 18 32
Transfer of funds 12 24
From the table it is clear that 100% of the respondents use mobile

banking for the purpose of checking of account. 34 respondents out of 56 have

shown that balance enquiry is other purpose considered for using Mobile

banking and followed by a few respondents who use Mobile phone for banking

transactions like payment of bills and transferring of funds.

4.1.12. Problems faced while using Mobile banking

In order to find out various problems in mobile banking, the respondents

were asked about the problems they experienced while using mobile banking.

Table 4.10 reveals the various problems faced by respondents while using

mobile banking.

Table 4.12 Problems faced while using Mobile banking

52
 Problem Respondents

a) Delay in delivery of message 33

b) Network connectivity 24

c) Traffic 39
d) Burnout 9

It can be well visualized from the table that most of the respondents

about 59% have experienced the problem of delay in delivery of message, as

24 respondents have faced problem of network connectivity. 39 respondents

have faced problem of traffic.9 have faced problem of burnout. This reveals

that different respondents have faced different problems.

53
4.1.13 Usage of Tele banking

Tele banking is another important aspect of electronic-banking services.

In order to find out the use of tele banking services, the respondents were

asked about use of tele banking. Table 4.13 shows the responses of

customers regarding the usage of tele banking.

Table 4.13 Usage of Tele banking

Yes/No No. of respondents Percentage

Yes 38 38

No 62 62

Chart 4.3

Yes
38%

No
62%

54
 Data reveals that 38 respondents have used the facility of tele banking.

This shows that 38% respondents use tele banking as more and more banks

have started provided tele banking services, this is expected to go up.

4.1.14 Facility for which they use Tele banking

To see for which facility tele banking is used mostly, the respondents

were asked about the use of tele banking. Table 4.14 shows the list of various

facilities for which respondents use tele banking.

55
Table 4.14 Facility for which -they use Tele banking

Facility No. of Percentage

respond

ents
a) DD making 24 63
b) Alc balance enquiry 32 84
c) Cheques enquiry 16 42
d) Request for passbook 14 37
e) Stopping payment 10 27
f) Rate of int. on deposit 16 42

schemes

Out of the various purposes of tele banking, most of the respondents are

using tele banking for the purpose of A/c balance enquiry. 24 respondents use

the tele banking for DD Making. Other facilities like cheques enquiry, request

for pass book etc. have got less responses, this indicates that these are not

very much used by tele banking users.

4.1.14. Problems faced while using Tele banking

In order to find out various problems in tele banking, the respondents

were asked about the problems they experienced while using tele banking.

Table 4.14 reveals the various problems faced by respondents while using tele

banking.

56
Table 4.14 Problems faced while using Mobile banking

Problem Respondents

a) Authenticity of call receiver is not sure 17

b) Poor Customer Care Service 24

c) Traffic 19

d) Lack of awareness among Tele Executives 9

It can be well visualized from the table that most of the respondents(24)

have experienced the Authenticity of call receiver is not sure, as 24

respondents have faced problem of poor customer care. 19 respondents have

faced problem of traffic.9 have Lack of awareness. This reveals that different

respondents have faced different problems.

4.1.15 Ownership of a Credit card

Credit cards, to the some extent, have helped in doing away wallets

stuffed with fat weds of currency. The respondents were asked whether they

owned Credit card. Table 4.15 shows the number of respondents owning a

Credit card.

Table 4.15 Ownership of a Credit card

Yes No No. of respondents Percentage

57
 Yes 54 54

No 46 46

Chart 4.4

No
46% Yes
Yes No
54%

The table depicts that out of 100 respondents studied 54 were having

Credit cards. This shows that 54% of respondents have got Credit cards for

banking purposes and remaining 46% of respond don’t own credit card.

4.1.16 Usage of card in a month on an average

To find out the use of credit/debit card, the respondents were asked

about the usage of Credit/Debit cards. Table 4.16 shows the response of

customers towards usage of cards in a month on average.

58
Table 4.16 Usage of card in a month on an average

Frequency No. of respondents Percentage

0-5 times 34 63

5-10 times 10 19

10-15 times 6 11

More than 15 times 4 7

The data shows that 34espondents use credit card for 0-5 times in a

month on an average. Out of 54 respondents, 10 respondents are using the

card for 5-10 times in a month. A credit card is used for more than 15

respondents only by 4 respondents. This tells that Credit cards are not often

used in a month. On being asked it was found that there are less no. of

Merchant Establishments accepting the credit cards.

4.1.17. Problems faced while using Credit cards

In order to find out various problems in credit cards, the respondents

were asked about the problems they experienced while using credit cards.

Table 4.17 reveals the various problems faced by respondents while using

credit cards.

Table 4.17 Problems faced while using Credit cards

Problem Respondents

59
 a) High Interest Rate 24
b) Less Credit limit 26
c) Less Acceptance 21
d) Less Credit Time 19

It can be well visualized from the table that most of the respondents(26)

are facing the problem of less credit limit , as 24 respondents have faced

problem of High interst rate customer care. 21 respondents have faced

problem of Less acceptance and 19 have faced problem of Less credit time .

This reveals that different respondents have faced different problems.

4.1.18 Access of Internet Banking

Internet banking is another convenient way to do banking transactions

from around the world. The table given below (4.18) shows the responses of'

customers regarding access of internet banking.

Table 4.18 Access of Internet Banking

Frequency No. of respondents Percentage

Often 16 16
Sometimes 36 36
Never 48 48

Chart 4.5

60
 It has been found that out of 100, 52 respondents are using services of

internet banking and out of these 52, 16 respondents use internet for most of

the banking transactions and remaining 36 respondents sometimes use

intelnet banking. The data shows that 48% of respondents have never used

internet banking.

4.1.19 Reasons for using Internet Banking

To find out the reasons for using internet for the banking purposes, the

respondents were asked about the reasons for using Internet banking. Table

4.19 throws the, data on the responses of customers showing the various

reasons for using internet banking.

61
Table 4.19 Reasons for using Internet Banking

Reason No. of respondents Percentage

More acceptability 38 73
Speedier transaction 32 62
Convenience 30 58
Reduction in processing cost 6 12

The above data shows that more than half of the respondents (73%)

have been using internet banking because of its more accessibility followed by

32 respondents who are of the view that internet banking is speedier to

conduct transactions than others. It also shows that 58% of the respondents

use internet banking because of the convenient. A few respondents have gone

for internet banking due to its cost advantage.

4.1.20 Purposes of using Internet banking

In order to find out the purposes for which internet banking is used, the

respondents were asked about the various purposes of using internet banking.

Table 4.19 shows that various purposes for which internet banking is used by

respondents.

Table 4.20 Purposes of using Internet Banking

62
 Purposes No. of respondents Percentage
Opening of account 42 81
Online transactions 14 27
Payment of bills 18 35
A/c enquiry 34 65
Others (share trading 24 46

etc.)

From the table it is very clear that the opening of account is the main

purpose of using internet banking as it has got 42 respondents out of 52. 34

responses out of 52 use the internet banking for A/c enquiry. The data shows

that only 14 respondents have conducted online transactions. On being asked

the reason for this, it was found that respondents were having doubts over the

online transactions conducted through internet banking and it was security

network required for using the internet banking and other reason was that

there were not many corporate offering this facility. Other purposes like share

trading, demat transactions etc. have got 24 responses out of 52.

4.1.21 What kind of problems experienced during Internet Banking

The respondents were asked about what kind of problem they

experienced during Internet banking. Table 4.21 illustrates the data regarding

various kinds of problems experienced during internet banking by respondents.

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Table 4.21 What kind of problems experienced during Internet Banking

Problems No. of Respondents Percentage

a) Downloading site 44 85

of

bank
b) Slow processing 38 73

speed

c) Any transaction 18 35

problem

d) Complexity of the 15 29

terms
Most of the respondents have found the problem of downloading site of

the Bank and slow speed while using internet banking. 18 respondents out of

52 have faced problem in conducting transactions through internet banking.

4.1.22 General view of E-Banking

E-banking is going to change the way banking has been done before. To

examine the overall view of the e-banking among the customers, the

respondents were asked about their general views of e-banking. Table 4.21

shows the general view of e-banking by respondents.

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Table 4.22 General view of E-Banking

Statement *Mean Score

E-banking will replace traditional banking 0.96
E-banking is safe 0.92
E-banking saves times 1.28
E-banking is convenient 1.46
E banking will give rise to fraud/misuse 0.1
E-banking gives you wider choice 1.22
* Mean Score (Score near to 0 means indifferent, I means agree and 2 means

strongly agree)

Data shows that most of the customers are of the view that e-banking

will replace traditional banking and it saves times, it is convenient and it gives

them wider choice. Customers do agree that e-banking is safe as with proper

infrastructure & support system. The customers has shown indifferent attitude

towards the rise in chances of fraud/misuse by e-banking.

4.3 Suggestions

Banking in the new millennium has been marked by high expectations of

customers who are well informed and possess the technical knowledge to

conduct banking transaction from home or office or while on the move. Taking

this point into mind the study was conducted and with it some of the points

have come up as suggestions and measures to be adopted by banks to

improve EBanking Services.

65
 After seeing the use of ATMs among respondents, it is considered that

there should be more penetration of ATMs and for it ATMs should be set

up within 4-5 Kms of the territory in a city.

 Withdrawal limits set up by the banks from ATM should be enhanced

raised as most of the ATM cardholders are not satisfied with the

withdrawal limit.

 ATM should be Used for providing facilities of more financial products

like buying of mutual funds and others income bonds should be started

through ATMs, as well as for other purposes like in Japan it is used as

laundries for mutilated and soiled notes.

 To remove the problems experienced by customers in using ATM or for

the better functioning of ATM, a strong technical infrastructure should be

placed in.

 The lack of inter bank Electronic Funds Transfer facilities and Electronic

Clearing System was felt in many places. These facilities should be

extended to more places and to more parties.

 Internet banking is the fastest way of conducting transactions like

payment of bills and transfer of funds, for it strong security network

should be made so as to make Internet Banking as a safe channel.

 To conduct online transaction like payment of bills etc. through mobile

phone and internet, the banks would have to have strong tie-ups with

66
 major players in the game for payment gateways and delivery system for

secured and convenience payment mode for customers.

 There should be more merchant establishments ready to accept Credit/

Debit card.

 It will be win-win situation for both the customers and utility companies, if

utilities like electricity boards, phone companies etc. start accepting

payment through Mobile banking and internet banking.

 More and More cellular operator should be called to put their shoes into

Mobile Banking and facilities should be extended more.

Chapter - V

SUMMARY AND CONCLUSION

Banks have achieved high level of automation and have started offering

electronic products to their customers. Entry of Private Sector into this has

been tremendous as some of the PSBs have also moved towards Electronic

Banking which include standalone ATMs, Tele-Banking, Net Banking,

Electronic Clearing System and Fund Transfer etc. considering the vast

customer base they serve. Technology has opened up option for various

67
delivery channels. Technology ended products like ATMs, Internet banking,

WAP Banking etc. have given the customers to choose his channels of getting

catered to his requirements.

The Internet Banking enables the customers to perform basic banking

transactions by sitting at his office or at home through PC or LAFFOP. The

customers access the banks website for viewing their account details and

subsequently as per requirements they can perform the transactions on

account through website. With the Interpet Banking Me brick and mortar

structure of the tradItIonal banking gets converted Into a click and portal model

there by glvln_q a concept of virtual banking asreal shape. Six reason to put

the money where the mouse is- Easy, Quick, Safe, Convenience, Global

access and Round-the-clock.

The Internet revolution has thus taken up quite well in the country. The

current low Internet users base of 2-3 million is expected to blow upto 23-30

million by 2004 when India is expected to be the 2nd largest internet user

population in the country.

ATM has completely changed the way you bank. Whether it is cash

needed in a hurry, a cheque or cash deposit, a mini statement or transfer of

money from one account to another. ATM will do the needful in a matter of

seconds.

68
 You can carry out all your banking work, 24hrs a day, from your home or

office over the phone banking absolutely free. Mobile-banking will take your

bank on the move.

Now banking is going to be highly competitive ai,d information

technology driven. The networking of banks, remote access, ATM facilities,

Tele Banking, Anytime & Anywhere banking would transform the face of

banking. The security measure will have to be improved and changes in

certain laws would become necessary. This would reduce the manpower and

physical infrastructure requirements of the banks and they would be able to

handle large value of business with manpower. The future would witness an

increase in online banking giving shape to the idea floated initially by Biill

Gates.

We need banking, do we need banks?

5.1 MAJOR FINDINGS

 Out of the various e-banking services, it has found that ATM has been

most popular among the customers. Net Banking and Mobile Banking is

picking up its slot after ATMs & Tele banking. ECS & EFT they are found

to be less in knowledge of the customers.

 Print media has been fast in promoting the E-Banking services offered

through different banks. Television media too promotes the E-Banking

69
 services but less than print media. Internet is slow in this effort. Bank

representatives are also doing a good job in promoting various

E-Banking products.

 ICICI and HDFC banks are considered to be leaders in E-Banking as

they have pioneered in providing different E-Banking products. Other

private sector banks like Bank of Punjab, Citibank, IDBI & UTI are

following them. PSBs like PNB, SBI and Syndicate Bank etc. are also

pushing up their reputation in providing E-Banking services.

 Factors like 24hr banking, time saving and wider accessibility are

considered to be the most influential factor going for ATMs. Other factors

like convenience and speed are also to be considered while using

ATMs.

 ATM is mainly considered as cash dispensing machine as mainly these

are used for cash withdrawal and deposit of cash/cheques besides used

for statement and balance enquiry.

 Most of the customers prefer to have ATMs set up at railways/bus

stands and on highways/on roads with also at concerned banks.

Although locations like offices, petrol pumps are also give preferences.

Other locations like school/colleges etc. are also preferred but less than

all.

70
 It has been found that usage of ATM card in a month on an average is

510 times. With exception of some customers using it for more than 15

times is in a less number as compared to 10-15 times. ATM is becoming

more and more popular in use for banking purposes.

 While using ATMs, customers usually experience problems like- Not

able to avail the facilities when they require and sometimes found

machine not working. Sometimes they too face problems like-

unavailability of cash in ATM during festivals, seasons & holidays and

ATM not connected to server.

 The data shows that mobile banking is less in use as compared to

ATMs. The Mobile banking generally is used for checking of accounts

and balance enquiry. Transfers of funds & payment of bills are not much

used by customers.

 As banks are providing Tele banking services free of cost, customer find

it much worthy to use it for some of facilities such as- DD making and for

balances enquiry. Sometimes it is used for stopping payments, cheques

enquiry etc.

 The data reveals that customers prefer to use Credit/Debit cards as

compared to carry cash with them and on a monthly average it has been

used 0-5 times. In some cases it goes up to 5-10 times, in extreme

71
 cases goes up to 10-15 times with average monthly spending of less

than Rs. 5,000.

 The main invent of IT in banking sector -Internet banking is still in

infancy stage. As data shows that sometimes it has been put into use,

with less no. of customers who access the internet for banking purposes

more often. What infact motivates them to use Net Banking is more

accessibility and speedier transactions. Other factors like convenience

and reduction in processing cost are also considered while using internet

banking.

 The main purpose for using Internet banking is opening of account and

accounts enquiry. It is also used for other purposes like for share

trading, foreign exchange and online transactions.

 Most of the customers agree that e-banking will replace traditional

banking. As strong response is given about the e-banking saves times,

e-banking is convenient and it gives them wider choice. Customers do

agree that e-Banking is safe as with proper infrastructure & support

system. The customers have shown indifferent attitude towards the rise

in chances of fraud/misuse by E-banking.

5.2 CONCLUSION

With the advent of IT in the Banking sector, there has come a change in

the way of banking that has done before. Banking is now moved from its brick

72
and mortar structure to customer centric approach. Various e-banking services

are giving customers unthinkable benefits like 24hr banking, anywhere

banking, speedier transactions and time saving. The banks are now riding

themselves on this new wave to have more profitable opportunities. Banks are

now spending heavily on information technology front. It is win-win situation for

both the customers and the banks. Slowly and steadily customers have started

moving towards e-banking system in India. The future would witness an

increase in the e-banking financial products. Banking is getting a new shape

with all E-Banking services. Now customers prefer to use E-banking products

than traditional banking products. It is still beginning… there is a long way to

go…

73
 REFERENCES

Agnihotri P (2001) IT way of getting cash. The Tribune 121 (146):23

Bhasin T M (2001) E-Commerce in Indian banking. IBA Bull 23 (4 & 5): 18 - 3

Cherian G (2000). As good as it gets. 7he Econ Times 40 (165): 11

Cresci G (2000) It is win-win for brick-and-click, not internet only banks. The

Econ Times 40 (3 9): 8

Dhall K (2000) Banking on e-commerce. 7he Econ Times 40 (117): 9

George N (2000) Clicking on the sleek. 7he Econ Times 40 (165): 11

Goel R (2000) New wave in Indian banking. 7he Econ Times 40 (181): 11

Gopinath m N (2000) One stop shop for all the financial services you need.

Busi World 20 (2): 3 5

Iyer T N (1999) Integrated payment system and role of RBI. Indian Inst Banks

70 (4): 3 - 5

Jayakar R (1999) The best banks. Busi Today 8 (20) : 70 - 87

Joe F and Ortan M (2000) Banks find 'brick' stronger than 'click'. The Econ

Times 40 (1): 7

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Krishna R (2000) Digital cash is dead-long live cards. The Econ Times 40 (34):

15

Krishnamurthy N (2000) Indian banking scene. ISA Bull 22 (4 & 5): 14-15

Pal D T (2001) Indian banking - changing scenario. IBA Bull 23 (3) : 20-23

Povaih R ( 2000) Digital entry AM 11 (2):41

Prasad S (2000) One stop shop for all the financial services you need. Busi

World

20 (2) : 34

Rao M (2000) The fifth wave in banking. 7he Econ Times 40 (139): 7

Rangarajan S (1997) Technology upgradation in banking. IBA Bull 19 (10): 19

Remedias F (2000) How secure is on line banking. The Econ Times 40 (147):

13

Shapping R V (2000) Technology for banks in India - challenges ahead. IBA

Bull 23 (3) : 28 - 31

Shetty N (2000) Its about money. 7he Econ Times 40 (129): 15

Singh R (1999) Banking expectation. IN Bull 21 (9):20

Soldanha B ( 2000) Money machine. Busi World 20 (8) : 54 - 55

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Verma D (2000) Banking on information technology. The Econ Times 40 (37):

76
 QUESTIONNAIRE

Q.1: Are you aware of E-banking system in Ludhiana?

(a) Yes (b) No

Q.2: Out of the following schemes, which schemes are you aware of?
(a) ATM (b) Net banking (c) Mobile banking

(d) EFT (e) Tele banking (f) Credit/Debit Cards

Q.3: Through which sources you came to know about E-banking?

(a) Print Media (b) Internet (c) Bank Representative

(d) Television (e) Others

Q.4: Do you know which banks provide E-banking Services?

__________________________________________________

Q.5: Do you have an ATM Card?

(a) Yes (b) No

If no than proceed to Ques. No11.

Q.6: Rank the following factors for which you go for ATM card.
(a) Wider accessibility
(b) Convenience
(c) Time saving
(d) 24 hrs banking
(e) Speedier
(f) Others

Q.7: For which purpose you use an ATM card?

(a) Cash withdrawal (b) Deposit of cash/cheque

(c) Account statement (d) Balance inquiry

77
 (e) Transfer of funds (f) Others

Q.8: Are you satisfied with the withdrawal limit set by your bank?
(a) Yes (b) No

Q.9: How often you use an ATM card in a month on an average?

(a) 0-5 times (b) 5-10 times

(c) 10-15 times (d) More than 15 times

Q.10: Have you ever experienced any of the following problems while using an
ATM card?

 Not connected/logged to server/

 System does not allow you to avail facilities when you require.
 Unavailability of cash in ATM during festivals, seasons and holidays.
 The machine itself is not working

Q.11: Do you access mobile banking?

(a) Often (b) Sometimes (c) Never

If no than proceed to Ques. No14

Q.12: Which factors you consider for using Mobile Banking?

 Checking of accounts
 Balance inquiry
 For payment of bills
 Transfer of funds

Q.13: Have you ever experienced any of the following problems while using
Mobile Banking?

Delay in delivery of message

 Network connectivity
 Traffic
 Burnout

Q.14: Have you ever availed the facility of Tele banking?

78
 (a) Yes (b) No

If no than proceed to Ques. No16

If yes for which facility

(a) DD making (b) A/c balance inquiry

(c) Cheques inquiry (d) Request for passbook

(e) Stopping payments (f) Rate of interest on deposit schemes

Q.15: Have you ever experienced any of the following problems while using
Tele Banking?

Authenticity of call receiver is not sure

 Poor Customer Care Service
 Traffic
 Lack of awareness among Tele Executives

Q.16: Do you own a Credit Card?

(a) Yes (b) No

If no than proceed to Ques. No19

Q.17: How often you use your Credit Card in a month?

(a) 0-5 times (b) 5-10 times

(c) 10-15 times (e) More than 15 times

Q.18: Have you experienced any of the following problems while using Credit
Card?

High Interest Rate

 Less Credit limit
 Less Acceptance
 Less Credit Time

Q.19: Do you access internet for banking purposes?

(a) Often (b) Sometimes (c) Never

79
Q.20: For what purpose do you use internet banking?
(a) Opening of accounts (b) Online transactions

(c) Payment of bills (d) A/c inquiry

(e) Request for cheque book (f) Other services

Q.21: Have you faced any of the following problems in internet banking?
 Downloading the bank site
 Slow processing speed
 Any transaction problem
 Complexity of the terms

Q.22: What are your views on the following statements of E- Banking?

Statements SA A ID DA SDA

E-banking is safe and secure

E-banking saves time

E-banking is convenient

E-banking will replace traditional banking

E-banking has wider accessibility

E-banking will give rise to frauds

S.A. Strongly agree

A Agree

ID Indifferent

D.A. Disagree

S.D.A Strongly disagree

Q.23: What are the scopes of improvement in E- Banking?

____________________________________________________

____________________________________________________

80
Name: _______________________________________________________

Address: ________________________________________________________

________________________________________________________

Thanks

81