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 customer’s valuable articles and securities.
 Underwriting facility
 Issuing of Traveler’scheque 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.
 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

SCOPE OF THE STUDY

•Area is restricted to only JALANDHARbecause due to the time constraintand notable to visit all the
branches in other cities or states
.
•All the classes of the customers were taken into consideration.

•This study was covered E-Banking service sector

•This is a realistic source directed collected from the customers of bank.

 INTRODUCTION TO INDIAN BANKING SECTOR

INTRODUCTION

Banking is the backbone of a modern economy. Health of banking industry is one of the

most important pre-conditions for sustained economic progress of any country. The world of

banking has assumed a new dimension at the dawn of the 21 st century with the advent of tech

banking, thereby lending the industry a stamp of universality. In general, banking may be

classified as retail and corporate banking. Retail banking, which is designed to meet the

requirements of individual customers and encourage their savings, includes payment of utility

bills, consumer loans, credit cards, checking account balances, ATMs, transferring funds

between accounts and the like. Corporate banking, on the other hand, caters to the needs of

corporate customers like bills discounting, opening letters of credit and managing cash.

The Indian banking scene has changed drastically with the private sector making inroads in an

area hitherto dominated by large public sector banks. Growing disinvestment is likely to impact the

banking industry as well. There is every possibility of privatization of public sector banks, leading to

greater operational autonomy. The development of the Indian banking sector has been accompanied by

the introduction of new norms such as Income Recognition and Capital Adequacy, by the government.

The latter implies that banks can lend on the basis of their respective capital base. These norms have

caused banks to construct equity on their own, before going in for debt. Disintermediation is a real threat

for banks. Of late, banks are adopting the EVA (Economic Value Added) concept wherein revenues are

viewed in the context of the risk associated with them.

The New World order has ensured "Survival of the Fittest". New services are the order of the day,

in order to stay ahead in the rat race. Banks are now foraying into net banking, securities, consumer

finance, housing finance, treasury market, merchant banking and insurance.

 BANKING STRUCTURE

The Indian banking industry, which has Reserve Bank of India as its regulatory authority, is a mix of

the public sector, private sector, and foreign banks. The private sector banks are again split into old

banks and new banks.

SCHEDULED BANKS

Scheduled commercial banks are those that come under the purview of the Second Schedule of

Reserve Bank of India (RBI) Act, 1934. The banks that are included under this schedule are those that

satisfy the criteria laid down vide section 42 (60 of the Act). Some co-operative banks come under the

category of scheduled commercial banks though not all co-operative banks.

PUBLIC SECTOR BANKS

Public sector banks are those in which the Government of India or the RBI is a majority

shareholder. These banks include the State Bank of India (SBI) and its subsidiaries, other nationalized

banks, and Regional Rural Banks (RRBs). Over 70% of the aggregate branches in India are those of the

public sector banks. Some of the leading banks in this segment include Allahabad Bank, Canara Bank,

Bank of Maharashtra, Central Bank of India, Indian Overseas Bank, State Bank of India, State Bank of

Patiala, State Bank of Bikaner and Jaipur, State Bank of Travancore, Bank of Baroda, Bank of India,

Oriental Bank of Commerce, UCO Bank, Union Bank of India, Dena Bank and Corporation Bank.
PRIVATE SECTOR BANKS

Private Banks are essentially comprised of Four types: the old and the new. The old private sector

banks comprise those, which were operating before Banking Nationalization Act was passed in 1969. On

account of their small size, and regional operations, these banks were not nationalized. These banks face

intense rivalry from the new private banks and the foreign banks. The banks that are included in this

segment include: Bank of Madura Ltd. (now a part of ALLAHABAD Bank), Bharat Overseas Bank Ltd.,

Bank of Rajasthan, Karnataka Bank Ltd., Lord Krishna Bank Ltd., The Catholic Syrian Bank Ltd., The

Dhanalakshmi Bank Ltd., The Federal Bank Ltd., The Jammu & Kashmir Bank Ltd., The KarurVysya

Bank Ltd., The Lakshmi Vilas Bank Ltd., The Nedungadi Bank Ltd. and Vysya Bank. The new private

sector banks were established when the Banking Regulation Act was amended in 1993. Financial

institutions promoted several of these banks. After the initial licenses, the RBI has granted no more

licenses. These banks are gearing up to face the foreign banks by focusing on service and technology.

Currently, these banks are on an expansion spree, spreading into semi-urban areas and satellite towns.

The leading banks that are included in this segment include Bank of Punjab Ltd., Centurion Bank Ltd.,

Global Trust Bank Ltd., HDFC Bank Ltd., ALLAHABAD Banking Corporation Ltd., IDBI Bank Ltd.,

IndusInd Bank Ltd. and Axis Bank Ltd.

FOREIGN BANKS

The operations of foreign banks, though similar to that of other commercial Indian banks, are

mainly confined to metropolitan areas. Foray of foreign banks depends on reciprocity, economic and

political bilateral relations. An inter-departmental committee has been set up to endorse applications for

entry and expansion. Foreign banks, in the wake of the liberalization era, are looking to expand and

diversify. Some of the leading foreign banks that operate in India are Citibank, Standard Chartered Grind

lays Bank, Hong Kong Shanghai Banking Corporation, Bank of America, Deutsche Bank, Development

Bank of Singapore and Banque National De Paris.

PUBLIC SECTOR BANKING – AT A DISADVANTAGE

Functioning of Public Sector Banks (PSBs), which are yet to achieve computerization across the

board, is at a relative disadvantage when compared to the private sector, which is offering state-of-the-art

facilities such as ATMs, doorstep banking, banking on phone, and net banking. PSBs also suffer from

huge costs of labor and low levels of automation. At this rate, it may not be long before new channels

devised by private banks effectively surpass the number of branch NeFourrks offered by the PSBs.

This apart, the problems which have assumed enormous proportion today as far as Public Sector

banks are concerned are ballooning NPA levels, declining margins, poor credit off-take, high overheads,

and lack of good quality assets. Banks are sticking to reliable borrowers for fear of bad debts. In fact,

banks largely invest in government securities, which have zero risk. With GOI being the single largest

borrower, the yields on these securities determine the interest rates.

The government aims to decrease its shareholding in PSBs to 33%, however, at the same time it

also wants to retain the controlling stake. This, it is feared, is not going to solve the problems which PSBs

are coping with now.

 PRIVATE SECTOR BLOOMS

Corporate governance and self-regulation are the ground rules for the private sector. Government

interference is not preferred. While some private banks such as ALLAHABAD Bank, Axis Bank and

IDBI Bank have financial institutions Banking them, others are opting for foreign partnerships for

technology and monetary resources.

Private Banks have emerged relatively strong, with about 60% growth reported in net

profits in the year ended March 2000. With a net profit of Rs.120 crores (+46%), HDFC was the

clear leader. IDBI Bank, however took the cake by doubling its net profit, which reached

Rs.60.99 crores in March [Link] jump in profits can mainly be attributed to non-traditional

sectors such as commission, exchange, brokerage, and profit on sale of investments.

RBI POLICIES

The RBI does not interfere in determining the prime lending rates for commercial banks. The

onus is on banks to do so. RBI regulates interest rates on savings accounts, export credit, and credit for

small and tiny sectors. The rates fixed by RBI are quite low at 7%, 5%, and 4% respectively for Bank

Rate, Repo Rate, and savings account rate. Fixing rates on bank credit is the discretion of the banks.

Though banks are allowed to offer variable interest rates on longer-term deposit rates, they continue to

offer fixed deposit rates.

Current account transaction norms eased

Norms on current account transactions were eased, in line with the Foreign Exchange

Management Act (FEMA). The Basic Travel Quota (BTQ) has been raised from US$3,000 to US$5,000,

without the need for central bank’s approval. Capital account restrictions related to dealing in assets with

residents and non-residents have also been relaxed.

RBI to launch liquidity adjustment facility

The Reserve Bank of India (RBI) is launching its new liquidity adjustment facility (LAF),

effective June 5. The first phase would see the withdrawal of additional collateralised lending facilities,

and Tier-II refinance to banks. The 5% fixed rate Repo will also be withdrawn. The facilities of

collateralised lending and Tier-I refinance facilities will continue.

The Central government has granted approval to banks during the current financial year to make a foray

into forward trading in gold by including gold on the list of commodities eligible for hedging under the

Forward Contract (Regulation) Act, 1952.

MEASURES ADOPTED BY RBI

Measures to increase liquidity and decrease the cost of funds to banks

 Bank rate cut by 1% from 8% to 7%

 CRR cut by 0.5%, from 8% to 7.5%

 Repo rate cut by 1%, from 6% to 5%

Savings deposit rate for scheduled commercial banks cut from 4.5% to 4.0%
A landmark ". COM" ventures in India between ICICI BANK and SIFY for online distribution of retail

banking products and services.

In a major development in the Internet world, ICICI Bank, the banking subsidiary of ICICI Ltd. (NYSE:

IC and IC.D) and Satyam Info way Ltd. (NASDAQ: SIFY) announced the setting up of a new ".COM"

company for on-line distribution of retail banking products and services on the Internet. This landmark

agreement marks the coming together of India's first Internet Banking provider, ICICI Bank, and India's

largest private ISP and mega-Portal, Satyam Infoway, to create a unique partnership between a major

Bank and a mega-Portal. The marriage between banking and portals is expected to be a win-win potent

combination, which is expected to result in improved customer orientation, lower distribution cost, long-

term customer relationships with ease of banking wherever and whenever the customer wants it and

enhanced profitability. The range of retail banking products to be distributed through the portal would

include savings accounts, current accounts, fixed deposits, bill payments and other retail banking products

that ICICI Bank may offer through this on-line channel.

The surge in demand for e-commerce related services stems from the rapid growth in Internet penetration

in the country and a fundamental change in the business paradigm. The two companies would therefore

also explore several opportunities to complement each other's strengths to capitalise on the opportunities

in e-commerce. This would include providing a platform for trade facilitation and payments over the

Internet using innovative banking products of ICICI Bank. SIFY has a buyer to seller ordering/selling

website, [Link], which is on-line except for the payments that are still physical. ICICI Bank

has developed an Internet based 'business to business' payment module for purchasers and sellers to effect

payments online. A synergistic offering of these two products would be made so that such

customers/users can complete the entire transaction and payments online.

1. Key Business Objectives

Organizations are facing tremendous competition word-wide. There is pressure on the organisations to

improve their profitability and efficiency for their survival and growth. The customer’s expectations

about the product and services are increasing and they do not hesitate to change their brand loyalty or the

loyalty towards the organisations with whom they have been dealing for a long time. The

deregularisation, liberalization and globalisation process have given freedom to the organisations in terms

of selecting and producing the products and services, selecting the market segment and targeting a

customer group at the same time they have to meet more rigid and regulatory requirements to satisfy the

regulators that the deregulation or liberalization does not work against the interest of the customers and

the society. The organisations also have to safeguard their resources to protect the interest of

shareholders.

The changing environment particularly that of competition, customer expectations and emerging

technology have influenced the banks word-wide. Thus, the key business objectives of a bank are to

manage increasing competition by improving their product and services, improving efficiency and

productivity by restructuring their systems and work procedures and improving employees productivity,

ensuring compliance with the regulatory requirements and safeguarding the assets. All these issues can be

addressed by implementation of the right type of technology for the right purpose. The technology-based

solutions have put the banks in a competitive advantage, improved the efficiency of the operations and

provided excellent customer service. The technology has helped the organisations to take strategic

decisions based on the on-line data rather than based on the past experience and intuitive decisions. The

computer assisted audit techniques have helped the banks to ensure safeguarding of resources and to
 a. Developments in Software Technology:

More than the developments in the hardware technology there have been developments in

software technology. Newer and newer software systems are implemented to facilitate the users.

The software systems are becoming more and more user friendly and interactive to provide on-

line help and validation facilities. The Graphic User Interface (GUI) environment facilitated the

users to use the systems by clicking the appropriate icons to perform various common functions

without bothering about the syntax of commands. The software packages are now supporting

multimedia i.e. text, audio, video and graphics. The software systems have also been developed to

support presentations, desktop printing, 3D graphics, animations, etc. Software has also been

developed to support any human activities to improve the efficiency, productivity, housekeeping

and customer service. Special packages have been developed for facilitation the auditors. The

Computer Assisted Audit Tools/ Techniques (CAATs) have made the job of auditors easy and

more effective.

b. Developments in Communication Technology:

The synergy between computer and communication technology has really changed the banking

scenario. It has facilitated the banks to reach to the customers without their physical presence.

The technologies available for LAN, WAN, Intranet, Internet and Groupware have improved the

efficiency of the banks. Banks are able to provide better and innovative services to customers

using these technologies. The satellite based communication systems provide high reliability and

scalability. This technology is highly suitable for remote locations. The fibre optic technology has

also improved the reliability, quality and speed of communication besides providing considerably

higher bandwidth for the data transfer.

4. Issues in Computer Technology

The major problem the IT users are facing today relates to fast obsolescence in Hardware Technology.

The obsolescence is fast because newer and newer software systems with more capabilities are developed

which require higher processing speed and storage. The other concern of the user of the technology

particularly of the banks is the data security and the disaster management as the data in the computerised

systems represents financial transactions. Inadequately secured systems may lead to frauds and other

computer related crimes. To provide uninterrupted services to its customers, the banks are also concerned

with the proper maintenance of hardware and software systems. The adequate and trained manpower is

generally not available at different business locations. It is also a very strategic issue for a bank whether

to develop and maintain the systems in-house or to outsource them. There are always some relative

advantages and disadvantages for outsourcing the systems depending upon the circumstances.

5. Issues in Communication Technology:

There are varieties of communication media available for networking and data communication. The

selection of suitable communication media in terms of its reliability, cost and durability is an important

decision. The selection of appropriate topology and the communication protocols are also important

considerations for the banks. Another major issue the banks are facing is to ensure network security. The

physical security is not considered adequate and effective in a networked environment particularly in a

wide area network. There is also shortage of communication infrastructure in developing countries and

the infrastructure is costly. There are not many choices as the infrastructure is generally provided by the

government agencies and there are always some regulatory hassles. There is also shortage of bandwidth

to support data, voice and image. The reliability of the infrastructure is also one of the major issues when

it is required to provide services like banking anytime and anywhere.

6. Impact on Staff:

There are number of issues related to the staff while implementing and using IT in banks. These relate to

availability of trained personnel to exploit the benefits of technology, continuous up gradation of their

skills, retention of trained manpower in the organisation and utilization of staff rendered surplus due to

implementation of technology.

7. The Future Trends:

Animation software, fusion of computer and communication technology, image processing and video

conferencing all will aid and present simulated environment for various business activities including

banking. Emergence of electronic commerce, electronic and Internet banking, electronic payment systems

and use of e-cash will bring our drastic changes in the banking activities.
 “BANKING SYSTEM IN NEW MILLENIUM’’

INTRODUCTION: -

Economic growth and development of a country depends on the health of its financial sector that

includes banking sector. Banking sector provides a very vital input wiz. Finance to all other

commercial and scientific fields thus; it should be always one step ahead of all the other fields. In

addition it provides mobiliasation of savings. It also plays an important role in capital formation

of the country.

The 1991 new economic policy adopted by the government of India is based on the three features LPG

VIZ. Liberalization, Privatization, Globalization. It created a huge improvement in the economy of our

country. Thanks to our present Prime Minister and the then Finance Minister, Dr. MANMOHAN

SINGH who is rightly called as Father of Economic Reforms. Broadly speaking reforms in the

financial sector are aimed at making Indian banks conform to the international prudential standards and

also making the financial system more competitive. The administrate structure of interest rates has been

dismantled, with freedom given to banks to fix the rates of interest on deposits on loans. New private

sector banks have been licensed.

In the words of Mr. RANGARAJAN, earlier governor of the RBI, the year 1993-94 in a way marks a

turning point in the financial history of India, in the banking system. He always gave much more

importance to improve the technology. Computerization in many commercial banks is an account of his

president efforts, in this direction.

[Link], the former governor of the RBI was equally conscious of the need to improve the

banking sector financially and immediately. After assuming the office of the governor, of the RBI, he has

accorded priority towards the implementation of some important recommendations of the Narasimham

Committee Report.

In order to visualize the reforms, it is necessary to trace its development in a historical prospective.

Future Of Banking Sector:

Public sector banks have enjoyed almost a monopoly situation till the Liberalization wave begin

in 1991. Recently, Union Bank of India and Bank of India have amalgamated with each other

and the other news is that subsidiaries are merging with SBI to form a single merged bank. This

will reduce the administrative expenses. The banks can share the common infrastructure,

management etc. it may even happen that one senior manager may look after two or more

branches in the city.

But in the present intensified process of liberalization and globalization a lot of challenges will

have to be meet by the banking sector for its survival and growth wiz.

1. Increase in competition with a growth of private banks the hitherto protected public sector banks

will have to shake off their lethargy to survive in the new liberalized banking sector.

Private sector banks are in a position to offer better customer service on account of being hi-tech.

From a sellers market, we have moved to a buyers market. It is a great challenge to keep meeting

the ever-growing requirements of non-aware, enlightened and demanding customers. They have

better alternative to meet the demands.

 2. Innovative banking process of disinter mediation has begun in the Indian financial sector. The

user of finance, the corporate sector especially, is gradually depending less and less on banks and

financial institutions. They prefer to mobilize funds directly from the market. This has an adverse

effect on the banks income and profitability. Banks now have to constantly lookout for the new

ways of earning income

3. Non-performing assets (NPAs) is a one of the serious challenges of banking system is facing. A

high level of NPAs adversely affects the profitability of our banks. In future, bank should adopt

intensive techniques to reduce the NPAs.

4. Technological changes in a hi-tech IT era customers, expect quick and efficient service. The

paper-based payment system is gradually changing into electronic payment system. With the

growth of computer network in India, some banks have also introduces Internet Banking,

Customers, who are linked to computers, find it very convenient.

Opportunities:

Let us have a look, at the opportunities that a banking sector has in future.

1. Growing banking business, a steady increase in personal income of people an incoming of MNCs

has increases the demand for bank loans to buy consumer durables. Demand for housing loan has

also increased.

2. Financial supper market banks have entered the area of financing and other services like

depository, underwriting, gilt trading and even brokering. Commercial banks are now operating

as a financial supper markets.

3. Insurance business-now insurance sector is open to the private sector as well. It is easer for banks

with a wide network to capture the widely speared-out market for insurance business.
 4. Cash-less system-growth of credit card business in India is another possibility for commercial

banks to exploit. It is possible to increase market share of credit card business on account of the

increase in middle and higher middle-class population.

Constraints:

The constraints that need to be removed to make our banking sector progressive are:

1. To remove inflexibility like lack of users friendly front and environment for bank officials;

2. Use of a very technical and proprietary back and software, which cannot be customized easily.

3. Users in banks as we know are not IT professionals and though they are trained in various

aspects, it really makes impractical for them to covers themselves suddenly to new upcoming

systems.

Concluding Remarks:

We feel that first of all, innovation is required in banks to render better and efficient customer

services. Electronic banking enables new products and services to be geared for specific

customers. We have variety of customers today and the need of each customer is different and

varied. Looking to other economies like France and United States our banking system has also

adopted credit cards, debit cards, electronic checks, smart cards, e-cash or cyber cash, automated

teller machines, which are being extensively practiced in these countries.

Internet banking is in vogue nowadays. It is the one of the latest example of IT in banking sector.

We can perform all the banking operations, just on the click of a button by sitting at our homes.

Finally, watchword is share information; money and resources (human, physical, and

technological) to improve our banking sector, for better tomorrow.

E-BANKING
 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.

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.
 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’[Link] 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.

Traditional banking Virtual or E-banking

Gunpowder Nuclear charged

Personalized services, time Real time transactions,

consuming, limited access integrated platform, all time
access

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

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

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.
 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.
 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.
 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 theaamjanta. Indian Railways has tied up with ICICI bank and
you can now make your railway pass for local trains online. The pass will be delivered to you at your
doorstep. But the facility is limited to Mumbai, Thane, Nasik, Surat and Pune. The bank would just
charge Rs 10 + 12.24 percent of service tax.

5. Investing through Internet banking

Opening a fixed deposit account cannot get easier than this. An FD can be opened online through funds
transfer. Online banking can also be a great friend for lazy investors.

Now investors with interlinked demat account and bank account can easily trade in the stock market and
the amount will be automatically debited from their respective bank accounts and the shares will be
credited in their demat account.

Moreover, some banks even give the facility to purchase mutual funds directly from the online banking
system.

So it removes the worry about filling those big forms for mutual funds, they will now be just a few clicks
away. Nowadays, most leading banks offer both online banking and demat account. However if the
customer have theredemat 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.
 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 [Link]

UTI Bank Infosys (Bank Away) I connect

 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."
 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 [Link] 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.

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
 advertising spending
 margins
 funding costs
 Merger opportunities and threats, both in the UK and abroad.
 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.

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.
 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.
 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.

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.
 RESEARCH
METHODOLOGY
 RESEARCH METHODOLOGY

Research

It 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
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.
 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:

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.

Secondary data:
 Articles on E-Banking taken from journals, magazines published from time to time.
 Through internet.
 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.
 DATA
ANALYSIS
AND
INTERPRETATION
 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%

Fully aware
Had an idea
100%
No idea
46% Total

17%

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
  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 4 4%

Figure 2

Sources of awareness about e-banking

4%
15%

26%
Personal Visit
Executive from Bank
21% Advertisements
Friends /Relatives
Others

34%

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.
  Table 3.
Awareness of E-Banking services

No. of Respondents Percentage

ATM 38 38%
Debit Card 20 20%
Credit Card 14 14%
Mobile Banking 14 14%
Internet Banking 14 14%
Total 100 100%

Figure 3

Relative awareness about different

e- banking services
40.00%
30.00%
20.00%
Series1
10.00%
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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 i.e. 11.83%.
  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

26%
Users
Non Users
74%

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.
  Table 5.
Representation of frequency of usage
Day % Week-wise % Fortni-ghtly % Mon- % Infreq- %
Wise thly uently

ATM 4 36.36 31 55.3 13 37.14 11 25.5 9 13.85

6 8
Debit 2 18.18 11 19.6 7 20 10 23.2 8 12.31
Card 4 6
Credit 1 9.09 5 8.93 6 17.14 6 13.9 18 27.69
Card 5
Phone 0 0 2 3.57 3 8.57 7 16.2 13 20
Banking 8
Mobile 0 0 4 7.14 4 11.43 2 4.65 9 13.85
Banking
Internet 4 36.36 3 5.36 2 5.71 7 16.2 8 12.31
Banking 8
11 100 56 100 35 100 43 100 65 100

Figure 5

Frequency of usage of different e-banking services

70
60 Internet Banking
50 Mobile Banking
40 Phone Banking
30 Credit Card
20 Debit Card
10 ATM
0
Wise thly

Day Week-wise Fortni-ghtly Mon- Infreq-

uently

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..
  Table 6.

Factors influencing the level of usage

More
Strongl Averag Less than Not
than Total
y e average at all
average
All time
56 8 11 1 3 79
availability
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

Factors influencing level of

usage

90
80
70
60 Not at all
50
40 Less than
30 average
Average
20
10 More than
0 average
Strongly

Figure6
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 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 FUND
TRANSFER
EMERGENCY SKIN
SAVING
OTHERS

Interpretation
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

Factors No. of Respondents Percentage

a Time consuming 59 14.82%
b Insecurity 45 11.31%
c ATM out of order 62 15.58%
Amount debited
d 39 9.80%
but not withdrawn
Problem of change
e 42 10.555
in mobile number
Password
f 54 14.57%
forgotten
g Card misplaced 50 12.56%
h Card misuse 47 11.81%

Figure 8

Problems identified by the users of E-Banking services

70
60
50
40
30
20
10
0
Time Insecurity ATM out of Amount Problem of Password Card Card
consuming order debited but change in forgotten misplaced misuse
not mobile
withdrawn number

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

More
Less
Highly than Least
Factors Average than Total
important averag important
average
e
Weights 5 4 3 2 1
No
need( Satisfied
A with 19 8 22 6 22 77
traditional
banking)
B It seems like a
7 0 9 16 30 62
botheration
C Insecurity 17 11 21 7 13 69
D No access to
9 5 13 10 16 53
internet/mobile
Lack of
E operational 12 7 12 12 15 58
knowledge
F Hidden costs 21 5 14 8 16 64
Figure 9

Reasons for not using E-Banking services

90
80
70
60
50
40
30
20
10
0
Satisfied with

It seems like a

Insecurity

internet/mobile

operational

Hidden costs
knowledge
No access to
Weights

Lack of
botheration
traditional
No need(

banking)

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.
FINDINGS
 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 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.
 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.
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.
 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.
SUGGESTIONS
 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.
 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

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

 [Link]
 [Link]
 [Link]
 [Link]
 [Link]
 [Link]
 [Link]

MAGAZINES AND NEWS PAPERS

 Economic Times
 Business Standard
 The Hindu
 Times of India
 Outlook Business Magazine
 Business Today Magazine
Annexure
 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 Bank
c. Punjab National Bank d. ICICI Bank
e. 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 visit
b. Executive from the bank
c. Advertisements
d. 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. ATM
f. Debit Card
g. Credit Card
h. Phone banking
i. Mobile banking
j. Internet banking

5. Do you use E-banking services?

a. Yes b. No

(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?
Once in a Once in a Once in a Once in a Infrequentl
Factors
day week fortnight month y
 a ATM
b Debit Card
c Credit Card
d Phone Banking
e Mobile Banking
f Internet Banking

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

More than Less than

Factors Strongly average Not at all
average Average
a All time availability
b Ease of use
c Nearness
d Security
e Direct access
f Friends/ Relatives
g Status symbol

8. Which of the following benefits accrue to you, while using E-banking services?
a. Time saving b. Inexpensive
c. Easy processing d. d. Easy fund transfer
e. Any other, please specify__________________________________________
9. Rate the problems identified while using E-banking services?

Highly
Factors considere Major Average Minor Ignorable
d
a Time consuming
 b Insecurity
c ATM out of order
d Amount debited but not
withdrawn
e Problem of change in
mobile number
f Password forgotten
g Card misplaced
h Misuse of card

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

Highly More than Less than Least

Factors Average
important average average important
a No need( Satisfied with
traditional banking)
b It seems like a botheration
c Insecurity
d No access to
internet/mobile
e Lack of operational
knowledge
f Hidden costs
Any 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?
____________________________________________________________