PROJECT REPORT
ON
“CUSTOMER PERCEPTION ABOUT
DIGITALIZATION IN BANKING
INDUSTRY”
Submitted for partial fulfilment of requirement for the award of degree of
Bachelor of Business Administration
Of
Chandigarh University, Mohali
Submitted To: Submitted by Group members:
Name: Mr. Gunjan Munjal [Link] NAME UID
Designation: Professor 1. Komal Pandey 21BBA2685
Chandigarh University 2. Uday Dhiman 21BBA2706
BBA VI semester 3. Divya Bhatia 21BBA2709
DECLARATION
We hereby declare that we have completed a research project titled “Customer
perception about digitalization in banking industry”is based our own work carried out
during the course of my study under the guidance of Mr. Gunjan Munjal, We assert
that the statements made and conclusions drawn are an outcome of the project work.
We further declare that to the best of our knowledge and belief that the project report
does not contain any part of any work which has been submitted for the award of any
other degree / certificate in this university or any other university.
Candidates:
1. 21BBA2685 Komal Pandey
2. 21BBA2706 Uday Dhiman
3. 21BBA2709 Divya Bhatia
ACKNOWLEDGEMENT
We would like to express our sincere gratitude to all those who contributed to the
completion of this group project report on “Customer perception about digitalization
in the banking industry”.
First and foremost, we extend our heartfelt thanks to our project supervisor Mr.
Gunjan Munjal , whose guidance, support, and invaluable feedback throughout the
duration of this project were instrumental in shaping our research and analysis.
We are also indebted to Chandigarh University, for providing us with the necessary
resources, facilities, and access to data and literature essential for conducting our
research.
Furthermore, we extend our appreciation to our fellow team members for their
unwavering dedication, collaboration, and collective effort in every phase of the
project, from conceptualization to execution. Each member brought unique
perspectives, skills, and expertise that enriched the quality of our work.
Special thanks are due to Komal Pandey, Uday Dhiman, Divya Bhatia, and Uday
Magotrawho contributed significantly to this project. Their diligence and commitment
played a vital role in the successful completion of this project.
We are also grateful to the participants who generously shared their time and insights
during interviews or surveys, without whom our research would not have been
possible.
This project has been a collaborative effort, and we are truly grateful to everyone who
has been part of this journey.
Thank you.
CHAPTER-1
INTRODUCTION
INTRODUCTION
In recent years, the banking industry has undergone a significant transformation driven by
technological advancements and the proliferation of digital tools and platforms. This
transformation, often referred to as digitalization, has revolutionized the way banks interact
with their customers, deliver services, and manage operations. The advent of digitalization
has not only altered the traditional banking landscape but has also reshaped customer
perceptions and expectations regarding banking services.
The aim of this project is to delve into the intricate dynamics of customer perceptions
surrounding digitalization in the banking industry. Understanding how customers perceive
and respond to digital innovations is crucial for banks to tailor their services effectively and
stay competitive in the rapidly evolving market.
Digitalization in the banking sector encompasses a wide array of technological innovations,
including online banking portals, mobile banking applications, contactless payment systems,
artificial intelligence (AI) algorithms, blockchain technology, and more. These innovations
have led to a fundamental shift in the way customers interact with their banks, enabling
greater convenience, accessibility, and efficiency in managing financial transactions and
services.
However, along with the myriad benefits that digitalization brings, there are also challenges
and concerns that impact customer perceptions. Security and privacy issues, the risk of cyber
threats and fraud, digital literacy barriers, and concerns about the erosion of personal
relationships with bank representatives are some of the factors influencing customer attitudes
towards digital banking.
Moreover, the COVID-19 pandemic has accelerated the pace of digital adoption in the
banking industry, as social distancing measures and lockdowns have compelled customers to
rely more heavily on digital channels for their banking needs. This unprecedented shift has
provided valuable insights into how customers adapt to and perceive digital banking during
times of crisis.
In this project, we will explore various aspects of customer perception regarding
digitalization in the banking industry, including:
1. Convenience and Accessibility: How do customers perceive the convenience and
accessibility of digital banking compared to traditional banking methods? What are the
factors that influence their preferences for digital channels?
2. Trust and Security: To what extent do customers trust digital banking platforms with their
sensitive financial information? What measures do banks implement to ensure the
security and integrity of digital transactions, and how do these measures impact customer
confidence?
3. User Experience and Interface Design: How do customers evaluate the user experience
and interface design of digital banking applications? What features and functionalities do
they prioritize, and how do these preferences shape their overall satisfaction with digital
banking services?
4. Financial Inclusion and Digital Literacy: How does digitalization impact financial
inclusion, particularly among underserved and marginalized communities? What
initiatives do banks undertake to improve digital literacy and promote greater access to
digital banking services for all segments of society?
5. Future Trends and Challenges: What are the emerging trends and challenges in digital
banking, and how do they influence customer perceptions? How can bank anticipate and
address evolving customer needs and preferences in an increasingly digital-centric
banking landscape?
Introduction to the Banking Industry:
The banking industry serves as the backbone of modern economies, facilitating financial
transactions, managing deposits and loans, and providing essential financial services to
individuals, businesses, and governments. Banks play a pivotal role in channeling funds from
savers to borrowers, thereby stimulating economic growth and development. Traditionally,
banking operations were conducted through brick-and-mortar branches, with customers
relying on face-to-face interactions with bank representatives for various financial services.
However, with the advent of technology and digitalization, the banking landscape has
undergone a profound transformation, reshaping the way customers engage with banks and
access financial services.
Digitalization in the Banking Industry:
Digitalization in the banking industry refers to the integration of technology and digital tools
to streamline banking operations, enhance customer experience, and improve service
delivery. This transformation encompasses a wide range of digital innovations, including
online banking platforms, mobile banking applications, electronic payment systems,
automated teller machines (ATMs), and advanced data analytics. Digitalization has
revolutionized virtually every aspect of banking, from account management and transaction
processing to risk assessment and customer relationship management.
Digitalization in the banking sector has been driven by several factors, including
advancements in information technology, changing consumer preferences, regulatory
reforms, and competitive pressures. Banks have increasingly embraced digital technologies to
stay ahead of the curve, reduce operational costs, expand market reach, and differentiate
themselves in an increasingly crowded marketplace.
Digitalization has not only enabled banks to offer a broader range of services but has also
transformed the way customers interact with their financial institutions. Today, customers can
perform various banking transactions conveniently from their smartphones or computers,
without the need to visit a physical branch. This shift towards digital channels has led to
greater convenience, accessibility, and efficiency in managing financial affairs, empowering
customers to take greater control over their finances.
However, digitalization in the banking industry also presents challenges and risks, including
cybersecurity threats, data privacy concerns, digital literacy barriers, and the potential for
exclusion of certain customer segments. Banks must navigate these challenges effectively to
build trust, safeguard customer data, and ensure the seamless functioning of digital
banking systems.
Digital banking is part of the broader context for the move to online banking, where banking
services are delivered over the internet. The shift from traditional to digital banking has been
gradual and remains ongoing and is constituted by differing degrees of banking service
digitization. Digital banking involves high levels of process automation and web-based
services and may include APIs enabling cross-institutional service composition to deliver
banking products and provide transactions. It provides the ability for users to access financial
data through desktop, mobile, and ATM services. To NPCI data, there are 148 live UPI
member banks that issue UPI for their customers and more than 33 third party UPI apps
available in Play Store. UPI transaction has reached Rs 63,20,000 as of November 2021 by
transaction value and has already surpassed the debit card transaction for the FY 2020-21.
Digital innovation is drastically reforming the provision of payment services. Information
Technology has modernised the various aspects of our lives, and the shift from traditional to
digital banking has been gradual and remains ongoing and is constituted by differing degrees
of banking service digitization. With the advent of digitization, paperless banking has become
a reality for everyone. The advancement of technology has been a significant influence on the
growth of the banking business. Previously, banking transactions took a long time. Customers
were expected to have physical records of their banking transactions or histories. It is
essential to first understand the fundamentals of banking to fully comprehend how it will
change in the digital era. The paper examines the adaptation and perception of the digital
payment system provided by the bank. The study’s objectives are to investigate how
customers view utilising digital banking to make payments, how they pay for merchandise,
how they experience problems while conducting online transactions, and how satisfied they
are with the digital banking services they receive. The study is descriptive, with a sample size
of 500. The instrument for data collection was a questionnaire, and ANOVA was used for
hypothesis testing.
Technology Intervention and Banking Industry
Technology adoption is a process that starts with the user becoming aware of the technology
and ending with the user embracing the technology and making full use of it. The rapidly
changing business environment of the financial services sector has led to an upsurge in
innovation-related activities (Blazevic & Lievens 2004). Information technology plays a
fundamental role in a firm's ability to enhance business performance through innovations in
products, channels and customer segments. Good innovation practices help enhance a firm's
competitive advantage. Banking sector which is an integral part of service industry has also
not remained untouched. It is now realized that in order to remain competitive and provide
the best services to customers, latest technology has to be introduced in financial industry
also. In the last two decades, the service industry has witnessed tremendous change. The
report of Rangarajan Committee on Mechanisation of Banks, 1984 focused the preference of
technology-enabled services in the financial sector. In the mid-nineties, the Institute for
Development and Research in Banking Technology (IDRBT), Hyderabad, was fixed up as a
research and technology centre for the Banking sector. Technological development is an
essential change which has brought a revolution in the entire service industry. The technology
enabled service delivery mediums are referred as self-service technologies (SSTs). Self-
service technologies are defined as any technology interface that enables a customer to
produce and consume services without direct assistance from firm employees. In the banking
sector, the Rangarajan Committee Recommendations (second - 1989), the Saraf Committee
Recommendations (1993) and Vasudevan Committee Recommendations (1998) have played
a vital role in the inclusion of technology in the banking processes. The new private sector
banks have adopted technology as a competitive tool against the public sector banks. Most of
the foreign banks and a few of the old private sector banks have followed the same strategy as
the new private banks (Financial Sector Technology Vision Document, 2005, RBI website). It
was reiterated by all banks in the postliberalization era that in order to remain competitive
and provide the best services to their customers, need to have the latest technology in place
and that technology would be the primary differentiating factor in offering customer- centric
services to the customers. Accordingly, irrespective of their ownership status (public sector or
private sector), all banks have today leveraged development and deployment of technology to
the maximum. ATMs, plastic money, online collection and payment services, electronic fund
transfer and clearing services, mobile ATMs, document management systems, smart cards,
core banking solutions, branch networking and internet banking are all outcomes of their
initiative of technological up-gradation.
Concept of Cyber Space and Cyber Security
Cyber space is non physical domain of information flows and communication between
computer systems and networks. Any device connected to the Internet has direct access to
cyber space which can be used for everyday tasks such as sending and receiving e mails and
messages, paying bills etc. Cyber security is the process of security information or assets that
are contained in cyberspace is known as cyber security. This is especially important in the
business world where information assets are kept on ever increasing complex information
system which in turned require even more sophisticated defence method.
Self-Service Technology as a Concept
A self-service technology means the use of technology to perform various banking
operations by the customers. The new delivery channels such as ATMs, Internet Banking and
Telephone Banking along with better access to customer information have reformed the
relationship between banks and customers. Banks are now able to process customer
information and use it for a number of purposes. They have the opportunity to market their
products and services online and additional financial services like bancassurance can be
targeted at the existing customers and prospects, thus facilitating customization to suit the
needs of individual customers (Godse,2005). The study investigates important self-service
technology - ATMs, Internet banking, and Tele-banking. Banking technology-security and
centralization of data: Security is the largest concern for every financial organisation. To
address this concern, advanced it solutions are built with security at the forefront. A current
IT solution encrypts all the user connection, making sure that connections are not vulnerable
to man in the middle attacks. Banking technology-scalability and control: The majority of
banks and financial institution have multiple branches across various states and often in
foreign countries. When investing in an IT solution banking institution must be able to scale
up the network with minimal effort to keep up with the today’s changing business demands,
while retaining control of every day.
Banking Industry - India
Banking in India, in the modern sense, originated in the last decades of the 18th century. The
first banks were the Bank of Hindustan (1770-1829) and The General Bank of India,
established in 1786 and since defunct. The Indian banking system consists of 20 public sector
banks, 22 private sector banks, 46 foreign banks, 56 regional rural banks, 1,485 urban
cooperative banks, and 96,000 rural cooperative banks, in addition to cooperative credit
institutions. As on January 31, 2021, the total number of ATMs in India increased to 213,145
and is further expected to increase to 407,000 by 2021. The asset of public sector banks stood
at Rs 72.59 lakh crore (US$ 1,038.76 billion) in FY19. As per Union Budget 2019-20, the
provision coverage ratio of banks reached the highest in 7 years. As per the Reserve Bank of
India (RBI), as of March 13, 2020, India recorded foreign exchange reserves of
approximately US$ 481.89 billion. During FY16-FY20, credit off-take grew at a CAGR of
13.93 per cent. As of FY20, total credit
extended surged to US$ 1,936.29 billion.6 Indian banks are increasingly focusing on
adopting an integrated approach to risk management. The NPAs (Non-Performing Assets) of
commercial banks have recorded a recovery of Rs 400,000 crore (US$ 57.23 billion) in
FY19, which is the highest in the last four years. The digital payments revolution will trigger
massive changes in the way credit is disbursed in India. Debit cards have radically replaced
credit cards as the preferred payment mode in India after demonetization. Transactions
through Unified Payments Interface (UPI) stood at 1.24 billion in March 2020, valued at Rs
2.06 lakh crore (US$ 29.47 billion).
Digitalisation in Indian Banks
Banks started using Information Technology by using Personal Computers which was new at
that time.
Later on, banks switched to Local Area Network (LAN) wherein a group of computers shares
a common communication line. Later on, banks adopted the Core Banking platform which
supports banks’ day-to-day transactions like opening new accounts, making and servicing
loans, processing cash deposits and withdrawals, etc.
Thus, branch banking changed to bank banking. All these features helped banks to increase
the comfort feature our customers and gave us a better customer experience through the
feature of Anywhere and Anytime Banking.
This feature allowed customers like us to do banking transactions 24*7 and through all the
branches of that bank in India.
The economy opened up in the latter half of the nineties. Private and foreign banks started
competing with the public sector banks in India.
Computerization increased during this era as banks started using more and more computers to
compete with one another and stay in the race. Many commercial banks started giving digital
customer services to stay competitive in the race.
Progress over the Years
Banks, as well as customers like us, have benefitted a lot by using the newer technologies
adopted by banks which made the entire experience user-friendly.
E-banking has resulted in reducing costs for banks, and at the same time, it increases their
user base, which ultimately helped them generate more revenue through various channels.
Digitization has decreased human error. It is now possible to access and analyse the data
anytime.
The Central Bank has overseen all these new developments taking place in banks.
Commercial Banks in our country have moved towards a technology by way of Bank
Mechanisation and Automation with the introduction of MICR, Electronic Funds Transfer.
MICR-based cheque processing helps banks use the technique to verify the validity and
enhance the security of signed checks. Electronic Fund transfers help customers like us to
transfer money from one account to another without the need to visit a bank branch.
Inter-connectivity among bank branches through the use of common software has helped in
faster decision-making and access to data.
Implementation of the ATM Channel has facilitated us to do transactions anywhere in the
country without visiting the branch.
Strong initiatives have been taken by the Central Bank of our country to strengthen the
payment and settlement system in banks.
Present Scenario
The Indian government is increasingly supporting digital transactions.
United Payments Interface (UPI) and Bharat Interface for Money (BHIM) launched by the
government was an important milestone not just for the banking system but for the entire
country. Innovation and popularity of digital payments are resulting in greater digital banking
transactions.
UPI is a payment method that allows the transfer of money anytime without the need to enter
bank details every time we transact. UPI and BHIM are economical ways of money transfer,
making us free of cash.
As we are moving towards a cashless economy, we see a rising number of ATMs in our
country. Implementation of electronic payment systems such as NEFT, ECS, RTGS, Mobile
banking, Debit cards, and Credit Cards have become very common with every Indian bank.
Indian banks are coming up with innovative variants of these products and show the newest
features added to these products to attract more customers.
All this has not just benefitted the banks by generating more revenue but has also made our
lives better by making banking very easy for us.
Challenges in the Banking Industry
1. Responsibility of User
Bank digital transactions can go wrong due to many reasons, some of which might not be the
fault of customers like us. The hacking of debit cards and bank accounts takes place very
frequently.
With the increased use of digital payments, we need to be protected from unauthorized
banking transactions.
Today, the responsibility is on us and not the banks when banks are really in control of the
payment system and are charging us for digital transactions.
2. Poor Laws
The laws on digital payments are vague. There is an urgent need to legally back digital
payments in our country, not only to ensure the safety of customers’ money but also for the
safety of these companies themselves.
Benefits of Digitalization
Since methods of banking have become more digitalized, banks are focusing on creating a
more efficient service for us, producing more methods of advancement in a more user-
friendly front-end service.
Through this mode of banking, paying bills online is done much faster and better since all our
information is tracked through our banking applications.
Digital banking also helps us to check our account history and transactions anywhere, which
ultimately satisfies customers like us since we are keeping track of our daily transactions.
Role of Artificial Intelligence and Data Analytics
Artificial Intelligence is continuously contributing to the banking industry to deliver a greater
level of value to us, decrease risks, and give better opportunities as the financial engines of
our modern economy.
It is helping in coming up with innovations and transforming the way clients are serviced.
Artificial Intelligence is working on giving personalized support, better customer experience,
and cost-saving.
Better performance, higher profitability, and reduction in risk are the main goals that the
banking and financial sectors are trying to achieve.
In this data-driven world, performance is dependent on those big data technologies which can
store and manage data in real-time.
Banks also have to mandatorily lend loans at a lower interest rate to priority sectors like
agriculture, housing, and education. Data Analytics has played an essential role in reducing
cost, product development, and increasing the client base for the banks.
In summary, digitalization has emerged as a transformative force in the banking industry,
fundamentally reshaping customer perceptions, expectations, and behaviors. Understanding
customer perceptions about digitalization in banking is essential for banks to tailor their
digital strategies effectively, enhance customer engagement, and deliver personalized and
seamless banking experiences.
OBJECTIVES AND SCOPE OF
STUDY
Objectives of the study
a. To assess consumers' awareness and usage of e-banking services provided by Standard
Bank Ltd.
b. To identify the factors influencing consumers' perceptions and attitudes towards e-
banking.
c. To explore the relationship between perceived benefits, perceived risks, and consumer
adoption of e-banking.
d. To examine the level of satisfaction and trust among consumers regarding the security and
reliability of e-banking platforms offered by Standard Bank Ltd.
e. To provide recommendations for enhancing e-banking services and addressing consumer
concerns to improve overall customer experience
Scope and significance
The study focuses on consumer perceptions towards e-banking services provided by Standard
Bank Ltd in Bangladesh. It encompasses factors such as awareness, usage behavior,
satisfaction, trust, perceived benefits, and perceived risks associated with e-banking. The
study utilizes a quantitative research approach, involving surveys or questionnaires
administered to a sample of Standard Bank Ltd customers. Additionally, 150 questionnaires
were supplied to the customers of Standard Bank Ltd and 100 responded.
The findings of the study will provide valuable insights into consumer preferences and
attitudes towards e-banking services offered by Standard Bank Ltd. The study will help
identify areas for improvement in e-banking platforms and strategies for enhancing customer
satisfaction and loyalty. The results can inform decision-making processes for Standard Bank
Ltd and other banking institutions seeking to optimize their digital banking offerings and
meet the evolving needs of customers in the digital age. By addressing these issues, the paper
aims to contribute to the existing literature on ebanking and provide practical
recommendations for enhancing consumer experiences with digital banking services in
Bangladesh
Statement of the problem
Despite the rapid growth of e-banking in Bangladesh, there remains a gap in understanding
consumer perceptions towards digital banking services offered by Standard Bank Ltd. It is
essential to investigate the factors influencing consumers' attitudes, preferences, and usage
behavior towards e-banking platforms to identify potential challenges and opportunities for
improving service delivery and customer satisfaction.
In summary, digitalization has emerged as a transformative force in the banking industry,
fundamentally reshaping customer perceptions, expectations, and behaviors. Understanding
customer perceptions about digitalization in banking is essential for banks to tailor their
digital strategies effectively, enhance customer engagement, and deliver personalized and
seamless banking experiences.