International Journal of Engineering and Management Research
Page Number: 298-309
Emerging Trends of Banking: A Study of Public and Private Sector Bank of Nainital
Himani Jalal1, N.S Bisht2
1Research Scholar, Department of Commerce, D.S.B. Campus, Kumaun University, Nainital, INDIA 2
Professor of Commerce, D.S.B. Campus, Kumaun University, Nainital, INDIA
ABSTRACT
Transformation is a dynamic process, which is also evident in the Indian banking industry. Various changes were initiated in the financial products and services, this led to development and facilitated greater choices for customers by providing a wide range of products electronically. All this necessitated transformation in the banking sector, which is called the e-banking.
Keeping in view the above advancement in the field of banking, a study was conducted to explore the usage and satisfaction level of the customers of a private sector and a public sector bank practicing e-banking system in Nainital town. The study examined the effect of various demographic factors on e-banking usage. It also evaluated the utility & cost benefit analysis of e-banking. The findings of the paper show that income, education, occupation, comparative leverage and perceived risk have significantly influenced the usage pattern, but education has been the major driving force in the adoption of e-banking. Keyword---- e-banking, private sector, public sector, bank, demographic factors, utility, cost benefit analysis.
I. INTRODUCTION
Technology is the key to development in today’s world. The use of technology has affected every aspect of human life in one way or the other. Most of the activities at workplace as well as home are being carried out electronically. Any activity which involves the use of technology in banking sector is called E-banking. E-banking delivers banking services and products through an electronic channel such as telephone, the internet, cell phone etc. It facilitates quick and easy financial transaction through which clients get a wide range of financial products and services online. It also has generated greater profitability and is considered to be a key driver for the economic development of a country. As banking sector is
expanding in different financial events every day, it is looking forward to providing better services to their customers which have increased the prospects of e-banking.
The fast advancing global information infrastructure includes information technology and computer network (internet, telecommunication) system which has empowered the development of e-commerce at a global level. Internet has become a valuable business aid as it is a universal connector. Every individual has started accepting it as an integral part of life as it has resulted in enhancement as well as simplification of work. One such technology is internet. Apart from other sphere of life, it has also spread its root in the banking sector. These developments have formulated a so called “digital economy”
II. LITERATURE REVIEWS
Various pragmatic and theoretical studies have been undertaken at the national and international level to analyze the impact of e-banking and information & communication technology (ICT) on banking sector, customers service quality and payment system. Most of the studies focused on customer satisfaction which has not only increased the satisfaction level but has proved to be an incentive of saving processing and transaction time. E-banking has also helped in the productivity of banks. For this purpose an extensive survey of the literature was conducted. The objective of this survey was to observe different variants of e-banking across the globe. This analysis was helpful to study the trends of e-banking in a private and a public sector bank with respect to the customers and the banks. This survey was carried out to identify and develop the objectives of e-banking. Simon and Victor (1994) examined the reasons behind the rejection and acceptance of electronic funds transfer at
point of sale (EFTPOS). They also observed the risk of EFTPOS by comparing the cash and credit transaction. The authors manifested that more marketing research and consumer participation was needed in designing and introducing e-banking services so as to gaining more user acceptance. They signified that in order to reduce fears in the minds of people regarding security, it was required to introduce risk reduction techniques such as money back guarantee, live demonstration and free trial to reduce psychological, financial and time loss risk. The researchers suggested that for the e-payment methods to be more successful, it should be based on proper marketing risk, prompt service support, sufficient legal protection and awareness. Dannenberg and Keller (1998) overviewed the opportunities of effective utilization of the internet with regard to the banking industry. They were of the opinion that appropriate application of today’s technology could ensure success of banks in the competitive market. The authors analyzed that transactions via internet reduced the risk of data loss to customers, a chance to cut down expenses, higher flexibility to bank employees, re-shaping the banks image into an innovative and technologically leading institutes. Joseph et al. (1999) evaluated the impact of electronic banking on the service delivery by the banks to its customers. A sample of 440 electronic banking customers was taken, and 300 fully filled questionnaires were analyzed. Six factors model was used to adequately represent the data and the factors chosen were convenience, accuracy, efficiency, queue management, accessibility and customization. The study examined customer perception on electronic banking services and attributes of electronic banking services. The study suggested that banks should provide statements of all transactions, customers should be provided toll free numbers and banks should also develop electronic banking facilities to meet the needs of elderly and disabled people. Pikkarainen et al. (2004) highlighted that electronic banking technology has created new ways of handling daily banking affairs especially via online banking channel. The authors adopted technology acceptance model to leverage the online environment. The model indicated online banking acceptance among private banking customers in Finland through a sample survey. The findings of the study showed that perceived usefulness, information on online banking, security and privacy, quality of service, ease of use on the website were the main factors influencing online banking acceptance. The authors suggested that banks should now concentrate more on their e-banking issues so that online banking could become more popular and adaptive for customers. Singh and Malhotra (2007) made an attempt to discover factors affecting a bank’s decision to adopt internet banking in India. The study was based on 88 banks
consisting of public, private and foreign banks covering financial years from 1997 to 2005. The results of the study showed that large banks having high fixed expenses, high income and expenditure tend to use more technology. Banks had used internet banking as complementary channel to existing branch network. However, the private and foreign banks were quick adopter to internet banking than public sector banks. Jassal and Seghal. (2013) explained about the reason behind the security breaches and the participation of both customers and the banks to enable the hackers to access others network. The present study aimed to find various types of flaws in the security of online banking that result in loss of money of account holders and financial institutions. Security breaches are not only because of banks faults and banks inadequate polices but customers are equally responsible for it because customer awareness regarding security is equally important. Sabi Muki Humprey (2014) analysed the research trends in the diffusion and adoption of internet banking through a content analysis of existing literature that focused on developing countries. The findings provided insightful direction and research gaps on internet banking which will be useful to researchers and academicians who are working or plan to work in this area.
III. OBJECTIVES OF THE STUDY The major objectives of the study are as follows: 1. To study the online banking system in the Private and Public Sector Bank of Nainital town. 2. To study the impact of e-banking on customers as well as the banks. 3. To analyze the utility and cost benefit analysis of e-banking. 4. To explore factors contributing to success and failure of e-banking.
IV. HYPOTHESES The major hypotheses of the study are as follows: 1. There is a significant positive difference between users who are familiar and less familiar to e-banking with respect to education. 2. There is a significant negative difference between users who are familiar and less familiar to e-banking with respect to occupation. 3. There is a no significant difference between users who are familiar and less familiar to e-banking with respect to income. 4. There is a significant positive difference between users who are familiar and less familiar to e-banking with respect to the apprehension that e-banking is safe and secure.
This section presents an overview of the objectives of the study, hypotheses and research methodology used. The study is explorative in nature. As there is barely any empirical study on e-banking in Nainital town, this study, therefore, sought to explore and identify the factors affecting e-banking. This study involves a survey design involving the use of the questionnaire to collect primary data on a wide range of variables. The questionnaire comprised of both open and close ended questions. Part I- includes the demographic information such as income, education and occupation and Part II- consists of customer responses on internet banking related issues, perception and attitude of the customers towards using e-banking. Secondary data was derived from various sources including the website of different banks, annual reports of the banking institutes, v a r i o u s journals, books and articles on related topics. The study is based on quantitative measure.
A sample of 8 0 0 individual customers and 10 bank officials of State Bank of India (SBI), Nainital branch and Housing Development Finance Corporation (HDFC), Nainital branch were selected to participate in the study and were asked to provide relevant details/information as specified in the questionnaire. The survey was conducted during the six months ending June 2015. This study involves graphic representation and interpretation of the data for the purpose of describing and explaining the e-banking phenomenon in Nainital town.
VI. SCOPE AND IMPORTANCE OF THE STUDY
It is clear from the above discussion that most of
the empirical studies on e-banking have been developed on customer’s satisfaction and banks feasibility. Therefore, it felt that a study should be conducted to test the security level, emphasizing cost benefit analysis and study its effect on traditional method of banking. Since banking sector has witnessed a rapid transformation during the last one
decade, therefore it was interesting to study the nature of banking by introducing the new electronic method of banking. For this purpose a comparative study has been conducted between a public sector bank (i.e. SBI) and private sector bank (i.e. HDFC)
VII. LIMITATION
All the respondents were asked to give the answers on the basis of what they feel and what they think. The confidentiality of data was also assured to the respondents. Since major data has been collected through questionnaire method, the present study is subject to common limitations of the most behavioral studies as there may be a chance of measurement error or bias.
VIII. PRECAUTIONS FOR DATA COLLECTION
1. Only agreeable respondents were given the questionnaire. 2. A rapport was established and maintained throughout the period of data collection. 3. Maximum care was taken to get answers for all the responses, also where respondents ticked multiple options instead of one, the respondents were contacted and answers were revised to arrive at the correct scores.
IX. DATA ANALYSIS AND DISCUSSION
For analyzing the data, simple statistical tools
have been used. The various tables as under show the summary of findings regarding different variables. The tables no 01 to 14 show:
• The comparison between people who are more familiar to e-banking as compared to the people who are less familiar to e-banking.
• It also shows the usage pattern among the customers of SBI and HDFC bank.
Table 1: Knowledge of e-banking of SBI customers with respect to education
Figure 1: Knowledge of e-banking of SBI customers with respect to education of the respondents
Table 1 and Fig 1 show the knowledge of e-
banking among the customers of SBI, with respect to education. It is clear from the table that the respondents having post graduate degree with an outcome of 67.95% are much familiar to e-banking. As compared to the respondents having other qualification i.e. graduate (17.04%), intermediate (5.27%), Secondary education
(3.65%) and other qualification (6.09%). On the contrary, 46.25% SBI customers having post graduate degree are less familiar to e-banking. As compared to the respondents having other qualification i.e. graduate (8.47%), intermediate (7.82%), Secondary education (22.15%), primary education (5.54%) and other qualification (9.77%)
Table 2: Knowledge of e-banking of HDFC customers with respect to education
As shown in Table 2 and Fig 2, respondents having post graduate qualification (63.38%) are much familiar to e-banking in case of HDFC bank, as compared to the respondents having other qualification i.e. graduate (25.25%), intermediate (10.06%), Secondary education (0.80%) and other qualification (0.40%). On the other hand, 37.29% HDFC customers having post graduate degree are less familiar to e-banking of HDFC bank as compared to the respondents having other qualification i.e.
graduate (36.30%), intermediate (15.18%), Secondary education (5.94%) and other qualification (5.28%).
Since the higher percentage is of the post graduate degree holders, are more inclined to e-banking and a similar trend is seen in case of unfamiliar respondents. Therefore, null hypothesis is rejected and it is concluded that there is no significant positive difference between the more familiar and less familiar users of e-banking with respect to education.
Table 3: Knowledge of e-banking of SBI customers with respect to occupation of the respondents.
Figure 3: Knowledge of e-banking of SBI customers with respect to Occupation of the respondents.
Knowledge of e-banking among the customers of
SBI with respect to occupation is brought out in Table 3 and Fig 3. It is interesting to note that e-banking in case of SBI customers is much more prevalent among the students, house wife and retired personal showing 25.96% , as compared to the respondents categorized as non-government employees (19.47%), government employees
(12.98%) and working in private sector (6.49%). On the other hand, 52.12% SBI customers who are government employees are less familiar to e-banking. Respondents who are non-government employees and private employees (10.42%) respectively, others (student/house wife/retired) and self-employed (20.85%) respectively show a lower involvement.
Figure 4: Knowledge of e-banking of HDFC customers with respect to Occupation of the respondents.
The position regarding the use of e-banking
facilities among different occupation groups in HDFC bank is shown in Table 4 and Fig 4. Respondents who are private employees (25.75%) were much familiar to e-banking, about 12.88% of the familiar bank customers categorized as others (student/house wife/retired), non-government employees and government employees showed a similar usage pattern and self-employed formed 6.44% of the total. On the other hand, 52.82% HDFC customers who are government employees were less
familiar to e-banking as compared to the respondents who are non-government employees (31.68%) and private employees, others categorized as student/house wives and retired personals and self-employed showed a similar trend (21.12%) respectively.
According to the findings a mixed response was seen among the respondents. Therefore, the null hypothesis stating that, there is a significant negative difference between users who are familiar and to e-banking with respect to occupation is accepted.
Table 5: Knowledge of e-banking of SBI customers with respect to Income of the respondents
Figure 5: Knowledge of e-banking of SBI customers with respect to Income of the respondents.
The knowledge of e-banking with respect to
income of the SBI customers is presented in Table 5 and Fig 5. Respondents having an annual income upto Rs. 5 lakh(53.01%) were much familiar to e-banking as compared to the respondents with annual income i.e. Rs 5 to 10 lakh (37.27%) and Rs 10 to 20 lakh (9.72%). On the
other hand, 53.53% SBI customers whose annual income was up to Rs 5 lakh were less familiar to e-banking as compared to the respondents whose annual income was Rs 5 to 10 lakh (26.36%), Rs 10 to 20 lakh (11.41%) and Above Rs 20 lakh (8.70%).
Table 6: Knowledge of e-banking of HDFC customers with respect to Income of the respondents
As shown in Table 6 and Fig 6, respondents with annual income up to Rs 5 lakh (42.37%) were much familiar to e-banking of HDFC bank as compared to the respondents whose annual income was Rs 5 to 10 lakh (38.35%), Rs 10 to 20 lakh (6.43%) and above Rs 20 lakh (12.85%).
On the other hand, 58.28% HDFC customers whose annual income was up to Rs 5 lakh were less familiar to e-banking as compared to the respondents
whose annual income was Rs 5 to 10 lakh (20.53%), Rs 10 to 20 lakh and Above 20 Rs lakh (10.60%) respectively.
Thus, findings show that it more prevalent among people lying in the first bracket of income group i.e. upto Rs 5 lakh and a similar trend is seen in case of less familiar users. Therefore, a null hypothesis is accepted stating that, there is a no significant difference between users who are familiar and less familiar to e-banking with respect to income.
Table 7: Knowledge of e-banking of SBI customers with respect to Comparative Leverage
Relative Advantage
Number of user much familiar to e-banking
Percentage of user much familiar to e-banking
Number of user less familiar to e-banking
Percentage of user less familiar to e-banking
Saves time 160 35.71
192 54.55
24*7 availability
96 21.43
64 18.18
Convenient 64 14.29
32 9.09
All of the above 128 28.57 64 18.18
Figure 7: Knowledge of e-banking of SBI customers with respect to Comparative Leverage of the respondents.
As shown Table 7 and Fig 7, out of those
respondents who are much familiar to e-banking, 35.71% respondents of SBI bank believed that e-banking saves time in banking practices, 21.43% respondents believed 24*7 of availability as advantageous, 14.29% respondents believed that e-banking is convenient and 28.57% respondents practiced e-banking because of all three advantages it provided.
On the other hand, respondents who were less familiar to e-banking services of SBI, 54.55% respondents of SBI bank believed that e-banking saves time, 18.18% respondents found it beneficial as it is 24*7 available, 9.09% respondents believed that the e-banking is convenient and 18.18% respondents found e-banking facilities beneficial due to all the comparative leverage it provided.
Table 8: Knowledge of e-banking of HDFC customers with respect to Comparative Leverage
Convenient 96 27.27 64 14.29 All of the above 64 18.18 160 35.71
Figure8: Knowledge of e-banking of HDFC customers with respect to Comparative Leverage of the respondents.
As shown Table 8 and Fig 8, respondents much
familiar to e-banking, 45.45% respondents of HDFC bank believed that e-banking saves time , 21.43% respondents preferred e-banking due to 24*7 availability, 14.29%
respondents believed that e-banking is convenient and 28.57% respondents believed on all the options of comparative leverage associated with e-banking services.
Table 9: Knowledge of e-banking of SBI customers with respect to Perceived Risk.
Knowledge of e-banking of SBI customers with respect to Perceived Risk is shown in Table 9 and Fig.9, out of those respondents who are much familiar to e-banking, 44.4% respondents of SBI bank believed that e-banking has excellent security level, 21.49% respondents believed that the security is good, 21.05% respondents believed that security is satisfactory and 12.72 believed that the security level is poor.
On the other hand, those respondents are less familiar to e-banking services of SBI, 18.60% respondents of SBI bank believed perceived risk is less, 62.79% respondents believed that e-banking security is good, 9.30% respondents believed that e-banking has good as well as poor security level.
Table 10: Knowledge of e-banking of HDFC customers with respect to Perceived Risk of the respondents.
Perceived Risk Number of user much familiar to e-banking
Figure 10: Knowledge of e-banking of HDFC customers with respect to Perceived Risk of the respondents.
Knowledge of e-banking with respect to
perceived risk among HDFC customers is shown in Table 10 and Fig 10, out of the respondents who are much familiar to e-banking, 22.27% respondents believed that e-banking has excellent and good security level, 45.45% respondents rates security level as satisfactory.
On the other hand, those respondents are less familiar to e-banking services of HDFC, 21.43% respondents believed that e-banking is safe, 35.71% respondents believed that e-banking has good security level, 42.86% respondents believed that the e-banking has satisfactory security level.
Thus, null hypotheses stating that there is a significant positive relation between users who are familiar and less familiar to e-banking with respect to the apprehension that e-banking is safe and secure is accepted as the findings show a positive relation.
X. COST EFFECTIVENESS
As compared to the manual banking which costs Rs 50 to Rs 55 per transaction, e-banking transaction cost is below Re 1 or negligible. Therefore, it can be concluded that e-banking is more cost effective.
XI. FINDINGS AND CONCLUSIONS
Adoption and acceptance to e-banking by individual customers of SBI and HDFC is low in Nainital town. The main objective of the study was to study the pattern of e-banking among the customers of a private and a public bank. The customers were grouped into two categories one those who were more familiar to e-banking and the other being less familiar to e-banking. The study mainly focused on the difference
between these two customers with respect to the demographic factors such as education, occupation and income. It also dealt with the perceptions of the customers which included factors like perceived risk and comparative leverage of e-banking.
Using the survey method, primary data was collected through the questionnaire. A random sample of 800 individual customers of HDFC and SBI each were selected. Apart from the customers 10 official of the banks were also interviewed (5 of each banks). Officials were interviewed to see the trend of e-banking in SBI and HDFC bank. The officials provided an input related to e-baking’s cost effectiveness with respect to manual banking, challenges faced in adopting e-banking technology and to learn future plans to promote e-banking.
The findings showed that there is no positive significant difference among more and less familiar users of e-banking with respect to education. Occupation shows a significant negative relation between the two groups and e-banking is more prevalent among students, housewives and self employed. Income showed no significance among the less and more familiar group as e-banking is much popular among less income group. The result with respect to the comparative leverage a n d perceived risk were significant. People used e-banking as it saved time and is available 24*7. On the other hand, customers were satisfied with the security level of both the banks.
Respondents were also asked about their views on mobile banking. Majority of them showed their inclination more towards mobile banking than to internet banking. Customers prefer mobile banking due to its easy accessibility, feel it is simple and easily manageable. Amongst all the services provided by banks for mobile banking, balance enquiry is more in use. Lately banks have added other services ranging from banking services to travel booking and entertainment booking services.
Further, factors like income, education, occupation, comparative leverage and perceived risk have significantly influenced the customers with respect to e-banking usage but education has been the biggest factor that has influenced customers in adopting e-banking.
XII. RECOMMENDATIONS
According to the study, e-banking is more prevalent among the younger generation, h o u s e w i v e s a n d r e t i r e d p e r s o n n e l . Therefore, bank should emphasize on promoting it among all customer groups by raising awareness about its benefits and its easy accessibility.
It also shows the people lying within the lower income bracket i.e. 5 lakhs are more accustomed to e-banking usage. On the other hand, people with higher income are hesitant to use e-banking because they feel it
is less secure. Security being the most important factor of e-banking, efforts should be made by the banks to improve the aids and bring cognizance to the realm of e-banking making it an effective activity.
E-banking is mostly used by people which higher education qualification, this shows education has been the significant factor in adoption of e-banking facilities. E-banking, being an aid to manual banking as it helps in reducing work load should be spread among all the people irrespective of the educational qualifications they hold. They should be aware of its cost effectiveness and accessibility.
According to the study, the rural and the older citizens have made negligible effort to adopt e-banking. The bank in this context should visit villages to make rural people aware of e-banking by giving demonstrations and organizing workshops. Similar methods should be adopted for older citizens as e-banking will prove to be more convenient for them in comparison to traditional banking. According to the survey done, the customers want banks to provide a video support and chat support system for customers to guide them. Easy banking deposit of cash through ATM should be encouraged. Apart from this banks should give discount to customers who process large volume of transactions.
REFERENCES [1] Abdulwahed et al., (2006), “Factors influencing the adoption of internet banking in Oman: A descriptive case study analysis” International Journal of Financial Services Management. Vol 1 Issue: 2/3, pp 155-172 [2] Chaudhary, K. and Sharma, M., (2011), “Performance of Indian Public Sector Banks and Private Sector Banks: A Comparative Study” International Journal of Innovation, Management and Technology, Vol.2 Issue:3, pp. 249-256 [3] Dannenberg and Keller., (1998), “The bank of tomorrow with today’s technology”, International Journal of Bank Marketing, Vol.16 Issue: 2, pp.90-97 [4] Gupta, A., (2003), “Data Protection in Consumer E-banking” Journal of Internet Banking and Commerce.Vol.11 Issue:1, pp.1 [5] Hwang et al., (2007), “Measuring customer satisfaction with internet banking: an exploratory study” International Journal o f Electronic Finance, Vol.1 Issue: 3, p p . 321–335 [6] Jassal and Sehgal., (2013), “ Online banking security flaws: A study” International Journal of Advance Research in Computer Science and Software Engineering, Vol 3 Issue: 8, pp.1016-1021 [7] Joseph et al., (1999), “Service quality in the banking sector: impact of technology on service delivery” International Journal of Bank Marketing, Vol 17 Issue:4, pp.182-199 [8] Liao, Z. and Cheung, M.T., (2002), “ Internet-based e-banking and consumer attitudes:
[9] An empirical study” Information & Management, Vol.39 Issue:4, pp.283-295. [10] Malhotra, P. and Singh, B., (2010), “ An analysis of Internet banking offerings and its determinants in India” Internet Research, Vol.20 Issue:1, pp.87-106 [11] Pikkarainen et al.,(2004) “ Customer Acceptance of Online banking:an acceptance of the technology acceptance model”, Internet Research, Vol 14 Issue:3, pp.224-235 [12] Sabi Humprey Muki., (2014) “Research Trends in the Diffusion and Adoption of Internet Banking in Developing Countries”, Journal of Internet Banking and Commerce, Vol.19 Issue.2, pp.1-31
[13] Sakkthivel, ( 2006), “Impact Of Demographics On The Consumption Of Different Services Online In India”, Journal of Internet Banking and Commerce, Vol.11 Issu:3, pp.1-8 [14] Simon S.M. and Victor T.F., (1994), “Customers Risk Perceptions of electronic payment system”, International Journal of Bank Marketing, Vol. 12 Issue: 8, pp.26-38 [15] Singh and Malhotra., (2007), “Determinants Of Internet Banking Adoption By Banks In India”, Internet Research, Vol.17 Issue.3, pp.323-339 [16] Uppal R.K., (2011), "Internet banking in India: Emerging risks and new dimensions", Business administration and Management (BAM), Vol.1 Issue: 3, pp.77-81
