CUSTOMERR

INTERNET

WEB SERVER

A

SUMMER TRAINING REPORT

ON

“E-BANKING PREFERENCES AMONG PEOPLE IN YAMUNANAGAR”

CONDUCTED BY

We understand your world

JAGADHRI

SUBMITTED TO:MM University, Mullana

In partial fulfillment of the degree of Master of Business Administration

(Session: 2008-2010)

UNDER THE SUPERVISION OF: Mr. Varun Bali (Deputy Manager)

M.M INSTITUTE OF MANAGEMENTAffiliated to Maharishi Markandeshwar University

Mullana –Ambala(Haryana)

SUBMITTED BY: SHIVANI Roll No. 1208729 MBA-3rd Sem.(A) Session: 2008-10

DECLARATION

I SHIVANI hereby declare that the dissertation report entitled “E-Banking

preferences among people in Yamuna Nagar” submitted for the partial fulfillment

of the degree of Masters in Business Administration from Maharishi Markandeshwer

University, Mullana is original document of mine and data provided is authentic and

to the best of way of my knowledge.

Shivani

ACKNOWLEDGEMENT

“Gratitude is not a thing of expression, it is more a matter of feeling”.

There is always a sense of gratitude which one express for others for

their help and supervision in achieving the goals. I too express my deep gratitude to

each and every one who has been helpful to me in completing the project report

successfully.

First, of all, I am highly thankful to Dr. Sanjiv Marvah, ( Director, MMIM) for allowing

me to persue my Summer Training Report on “Analysis of Various Schemes

Provided by HDFC Bank.”

My special thanks to Mr. Lokesh Dutt (Branch Manager) who encouraged me,

properly guided me in each and every possible way through out my Training Report.

I give my regards and sincere thanks to Mr. Varun Bali (Deputy Manager) who

has devoted his precious time in guiding me and helping me it with in time.

I am indebted to the Bank employees who supported me in handling my

queries. I feel self-short of words to thanks my parents and friends who had directly

or indirectly instrumental in the completion of the project.

Shivani

PREFACE

With the rapid globalization of the Indian economy, enterprises are facing with ever

changing competitive environment. Enterprises are adopting strategies aimed at

developing competitive advantage based on enhanced customer value in terms of

product differentiation, quality, speed, service and costs. In the post liberalization

era, with the deregulation of Indian economy, the financial service sector witnessing

a complete metamorphosis and technology is playing a very significant role in this

record. Over the last decade India has been one of the fastest adopters of

information technology, particularly because of its capability to provide software

solution to organizations around the world. This capability has provided a

tremendous impetuous to the domestic banking industry in India to deploy the latest

in technology, particularly in the Internet banking and e-commerce arenas. Banks

are growing in size by mergers and acquisitions, which have been driven by

communication and technology. Technology is playing a major role in increasing the

efficiency, courtesy and speed of customer service. It is said to be the age of E-

banking. An Online Banking user is expected to perform at least one of the following

transactions online:

1. Checking account balance and transaction history

2. Paying bills

3. Transferring funds between accounts

4. Requesting credit card advances

5. Ordering checks

6. Managing investments and stocks trading

From a bank’s perspective, using the Internet is more efficient than using other

distribution mediums because banks are looking for an increased customer base.

Using multiple distribution channels increases effective market coverage by enabling

different products to be targeted at different demographic segments. Also Banks

cannot risk loosing customers to competitors within the aggressive competition in the

banking industry around the world. Moreover Internet delivery offers customized

service to suit the needs and the likes of each user. Mass customization happens

effectively through Online Banking. It reduces cost and replaces time spent on

routine errands with spending time on business errands. Online Banking means less

staff members, smaller infrastructure demands, compared with other banking

channels. From the customers’ perspective, Online Banking provides a convenient

and effective way to manage finances that is easily accessible 24 hours a day, seven

days a week. In addition information is up to date. Nevertheless Online Banking has

disadvantages for banks like how to work the technology, set-up cost, legal issues,

and lack of personal contact with customers. And for customers there are security

and privacy issues.

INDEX

Declaration

Acknowledgement

Preface

Introduction : To banking To HDFC Bank

E-banking

Literature Review

Research Methodology

Data Analysis And Interpretation

Findings

SWOT Analysis

Limitations

Conclusion

Suggestions

Bibliography

Annexure

INTRODUCTION

INTRODUCTION

A feature of the banking industry across the globe has been that it is increasingly

becoming turbulent and competitive, characterized by an increasing trend towards

internationalization, mergers, takeovers and consolidation of the banking industry.

Moreover a number of non-banking companies are entering the banking industry by

offering financial products and services (e.g., Toyota’s credit card, GM’s auto

financing, etc). This has given innumerable options to customers in choosing

banking services. As a response and aided by technological developments, banks

have attempted to build customer satisfaction through providing better products and

services and at the same time to reduce operating costs. Thus the banking industry

has been constantly innovating and with the advent of technological developments,

particularly in the area of telecommunications and information technology, one of the

latest innovation that took birth, and quite inevitably, has been the internet

With cyber cafés and kiosks springing up in different cities access to the Net is going

to be easy. Internet banking (also referred as e banking) is the latest in this series of

technological wonders in the recent past involving use of Internet for delivery of

banking products & services. Even the Morgan Stanley Dean Witter Internet

research emphasized that Web is more important for retail financial services than for

many other industries.

Internet banking is changing the banking industry and is having the major effects on

banking relationships. Banking is now no longer confined to the branches were 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.

BANKING INDUSTRY PROFILE

BANKING

The word "BANK" is derived from the 'Bancus' or 'Banque', which means a bench. In

the early days the European moneylenders and moneychangers used to sit on the

benches and exhibit coins of different countries in big heaps for the purpose of

changing and lending money,

:

Definition:

A Banking company is defined as a company, which transacts the business of

banking in India.

As per Banking Regulation Act 1949 Section 5(b)

"Banking means, accepting for the purpose of lending or investment, of deposits of

money from the public, repayable on demand or otherwise, and withdrawal by

cheque, draft, or otherwise."

According to Sir John Paget

"No person or body, corporate or otherwise can be a banker who does not, (a) take

deposits accounts, (b) take current accounts, (c) issue and pay cheques, (d) collect

cheques, crossed and uncrossed, for his customers."

In simple words we can say that bank is a financial institution which deals in

money and credit by obtaining deposits from public and giving loans and credit to

trade and industrial respectively. "

FUNCTIONS OF BANKS

1. Primary Functions

(a) Acceptance of deposits

(b) Making Loans and Advances

Loans

Overdrafts

Cash Credit

Discounting of Bills of Exchange

2. Secondary Functions

(a) Agency Functions

Collection of cheques and bills etc

Collection of interest and dividend

Making payment on behalf of customers .Purchase and sale of

securities.

Facility of transfer of funds

To act as trustee and executor

(b) Utility Functions

Safe custody of customers valuable articles and securities.

Underwriting facility

Issuing of Traveller's cheque and letter of credit

Facility of foreign exchange

Providing trade information

Providing information regarding credit worthiness of their

customers.

CLASSIFICATION ON BASIS OF OWNERSHIP

On the basis of ownership banks are of the following types:

1. PUBLIC SECTOR BANK

Public sector banks are those banks that are owned by the Government. The

Govt. runs these Banks. In India 14 banks were nationalized in 1969 & in 1980

another 6 banks were also nationalized. Therefore in 1980 the number of

nationalized bank 20. But at present there are 9 banks are nationalized. All these

banks are belonging to public sector category. Welfare is their principle objective.

2. PRIVATE SECTOR BANKS

These banks are owned and run by the private sector. Various banks in the

country such as ICICI Bank, HDFC Bank etc. An individual has control over there

banks in preparation to the share of the banks held by him.

3. CO-OPERATIVE BANKS

Co-operative banks are those financial institutions. They provide short term &

medium term' loans to there members. Co-operative banks are in every state in

India -Its branches at district level are known as the central co-operative bank.

The central co-operative bank in turn has its branches both in the urban & rural

areas. .Every state cooperative bank is an apex bank, which provides credit

facilities to the central co-operative bank. It mobilized financial resources from

richer section of urb3n population by accepting deposit and creating the credit

like commercial bank and borrowing from the money mkt. It also gets funds from

RBI.

12

INTRODUCTION

TO HDFC BANK

13

HDFC COMPANY PROFILE

HDFC BANK LTD

Type PrivateFounded 1994

HeadquartersHDFC Bank Ltd.,

Mumbai, India

IndustryBankingInsuranceCapital Markets and allied industries

ProductsLoans, Credit Cards, Savings, Investment vehicles, Insurance etc.

Website www.hdfcbank.com

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..

14

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 liberalisation 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, corporates, 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.

15

BOARD OF DIRECTORS

Mr. Aditya Puri (Managing Director)

Mr. Keke Mistry

Dr. (Mrs.) Amla Samanta

Mr. Venkat Rao Gadwal

Mr. Anil Ahuja

Mr. Vineet Jain

Mr. Ranjan Kapoor

Mr. Bobby Parikh

Mrs. Renu Karnal

VICE President (Legal ) & Co. Secretary

Mr. Sanjay Dongre

Auditor

P.C. Honsolia & Co. (Chartered Accountant)

Registered Office

HDFC Bank House

Senapati Bapat Marg

Loveer Parel Mumbai – 400013

Tel. No. 56521000

Fax No. 24960739

Web. Site – www.hdfcbank.com

16

BUSINESS FOCUSHDFC 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 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 both commercial and

investment banking on the wholesale side and transactional/branch banking on the

retail side. The bank has three key business areas:

(a) 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

corporates. 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.

(b) 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

17

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 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.

(c) Treasury Operations

Within this business, the bank has three main product areas-Foreign 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.

18

Product Range

19

Product Range of HDFC Bank

Accounts &

Deposits

Forex Services

Access your Bank

Investments &

Insurance

CardsLoans

Accou--nts & Deposi

ts

Saving Accou

nt

Demat Accou

nt

Safe Deposi

ts Locker

s

Fixed Deposi

ts

Current

Account

SalaryAccou

nt

20

Loans

Personal

Loan

Tractor

Loan

Gold Loan

Loan Agains

t Proper

ty

Education

Loan

Two Wheel

er Loan

Home Loan

Cards

Debit cards Credit Cards Prepaid Card

21

Investment &

Insurance

Mutual Fund

Equities &

Derivatives

Mudra Gold Bar

Knowledge

CenterBonds

General & Health Insurance

Insurance

Forex services

Product &

Services

RBI Guidelin

e

Forex services Branch Locator

Forex Limited

Trade Services

22

Access Your Bank

Access Your Bank

ATMATM Branch NetworkBranch

Network

Email Statemen

t

Email Statemen

t

Net Banking

Net Banking

Phone BankingPhone

BankingMobile

BankingMobile

Banking

E-BANKING

23

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.

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.

24

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 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.

25

Traditional banking

Gunpowder

Personalized services, time consuming, limited access

Virtual or E-banking

Nuclear charged

Real time transactions, integrated platform, all time

access

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 1970’s and

1980’s.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 1990’s 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 front-end

machine.

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.

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

26

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.

E-Banking

transaction

mechanism

27

E-BANKING PRODUCTS

Automated 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.

ATMs are known by various casual terms including cash machine, hole-in-the-wall, cash

point or Bancomat (in Europe and Russia). The occasionally-used ATM Machine is an

example of RAS syndrome.

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 ATM’s.

28

Telebanking 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 channel

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 customer’s receipt at the point of sale. Now that their

29

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.

30

TYPES OF INTERNET BANKING OR E-BANKING

Understanding 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 bank’s products and services on a stand-alone

server. The risk is relatively low, as informational systems typically have no path

between the server and the bank’s 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 bank’s

server or web site.

Communicative- this type of Internet banking systems and the customer. The

interaction between the bank’s 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

bank’s 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 bank’s

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

outsourcer’s 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.

31

ADVANTAGES OF INTERNET BANKING

Convenience- Unlike your corner bank, online banking sites never close;

they’re available 24 hours a day, seven days a week, and they’re only a mouse

click away.

Ubiquity- If you’re 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

IRA’s, 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.

32

DISADVANTAGES OF INTERNET BANKING

Start-up may take time-In order to register for your bank’s 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.

33

E- BANKING 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. Payee’s 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,

34

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.

35

List of some banks operating E-Banking in India

Bank Name Technology Vendor Service offering

ABN AMRO Bank Infosys (Bank Away) NetBanking

Abu Dhabi Commercial Bank Infosys (Bank Away) ADCB NetLink

Bank of India I-flex BOIonline

Citibank Orbitech (now Polaris) Citibank Online

Corporation Bank I-flex CorpNet

Deutsche Bank   db direct

Federal Bank Sanchez FedNet

Global Trust Bank Infosys (BankAway) ibank@gtb

HDFC Bank i-flex/ Satyam NetBanking

HSBC   Online@hsbc

ICICI Bank Infosys, ICICI Infotech Infinity

IDBI Bank Infosys (Bank Away) i-net banking

IndusInd Bank CR2 IndusNet

Punjab National Bank Infosys (Bank Away) Internet Banking 

Standard Chartered Bank In-House Me Standard Chartered Online

State Bank of India Satyam/Broadvision onlinesbi.com

UTI Bank Infosys (Bank Away) I connect

36

INTERNET BANKING VERSUS TRADITIONAL BANKING

In 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."

37

IMPACT OF E-BANKING ON TRADITIONAL SERVICES

One 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 yesterday’s 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 – eg buyer and seller, payer and payee.

38

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.

E-banking 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

39

advertising spending

margins

funding costs

Merger opportunities and threats, both in the UK and abroad.

40

THE INDIAN SCENARIO

Drivers of change

Advantages previously held by large financial institutions have shrunk considerably. The

Internet has leveled the playing field and afforded open access to customers in the

global marketplace. Internet banking is a cost-effective 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 non-traditional

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.

41

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.

EMERGING CHALLENGES

Information 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.

42

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.

43

E-BANKING WORLD WIDE

Since 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 world’s 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 easyto- 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.

44

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.

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 E-

Banking, 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.

45

LITERATURE

REVIEW

46

Literature Review

Product and Technology group, ICICI Bank, in its paper “Corporate banking

using technology in transactions” it was inferred that Information Technology has

revolutionized the services and mode of services offered by the banks to their

corporate clients. The emergence of E-Banking has enabled the banks to offer

real-time transactions and integrate all customers’ related functions. Indian

Banks are utilizing the new technology to provide better technology and

convenient access to its customers and India is thus poised to for a huge growth

in the world of electronic banking.

Chandana R, Unnithan, Paula M.C., Swatman in their research paper titled “E-

Banking Adaptions and Dot.Com viability: A comparison of Australian and Indian

experiences in the Banking sector” a comparative study of Australian and Indian

experiences in eBusiness was done, which seeks to identify the effectiveness of

dot.coms as indicators of eBusiness uptake and success on a sector-by-sector

basis was undertaken. It was concluded that the banking industry is now a very

mature one and banks are being forced to change rapidly as a result of open-

market forces such as the threat of competition, customer demand, and

technological innovations such as the growth of the Internet. E-Banking is a

successful strategic weapon for banks to remain profitable in a volatile, and

competitive market place of today in both Indian and Australian Economies

despite the differences of IT usage.

G. Kannabiran and P.C. Narayan discuss in their article the experiences of a

private-sector bank in deploying Internet banking and eCommerce in India.

Strategic alignment of business and IT strategies, planning and implementation

of e-banking initiatives, and management of benefits have been captured, along

with key contributions to development.

Huggins points to the fact that traditional boundaries in banking are

disappearing. Using eBusiness methods, major retailers and telecom providers

47

are starting to offer financial services to their clients. Extending the value chain

and offering versatile services seems to be the key to retaining competitiveness

in the sector. Attitudes are also shifting from direct transactions to savings and

investments, as the baby boomers reach their fortis and fifties, and prepare for

retirement.

Mario Martinez Guerreroin his paper titled “Profiling the adoption of Online

banking Services in the European Union” offers an empirical investigation on the

adoption of online banking services among European citizen. The use of e-

banking services is explained on the basis of socio-demographic and Internet –

specific behavioral indicators. The performed analyses provide support for the

influence of country, age, profession and several Internet behaviors on the use of

E-banking.

The Indian Internet Banking Journey In 2001, a Reserve Bank of India survey

revealed that of 46 major banks operating in India, around 50% were either

offering Internet banking services at various levels or planned to in the near

future. According to a research report,( India Research, Kotak Securities, May

2000.) while in 2001, India's Internet user base was an estimated 9 lakh; it was

expected to reach 90 lakh by 2003. Also, while only 1% of these Internet users

utilized the Internet banking services in 1998, the Internet banking user base

increased to 16.7% by mid- 2000.

48

RESEARCH

METHODOLOGY

49

RESEARCH METHODOLOGY

Research 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.

Nature

The methodology adopted to achieve the project objective involved exploratory research

& descriptive research method. The information required for fulfilling the objective of

study was collected from various primary and secondary sources.

50

OBJECTIVES OF THE STUDY:-

The main objectives of the study are:

To study the awareness level of service class people regarding E-Banking.

To find out the frequency and the factors that influences the adoption of E-

Banking services.

To measure the satisfaction level of people.

To understand the problems encountered in by service class people while using

E-Banking services(ATM, Phone banking, etc)

51

Type of research

This study is EXPLORATORY and DESCRIPTIVE in nature. It helps in breaking vague

problem into smaller and precise problem and emphasizes on discovering of new ideas

and insights. Exploratory research was conducted during the initial stage of the

research process which helped to refine the problem into researchable one. It has

progressively narrowed the scope of research topic.

Research design

Research design constitutes the blue print for the collection, measurement and analysis

of data. The present study seeks to identify the extent of preferences of E-Banking over

traditional banking among service class. The research design is exploratory in nature.

The research has been conducted on service class people within yamunanagar. For the

selection of the sample, convenient sampling method was adopted and an attempt has

been made to include all the age groups and gender within the service class.

Sources of data:

Following are the methods of sources of data:

Secondary data:

Articles on E-Banking taken from journals, magazines published from time to

time.

Through internet.

Primary data:

Questionnaire was used to collect primary data from respondents. The questionnaire

was structured type and contained questions relating to different dimensions of e-

banking preferences among service class such as level of usage, factors influencing the

usage of e-banking services, benefits accruing to the users of e-banking services,

problems encountered. An attempt was also made to elicit reasons for its non-usage.

The questions included in the questionnaire were open-ended, dichotomous and

offering multiple choices.

52

Sampling technique: The sampling technique used for judgment is CONVENIENCE

AND JUDGEMENT SAMPLING.

Sampling unit: It defines the target population that will be sampled i.e. it answers who

is to be surveyed. In this study, the sampling unit is the people of yamunanagar.

Sampling size: It indicates the numbers of people to be surveyed. Though large

samples give more reliable results than small samples but due to constraint of time and

money, the sample size was restricted to 100 respondents. The respondents belong to

different income group and profession.

Method of data collection: The survey method is used to collect the data. Various

places of Yamunanagar visited for the purpose of collection of data.

Research instrument:

The instrument used for gathering data was questionnaire. To get further insight in to

the research problem, interview regarding their buying practices too was made. This

was done to crosscheck the authenticity of the data provided. To supplement the

primary data and to facilitate the process of drawing inference, secondary data was

collected from published sources like magazines, journals, newspapers etc.

Tools and techniques of analysis:

The data so collected will be analyzed through the application of statistical techniques,

such as bar graphs and pie charts.

53

DATA

ANALYSIS

AND

INTERPRETATIO

N

54

DATA ANALYSIS AND INTERPRETATION

Table 1.

Awareness of people regarding e-banking service provided by the bank while opening an

account

No. of Respondents Percentage

Fully aware 37 37%

Had an idea 46 46%

No idea 17 17%

Total 100 100%

Figure 1.

Awareness about e-banking services

37%

46%

17%

100%

Fully aware

Had an idea

No idea

Total

Interepretation

As seen from Table 1, overall percentage of service class people having complete

knowledge about e-banking services provided by the bank while opening an account in

it is 37%, those having some idea about it is 46% and the percentage of people having

no awareness of e-banking services provided by the bank is 17%. It can reasonably, be

concluded that nearly 85% of the population is having awareness about e-banking

services

55

Table 2.

Sources from which the respondents get the knowledge about the e-banking

services

No. of Respondents Percentage

Personal Visit 15 15%

Executive from Bank 21 21%

Advertisements 34 34%

Friends /Relatives 26 26%

Others 2 2%

Figure 2

Interpretation

Table 2, indicates the percentage distribution of awareness avenues, the major are in

favour of advertisements, which score 34% among different avenues such as personal

visit, executives of the banks, advertisements and friend/relatives. While the least score

is for personal visit and that of other sources.

56

Sources of awareness about e-banking

15%

21%

34%

26%

2%

Personal Visit

Executive from Bank

Advertisements

Friends /Relatives

Others

Table 3.

Awareness of E-Banking services

No. of Respondents Percentage

ATM 88 26.03%

Debit Card 60 17.75%

Credit Card 50 14.79%

Phone Banking 40 11.83%

Mobile Banking 50 14.79%

Internet Banking 50 14.79%

Total 338 100%

Figure 3

Relative awareness about different e-banking services

0.00%10.00%20.00%30.00%

AT

M

Deb

itC

ard

Cre

dit

Car

d

Pho

neB

anki

ng

Mob

ileB

anki

ng

Inte

rnet

Ban

king

Series1

Interpretation

E-banking constitutes services provided in terms of ATMs, Debit Card, Credit Card,

Phone Banking, Mobile Banking, Internet Banking etc, of which the first six have been

covered. Amongst these ATM scores the largest used service status (26.03%) as

indicated by table 3 figures. Close on the heels is Debit card (17.75%), Credit card

(14.79%), while phone banking lags behind by scoring the least ie.,11.83%.

57

Table 4

Users of E-banking services

No. of Respondents Percentage

Users 74 74%

Non Users 26 26%

Total 100 100%

Figure 4

Usage of e-banking

74%

26%

Users

Non Users

Interpretation

Table 4 shows that among those aware (which account for 83 in number) about 74

persons use e-banking services, which is 74% of total population studied.

58

Table 5.

Representation of frequency of usage

Day

Wise

% Wee

k-

wise

% Fort

ni-

ghtl

y

% Mon

-

thly

% Infreq

-

uently

%

ATM 4 36.36 31 55.3

6

13 37.1

4

11 25.5

8

9 13.8

5

Debit

Card

2 18.18 11 19.6

4

7 20 10 23.2

6

8 12.3

1

Credit

Card

1 9.09 5 8.93 6 17.1

4

6 13.9

5

18 27.6

9

Phone

Bankin

g

0 0 2 3.57 3 8.57 7 16.2

8

13 20

Mobile

Bankin

g

0 0 4 7.14 4 11.4

3

2 4.65 9 13.8

5

Interne

t

Bankin

g

4 36.36 3 5.36 2 5.71 7 16.2

8

8 12.3

1

11 100 56 100 35 100 43 100 65 100

59

Figure 5

Frequency of usage of different e-banking services

0

10

20

30

40

50

60

70

Wise thly

Day Week-wise Fortni-ghtly Mon- Infreq-uently

Internet Banking

Mobile Banking

Phone Banking

Credit Card

Debit Card

ATM

Interpretation

To find out the level of usage amongst the service class, percentage has been

calculated from the total completely filled in questionnaires and the incomplete

questionnaires were discarded.

The frequency of usage of ATM is highest which is evident from table 5, followed by

debit card..

60

Table 6.

Factors influencing the level of usage

Strongl

y

More than

average

Averag

e

Less

than

average

Not

at allTotal

All time

availability56 8 11 1 3 79

Ease of use 32 22 7 2 1 64

Nearness 21 18 14 5 0 58

Security 12 10 13 4 1 40

Direct access 32 12 7 2 0 53

Friends/ Relatives 3 8 14 7 8 40

Status symbol 7 11 14 7 10 49

Figure6

Factors influencing level of usage

0102030405060708090

Not at all

Less thanaverageAverage

More thanaverageStrongly

Interpretation

A study of the factors, table 6, influencing the usage was made by listing out various

factors such as all time availability, ease of use, nearness etc., and from which it came

to fore that amongst the various factors all time availability is ranked as the major

61

motivating factor, followed by ease of use, direct access, nearness, security in

decreasing order of importance. Quite interestingly friends and relatives, status symbol

scored the least motivating factors.

Table 7

Various benefits accruing from E-Banking services to its

users

No. of Respondents Percentage

Time Saving 70 42.42%

Inexpensive 21 12.72%

Easy Processing 40 24.24%

Easy Fund Transfer 26 15.75%

Others 8 4.85%

Figure 7

Benefits of e-banking

TIME SAVING

INEXPENSIVE

EASY PROCESSING

EASY FUNDTRANSFER

EMERGENCY SKINSAVING

OTHERS

Interpretation

62

When asked to list various benefits accruing from the usage of e-banking, time saving

received highest percentage score at 42.42% among different benefits such as time

saving (42.42%), inexpensive (12.72%), easy processing (24.24%), easy fund

transfer(15.75%).

Quite interestingly, easy processing feature scored more than the inexpensiveness of

the e-banking services. The other benefits accruing to the people include ready

availability of funds, removal of middlemen and no rude customer relation executives.

Table 8

Problems identified by the users of E-Banking service

FactorsNo. of

Respondents Percentage

a Time consuming 59 14.82%

b Insecurity 45 11.31%

c ATM out of order 62 15.58%

dAmount debited

but not withdrawn39 9.80%

e

Problem of

change in mobile

number

42 10.555

fPassword

forgotten54 14.57%

g Card misplaced 50 12.56%

h Card misuse 47 11.81%

63

Figure 8

Problems identified by the users of E-Banking services

010203040506070

Timeconsuming

Insecurity ATM out oforder

Amountdebited but

notwithdrawn

Problem ofchange in

mobilenumber

Passwordforgotten

Cardmisplaced

Cardmisuse

No. of Respondents

Interpretation

Most of the users face the problem of ATM out of order (15.58%), followed by time

consuming (14.82%), password forgotten (14.57%) and then otherproblems as card

misplaced, card misuse, insecurity, etc

Table 9

Reasons for not using E-Banking services as rated by the non users

Factors

Highly

importan

t

More

than

averag

e

Averag

e

Less

than

averag

e

Least

importan

t

Tota

l

Weights 5 4 3 2 1

A

No

need( Satisfie

d with

traditional

banking)

19 8 22 6 22 77

64

B It seems like

a botheration7 0 9 16 30 62

C Insecurity 17 11 21 7 13 69

D

No access to

internet/mobi

le

9 5 13 10 16 53

E

Lack of

operational

knowledge

12 7 12 12 15 58

F Hidden costs 21 5 14 8 16 64

Figure 9

Reasons for not using E-Banking services

0102030405060708090

Wei

ghts

No

need

(S

atis

fied

with

trad

ition

alba

nkin

g)

It s

eem

s lik

e a

both

erat

ion

Inse

curit

y

No

acce

ss t

oin

tern

et/m

obile

Lack

of

oper

atio

nal

know

ledg

e

Hid

den

cost

s

Highly important More than average Average Less than average Least important

Interpretation

From the non users, an attempt was made to elicit the reasons for its non usage. As

indicated by table 12, satisfaction with traditional banking was considered as prime de-

motivating factor, followed closely by the fear of insecurity, then ‘hidden cost’ factor,

which suggested their resistance to change, which to some extent can be countered by

aggressive advertisement and utilizing other modes of awareness dissemination as

well.

65

FINDINGS

66

FINDINGS OF THE STUDY

The overall percentage of servicemen having complete knowledge about e-

banking services provided by the bank while opening an account in it is 37%,

those having some idea about it is 46% and the percentage of people have no

awareness of e-banking services provided by the bank is 17%. It can reasonably,

be concluded that nearly 85% of the population is having awareness about e-

banking services.

The percentage distribution of awareness avenues, the major skewness is in

favour of advertisements, which score 34% among different avenues such as

personal visit, executives of the banks, advertisements and friend/relatives. While

the least score is for personal visit.

Among those aware (which account for 83 in number) about 74 persons use e-

banking services, which is 74% of total population studied.

E-banking constitutes services provided in terms of ATMs, Debit Card, Credit

Card, Phone Banking, Mobile Banking, Internet Banking etc, of which the first six

have been covered. Amongst these ATM scores the largest used service status

(26.03%) Close on the heels is Debit card (17.75%), Credit card (14.79%), while

phone banking lags behind by scoring the least ie.,11.83 .

To find out the level of usage amongst the service class, percentage has been

calculated from the total completely filled in questionnaires and the incomplete

questionnaires were discarded. The frequency of usage of ATM is highest

followed by debit card..

A study of the factors, influencing the usage was made by listing out various

factors such as all time availability, ease of use, nearness etc., and amongst the

various factors all time availability is ranked as the major motivating factor,

followed by ease of use, direct access, nearness in decreasing order of

importance. Quite interestingly friends and relatives, status symbol scored the

least motivating factors.

When asked to list various benefits accruing from the usage of e-banking, time

saving received highest percentage score at 42.42% among different benefits

67

such as time saving (42.42%), inexpensive (12.72%), easy processing (24.24%),

easy fund transfer(15.75%).Quite interestingly, easy processing feature scored

more than the inexpensiveness of the e-banking services. The other benefits

accruing to the people include ready availability of funds, removal of middlemen

and no rude customer relation executives.

Among the users, various problems that are encountered while using e-banking

services. Card misuse and its misplace are major reasons that create hurdles in

its usage, while time consumption, accounting mistakes such as amount debited

but not withdrawn and change of mobile number seem to be the least bothering

problems.

From the non users, an attempt was made to elicit the reasons for its non usage..

Satisfaction with traditional banking was considered as prime de-motivating

factor, followed closely by the fear of insecurity, then ‘hidden cost’ factor, which

suggested their resistance to change, which to some extent can be countered by

aggressive advertisement and utilizing other modes of awareness dissemination

as well.

68

SWOT ANALYSIS

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SWOT ANALYSIS

STRENGTHS :

It has an extensive distribution network comprising of 535 branches in 312 cities

& one international office in Dubai this provides a competitive edge over the

competitors.

The Bank has a strong retail depository base & has more than million customers.

Bank has strong brand equity.

ISO 9001 certification for its depository & custody operations & for its backend

processing of retail operations & direct banking operation.

The bank is a market leader in cash settlement service for the major stock

exchanges in its country.

HDFC Bank is one of the largest private sector banks working in India.

It has a highly automated environment in terms of information technology &

communication system.

Infrastructure is one of the best in the country.

It has many innovative products like kids Advantage scheme, NRI services.

WEAKNESSES :

Account opening and delivery of cheque book take more time. Lack of availability

of different credit products like CC Limit, Bill discounting facilities.

Complicated terms and conditions of products, which is not easily

understandable by the layman.

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OPPORTUNITIES :

Branch expansion

Door step services

Greater liberalization is foreign ownership via FDI in Indian Pvt. Sector banks.

Infrastructure movements & better systems for trading & settlement in the Govt.

securities & foreign exchange markets.

THREATS :

The bank has started facing competition from players like SBI, PNB in the

finance market itself. This may reduce the profit margins in the future.

Some Pvt. Banks have 7 days banking.

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LIMITATIONS

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LIMITATIONS OF THE STUDY

Every research is conducted under some constraints and this research is not an

exception. Limitations of this study are as follows:-

1. There were several time constraints.

2. The study is limited to areas of yamunanagar only.

3. The sample size of only 100 was taken from the large population for the purpose

of study, so there can be difference between results of sample from total

population.

4. The study is related to service class people only.

5. People were reluctant to go in to details because of their busy schedules.

6. Merely asking questions and recording answers may not always elicit the actual

information sought.

7. Due to continuous change in environment, what is relevant today may be

irrelevant tomorrow.

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CONCLUSION

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CONCLUSION

The usage of E-banking is all set to increase among the service class. The service class

at the moment is not using the services thoroughly due to various hurdling factors like

insecurity and fear of hidden costs etc. So banks should come forward with measures to

reduce the apprehensions of their customers through awareness campaigns and more

meaningful advertisements to make E-banking popular among all the age and income

groups. Further, with increasing consumer demands, banks have to constantly think of

innovative customized services to remain competitive. E-Banking is an innovative tool

that is fast becoming a necessity. It is a successful strategic weapon for banks to

remain profitable in a volatile and competitive marketplace of today.

In future, the availability of technology to ensure safety and privacy of e-transactions

and the RBI guidelines on various aspects of internet banking will definitely help in rapid

growth of internet banking in India.

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SUGGESTIONS

76

SUGGESTIONS

Internet banking would drive us into an age of creative destruction due to non-physical

exchange, complete transparency giving rise to perfectly electronic market place and

customer supremacy. The question to be asked right now is "What the Indian Banks

should do" Whatever is the strategy chosen and options adopted, certain key

parameters would determine the bank's success on web:

For long-term success, a bank may follow:

Adopting a webs mindset

Catching on the first mover's advantage

Recognizing the core competencies

Ability to deal multiplicity with simplicity

Senior Management initiative to transform the organization from inward to

outward looking

Aligning roles and value propositions with the customer segments

Redesigning optimal channel portfolio

Acquiring new capabilities through strategic alliances.

The above can be implemented in four steps:

Familiarizing the customer to new environment by demo version of software on

bank's web site. This should contain tour through the features which are to be

included. It will enable users to give suggestions for improvements, which can be

incorporated in later versions wherever feasible.

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Second phase provides services such as account information and balances,

statement of account, transaction tracking, mailbox, check book issue, stop

payment, financial and customized information.

The third phase may include additional services such as fund transfers, DD

issue, standing instructions, opening fixed deposits, intimation of loss of ATM

cards.

The last step should include advanced corporate banking services like third party

payments, utility bill payments, establishment of L/Cs, Cash Management

Services etc. Enhanced plan for the customers in future can include requests for

demand drafts and pay orders and many more to bring in the ultimate in banking

convenience.

Also if proper training should be given to customer by the bank employs to open an

account will be beneficial secondly the website should be made friendlier from where

the first time customers can directly make and access there accounts.

We can see the time is changing and we he passage of time people are accepting

technology there is still a lot of perceptual blocking which hampers the growth it’s the

normal tendency of a human not to have changes work on the old track, that’s also

one of the reason for the slow acceptance of internet banking accounts.

Give proper training to customers for using i-banking

Create a trust in mind of customers towards security of there accounts

Provide a platform from where the customers can access different accounts

at single time without extra charge.

Make there sites more users friendly.

Customers should be motivated to use I banking facilities more.

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BIBLIOGRAPHY

BOOKS

Malhotra, T. D., “ Electronic Banking and Information Technology in Banks”

Sultan Chand and Sons, New Delhi,2008.

S.S Kaptan & N.S. Choubey. “Indian Banking in Electronic Era”

Internet Banking in India-Part I- Dr A. K. Mishra

WEBSITES

www.banknetindia.com

www.bharatbook.com

www.hdfcbank.com

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Annexure

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QUESTIONAIRE

Dear Respondent, We are conducting a research study of “E-banking Preferences among people in Yamunanagar”. We will appreciate your cooperation in this regard by filling up the questionnaire carefully. All the information provided by you will be kept confidential.

1. In which banks do you have your account?a. State Bank of India b. HDFC Bankc. Punjab National Bank d. ICICI Banke. State Bank of Patiala f. Canara Bank g.

Bank of India h. Oriental Bank of Commerce i. Any other, Please Specify

i. ---------------------ii. ---------------------iii. ---------------------

2. While opening up the account, were you aware of E-banking services provided by your bank?

a. Fully aware b. Had an idea c. No

3. If answer to question no.2 is c, how did you get to know about E-banking services of your bank?

a. Personal visitb. Executive from the bankc. Advertisementsd. Friends/ Relatives

4. If answer to question no.2 is a or b, which of the following E-banking services are you aware of?

e. ATMf. Debit Cardg. Credit Cardh. Phone bankingi. Mobile bankingj. Internet banking

5. Do you use E-banking services? a. Yes b. No

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(If No, answer question no. 10 directly).

6. If answer to question no.5 is yes, how frequently do you use each of the following services?

FactorsOnce in a

dayOnce in a

weekOnce in a fortnight

Once in a month

Infrequently

a ATMb Debit Cardc Credit Cardd Phone Bankinge Mobile Bankingf Internet Banking

7. Which of the following factors influence you the most to use E-banking services?

Factors StronglyMore than average

averageLess than Average

Not at all

a All time availabilityb Ease of usec Nearnessd Security e Direct accessf Friends/ Relativesg Status symbol

8. Which of the following benefits accrue to you, while using E-banking services?a. Time saving b. Inexpensivec. Easy processing d. d. Easy fund transfere. Any other, please specify__________________________________________9. Rate the problems identified while using E-banking services?

FactorsHighly

considered

Major Average MinorIgnorabl

ea Time consumingb Insecurityc ATM out of orderd Amount debited but not

withdrawne Problem of change in

mobile numberf Password forgotteng Card misplacedh Misuse of card

10. Kindly rate the following reasons enlisted for not using the E-banking services?

Factors Highly More than Average Less than Least

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important average average importanta No need( Satisfied with

traditional banking)b It seems like a botherationc Insecurityd No access to

internet/mobilee Lack of operational

knowledgef Hidden costsAny other, please specify__________________________________________11. To what extent are you satisfied with your Banks’ E-banking services?

b. Highly Satisfied ___________

c. Satisfied _________

d. Neutral ___________

e. Dissatisfied ___________

f. Highly dissatisfied ___________

12. What other services you would like to have through E-banking?____________________________________________________________

____________________________________________________________

Respondent’s Profile

Name : ________________ Income level per month

Age : ________________ Less than Rs. 10,000

Gender (M/F) : ________________ Rs.10,000 to Rs.20,000

Profession : ________________ Rs.20,000 to Rs.30,000

Organisation : ________________ More than Rs.30,000

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