Literature Review.docx

LITERATURE REVIEW Internet revolution is global phenomenon and going by the current growth statistics, India expects a spurt in the Internet penetration in coming years particularly in the electronic commerce. It is an obvious notion that electronic (Internet) banking and payments are likely to advance more or less in tandem with e-commerce. Researches indicate that Internet banking has a significant impact on the business models of banks, securities trading firms, brokerage houses, insurance companies etc. Internet banking has also attracted the attention of, regulators and lawmakers in the developing nations since the late 1990s. Internet banking is a cause of concern to majority of the offline banks who should be ready for an unprecedented competition from the nontraditional banking institutions that offer banking and financial services over the Internet. Although some of the traditional banks have started offering their services on line, it is only an extension of their offline services. Internet banking has now started motivating customers to park their funds with the online banks, which has a substantially impact on the deposit base of the brick and mortar banks. However, Internet banking is a mixed blessing in the form of increased risk, the level of confidence reposed by the consumers and the problem of blending it with the physical system. Internet banking has brought about a new orientation to risks like settlement risk, international technology transfer risk, crime or fraud risk, regulatory avoidance risk, taxation avoidance risk, and competition risk. Basel II recommendation on operational risk also supports this hypothesis. In India, some banks like HDFC and ICICI have introduced payment gateways running on secure systems having firewalls against hacking. Convenience, safety and cost effectiveness are the jargons in the spectrum of online banking. Researchers on various occasions have raised many issues, which must be addressed in context of Internet banking in India. First, the availability of technology and infrastructure to support the new model of banking. Second, the need for Internet banking itself – Internet Banking or an efficient system of instantaneous banking or convenient banking. Third, an adequate mechanism to tackle the security risk and operational risk

aspects. Fourth, a proper legal framework to take care of the rights and obligation of the consumers. While most of these issues have been somewhat addressed, an important issue still remains - what existing and potential consumers feel about Internet banking and on the basis of this how an appropriate banking model can be developed in Indian context. There is a need to measure and analyze the consumer perception towards Internet banking, to find out what is wrong with traditional banks and provide a framework for the banks to strategically adopt the Internet so as to maximize value for the consumers. The purpose of this research is to examine the customer satisfaction among group of customer towards the public sector & private sector banking industries in India represented by SBI bank in public sector banks and HDFC bank in private sector banks. Study is cross-sectional and descriptive in nature. This study evaluates major factors (i.e. service quality, brand perception and perceived value) affecting on customers’ satisfaction in e-banking service settings. This study also evaluates influence of service quality on brand perception, perceived value and satisfaction in e-banking. Descriptive research design is used for this study, where the data is collected through the below mentioned questionnaire of 10 questions. The information is gathered from the different customers of the HDFC Bank located in the Juhu Area of Mumbai region.

Questionnaire:  Do you have a bank account? -Yes -No  In which bank do you have an account?

-HDFC Bank -SBI Bank -Other -N/A  Do you have Digital banking account with your bank account? -Yes -No -N/A  If No, what are the main reasons of not using Digital banking? -Never heard -Concerned about security -Not available through my bank -Not comfortable -Others  If Yes, what are the most important reasons for you to use digital banking? -Convenience -Curiosity -Safe & Secure -Low service charge -Easy to maintain all transactions activity -Others  Is bank staff able to solve all your queries and issues related to digital banking? -Yes -No -N/A

 Which are the digital banking services do you use? -Download statements -Fund Transfer -Online bill payments -Seeking product and services information -Others -Never Used

 What was the most important reason for choosing this bank’s digital banking? -I have a traditional bank account with the same bank

-The brand name of the bank -The excellent service offered by the bank -Avoiding long queues in the bank -Other  In your opinion what are the most important factors for an effective website? -Ease of use -Up to date information -Privacy Protection -Easy navigation -Others  What are the benefits you get from using digital banking? -Convenience -24/7 Access -Low cost and charges -Saves Time -Others

( 4, 5, 7, 8, 9, 10 were multiple choice questions )

Below are the responses received :1.

Have an Account

Yes No

100

Study shows that each and every individual participating in the study have an account. 2. In which bank do you have an account

29.4

29.4 HDFC Ba nk SBI Ba nk Others N/A

41.2

Further, study shows that 41.2% of the account holders have an account with SBI Bank,29.4% account holders have an account with HDFC Bank and remaining 29.4% account holders have an account with different other private sector or public sector banks.

3. Do you have a digital banking account with your bank account 17.60%

Yes No N/A

82.40%

Out of the gathered information 82.40% customers have a digital banking account whereas 17.60% customers are still not having any digital banking account. 4. If No, what are the main reasons Others

11.10%

Not comforta bl e

Not avai l a bl e through my bank

66.47%

22.20%

Concerned about s ecuri ty

66.70%

Never Heard 0.00% If No, what are the ma i n rea s ons

The study reveals that adopters and non-adopters realized that internet banking has quite a lot of benefits and amenities. However, non-adopters were concerned about some factors like trust, ease of use, awareness and

security. The customers are not comfortable using digital banking are either not using smartphone or senior citizen who find it more reliable to meet branch staff face to face and getting things done.

5. If Yes, what are the main reasons Curi os i ty

3%

Easy to mai nta i n al l transa ction activi ties

Low s ervice charges

52%

14%

Safe & Secure

Ea se & Conveni ence

31%

32%

If Yes, what a re the ma i n rea s ons

Customers are finding it easy and very cost effective using HDFC digital banking for their day to day transactions and banking needs. The results also showed that adopters had positive influence on use of online banking.

6.

Is bank staff able to solve all your queries 14.50%

Yes No N/A

14.73%

70.76%

Many customers (70.60%) don’t have problems with these factors because they had sufficient knowledge and experience in using online banking. The findings are important to enable bank Executives to have a better understanding of clients’ perception to adopt internet banking and its several benefits. By study, HDFC Bank and other private banks’ staffs are able to help them out in carrying any digital banking transactions and have thorough knowledge of the complete system and process. Also, few customers (14.7%) are not able to get solution to their problems because of the lack of knowledge of the banks staff and long queues in the bank. Remaining 14.7% are the customers they are not able to visit branch due to their work timings and location issues.

7.

Which of the services you use the most Others Never Us ed Seeki ng i nformation

8.80% 11.80% 26.50%

Onl i ne Bi l l Payments

76.50%

Fund Tra nsfer

58.80%

Downl oa d statement

61.80% Whi ch of the s ervi ces you us e the most

Study results indicate that customer use digital banking for various purposes such as, Account statement, balance enquiry, fund transfers, cheque book requesting, credit card and loan account details, bills payments and many more transactions without paying much charges at their convenience. Most of the customers (76.5%) selected digital banking for their bill payments such as mobile recharge, credit card, DTH and electricity as they get a good amount of discounts on that. 61.80% have voted for account statement downloading. Other (58.8%) customers use digital banking for Fund Transfer. Some of them (26.5%) also use it for banks’ product and services information. While 8.8% customers use it for other several reasons like, balance enquiry, demat trading, mutual fund investments, details updation etc. 11.8% even voted for not using any kind of services online due to vaious reasons mentioned ahead.

8.

Reason for choosing particular bank's Digital Banking Others

9.40%

Avoi di ng l ong queues

28.10%

The excell ent s ervi ce offered

31.30%

The brand name of the ba nk

34.40%

Tra di tiona l ba nk account wi th the ba nk

40.60%

Reas on or choos i ng particul ar bank's Di gi tal Banki ng

Study reveals that customers (40.60%) have their traditional bank account and that’s why they feel it’s more reliable whereas 34.4% go on the brand name. 31.30% customers feel the services offered by the bank is excellent. There are public sector banks in which people (28.10%) have to go through long queues and lot of hassle to contact bank staff and getting things done. So to avoid that hassle, customer switches to another bank for services. 9.40% customers have their own preferences in choosing particular bank such as location issues, not having any option while opening salary account etc. 9. Important factors for an effective digital banking website Others

Easy navi gation

12.10%

39.40%

Priva cy Protection

Upto date i nformation

51.50%

42.40%

Ea se of us e

72.70% Important factors for an effective di gi ta l banki ng webs i te

The study results indicate that loyalty of e- banking customers is directly affected by satisfaction and trust in an online bank, which in turn are determined by Web site quality and service quality. Moderating variables such as age, involvement, variety seeking behavior and technophobia exert a significant influence on some of the proposed relationships. 10. Benefits you get from digital banking Others

Saves time

Low cost and cha rges

24/7 Acces s

3.10%

25.00%

31.30%

37.50%

Conveni ence

71.90% Benefits you get from di gi ta l banki ng

Study reveals that customers are finding it easy and very cost effective using digital banking as being time saving and 24/7 access to it at their convenience. Overall study indicates that customer’s preferring HDFC Bank being a private bank and more helpful and attentive than SBI or any other bank. HDFC bank’s staff found to be having thorough knowledge and well awareness about their products and services for digital banking. Also they have different modes of digital banking such as Net banking, Watch banking, SMS banking, Mobile banking and Social media offering more than 200 transactions possible to do online.

Vijay M. Kumbhar (2011) , In his research paper “Factors Affecting the Customer satisfaction In E-Banking: Some evidences Form Indian Banks”. This study evaluates major factors (i.e. service

quality, brand perception and perceived value) affecting on customers’ satisfaction in e-banking service settings. This study also evaluates influence of service quality on brand perception, perceived value and satisfaction in e-banking. Required data was collected through customers’ survey. For conducting customers’ survey liker scale based questionnaire was developed after review of literature and discussions with bank managers as well as experts in customer service and marketing. Pooja Malhotra & Balwinder SINGH (2009) In their research paper “The Impact of Internet Banking on Bank Performance and Risk: The Indian Experience”. The paper describes the current state of Internet banking in India and discusses its implications for the Indian banking industry. Particularly, it seeks to examine the impact of Internet banking on banks’ performance and risk. Using information drawn from the survey of 85 scheduled commercial bank’s websites, during the period of June 2007, the results show that nearly 57 percent of the Indian commercial banks are providing transactional Internet banking services. The univariate analysis indicates that Internet banks are larger banks and have efficiency ratios and profitability as compared to non-Internet banks. Anil Kumar and Manoj Kumar Dash (2013) In their research paper “Constructing a Measurement in Service Quality for Indian Banks: Structural Equation Modeling Approach”...The aim of this paper is to construct a measure in service quality for Indian banks and establishes a causal relationship of service attributes performance with customer satisfaction. The results indicate that service quality variables are important antecedents of customer satisfaction and retention. These antecedents of service quality have a positive significantly relationship with customer satisfaction. The study concludes with an analysis of how different dimensions of service quality performance attribute impact on customer satisfaction and retention. Shilpi Khandelwal (2013) In his research titled on “E Banking: Factors of Adoption in India” This paper present the last decade has witnessed a drastic change in the economic and banking environment all over the world. With the economic and financial sector reforms introduced in the country since early 1990s, the operating environment for banks in India has also undergone a rapid change. Increasingly, more and more people are switching to electronic platforms for executing financial transactions. Internet banking has brought about a 360 degree change in the entire banking industry. The wider usage of cell phone and internet certainly seems to be playing a role in blurring physical boundaries, and unlocking a whole new world of opportunities for banks in tapping newer customer segments and in recording greater volume of transactions. Neeli Prameela, Dr. B. Abdul Azeem & K.V. Geetha Devi (2012) This study is a challenge to Owing to the high costs occupied in increasing the current client base, one of the main goals of banks and other monetary services providers, which operate through the internet, should be to develop customer allegiance in order to improve the results. To achieve this aim, these companies face most imperative challenge in providing and maintaining service quality. Service quality is an input of customer trust which becomes satisfaction and lead to loyalty as an output. But the research in the development of e-loyalty is scarce and partial. This paper attempts to accumulate invented story in order to understand the overall structure of the formation of e-loyalty.