CHAPTER 1INTRODUCTION TO SUBJECT

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INTRODUCTION TO SUBJECT1.1.1 INTRODUCTION OF E-BANKINGThe world is changing at a staggering rate and technology is considered to be the key driver for these changes around us. An analysis of technology and its uses show that it has permeated in almost every aspect of our life. Many activities are handled electronically due to the acceptance of information technology at home as well as at workplace. Slowly but steadily, the Indian customer is moving towards the internet banking. The ATM and the Net transactions are becoming popular. But the customer is clear on one thing that he wants net-banking to be simple and the banking sector is matching its steps to the march of technology. E-banking or Online banking is a generic term for the delivery of banking services and products through the electronic channels such as the telephone, the internet, the cell phone etc. The concept and scope of e-banking is still evolving. It facilitates an effective payment and accounting system thereby enhancing the speed of delivery of banking services considerably. Several initiatives have been taken by the Government of India as well as the RBI (Reserve Bank of India); have facilitated the development of e-banking in India. The government of India enacted the IT Act, 2000, which provides legal recognition to electronic transactions and other means of electronic commerce. The RBI has been preparing to upgrade itself as regulator and supervisor of the technologically dominated financial system. It issued guidelines on the risks and controls in computer and telecommunication systems to all banks, advising them to evaluate the risks inherent in the systems and put in place adequate control mechanisms to address these risks. WHAT IS E-BANKING? Electronic banking is one of the truly widespread avatars of E-commerce the world over. Various authors define E-Banking differently but the most definition depicting the meaning and features of E-Banking are as follows: 1. Banking is a combination of two, Electronic technology and Banking. [ 22 ]

2. Electronic Banking is a process by which a customer performs banking Transactions electronically without visiting a brick-and-mortar institutions. 3. E-Banking denotes the provision of banking and related service through

Extensive use of information technology without direct recourse to the bank by the customer.

Bank Information technology

Customer

NEED FOR E-BANKING One has to approach the branch in person, to withdraw cash or deposit a cheque or request a statement of accounts. In true Internet banking, any inquiry or transaction is processed online without any reference to the branch (anywhere banking) at any time. Providing Internet banking is increasingly becoming a "need to have" than a "nice to have" service. The net banking, thus, now is more of a norm rather than an exception in many developed countries due to the fact that it is the cheapest way of providing banking services. Banks have traditionally been in the forefront of harnessing technology to improve their products, services and efficiency. They have, over a long time, been using [ 33 ]

electronic and telecommunication networks for delivering a wide range of value added products and services. The delivery channels include direct dial up connections, private networks, public networks etc and the devices include telephone, Personal Computers including the Automated Teller Machines, etc. With the popularity of PCs, easy access to Internet and World Wide Web (WWW), Internet is increasingly used by banks as a channel for receiving instructions and delivering their products and services to their customers. This form of banking is generally referred to as Internet Banking, although the range of products and services offered by different banks vary widely both in their content and sophistication.

1.1.2 HISTORY OF E- BANKINGThe precursor for the modern home online banking services were the distance banking services over electronic media from the early '80s. The term online became popular in the late '80s and refers to the use of a terminal, keyboard and TV (or monitor) to access the banking system using a phone line. Home banking can also refer to the use of a numeric keypad to send tones down a phone line with instructions to the bank. Online services started in New York in 1981 when four of the citys major banks (Citibank, Chase Manhattan, Chemical and Manufacturers Hanover) offered home banking services using the videotex system. Because of the commercial failure of videotex these banking services never became popular except in France where the use of videotex (Minitel) was subsidised by the telecom provider and the UK, where the Prestel system was used. The UKs first home online banking services were set up by the Nottingham Building Society (NBS) in 1983 ("History of the Nottingham" Retrieved on 2007-12-14.). The system used was based on the UK's Prestel system and used a computer, such as the BBC Micro, or keyboard (Tandata Td1400) connected to the telephone system and television set. The system (known as 'Homelink') allowed on-line viewing of statements, bank transfers and bill payments. In order to make bank transfers and bill payments, a written instruction giving details of the intended recipient had to be sent to the NBS who set the details up on the Homelink system. Typical recipients were gas, electricity and telephone companies and accounts with other banks. Details of payments to be made were input into the NBS system by the account holder via

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Prestel. A cheque was then sent by NBS to the payee and an advice giving details of the payment was sent to the account holder. BACS was later used to transfer the payment directly. Stanford Federal Credit Union was the first financial institution to offer online internet banking services to all of its members in Oct, 1994. EVOLUTION OF E-BANKING The story of technology in banking started with the use of punched card machines like Accounting Machines or Ledger Posting Machines. The use of technology, at that time, was limited to keeping books of the bank. It further developed with the birth of online real time system and vast improvement in telecommunications during late 1970s and 1980s.it resulted in a revolution in the field of banking with convenience banking as a buzzword. Through Convenience banking, the bank is carried to the doorstep of the customer. The 1990s saw the birth of distributed computing technologies and Relational Data Base Management System. The banking industry was simply waiting for these technologies. Now with distribution technologies, one could configure dedicated machines called front-end machines for customer service and risk control while communication in the batch mode without hampering the response time on the frontend machine. Traditional banking Gunpowder Personalized services, time consuming, limited access Virtual or E-banking Nuclear charged Real time transactions, integrated platform, all time access

Intense competition has forced banks to rethink the way they operated their business. They had to reinvent and improve their products and services to make them more beneficial and cost effective. Technology in the form of E-banking has made it possible to find alternate banking practices at lower costs.

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More and more people are using electronic banking products and services because large section of the banks future customer base will be made up of computer literate customer, the banks must be able to offer these customer products and services that allow them to do their banking by electronic means. If they fail to do this will, simply, not survive. New products and services are emerging that are set to change the way we look at money and the monetary system.

1.1.3 USAGE OF E-BANKINGThe rise in the e-commerce and the use of internet in its facilitation along with the enhanced online security of transactions and sensitive information has been the core reason for the penetration of online banking in everyday life. According to the latest official figures from the office of National Statistics ( ONS 2007) indicate that subscriptions to the internet has grown more than 50% from 25 million in 2005 to 45 million in 2007 in India. It has also been estimated that 60% of the population in India use internet in their daily lives. The fundamental shift towards the involvement of the customer in the financial service provision with the help of the technology especially internet has helped to reduce the costs of financial institutions as well as helped client to use the service at anytime and from virtually anywhere with access to an internet connection. The use of electronic banking has removed personnel that facilitate the transactions and has placed additional responsibilities on the customers to transact with the service. The computerization of the banking operations has made maximum impact on:1) Internal Accounting System 2) Customer service 3) Diversification of system

1.1.4 INTERNET BANKING VERSUS TRADITIONAL BANKINGIn spite of so many facilities that Internet banking offers us, we still seem to trust our traditional method of banking and is reluctant to use online banking. But here are few cases where Internet banking will turn out to be a better option in terms of saving your money.

'Stop payment' done through Internet banking will not cost any extra fees but when done through the branch, the bank may charge you Rs 50 per cheque plus the service tax. Through Internet banking, you can check your transactions at any time of the day, and as many times as you want to. On the other hand, in a traditional method, you get quarterly statements from the bank and if you request for a statement at your required time, it may turn out to be an expensive affair. The branch may charge you Rs 25 per page, which includes only 30 transactions. Moreover, the bank branch would take eight days to deliver it at your doorstep. If the fund transfer has to be made outstation, where the bank does not have a branch, the bank would demand outstation charges. Whereas with the help of online banking, it will be absolutely free for you. As per the Internet and Mobile Association of India's report on online banking 2006, "There are many advantages of online banking. It is convenient, it isn't bound by operational timings, there are no geographical barriers and the services can be offered at a miniscule cost."

1.1.5 IMPACT OF E-BANKING ON TRADITIONAL SERVICESOne of the issues currently being addressed is the impact of e-banking on traditional banking players. After all, if there are risks inherent in going into e-banking there are other risks in not doing so. It is too early to have a firm view on this yet. Even to practitioners the future of e-banking and its implications are unclear. It might be convenient nevertheless to outline briefly two views that are prevalent in the market. The view that the Internet is a revolution that will sweep away the old order holds much sway. Arguments in favor are as follows: E-banking transactions are much cheaper than branch or even phone transactions. This could turn yesterdays competitive advantage - a large branch network - into a comparative disadvantage, allowing e-banks to undercut bricks-and-mortar banks. This is commonly known as the "beached dinosaur" theory. E-banks are easy to set up so lots of new entrants will arrive. Old-world systems, cultures and structures will not encumber these new entrants. Instead, they will be

adaptable and responsive. E-banking gives consumers much more choice. Consumers will be less inclined to remain loyal. E-banking will lead to an erosion of the endowment effect currently enjoyed by the major UK banks. Deposits will go elsewhere with the consequence that these banks will have to fight to regain and retain their customer base. This will increase their cost of funds, possibly making their business less viable. Lost revenue may even result in these banks taking more risks to breach the gap. Portal providers are likely to attract the most significant share of banking profits. Indeed banks could become glorified marriage brokers. They would simply bring two parties together e.g. buyer and seller, payer and payee. The products will be provided by monolines, experts in their field. Traditional banks may simply be left with payment and settlement business even this could be cast into doubt. Traditional banks will find it difficult to evolve. Not only will they be unable to make acquisitions for cash as opposed to being able to offer shares, they will be unable to obtain additional capital from the stock market. This is in contrast to the situation for Internet firms for whom it seems relatively easy to attract investment. There is of course another view which sees e-banking more as an evolution than a revolution. Ebanking is just banking offered via a new delivery channel. It simply gives consumers another service (just as ATMs did). Like ATMs, e-banking will impact on the nature of branches but will not remove their value. Experience in Scandinavia (arguably the most advanced e-banking area in the world) appears to confirm that the future is clicks and mortar banking. Customers want full service banking via a number of delivery channels. The future is therefore Martini Banking (any time, any place, anywhere, anyhow). Traditional banks are starting to fight back. The start-up costs of an e-bank are high. Establishing a trusted brand is very costly as it requires significant advertising expenditure in addition to the purchase of expensive technology (as security and privacy are key to gaining customer approval). E-banks have already found that retail banking only becomes profitable once a large critical mass is achieved. Consequently many e-banks are limiting themselves to providing a tailored service to the better off. Nobody really knows which of these versions will triumph. This is something that the

market will determine. However, supervisors will need to pay close attention to the impact of e-banks on the traditional banks, for example by surveillance of:

strategy customer levels earnings and costs advertising spending margins funding costs Merger opportunities and threats, both in the UK and abroad.

1.1.6 DIAGRAM OF E-BANKING SYSTEM

1.1.7 E-BANKING PRODUCTSAutomated Teller Machine (ATM): These are cash dispensing machine, which are frequently seen at banks and other locations such as shopping centers and building societies. Their main purpose is to allow customer to draw cash at any time and to provide banking services where it would not have been viable to open another branch e.g. on university campus. An automated teller machine or automatic teller machine (ATM) is a computerized telecommunications device that provides a financial institution's customers a method of financial\ transactions in a public space without the need for a human clerk or bank teller. On most modern ATMs, the customer identifies him or herself by inserting a plastic ATM card with a magnetic stripe or a plastic smartcard with a chip that contains his or her card number and some security information, such as an expiration date or CVC (CVV). Security is provided by the customer entering a personal identification number (PIN). Using an ATM, customers can access their bank accounts in order to make cash withdrawals (or credit card cash advances) and check their account balances. Many ATMs also allow people to deposit cash or checks, transfer money between their bank accounts, pay bills, or purchase goods and services. Some of the advantages of ATM to customers are: Ability to draw cash after normal banking hours Quicker than normal cashier service Complete security as only the card holder knows the PIN Does not just operate as a medium of obtaining cash. Customer can sometimes use the services of other bank ATMs.

Tele banking or Phone Banking: Telephone banking is relatively new Electronic Banking Product. However it is fastly becoming one of the most popular products. Customer can perform a number of transactions from the convenience of their own home or office; in fact from anywhere they have access to phone. Customers can do following:-

Check balances and statement information Transfer funds from one account to another Pay certain bills Order statements or cheque books Demand draft request

This facility is available with the help of Voice Response System (VRS). This system basically, accepts only TONE dialed input. Like the ATM customer has to follow particular process, initially account number and telephone PIN are fed for the process to start. Also the VRS system provides the users within additional facilities such as changing existing password with the new desired, information about new products, current interest rates etc. Mobile Banking: Mobile banking comes in as a part of the banks initiative to offer multiple channels banking providing convenience for its customer. A versatile multifunctional, free service that is accessible and viewable on the monitor of mobile phone. Mobile phones are playing great role in Indian banking- both directly and indirectly. They are being used both as banking and other channels. Internet Banking: The advent of the Internet and the popularity of personal computers presented both an opportunity and a challenge for the banking industry. For years, financial institutions have used powerful computer networks to automate million of daily transactions; today, often the only paper record is the customers receipt at the point of sale. Now that their customers are connected to the Internet via personal computers, banks envision similar advantages by adopting those same internal electronic processes to home use. Banks view online banking as a powerful value added tool to attract and retain new customers while helping to eliminate costly paper handling and teller interactions in an increasingly competitive banking environment. In India first one to move into this area was ICICI Bank. They started web based banking as early as august 1997.

1.1.8 TYPES OF INTERNET BANKING OR E-BANKINGUnderstanding the various types of Internet banking will help examiners assess the risks involved. Currently, the following three basic kinds of Internet banking are being employed in the marketplace.

Informational- this is the basic level of Internet banking. Typically, the bank has marketing information about the banks products and services on a standalone server. The risk is relatively low, as informational systems typically have no path between the server and the banks internal network. This level of Internet banking can be provided by the banks or outsourced. While the risk to a bank is relatively low, the server or web site may be vulnerable to alteration. Appropriate controls therefore must be in place to prevent unauthorized alterations to the banks server or web site.

Communicative- this type of Internet banking systems and the customer. The interaction between the banks system and the customer. The interaction may be limited to electronic mail, account enquiry, loan applications, or static file updates (name and address change). Because these servers may have a path to the banks internal networks, the risk is higher with this configuration than with informational systems. Appropriate controls need to be in the place to prevent, monitor, and alert management of any unauthorized attempt to access the banks internal networks and computer systems. Virus controls also become much more critical in this environment.

Transactional- this level of Internet banking allows customers to execute transactions. Since a path typically exists between the server and the bank or outsourcers internal network, this is the highest risk architecture and must have the strongest controls. Customer transactions can include accessing accounts, paying bills, transferring funds etc.

1.1.9 FEATURES OF E-BANKINGTransactional: (e.g. performing a financial transaction such as an account to account transfer, paying a bill or applications like applying for a loan, new account, etc.) Electronic Bill Presentment and Payment (EBPP) Funds transfer between customers own checking and savings accounts, or to

another customers account. Investment purchase or sale. Loan application and transactions such as repayments.

Non-transactional: (e.g. online statements, Check links, Chat, Co-browsing etc.) Financial Institution Administration- features allowing financial institutions to manage the online experience of their end users. ASP/ Hosting Administration features allowing the hosting company to administer the solution across financial institution.

1.1.10 ADVANTAGES OF E-BANKING: Convenience- Unlike your corner bank, online banking sites never close; theyre available 24 hours a day, seven days a week, and theyre only a mouse click away. With pressures on time and longer travelling periods, more and more people find it tiresome waiting in queues. People want flexibility, and Internet banking offers just that. Ubiquity- If youre out of state or even out of the country when a money problem arises, you can log on instantly to your online bank and take care of business, 24\7. Transaction speed- Online bank sites generally execute and confirm transactions at or quicker than ATM processing speeds. Efficiency-You can access and manage all of your bank accounts, including IRAs, CDs, even securities, from one secure site. Effectiveness- Many online banking sites now offer sophisticated tools, including account aggregation, stock quotes, rate alert and portfolio managing

program to help you manage all of your assets more effectively. Most are also compatible with money managing programs such as quicken and Microsoft money. Cheaper alternative: - With increasing competition, it seems to be the cost factor that is driving banks to offer the facility. The Internet is still a very cheap alternative to opening a physical branch, and most of the push seems to be coming from the supply side. The costs of a banking service through the Internet form a fraction of costs through conventional methods. From snob value to necessity:- A couple of years ago, there was a belief even among bankers that customers opening new accounts wanted the online banking facility, just to "feel good" and very few of them actually used the services. Today, bankers believe that the trend from `nice to have' is changing to `need to have'. The "snob value" of banking with an organisation that could offer service on the Internet has given way to a genuine necessity, he feels. "It all depends on how busy a person is." DISADVANTAGES OF INTERNET BANKING Start-up may take time-In order to register for your banks online program, you will probably have to provide ID and sign a form at a bank branch. If you and your spouse wish to view and manage their assets together online, one of you may have to sign a durable power of attorney before the bank will display all of your holdings together. Learning curves- Banking sites can be difficult to navigate at first. Plan to invest some time and\or read the tutorials in order to become comfortable in your virtual lobby. Bank site changes- Even the largest banks periodically upgrade their online programs, adding new features in unfamiliar places. In some cases, you may have to re-enter account information.

1.1.11 HOW E-BANKING CAN EASE YOUR LIFEIndian banks are trying to make your life easier. Not just bill payment, you can make investments, shop or buy tickets and plan a holiday at your fingertips. In fact, sources

from ICICI Bank tell us, "Our Internet banking base has been growing at an exponential pace over the last few years. Currently around 78 per cent of the bank's customer base is registered for Internet banking." To get started, all you need is a computer with a modem or other dial-up device, a checking account with a bank that offers online service and the patience to complete about a one-page application-which can usually be done online. You can avail the following services. 1. Bill payment service: Each bank has tie-ups with various utility companies, service providers and insurance companies, across the country. It facilitates the payment of electricity and telephone bills, mobile phone, credit card and insurance premium bills. To pay bills, a simple one-time registration for each biller is to be completed. Standing instructions can be set, online to pay recurring bills, automatically. One-time standing instruction will ensure that bill payments do not get delayed due to lack of time. Most interestingly, the bank does not charge customers for online bill payment. 2. Fund transfer: Any amount can be transferred from one account to another of the same or any another bank. Customers can send money anywhere in India. Payees account number, his bank and the branch is needed to be mentioned after logging in the account. The transfer will take place in a day or so, whereas in a traditional method, it takes about three working days. ICICI Bank says that online bill payment service and fund transfer facility have been their most popular online services. 3. Credit card customers: Credit card users have a lot in store. With Internet banking, customers can not only pay their credit card bills online but also get a loan on their cards. Not just this, they can also apply for an additional card, request a credit line increase and God forbid if you lose your credit card, you can report lost card online. 4. Railway pass: This is something that would interest all the aam janta. Indian Railways has tied up with ICICI bank and you can now make your railway pass for local trains online. The pass will be delivered to you at your doorstep. But the facility is limited to Mumbai, Thane, Nasik, Surat and Pune. The bank would just charge Rs 10 + 12.24 percent of service tax.

5. Investing through Internet banking: Opening a fixed deposit account cannot get easier than this. An FD can be opened online through funds transfer. Online banking can also be a great friend for lazy investors. Now investors with interlinked demat account and bank account can easily trade in the stock market and the amount will be automatically debited from their respective bank accounts and the shares will be credited in their demat account. Moreover, some banks even give the facility to purchase mutual funds directly from the online banking system. So it removes the worry about filling those big forms for mutual funds, they will now be just a few clicks away. Nowadays, most leading banks offer both online banking and demat account. However if the customer have there demat account with independent share brokers, then need to sign a special form, which will link your two accounts. 6. Recharging your prepaid phone: Now there is no need to rush to the vendor to recharge the prepaid phone, every time the talk time runs out. Just top-up the prepaid mobile cards by logging in to Internet banking. By just selecting the operator's name, entering the mobile number and the amount for recharge, the phone is again back in action within few minutes. 7. Shopping at your fingertips: Leading banks have tie ups with various shopping websites. With a range of all kind of products, one can shop online and the payment is also made conveniently through the account. One can also buy railway and air tickets through Internet banking.

1.1.12 INTERNET BANKING IN INDIAThe Reserve Bank of India constituted a working group on Internet Banking. The group divided the internet banking products in India into 3 types based on the levels of access granted. They are: Information Only System: General purpose information like interest rates, branch location, bank products and their features, loan and deposit calculations are provided in the banks website. There exist facilities for downloading various types of application forms. The communication is normally done

through e-mail. There is no interaction between the customer and bank's application system. No identification of the customer is done. In this system, there is no possibility of any unauthorized person getting into production systems of the bank through internet. Electronic Information Transfer System: The system provides customer-

specific information in the form of account balances, transaction details, and statement of accounts. The information is still largely of the 'read only' format. Identification and authentication of the customer is through password. The information is fetched from the bank's application system either in batch mode or off-line. The application systems cannot directly access through the internet. Fully Electronic Transactional System: This system allows bi-directional capabilities. Transactions can be submitted by the customer for online update. This system requires high degree of security and control. In this environment, web server and application systems are linked over secure infrastructure. It comprises technology covering computerization, networking and security, inter-bank followings: o ATM o DEBIT CARDS o SMART CARDS o MOBILE BANKING payment gateway and legal infrastructure. It includes the

1.1.13 THE INDIAN SCENARIODRIVERS OF CHANGE: Advantages previously held by large financial institutions have shrunk considerably. The Internet has levelled the playing field and afforded open access to customers in the global marketplace. Internet banking is a costeffective delivery channel for financial institutions. Consumers are embracing the many benefits of Internet banking. Access to one's accounts at anytime and from any location via the World Wide Web is a convenience unknown a short time ago. Thus, a bank's Internet presence transforms from 'brouchreware' status to 'Internet banking' status once the bank goes through a technology integration effort to enable the

customer to access information about his or her specific account relationship. The six primary drivers of Internet banking includes, in order of primacy are: Improve customer access Facilitate the offering of more services Increase customer loyalty Attract new customers Provide services offered by competitors Reduce customer attrition

INDIAN BANKS ON WEB The banking industry in India is facing unprecedented competition from nontraditional banking institutions, which now offer banking and financial services over the Internet. The deregulation of the banking industry coupled with the emergence of new technologies, are enabling new competitors to enter the financial services market quickly and efficiently. Indian banks are going for the retail banking in a big way. However, much is still to be achieved. This study that was conducted by students of IIML shows some interesting facts: Throughout the country, the Internet Banking is in the nascent stage of development (more than 50 banks are offering varied kind of Internet banking services). In general, these Internet sites offer only the most basic services. 55% are so called 'entry level' sites, offering little more than company information and basic marketing materials. Only 8% offer 'advanced transactions' such as online funds transfer, transactions & cash management services. Foreign & Private banks are much advanced in terms of the number of sites & their level of development.

1.1.14 EMERGING CHALLENGESInformation technology analyst firm, the Meta Group, recently reported "financial institutions who don't offer home banking by the year 2000 will become marginalized." By the year of 2002, a large sophisticated and highly competitive Internet Banking Market will develop which will be driven by Demand side pressure due to increasing access to low cost electronic services. Emergence of open standards for banking functionality. Growing customer awareness and need of transparency. Global players in the fray Close integration of bank services with web based E-commerce or even disintermediation of services through direct electronic payments (E- Cash). More convenient international transactions due to the fact that the Internet along with general deregulation trends eliminates geographic boundaries. Move from one stop shopping to 'Banking Portfolio' i.e. unbundled product purchases. Certainly some existing brick and mortar banks will go out of business. But that's because they fail to respond to the challenge of the Internet. The Internet and its underlying technologies will change and transform not just banking, but also all aspects of finance and commerce. It represents much more than a new distribution opportunity. It will enable nimble players to leverage their brick and mortar presence to improve customer satisfaction and gain share. It will force lethargic players who are struck with legacy cost basis, out of business-since they are unable to bring to play in the new context.

1.1.15 E-BANKING WORLD WIDESince its inception, Internet banking has experienced strong and sustained growth. World Bank report on leapfrogging in e-finance pointed out that the three countries with impressive progress in information technology in this sense are Estonia, Republic of Korea and Brazil. Creation of the worlds leading electronic banking systems has been done at a remarkably low cost compared to other world-class internet banks.

In the European Union, 60 million people, representing 18 per cent of the adult population, use online banking In France, the number of online banking accounts is recording an annual growth rate of 75 per cent. However, Estonia is a country that has become a leader in Internet banking (which now reaches 18 per cent of the population), not only among Eastern European countries but in world rankings, through a combination of easy to- use software, free-of-charge transactions and behavior changes resulting from the influence of the Nordic countries IT culture on Estonia. A sector in which Latin America is seems to be performing better than in other industries is online retail banking. Growth in this area has been driven by traditional banks, which have used the online channel to generate customer loyalty and improve their operating margins. Two Brazilian banks, Bradesco and Banco do Brasil; have thus achieved more than 4 million online customers each. Mexico is another leader of Internet banking in Latin America. It adopted legislation providing for the development of both E-Commerce and e-finance. In Mexico, the number of online bank users more than tripled from 700,000 in 2000 to 2.4 million in 2001, and it could reach 4.5 million in 2005 (E-Marketer 2002b). One reason for the success of Latin American banks online ventures seems to be the attention they have paid to providing retail customers with multiple ways to access their accounts (Internet, telephone, wireless). However, given that the share of the total population that actually has a bank account is relatively small, the expansion of Latin American online banking may be facing a bottleneck. Compared with overall Internet usage estimated at 4.4 million in Australia, the major banks together have attracted only 1.2 million to online banking. The Internet is a global phenomenon and so is e-finance. Its deployment is not limited to developed countries, and indeed some developing countries such as India and the Republic of Korea are experiencing particularly strong growth in E-Banking. In Asia one of the most impressive records has been achieved by the Republic of Korea. The Republic of Korea is leading in online brokerage and in mobile banking. In South-East Asia Internet banking is also developing rapidly in Thailand, Malaysia, and Singapore and to a lesser extent, in the Philippines.

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In Bangladesh there is a large gap between the computerization of foreign banks and that of local commercial banks and as regards the state of their intra- and inter-branch online networks. However, 75 per cent of local banks are planning to introduce EBanking, which implies very dynamic improvements. Apart from North and South Africa the Sub Saharan Africa is the region that is seriously lagging behind in Internet banking, although it is giving to the rest of the world the good example of microfinance developments.

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CHAPTER 1.2INTRODUCTION TO HDFC & ICICI

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1.2.1 HDFC COMPANY PROFILEINTRODUCTION HDFC Bank (NYSE: HDB), one amongst the firsts of the new generation, tech-savvy commercial banks of India, was incorporated in August 1994, after the Reserve Bank of India allowed setting up of Banks in the private sector. The Bank was promoted by the Housing Development Finance Corporation Limited, a premier housing finance company (set up in 1977) of India. HISTORY The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. BRANCH NETWORK Currently HDFC Bank has 1416 branches, 3382 ATMs, in 550 cities in India, and all branches of the bank are linked on an online real-time basis. The bank offers many innovative products & services to individuals, corporate, trusts, governments, partnerships, financial institutions, mutual funds, insurance companies. It is a path breaker in the Indian banking sector. In 2007 HDFC Bank acquired Centurion Bank of Punjab taking its total branches to more than 1,000. Though, the official license was given to Centurion Bank of Punjab branches, to continue working as HDFC Bank branches, on May 23, 2008. BUSINESS FOCUS HDFC Bank's mission is to be a World-Class Indian Bank. The Bank's aim is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services in the segments that the bank operates in and to achieve healthy [2 323

growth in profitability, consistent with the bank's risk appetite. The bank is committed to maintain the highest level of ethical standards, professional integrity and regulatory compliance. HDFC Bank's business philosophy is based on four core values: Operational Excellence, Customer Focus, Product Leadership and People. BUSINESS PROFILE HDFC Bank caters to a wide range of banking services covering commercial and investment banking on the wholesale side and transactional/branch banking on the retail side. The bank has three key business areas:

Wholesale Banking Services : The Bank's target market is primarily large, blue chip manufacturing companies in the Indian corporate sector and to a lesser extent, emerging midsized corporate. For these corporate, the Bank provides a wide range of commercial and transactional banking services, including working capital finance, trade services, transactional services, cash management, etc. The bank is also a leading provider of structured solutions that combine cash' management services with vendor and distributor finance for facilitating superior supply chain management for its corporate customers.

Retail Banking Services: The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one stop window for all his/her banking requirements. The products are backed by world-class service and delivered to the customers through the growing branch network, as well as through alternative delivery channels like ATMs, Phone Banking, Net Banking and Mobile Banking. The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus and the Investment Advisory Services programs have been designed keeping in mind needs of customers who seek distinct financial solutions, information and advice on various investment avenues. The Bank also has a wide array of retail loan products including Auto Loans, Loans against marketable securities, Personal Loans and Loans for Two-wheelers. Its also a leading provider of Depository Services to retail customers, offering customers the facility to hold their investments in electronic form.

HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA Electron) and issues the MasterCard Maestro debit card as well. The debit card allows the user to directly debit his account at the point of

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purchase at a merchant establishment, in India and overseas. The Bank launched its credit card in association with VISA in November 2001. The Bank is also one of the leading players in the "merchant acquiring" business with over 25,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments. The Bank is well positioned as a leader in various net-based B2C opportunities including a wide range of Internet banking services for Fixed Deposits, Loans, Bill Payments., etc. Treasury Operations: Within this business, the bank has three main product areasForeign Exchange and Derivatives, Local Currency Money Market & Debt Securities, and Equities With the liberalization of the financial markets in India, corporate need more sophisticated risk management information, advice and product structures, These and fine pricing on various treasury products are provided through the bank's Treasury team. To comply with statutory reserve requirements, the bank is required to hold 25% of its deposits in government securities. The Treasury business is responsible for managing the returns and market risk on this investment portfolio.

1.2.2 HDFC BANK SERVICESNET BANKING: Net Banking is HDFC Bank's Internet Banking service. Providing up-to-the-second account information, Net Banking lets you manage your account from the comfort of your mouse - anytime, anywhere. HDFC Bank Net Banking Secure Access HDFC Bank has implemented a new security solution for its customers - Secure Access .As your security is our top priority, we have initiated the Secure Access solution to protect you from fraudsters and hackers - who are looking to find a way to access your account. Currently following transactions are covered under Secure Access Transfer from one HDFC Bank account to other HDFC Bank account holders (under distinct customer ID) Transfer from HDFC Bank account to any other Bank's account (also known as RTGS & NEFT) Visa Money Transfer Third Party Demand Draft through Net Banking [2 525

Third Party Transfer Third-Party Transfer is a Net Banking feature for which you will need your unique Customer ID and IPIN (password). Login to Net Banking to confirm that your ID is active in our records. What is TPT? With Third-Party Transfer (TPT) you can transfer funds online from your HDFC Bank account to another HDFC Bank/Other Bank account (beneficiary), anywhere in India. This is a real-time transaction and the debit and credit will reflect in the respective accounts immediately. Third Party Transfer can be initiated: From your Account to other Bank Accounts using National electronic Funds Transfer (NEFT) - Funds will be credited to the beneficiary account in two working days Real Time Gross Settlement (RTGS) - Funds will be credited to the beneficiary account on the same working day. From your HDFC Bank account to other HDFC Bank accounts (different cuts ids). From your account to any Visa Card (Debit or Credit) within India. For issuance of Third Party Demand Drafts from your account.

You can transfer up to a maximum of Rs. 10, 00,000/- per cuts id per day using this facility. This amount can be transferred in parts or on a single basis. INSTA IPIN FACILITY It has been our constant endeavor to make banking a hassle-free experience for you. At HDFC Bank, we understand that it is quite possible to forget even important things like your Net Banking password (IPIN). But that should not be holding you back from accessing your bank account. You can now re-generate your Net Banking password instantly with the help of your Debit Card details and start using your new password (IPIN) immediately. No need to request for a new password and await its arrival. And

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it is even better as you select your new HDFC Bank password yourself so it becomes much easier to remember the same. CREDIT CARDS ONLINE We take great pleasure in announcing that the HDFC Bank Net Banking service is now available for Credit Cards also. Now using your HDFC Bank Credit Card has become more convenient and time saving. You can now access your Credit Card account from home or office or even while traveling. With Net Banking you can view your card account information and do much more just at the click of a button. Currently the following Credit Cards Net banking features are available: Account Information Unbilled Transactions Credit Card Statement Download Card Statement (upto last 6 months)

ONEVIEW: One View is a revolutionary service from HDFC Bank that allows you to manage multiple accounts in different banks through one single online interface. If you are an HDFC Bank customer and have one or more accounts with Citibank, ICICI Bank, HSBC India, Standard Chartered Bank then One View is just right for you. FEATURES & BENEFITS No need to individually log on to internet banking of every account. Just log on to One View and manage upto FIVE accounts in different banks. Remember only ONE password. No charges whatsoever

HOW SECURE IS ONEVIEW? One View gives you the world class banking security and technology sophistication you'd expect of HDFC Bank, with features such as: Robust firewall protection makes it nearly impossible to break through. All information is transmitted using advanced 128 bit Secure Socket Layer (SSL) encryption technology. Automatic time-outs ensure that your account details are not viewed by others. You can only view your accounts and cannot transact, so your money is absolutely safe.

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INSTA ALERTS: Now you can get regular updates on your bank account on your mobile phone or email ID. Just register for our Insta Alert service and receive updates on your account as and when the select transaction happens - all this without visiting the branch or ATM.You can register for any or all of the following alerts: Debit transactions greater than Rs. 5,000/ Rs.10, 000/ Rs. 20,000/Rs. 50,000 Credit in account greater than Rs. 5,000/ Rs.10, 000/ Rs. 20,000/Rs. 50,000 Account Balance below Rs. 5,000/ Rs.10, 000/ Rs. 20,000/Rs. 50,000Weekly account balance Salary Credits Utility bill payment due Alert

MOBILE BANKING: Your Mobile is now your bank! Now access your bank account and conduct a host of banking transactions through your mobile, with our unique Mobile Banking service. You can check your account level information such as balance details, mini statement, and cheque status as well as carry out financial transactions such as Funds Transfer using HDFC Bank Mobile Banking service. FEATURES OF MOBILE BANKING Using our Mobile Banking service, you can avail of a host of features at your finger tips Perform funds transfers Get your balance details Obtain your last 3 transaction details Request a cheque book Stop a cheque payment Enquire cheque status Request an account statement Get Fixed Deposit details Request for I-PIN generation Request a cheque book

AUTOMATED TELLER MACHINE: With wide spread network of 4,000 ATMs across India, enjoy the following benefits at your convenience.

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24-hour access to Cash - Withdraw up to Rs.10, 000/- per day on your ATM Card and up to Rs. 15,000 on your Debit Card.

Personalized Cash Withdrawals Save time on your cash withdrawal transactions by pre-setting your preferred language / account / amount.

View Account Balances & Mini-statements - Get details of the last 9 transactions on your account with the mini-statement, along with your account balance.

Change ATM PIN - Change your ATM PIN at any given point in time. Order a Cheque Book / Account Statement HDFC Bank Credit Card Payment - Make payment of your HDFC Bank Credit Card dues using the ATM. The primary account of your Debit / ATM card will be debited.

Deposit Cash or Cheques - Deposit Cash or Cheques into your account without visiting the Branch. Available at Non-Branch HDFC Bank ATMs

Transfer Funds between accounts Transfer money between your accounts. Both accounts must be linked to your ATM / Debit Card. Maximum of 16 A/Cs (Savings / Current) can be linked to a card.

REFILL YOUR PREPAID MOBILE Refill your prepaid mobile using Prepaid Mobile Refill service instantly. HDFC Bank offers Prepaid Mobile Refill, which allows you to recharge your prepaid mobile phone anytime from anywhere and pay directly from your Bank account. Avoid hassles of withdrawing cash or searching for a retailer for buying the recharge card. You can avail of this service in two convenient ways: Prepaid Mobile Refill on Internet Prepaid Mobile Refill on ATM

Prepaid Mobile Refill on Internet You can now recharge your Prepaid Mobile phone right here on the HDFC Bank website. Enjoy Convenience of: Recharging your prepaid mobile phone from the comfort of your home or office anytime. [2 929

Paying directly from your Bank account - avoid the hassle of withdrawing cash from an ATM or Branch. To avail the facility, customer has to go to the recharge page and do the following steps: Select Mobile Operator Name, enter Mobile Number, Amount for Top-Up Confirm payment by logging into Net Banking using your Customer ID and IPIN (Net Banking password). Depending on the recharge option chosen, your phone will be recharged in a few seconds. PHONE BANKING: Your phone is now your bank. When you dial in to Phone Banking, a voice prompt will guide you through the various transactions. You may also talk to a Phone Banker, who will provide you with the required assistance. Avail of the following services via Phone Banking:

Check your account balance - Get up-to-the-second details of your Savings or Current Accounts and your Fixed Deposits. You can also get the details of the last 5 transactions on your account, or have a mini statement of last 9 transactions faxed across to you.

Enquire on the cheque status - You can use Phone Banking to check on the status of cheques issued or deposited from anywhere in India.

Order a Cheque Book / Account Statement - Just call Phone Banking and get your Cheque Book or latest Account Statement delivered at your doorstep.

Stop Payment - Stop payment of a single cheque or a series of cheques, 24 hours a day. Loan Related queries - Get details of the outstanding loan amount, enquire about your loan account, request for an interest certificate and repayment schedule, etc. Just call Phone Banking in your city and dial 4 to speak to our Phone Banker

Open a Fixed deposit or Enquire on your Fixed deposits / TDS*# - Talk to our Phone Banker to easily open a Fixed Deposit over the phone, by simply authorizing a transfer of funds from your Savings Account.

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Transfer Funds between accounts*# - You can also transfer money from one of your accounts to another. Both accounts must be linked to your Customer ID. You can transfer amounts upto Rs 1 Lac in a single day.

Pay your bills - Pay your cellular, telephone, electricity and HDFC Bank Credit Card bills through Phone Banking using Bill Pay, a comprehensive bill payments solution.

Report loss of your ATM / Debit Card / Forex Plus Card - If your ATM / Debit / Forex plus Card are lost, call any Phone Banking number to deactivate your card(s).

Learn about all our other products - Get details on HDFC Bank products & services by talking to our Phone Banker.

Enquire about latest Interest / Exchange rates - Get latest Interest rates on Deposits and Foreign Exchange rates by talking to our Phone Banker.

Request a Demand Draft / Manager's Cheque #** - Call Phone Banking and get a Demand Draft / Manager's Cheque delivered to your doorstep.

Demat Related Queries - Get the Account holding details, Transaction details, ISIN Number of a scrip, Status of Depository Slips, details of Client Master list (Dividend account, Charges Debit account, PAN etc.) & others. Call Phone Banking in your city & dial 5 to speak to our Phone Banker.

1.2.3 ICICI BANK PROFILEINTRODUCTION ICICI Bank is India's second-largest bank with total assets of Rs. 3,562.28 billion (US$ 7 billion) at December 31, 2009 and profit after tax Rs. 30.19 billion (US$ 648.8 million) for the nine months ended December 31, 2009. The Bank has a network of 1,723 branches and about 4,883 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank currently has [3 131

subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). HISTORY ICICI Bank is India's second-largest bank with total assets of Rs. 3,562.28 billion (US$ 77 billion) at December 31, 2009 and profit after tax Rs. 30.19 billion (US$ 648.8 million) for the nine months ended December 31, 2009. The Bank has a network of 1,723 branches and about 4,883 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

1.2.4 ICICI BANK SERVICESMOBILE BANKING: Conducting banking operations using the mobile phone has been fast catching up around the world for its convenience. We have launched mobile services in India to convenience our customers. You can do your banking operations sitting anywhere, anytime. It is discreet, personalized and on your phone. Use it when [3 232

at a meeting, in a movie hall, while having your Sunday brunch or at any other place you cannot usually expect to get the information you want from your bank. It is an empowering and user-friendly mode of accessing your bank account. To get started, take a look at the menu on the left and go through our various services. You can now access the following ICICI Bank services via your mobile phone: Bank Account Funds Transfer* Credit Card Balance Details Demat Holding Enquiry Loan Provisional Income Certificate Final Income Tax Locate Branch Other Services

Bill Payment+

Last

Payment Transaction Status

Details

Tax Certificate

Locate ATM

Balance Enquiry Last Transactions 5

Payment Date

Due

Bill Enquiry

Reset Letter

Phone Banking Number

Reward Status

Point

ISIN Enquiry

Rescheduled Letter Loan Agreement Copy

Prepaid Mobile Recharge* Apply for

Cheque Request

Book

Bank Products Status of

Stop

Cheque

Service Request Raised

Request

Cheque Status Enquiry

INSTA BANKING [3 333

Insta Banking makes your banking simpler, faster, and more convenient. Through these 5 great channels - Internet Banking, Mobile Banking, ICICI Bank ATMs,

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Instant Voice Response (IVR) Banking and iMobile - you can do your day today banking anytime, anywhere. INTERNET BANKING ICICI Bank brings convenience and security to your desktop. Now you can check your account balance, transfer funds, download your account statement, and pay bills or even book tickets online, from the comfort of your home or in the middle of a busy day at the office. Explore the power of simpler and smarter Banking whether you are a Banking, Credit Card, Loan or Demat customer. ATM BANKING Bank 24/7 through a widespread network of ICICI Bank ATMs making life easy and convenient for you. User-friendly graphic screens and easy to follow instructions available in a choice of local languages, makes ATM Banking with ICICI Bank a smoother experience. ICICI Bank's widespread network of ATMs makes it easy and convenient for you to bank 24/7. With over 4,883 + ATMs and 1,626 + branches set up within India, we ensure that you are never too far from an ICICI Bank ATM. Userfriendly graphic screens and easy to follow instructions in a choice of local languages, makes ATM Banking with ICICI Bank a smooth experience. ICICIBank.com also features the easy to access ATM Locator, making it easy for you to find an ICICI Bank ATM in your neighbourhood. The ICICI Bank edge

Cash withdrawal up to Rs. 25,000/- per day from your account (50,000 for HNI's). Fast Cash option facilitates withdrawal of prefixed amounts; Ultra Fast Cash allows withdrawal of Rs. 3000/- in one shot Check your ledger balance and available balance Print out your Mini Statement which displays your last 8 transactions and the current balance Deposit Cash / Cheques at all full function ATMs; cash deposited in ATMs will be credited to the account on the same day if deposited before the clearing and cheques are sent for clearing on the next working day Transfer funds from one account to another linked account in the same branch. [3 434

Change the Personal Identification Number (PIN) of your ATM or Debit card Pay bills, make donations to temples / trusts, buy internet packs, airtime recharges for prepaid mobile phones, etc. Request for a cheque book from our ATMs; concerned branch dispatches it to reach you within 10 working days No charge is levied on ICICI Bank customers for transacting through ICICI Bank's ATMs. But, if the minimum quarterly average balance is not maintained in your savings account, first 6 transactions in the quarter are free and thereafter, Rs. 25 per transaction is charged.

I MOBILE ICICI Bank's iMobile is a breakthrough innovation in banking that allows you to transfer funds, make your credit card payments, pay utility bills, check your balance and do lots more, for free. So why wait anymore. Just download the iMobile application on your phone by sending us an SMS and experience iMobile. . ICICI Bank brings to you the 2nd generation iMobile that has newer features, smarter interface, quicker navigation and enhanced functionality. ICICI Bank's iMobile is your answer to banking on the move. The next generation iMobile is your key to a faster, easier and simplified banking service. Using GPRS enabled on your mobile handset or through SMS, iMobile helps you to connect directly to your bank account. This Rich Client Based Application needs to be installed on your mobile thereby enabling a single click access to your account. Services available with i Mobile:

Payment of utility bills and credit card bills Transfer of funds to any bank account Payment of insurance premium Placement of service request such us ordering of cheque books, bank account statements, cheque status and balance enquiry

Access the following ICICI Bank services via iMobile:

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Bank Account Funds transfer Bill Payment Balance Enquiry Last 5 transactions Cheque Book Request Stop Cheque request Cheque status Enquiry

Credit Card Balance Details Last Payment Details Payment Due Date Reward Point Status

Demat A/c Holding Enquiry Transaction Status Bill Enquiry ISIN Enquiry

Loan A/c Provisional IT Certificate Final IT Certificate Reset Letter Rescheduled Letter Loan Agreement Copy

M Shop Prepaid Mobile Recharge

Other Services Status of Service Request Raised Locate US [3 636

IVR BANKING Find answers to all your banking needs from your phone. ICICI Bank's Instant Voice Response (IVR) Banking is free of charge, fully automated and at the same time userfriendly. Just having an ATM PIN for your account and credit card ensures that your transactions are secure. Saving A/C Credit cards Demat Bonds Others

TV BANKING At ICICI Bank, we've introduced India to an all new way of banking. TV Banking. This pioneering initiative now enables you to get information regarding loans, accounts, deposits and a lot more while you're watching that exciting cricket match or your favorite sitcom.

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CHAPTER 2REVIEW OF LITERATURE

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2.1.1 REVIEW OF LITERATUREMalhotra, Pooja & Singh, B. (2010) This study is an attempt to present the present status of Internet banking in India and the extent of Internet banking services offered by Internet banks. In addition, it seeks to examine the factors affecting the extent of Internet banking services. The data for this study are based on a survey of bank websites explored during July 2008. The sample consists of 82 banks operating in India at 31 March 2007. Multiple regression technique is employed to explore the determinants of the extent of Internet banking services. The results show that the private and foreign Internet banks have performed well in offering a wider range and more advanced services of Internet banking in comparison with public sector banks. Among the determinants affecting the extent of Internet banking services, size of the bank, experience of the bank in offering Internet banking, financing pattern and ownership of the bank are found to be significant. The primary limitation of the study is the scope and size of its sample as well as other variables (e.g. market, environmental, regulatory etc) which may have an effect on the decision of the banks to offer a wide range of Internet banking services. The purpose of the study is to help fill significant gaps in knowledge about the Internet banking landscape in India. The findings are expected to be of great use to the government, regulators, commercial banks, and other financial institutions, e.g. co-operative banks planning to offer Internet banking, bank customers and researchers. The bankers as well as society at large will come to know where the banks lag in terms of adoption of Internet banking and in providing different products and services. An understanding of the factors affecting the extent of Internet banking services is essential both for economists studying the determinants of growth and for the creators and producers of such technologies. Moreover, this paper contributes to the empirical literature on diffusion of financial innovations, particularly Internet banking, in a developing country, i.e. India. Polaris Software Lab (2010) In this study Polaris Software Lab Limited (POLS.BO), a leading Financial Technology Company, launched Intellect(TM) PRIVACY based on state-of-the-art technology and four patents filed by the Indian Institute of Technology Madras. IndusInd Bank has become the first bank in India to implement Intellect(TM) PRIVACY, an online and internet banking security card, for its internet [3 939

banking customers. The technology will protect customers and banks from practically all kinds of phishing attacks, viz. deceptive e-mail, key/screen logger, brute force/dictionary attacks and Trojans, etc.Intellect PRIVACY uses multi factor, dynamic authentication technology providing for authorizing online banking transactions, in a completely secure platform. Commenting on the innovation, Professor L S Ganesh, Coordinator of the programmer, said, "At IIT Madras, the Department of Computer Science and Engineering and the Department of Management Studies got particularly interested in designing an internet security technology that is cost efficient and easy to use in a rapidly growing e-commerce scenario, and transferring it commercially. We chose the Cost-Usability-Security (CUS) approach to arrive at a solution and Polaris Software created an eminently usable application for the banking industry. IndusInd Bank, which was looking for providing greater security for web based transactions, became the first organization to adopt it." Intellect PRIVACY is a simple plastic card that customers can use to generate a one-time password (OTP) for carrying out any kind of online banking transaction including the sign on. Banks can issue booklets containing a desired number of cards that would last many transactions. The card has no pilferage value by itself and customers can easily manage its life cycle, including making a request for a new booklet and reporting loss of cards through online banking. Azouzi, D. (2009) this paper aims to check if the current and prompt technological revolution altering the whole world has crucial impacts on the Tunisian banking sector. Particularly, this study seeks some clues on which we can rely in order to understand the customers' behavior regarding the adoption of electronic banking. To achieve this purpose, an empirical research is carried out in Tunisia and it reveals that panoply of factors is affecting the customers-attitude toward e-banking. For instance; age, gender and educational qualifications seem to be important and they split up the group into electronic banking adopters and traditional banking defenders and so, they have significant influence on the customers' adoption of e-banking. Furthermore, this study shows that despite the presidential incentives and in spite of being fully aware of the e-banking's benefits, numerous respondents are still using the conventional banking. It is worthy to mention that the fear of loss because of transactions errors or hackers plays a significant role in alienating Tunisian customers from online banking.

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B. Dizon, J.A. (2009) In this study they have founded that while big banks still conduct the bulk of their business in brick and mortar bank branches, the finance sector has been increasingly investing on e-banking facilities to offer 24-hour, queuefree services to their regular clients, whether through ATM machines, mobile phones or the Internet. "E- Banking's appeal is primarily its convenience. Clients nowadays want instant results; they don't want to wait anymore," said Francisco M. Caparros, Jr., senior vice-president of Asia United Bank and president of Banc Net. It's also turned out to be a more efficient way to process transactions, as e-banking does away with most of the paperwork that clients have to accomplish. "A lot of people don't like filling forms," Mr. Caparros added. "Online banking, in particular, relies on user names and passwords which need to be protected," said Ferdinand G. La Chica, first vice- president and marketing group head for Sterling Bank of Asia. These anti- theft barriers are at times supplemented by transaction passwords and "tokens", often a keychain-like device that is issued to the client and generates random, one-time passwords to enable him to log into his account online. Last year, the Rural Bank Association of the Philippines announced that its members are looking to appoint local merchants like sari-sari stores as third party agents where consumers can open new accounts and make large payments. Such informal outlets will enable banks to reach out to small-income businesses and individuals, particularly those in the agrarian sector, most of who are based outside the city center. Uppal, R.K. & Chawla, R. (2009) this study highlights customer perceptions regarding e-banking services. A survey of 1,200 respondents was conducted in October 2008 in Ludhiana district, Punjab. The respondents were equally divided among three bank groups namely, public sector, private sector and foreign banks. The present study investigates the perceptions of the bank customers regarding necessity of e-banking services, quality of e-banking services, bank frauds, future of e-banking, preference of bank customers regarding banks, comparative study of banking services in various bank groups, preferences regarding use of e-channels and problems faced by e-bank customers. The major finding of this study is that customers of all bank groups are interested in e-banking services, but at the same time are facing problems like, inadequate knowledge, poor network, lack of infrastructure, unsuitable location, misuse of ATM cards and difficulty to open an account. Keeping in mind these problems faced by bank customers, this paper frames some strategies like customer [4 141

education, seminars/meetings, proper network and infrastructure facilities, online shopping facilities, proper working and installation of ATM machines, etc., to enhance e-banking services. Majority of professionals and business class customers as well as highly educated and less educated customers also feel that e-banking has improved the quality of customer services in banks. Reeti, Sanjay, and Malhotra, A. (2009), stated about the Customers perspectives regarding e-banking in an emerging economy. So that, the author determining various factors affecting customer perception and attitude towards and satisfaction with ebanking is an essential part of a bank's strategy formulation process in an emerging economy like India. To gain this understanding in respect of Indian customers, the study was conducted on respondents taken from the northern part of India. The major findings depict that customers are influenced in their usage of e-banking services by the kind of account they hold, their age and profession, attach highest degree of usefulness to balance enquiry service among e-banking services, consider security & trust most important in affecting their satisfaction level and find slow transaction speed the most frequently faced problem while using e-banking. Hsun, K.S. (2008), this study considers the coherence of the financial service sector and adopts different observational variables to identify innovation capital (training and R&D density) and process capital (IT system sufficiency). The results show that human capital has a direct impact on both innovation capital and process capital, which in turn affect customer capital; while finally, customer capital affects business performance. In addition, there is a negative relationship between process capital and customer capital in the financial service sector. It suggests that in the financial service sector, customer satisfaction relies on a sufficient degree of training and R&D density. Intemperate investment on the support of e-banking operation systems may not be a good answer. Laukkanen, P., Sinkkonen, S. & Laukkanen, T. (2008) The purpose of this paper is to further the understanding of innovation resistance by dividing internet banking non-adopters into three groups based on their intentions to use the innovation. Thereafter, the aim is to identify how the resistance differs in these customer groups. This study identifies three groups of internet banking non-adopters, namely [4 242

postponers, opponents and rejectors. The data were collected by conducting an extensive postal survey among the retail banking customers in Finland who had not adopted internet banking. The measurement development was based on consumer resistance theory and the earlier literature on internet banking. Principal component analysis was used to classify the resistance items into five adoption barriers derived from the earlier literature. Thereafter, analysis of variance was used to analyze the statistical differences in resistance to internet banking between the three groups. Significant differences were identified between the groups explored. The resistance of the rejectors is much more intense and diverse than that of the opponents, while the postponers show only slight resistance. The results also indicate that psychological barriers are even higher determinants of resistance than usage and value, which are constructs related to ease-of-use and usefulness determining acceptance in the traditional technology acceptance model. Moreover, the findings highlight the role of self-efficacy in bank customers' risk perceptions to internet banking. This study provides further understanding of what inhibits internet banking adoption by comparing three non-adopter groups with respect to their resistance to internet banking. It also has implications for management in overcoming non-adopters' resistance to the innovation. Routray (2008), the study describes that Mobile and Wireless communication devices are becoming enablers for organizations to conduct business more effectively and efficiently. One of the most effective applications is mobile banking (m-banking). For any application to gain recognition technological advancements play a vital role. To make m-banking application a success bandwidth management is an important issue. The increased flexibility and mobility feature of wireless ATM and its bandwidth on demand function is motivating a large number of carriers towards deployment of the WATM networks. But there are certain issues which are required to be addressed in WATM. The issues are cost effective planning of network, location management and handover management. In this paper we have suggested and evaluated a technological framework for the m-banking application using wireless ATM which optimizes the bandwidth usage and provides an effective handover management. Simulation results show that the resultant framework is very effective in handling the bandwidth and the handover issue in wireless ATM and provides an effective WATM framework model.

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Malhotra, P. & Singh, B. (2007) stated about this research tells us that the larger banks, banks with younger age, private ownership, higher expenses for fixed assets, higher deposits and lower branch intensity evidence a higher probability of adoption of this new technology. Banks with lower market share also see the Internet banking technology as a means to increase the market share by attracting more and more customers through this new channel of delivery. Further, the adoption of Internet banking by other banks increases the probability that a decision to adopt will be made. An understanding of the factors affecting this choice is essential both for economists studying the determinants of growth and for the creators and producers of such technologies. From this perspective, understanding the factors determining the adoption of technology becomes highly relevant from the policy point of view. Moreover, the studies on the adoption of financial innovations are related to developed markets, e.g. US or European banking markets. Hence, this paper contributes to the empirical literature on diffusion of financial innovations, particularly Internet banking, in a developing country. Shah & Braganza (2007), this survey indicates the Critical Success Factors in e-

banking and the author suggest in this article that the organizational factors, which are critical to the success of e-banking, are investigated. Different pieces of literature report different factors as key to success and generally based on subjective, perceptual data. A synthesis of existing literature is a basis for survey questions. The data was collected from UK based financial sector organizations who are offering their services on electronic channels, using postal questionnaires. The top factors found to be most critical for the success in e-banking are: quick responsive products/services, organizational flexibility, services expansion, systems integration and enhanced customer service. An important lesson from this research is that organizations need to view the e-banking initiative as a business critical area rather than just a technical issue. They need to give attention to internal integration, which may include channels, technology and business process integration, and improving the overall services to their customers. Awamleh (2006) This study analyses the internet banking channels and service preferences of educated banking consumers in the UAE and examines the factors influencing the intention to adopt or to continue the use of internet banking among [4 444

both users and non users of internet banking. It is shown that although the banking sector in the UAE is a regional leader, internet banking in the UAE is yet to be properly utilized as a real added value tool to improve customer relationship and to attain cost advantages. The Technology Acceptance Model (TAM) was used to identify factors influencing the intention to adopt and continued use of internet banking customers. Data was collected from internet banking users and potential users in the United Arab Emirates and factor analyses and multiple regression analyses were conducted to examine the data. Relative usefulness is introduced as one of the factors and is defined as the degree to which a new technology is better than existing ones. There is a significant difference between users and non-users on six of the seven factors identified. Further, it was revealed that relative usefulness, perceived risk, computer efficacy and image had a significant impact on continued usage of internet banking for IB Users, while relative usefulness and result demonstrability were the only ones significant for Non-users of internet banking. The effects of age, gender, income, and e-commerce users also explored. Result demonstrability is significant for all categories of non-users except for those with income below AED 7,000. Implications of results were discussed, and future research directions outlined. Bauer, Malik & Falk (2006), this article reviews the measuring the quality of EBanking portals. In the internet economy, the business model of web portals has spread rapidly over the last few years. Despite this, there have been very few scholarly investigations into the services and characteristics that transform a web site into a portal as well as into the dimensions that determine the customers evaluation of the portals service quality. Based on an empirical study in the field of e-banking the authors validate a measurement model for the construct of web portal quality based on the following dimensions: security and trust, basic services quality, crossbuying services quality, added value, transaction support and responsiveness. Findings The identified dimensions can reasonably be classified into three service categories: core services, additional services, and problem-solving services. Originality/value The knowledge of these dimensions as major determinants of consumers quality perception in the internet provides banks a promising starting point for establishing an effective quality management for their e-businesses.

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Kamiya (2006) this articles show that Indian banks are trying to make your life easier. Not just bill payment, you can make investments, shop or buy tickets and plan a holiday at your fingertips. In fact, sources from ICICI Bank tell us, "Our Internet banking base has been growing at an exponential pace over the last few years. Currently around 78 per cent of the bank's customer base is registered for Internet banking." To get started, all you need is a computer with a modem or other dial-up device, a checking account with a bank that offers online service and the patience to complete about a one-page application--which can usually be done online. You can avail the following services: Bill payment Services, Fund Transfer, Credit Card, Internet shopping, and Investment though Internet etc. Due to the Internet banking the life of an individual becomes easy and raises the standard of life of the humans. Maumbe (2006) This study depicts that most banks throughout the world, ICT have become the back bone of financial service delivery and finance networks have shifted from paper-based to the digital mode. However, digital financial service delivery confronts a number of challenges regarding its efficacy in closing the financial divide affecting the poor. Although e-banking is considered an inexpensive way to reach clients, its accessibility is hindered by a number of factors including poor Internet penetration, lack of e-banking awareness and customer inflexibility to new technology. In developing countries most of which are characterized by extreme poverty and poor infrastructure, universal Internet-based service provision remains indefinable. Further, the author argues that developing nations need to improve educational standards and computer literacy prior to broad-based adoption and constructive use of Internet services. As result, the poor and unemployed remain disadvantaged in terms of access to rural Internet based services. Real access to wellfunctioning and efficient financial services has the potential to empower poor communities. Veneeva (2006) this article describes that world is changing at a staggering rate and technology is considered to be the key driver for these changes around us. Many activities are handled electronically due the acceptance of information technology at home as well as at workplace. Internet can be seen as a truly global phenomenon that has made time and distance irrelevant to many transactions. The evolution of electronic banking started from the use of automatic teller machines (ATM) and has [4 646

passed through telephone banking, direct bill payment, electronic fund transfer and the revolutionary online banking (Alter, 2002). The future of electronic banking according to some is the acceptance of WAP enabled banking and interactive-TV banking (Petrus & Nelson, 2006). But it has been forecasted that among all the categories, online banking is the future of electronic financial transaction. The rise in the e-commerce and the use of internet in its facilitation along with the enhanced online security of transactions and sensitive information has been the core reasons for the penetration of online banking in everyday life. Anthony (2004), this article discusses the importance of usability within the EBanking sector and identifies common usability problems and ways to resolve them. It is widely recognised that online banking provides more revenue per customer and costs less per transaction than any other channel, including phone banking. Encouraging news from Forrester Research states that by 2007 the number of Europeans banking online will double to 130 million. Based on the principles of Human Computer Interaction (HCI), web usability has become a recognised success factor for all e-business, including online banking. Users most enjoy those sites that provide clear information, easy navigation and an engaging customer experience. Yet people will naturally gravitate to the ones which are easiest to use and offer the best service. Banks aiming to profit the most from the increase in online banking volumes should consider the usability and accessibility of all aspects of their site to welcome them. Asghar (2004), the study depicts that online banking and the web channel are here to stay. Financial services rely on multiple distribution channels and e-banking represents the channel of the future. Success stories around e-banking have taken shape through a mix of innovation and experience. The financial services sector needs to apply both these factors to their advantage to produce the desired results. Win-win implementation of e-banking not only requires high Internet penetration rates and stable infrastructures, but more importantly, for companies to realize the powerful revenue opportunity of this business arm vis--vis the traditional brick and mortar system of operation. Therefore, it is imperative that all e-banking implementations are seamlessly integrated with the core 'traditional' services thereby making the online experience truly holistic for the customer. [4 747

Picado, Gonzalez & Eckelman (2004), this study investigated the customer satisfaction using QFD and a research on service quality and customer satisfaction has become significant in the service industries. This study develops a case study that considers both external and internal service management issues and subsequent service innovations based on the framework of quality function deployment (QFD). The application of the customer window quadrant (CWQ) and the action plan matrix in the analysis of customer and service elements constitute a different approach for QFD. Some benefits and disadvantages of the QFD process are discussed as compared to extant service quality and customer paradigms. Finally, suggestions and directions are offered for future applications, with particular interest in the e-bank service management issues. Nitsure, R.R. (2003), this article indicates the E-banking Challenges and opportunities lies in the banking industry. E-banking has the potential to transform the banking business as it significantly lowers transaction and delivery costs. This paper discusses some of the problems developing countries, which have a low penetration of information and telecommunication technology, face in realizing the advantages of ebanking initiatives. Major concerns such as the 'digital divide' between the rich and poor, the different operational environments for public and private sector banks, problems of security and authentication, management and regulation, and inadequate financing of small and medium scale enterprises (SMEs) are highlighted.

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CHAPTER 3NEED, OBJECTIVE, SCOPE & METHODOLOGY

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3.1.1 NEED OF THE STUDY To determining growth direction of online banking service. Promoting E-banking services in banking industry. Customer perception will be taken into consideration about the internet banking.

3.1.2 OBJECTIVES To study about the factors that affects the customer perception towards ebanking of HDFC and ICICI bank. To know about the current and future prospects of E-Banking to the customers. To find out the major problems faced by the customers while using e-banking services.

3.1.3 HYPOTHESISEASE OF USE Ho: Ease of use does not influence the use of E Banking services. H1: Ease of use does influence the use of E Banking services. DIRECT ACCESS Ho: Direct Access does not influence the use of E Banking services. H1: Direct Access does influence the use of E Banking services. FRIENDS/RELATIVES Ho: Friends/Relatives do not influence the use of E Banking services. H1: Friends/Relatives do influence the use of E Banking services.

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3.1.4 SCOPE OF THE STUDY Area is restricted to only JALANDHAR because due to the time constraint and not able to visit all the branches in other cities or states. All the classes of the customers were taken into consideration. This study was covered E-Banking service sector. This is a realistic source directly collected from the customers of Bank.

3.1.5 RESEARCH METHODOLOGYResearch is defined as human activity based on intellectual application in the investigation of matter. The primary purpose for applied research is discovering, interpreting, and the development of methods and systems for the advancement of human knowledge on a wide variety of scientific matters of our world and the universe. The term research is also used to describe an entire collection of information about a particular subject. Methodology is the method followed while conducting the study on a particular project. Through this methodology a systematic study is conducted on the basis of which the basis of a report is produced. It is a written game plan for conducting Research. Research methodology has many dimensions. It includes not only the research methods but also considers the logic behind the methods used in the context of the study and explains why only a particular method or technique has been used. It also helps to understand the assumptions underlying various techniques and by which they can decide that certain techniques will be applicable to certain problems and other will not. Therefore in order to solve a research problem, it is necessary to design a research methodology for the problem as the some may differ from problem to problem. The methodology adopted for studying the objectives was surveying the in-house customers of these two banks in the city of Jalandhar.

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NATURE The methodology adopted to achieve