A RESEARCH REPORTON

OF

Submitted toKCL – Istitute of Management, Jalandhar

in the partial fulfillment of requirement of degree of

MASTERS OF BUSINESSADMINIDTRATION (MBA)

Supervised by: Submitted by:Dr. Inderpal Singh Ankit KCL-IMT Jalandhar MBA – II (A) Roll No. 1033 Univ. Roll No. 1174227

STUDENT DECLARATION

This is to certify that I, Ankit student of MBA-II (A) have undergone a research on Adoption Issues of Internet Banking in Jalandhar and prepared a full research report based on it.

All the theory contained in report is from the list of books given in the end in bibliography. I have not copied from any research report submitted earlier this or any other university. This is purely original and authentic report.

ANKIT

ACKNOWLEDGEMENT

With an introduction of the professional courses the students are getting an opportunity to get the practical knowledge along with the theoretical knowledge. Such kinds of researches help us in getting the practical knowledge of the workings. Therefore, I would like to thank all the persons who have been instrumental in the completion of my project. It gives me pleasure in acknowledging invaluable assistance extended to me by various personalities in the successful completion of this learning.

I express my deep gratitude and sincere thanks to Dr. Inderpal Singh, Professor in KCL-Institute of Management, Jalandhar for him inspiration and guidance that has encouraged me a lot in the successful completion of this research report.

ANKIT

PREFACE

Management education in India gained momentum in the early seventies. In the early stages, faculty, concepts, materials and pedagogy were borrowed from the Western collaborators. The need for market analysis, strategy and decision making and the need for contextual relevance of the application of quantitative techniques to developing countries has been increasingly felt because management principles are not only being applied to business and industry, but also to newer areas like rural development, non- profit making organizations and non-enterprise management. Banking is a highly information intensive activity that relies heavily on information technology (IT) to acquire, process, and deliver the information to all relevant customers. Banks used the Internet technology as a strategic weapon to revolutionize the way they operate, deliver, and compete against each other. As a result online banking was introduced as a channel where bank customers could perform their financial transactions electronically via their banks’ Web sites. An Online Banking user is expected to perform at least one of the following transactions online:

1. Checking account balance and transaction history

2. Paying bills

3. Transferring funds between accounts

4. Requesting credit card advances

5. Ordering checks

6. Managing investments and stocks trading

TABLE OF CONTENTS

SR.NO. PARTICULARS

CHAPTER-1: INTRODUCTION

1.1 Bank

1.2 Banking

1.3 Definitions

1.4 Advantages of Banking

1.5 Limitations of Banking

1.6 Internet Banking

1.7 Definitions

1.8 Scope

1.9 Advantages

1.10 Constitution of the working group on I-banking by RBI

1.11 Terms of reference

1.12 Approach of the group

1.13 Edge over traditional Banking

CHAPTER-2: REVIEW OF LITERATURE

2.1 Review of Literature

CHAPTER-3: RESEARCH METHODOLOGY

3.1 Meaning

3.2 Definitions

3.3 Objectives of the study

3.4 Types of Research

3.5 Formation of Questionnaire

3.5.1 Variables

3.6 Hypothesis

3.7 Limitations of study

CHAPTER-4: ANALYSIS AND INTERPRETATION OF DATA

4.1 Analysis of Questionnaire

CHAPTER-5: FINDINGS OF THE STUDY

5.1 Findings of the study

CHAPTER-6: CONCLUSION

6.1 Conclusion

Bibliography Questionnaire

CHAPTER - 1

INTRODUCTION TO STUDY

INTRODUCTION

1.1 BANK

A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers with capital deficits to customers with capital surpluses.

Due to their critical status within the financial system and the economy generally, banks are highly regulated in most countries. Most banks operate under a system known as fractional reserve banking where they hold only a small reserve of the funds deposited and lend out the rest for profit. They are generally subject to minimum capital requirements which are based on an international set of capital standards, known as the Basel Accords.

1.2 BANKING

The term banking means the business activity of accepting and safeguarding money owned by other individuals and entities, and then lending out this money in order to earn profit.

Bank is an important organ of the modern trade and commerce. Banks in India are regulated by the Banking Regulation Act, 1949. Under Section 5(b) of the said Act “BANKING” means, the 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, order or otherwise. Any bank which transacts this business in India is called a banking company. However, any company which is engaged in the manufacturer of goods or carries on any trade and which accepts deposits of money from the public merely for the purpose of financing its business as manufacturer or trader shall not be deemed to transact the business of banking.

1.3 DEFINITIONS

According to Justice Holmes in an Irish case :"The real business of the banker is to obtain deposits of money which he may use for his own profit by lending it out again."

According to Lord Denning :"An establishment for the custody of money received from, or on behalf of, its customers. Its essential duty is to pay their drafts on it: its profits arise from the use of money left unemployed by them."

According to Judge Cohen :"Chequeing privileges accorded depositors and general dealing in credit are characteristic of, and perhaps essential to, banking."In distinguishing banking from other business, probably the real test is the receiving money to be withdrawn by cheque."

1.4 Advantages of Banking

The following are the merits of banking:

(i) The banking principle renders note issue system elastic. The monetary authority can change the supply of currency according to the needs of the economy.

(ii) Since the banking principle does not require 100 percent metallic backing against the note issue, it is the most economic principle and thus can be followed by both rich and poor countries.

(iii) Helps economic revival of the nation through increased production activity.(iv) Improves lifestyle and fulfils aspirations of the people through affordable credit.(v) Diversified portfolio due to huge customer base enables bank to reduce their dependence

on few or single borrower.(vi) Banks can earn good profits by providing non fund based or fee based services without

deploying their funds.

1.5 Limitations of Banking

The following are the limitations of banking:

(i) Designing own and new financial products is very costly and time consuming for the bank.

(ii) Though banks are investing heavily in technology, they are not able to exploit the same to the full extent.

(iii) A major disadvantage is monitoring and follows up of huge volume of loan accounts inducing banks to spend heavily in human resource department.

(iv) Long term loans like housing loan due to its long repayment term in the absence of proper follow-up, can become NPAs.

(v) The volume of amount borrowed by a single customer is very low as compared to wholesale banking. This does not allow banks to exploit the advantage of earning huge profits from single customer as in case of wholesale banking.

(vi) Customers now-a-days prefer net banking to branch banking. The banks that are slow in introducing technology-based products, are finding it difficult to retain the customers who wish to opt for net banking.

(vii) The monetary system based on the banking principle does not command public confidence because the system is not fully backed by metallic reserves.

INTERNET BANKING

1.6 MEANING

It is a system that allows individuals to perform banking activities at their homes via internet. Some online banks are traditional banks which also offer online banking, while others are online only and have no physical presence. Online banking through traditional banks enable customers to perform all routine transactions, such as account transfers, balance enquiries, bill payments , and stop payments requests, and some even offer online loan and credit cards applications. Account information can be accessed anytime, day or night, and can be done from anywhere. A few online banks update information in real time, while others do it daily. Once information has been entered, it doesn't need to be re-entered for similar subsequent checks, and future payments can be scheduled to occur automatically. Many banks allow for file transfer between their program and popular accounting software packages, to simplify record keeping. Despite the advantages, there are a few drawbacks. It does take some time to set up and get used to an online account. Also, some banks only offer online banking in a limited area. In addition, when an account holder pays online, he/she may have to put in a check request as much as two weeks before the payment is due, but the bank may withdraw the money from the account the day that request is received, meaning the person has lost up to two weeks of interest on that payment. Online-only banks have a few additional drawbacks: an account holder has to mail in deposits (other than direct deposits), and some services that traditional banks offer are difficult or impossible for online-only banks to offer, such as traveler’s cheque and cashier’s cheque.

The services available online vary from bank to bank. Most of the general services are on all banking websites but the larger banks contain more control over your money. Here are some of the things that are possible –

View your account balances

Pay your bills (With the help of programs like ‘B-Pay’)

View records of transactions

Transfer money to linked accounts with the same bank

Transfer money to specially selected unlinked accounts

Order printed payment reviews

Pay for shares

Check interest in your accounts

Send money overseas

Change your details

Open new accounts

1.7 DEFINITIONS

"A system that allows you to communicate with your bank on the Internet."

"Internet 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 via internet."

1.8 SCOPE

Banking activities are considered to be the life blood of the national economy. Without banking services, trading and business activities cannot be carried on smoothly. Banks are the distributors and protectors of liquid capital which is of vital significance to a developing country. Efficient administration of the banking system helps in the economic growth of the nation. Banking is useful to trade and commerce.

Banking activities are useful to trade and industry in the following ways.

1) Money deposited in a bank remains safe. Precious articles too can be kept in the safe custody of banks in lockers.

2) Banks provide credit facilities to their customers. Customers with bank accounts also enjoy better credit in the business world.

3) Banks encourage the habit of saving and thrift among people. They mobilize savings and invest them in productive activities. Thus, they help in increasing the rate of savings and investment in the country.

4) Banks provide a convenient and safe means of transferring money from one place to another and facilitate business dealings/ transactions.

5) Banks collect and realize bills, cheques, interest and dividend warrants etc. on behalf of their customers.

6) Foreign trade is facilitated considerably with the help of banks which receive and make payments, provide credit and deal in foreign exchange. They protect importers from the risk of loss on account of exchange rate fluctuations. They issue letter of credit and provide information on the credit worthiness of importers. They also act as referees of their customers.

7) Banks meet the financial needs of small-scale business units which are located in economically backward areas.

8) Farmers and artisans in rural areas can also avail of bank credit for financing their activities.

9) Commercial banks provide many other services to the general public which includes locker facility, issue of traveler’s cheques and gift cheques, payment of insurance premium, etc.

1.9 ADVANTAGES

1) An internet banking account is simple to open and use.

You just enter a few answers to questions in a form while sitting comfortably in your own home or office. To access your account, you establish security measures such as usernames and passwords. To complete the set up of your account, you just print, sign and send in a form.

2) Internet banking is costs less because there are fewer buildings to maintain, and less involvement by salaried employees, there is a much lower overhead with online banks. 

3) Comparing internet banks to get the best deal is easy.

In a short time, you can visit several online banks to compare what they offer re savings and checking account deals as well as their interest rates.

4) Bouncing a check (accidentally) should be a thing of the past because you can monitor your account online any time, day or night.

You can track your balance daily, see what checks have cleared and when and know when automatic deposits and payments are made.

5) You can keep your account balanced using your computer and your monthly statement.

Your bank account information can be downloaded into software programs such as Microsoft Money or Quicken; making is easy to reconcile your account with just a few mouse clicks.

6) Internet banking offers a great deal more convenience than you could get from a conventional bank.

You aren't bound by 'banker's hours' and you don't have to go there physically in your car. Time is not wasted when you have work to do because you can do your office's banking without leaving the office.

7) The customer can obtain funds at any time from ATM machines.8) The credit cards and debit cards enables the Customers to obtain discounts from retail

outlets.9) The customer can easily transfer the funds from one place to another place electronically.10) Online banking is an eco-friendly process as it does not consume volumes of paper like

conventional banking modes and hence helps protect the environment.11) Online banking is a faster way of performing banking functions. Whether you buy goods

online, pay bills or transfer money, it gets done in real time and within moments.

1.10 Constitution of the Working Group on I-Banking by RBI

In the above background Reserve Bank of India constituted a Working Group to examine

different issues relating to I-banking and recommend technology, security, legal standards and

operational standards keeping in view the international best practices. The Group is headed by

the Chief General Manager–in–Charge of the Department of Information Technology and

comprised experts from the fields of banking regulation and supervision, commercial banking,

law and technology. The Bank also constituted an Operational Group under its Executive

Director comprising officers from different disciplines in the bank, who would guide

implementation of the recommendations.

1.11 Terms of reference

The Working Group, as its terms of reference, was to examine different aspects of Internet

banking from regulatory and supervisory perspective and recommend appropriate standards for

adoption in India, particularly with reference to the following:

1. Risks to the organization and banking system, associated with Internet banking and

methods of adopting International best practices for managing such risks.

2. Identifying gaps in supervisory and legal framework with reference to the existing

banking and financial regulations, IT regulations, tax laws, depositor protection,

consumer protection, criminal laws, money laundering and other cross border issues and

suggesting improvements in them.

3. Identifying international best practices on operational and internal control issues, and

suggesting suitable ways for adopting the same in India.

4. Recommending minimum technology and security standards, in conformity with

international standards and addressing issues like system vulnerability, digital signature,

information system audit etc.

5. Clearing and settlement arrangement for electronic banking and electronic money

transfer; linkages between I-banking and e-commerce

6. Any other matter, which the Working Group may think as of relevance to Internet

banking in India.

1.12 Approach of the Group

The first meeting of the Working Group was held on July 19, 2000. It was decided that members

of both Working Group and Operational Group would participate in all meetings and

deliberations. The Group, in its first meeting identified the broad parameters within which it

would focus its deliberations.

The Group agreed that Internet banking is a part of the electronic banking (ebanking), the main

difference being that in I-banking the delivery channel was Internet, a public domain. Although

the concerns of e-banking and I-banking have many things in common, the fact that Internet is a

public domain called for additional security measures. It was agreed that the Group would

primarily focus its attention on I-banking and to the extent there were commonality between I-

banking and e -banking, its recommendation would also apply to e-banking.

The Group further held that I-banking did not mean any basic change in the nature of banking

and the associated risks and returns. All the same, being a public domain and a highly cost

effective delivery channel, it does impact both the dimension and magnitude of traditional

banking risks. In fact, it adds new kinds of risk to banking. Some of the concerns of the

Regulatory Authority in I-banking relate to technology standards including the level of security

and uncertainties of legal jurisdiction etc. Its cost effective character provides opportunities for

efficient delivery of banking services and higher profitability and a threat to those who fail to

harness it.

The Group decided to focus on above three major areas, where supervisory attention was needed.

Accordingly, three sub-groups were formed for looking into three specific areas: (i) technology

and security aspects, (ii) legal aspects and (iii) regulatory and supervisory issues. The sub-groups

could seek help of external experts in the relevant fields, if needed.

1.13 Edge over Traditional Banking

We have seen a lot of companies offering a variety of customer services ranging from personal up to but not limited to phone transaction. With the growth of commercialized internet and electronic transactions, a lot of companies are beginning to take advantage of this method to provide customer service. More and more industries around the world have decided to add one service option to accommodate their internet savvy customers and that is online service. With this, the banking industry has decided to offer a sort of internet portal for their customers to perform some basic transactions like account transfers, balance inquiries, bill payments and stop payment requests. Online banking is one way to perform transactions with your bank through its secure site. This can be very useful for a customer who doesn't have the time to make it within the regular banking hours since it enables them to perform banking activities via the internet.

I'm sure that a lot of people have at least heard of online banking but not quite a few of them has tried. A lot would think the process is too complicated Of course; we cannot take that away from them. Clearly, there are a lot of advantages or shall I say comfort that online banking can provide than traditional banking. Let me discuss a few of them.

Online banking is fast and convenient. Transactions made through the internet are a lot faster as compared to doing it with an ATM machine or waiting for a bank teller to accommodate your concern. Traditional banking can be relatively slow especially if you encounter a line of persons waiting to be assisted. Online banking offers a secured portal that uses the latest technology to secure your information and make your experience faster and hassle-free. It also offers a comprehensive set of features like managing investments, loan calculators and tools for functional budgeting and forecasting.

Better rates are also one significant effect of online banking. Without the actual infrastructure and a lot of office equipments to pay, interest rates are paid at a higher cost on savings and lower on other loans. This leaves more money left to pay depositors and still maintain a profit. Some accounts can even be opened with no minimum deposits or service fees.

With just internet access, online banking can be performed with the use of your mobile phone. New phone features are continually being enhanced to further expand and improve this capability on smart phones and other mobile devices. Imagine doing bank transactions in your mobile phone? With traditional banking, more information are required in order for you to set up an account as compared to online banking that only requires you once to fill in your information and subsequently retains these information for future use. Moreover, a lot of internet savvy customers prefer to input data online and/or downloading forms for mail. If problem occurred, you can just call or email the bank directly.

Lastly, online banking is environment-friendly. Take note that transactions made through the internet are paperless, reduce traffic and free of pollution. It also does not require the use of offices and some office equipments that are hazardous to the environment, directly or indirectly.

Since both online and traditional banking has its advantage and disadvantages, it is not necessary that you have to choose one over the other. To some, online banking makes banking transaction easier and more convenient. Nevertheless, others still prefer to make transactions about their money with a real person. It is I think more of an advantage to do online banking and enjoy its conveniences and savings while maintaining a branch account in your area for customer service and personal relationships.

CHAPTER - 2

REVIEW OF LITERATURE

REVIEW OF LITERATURE

“A literature review uses as its database reports of primary or original scholarship, and does not report new primary scholarship itself. The primary reports used in the literature may be verbal, but in the vast majority of cases reports are written documents. The types of scholarship may be empirical, theoretical, critical/analytics, or methodological in nature. Second a literature review seeks to describe summaries, evaluate, clarify and/or integrate the content of primary reports.”

Literature Review is a body of text that aims to review the critical points of current knowledge on a particular topic. The aim of literature review is to show “that the writer has studied existing work in the field with insight”. It is not to view the work of others with insight to review critically. An effective review analyses and synthesizes material, and it should meet the following purposes:

(i) Define and limit the problem you are working on,(ii) Place your study in a historical perspective,(iii) Avoid unnecessary duplication,(iv)Evaluate promising research methods,(v) Relate your findings to previous knowledge and suggest further research.

Some of the reviews are as follows:

Sarthe “Status of internet banking in Australia” (1997).In his study he found that only two of the 52 banks started internet banking services. He opined that education would be a crucial factor for expanding internet banking in Australia. If customers are convinced about the various advantages of internet banking they will start asking for this service from their banks, and will put pressure on the banks to go ahead with internet banking.

Filotto ET al. “adoption rates of ATM” (1997) illustrated that there were higher adoption among young users. In addition, Barnett (1998) findings proved that younger consumers are more comfortable in using e-banking. Katz and Aspden (1997) findings explained that males were more likely to adopt e-banking than females.

Mookerji “internet banking” (1998) explored that it is the very fast becoming popular in India. Nevertheless, it is still in its evolutionary stage. They expect that a large sophisticated and highly competitive internet banking market will develop in future.

Joseph et al. “influence of internet on the delivery of banking services” (1999) examined those six primary dimensions of e-banking service quality such as convenience and accuracy, feedback and complaint management, efficiency, queue management, accessibility and customization.

Mols “internet banking as an innovative distribution channel” (1999) acknowledged that the offers less waiting time and a higher spatial convenience than traditional branch banking with significantly lower cost structure than traditional delivery channels. Internet banking reduces not only operational cost to the bank but also leads to higher levels of customer satisfaction and retention. As a result internet banking is very attractive to banks and consumers, who now have higher acceptance to new technology. (Polatoglu and Ekin, 2001, Mols, 2000, Sathye, 1999, Wisner and Corney, 2001)

Jeevan “internet banking” (2000) observed that it enables banks to offer low cost and high value added financial services. US web-corporation argues that finally banks are finding that a comprehensive online banking strategy is indispensable for success in the increasingly competitive financial services market. Changes in technology, competition and lifestyles have changed the face of banking and banks in the present environment are looking for alternative ways to provide differentiated services.

Hasan “online home banking” (2002) found that it has came out as a significant strategy for banks to attract and retain customers. About 75 percent of the Italian banks have adopted some form of internet banking during the period 1993-2000. The study also found that the higher likelihood of adopting active internet banking activities is by larger banks, banks with higher involvement in off-balance sheet activities, past performance and higher branch network.

Mishra “security concerns about internet banking” (2005) in his paper explained the advantages and the. According to him, improved customer access, offering of more services, increased customer loyalty, attracting new customers are the primary drivers of internet banking. But in a survey conducted by the online banking association, member institutions rated security as the most important concern of online banking.

Nyangosi et al. “customers' opinions regarding the importance of e-Banking” (2009) and the adoption levels of different e-Banking technologies in India and Kenya. The study highlighted the trends of e-banking indicators in both countries. The overall result indicates that customers in both countries have developed a positive attitude and they give much importance to the emergence of e-banking.

CHAPTER - 3

RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

3.1 MEANING

Research in common parlance refers to a search for knowledge. Once can also define research as a scientific and systematic search for pertinent information on a specific topic. In fact, research is an art of scientific investigation. The Advanced Learner’s Dictionary of Current English lays down the meaning of research as “a careful investigation or inquiry especially through search for new facts in any branch of knowledge.” Redman and Moray define research as a “systematized effort to gain new knowledge.” Some people consider research as a movement, a movement from the known to the unknown. It is actually a voyage of discovery. We all possess the vital instinct of inquisitiveness for, when the unknown confronts us, we wonder and our inquisitiveness makes us probe and attain full and fuller understanding of the unknown. This inquisitiveness is the mother of all knowledge and the method, which man employs for obtaining the knowledge of whatever the unknown, can be termed as research.

Research is an academic activity and as such the term should be used in a technical sense. According to Clifford Woody research comprises defining and redefining problems, formulating hypothesis or suggested solutions collecting, organizing and evaluating data making deductions and reaching conclusions; and at last carefully testing the conclusions to determine whether they fit the formulating hypothesis. D. Slazenger and M. Stephenson in the Encyclopedia of Social Sciences define research as “the manipulation of things, concepts or symbols for the purpose of generalizing to extend, correct or verify knowledge, whether that knowledge aids in construction of theory or in the practice of an art.” Research is, thus, an original contribution to the existing stock of knowledge making for its advancement. It is the pursuit of truth with the help of study, observation, comparison and experiment. In short, the search for knowledge through objective and systematic method of finding solution to a problem is research. The systematic approach concerning generalization and the formulation of a theory is also research. As such the term ‘research’ refers to the systematic method consisting of enunciating the problem, formulating a hypothesis, collecting the facts or data, analyzing the facts and reaching certain conclusions either in the form of solutions towards the concerned problem or in certain generalization for some theoretical formulation.

3.2 DEFINITIONS

According to John W. Best “Research is considered to be more formal, systematic, intensive process of carrying on the scientific methods of analysis. It is intensive process of carrying on the scientific methods or analysis. It involves a more systematic structure of investigations; usually resulting is some of formal record of procedures and a report of results or conclusions.”

According to James Harvey Robinson“Research is the manipulation of things, concepts or symbols for the purpose of generalizing to extends correct or verify knowledge, whether that knowledge aids in construction of theory or in the practice of an art.”

3.3 OBJECTIVES OF THE STUDY

The study has been conducted to analyze the costumers regarding adoption of internet banking.

However, the specific objectives of the study are as follows:

1) To study customers perception about Internet Banking.2) To study security issues involved in Internet Banking.3) To study the problems faced by Internet Banking users.

3.4 TYPES OF RESEARCH

A. Problem statementResearch work is management parlance is extremely important for a given close view of the relatives of the real life business issues. For any management student who is striving to perform outstandingly. It is of paramount importance that apart from theoretical knowledge he must also gain some practical knowledge. Survey report deals exposure in real business world. An internet banking is regarded as one of the biggest market there are many factors in mind of customer which induce them to investment, tax saving. Ever changing perception of investor, dominance of different internet banking schemes in the market compelled me to undertake a research work in this segment. The prime objective of my study is to analyze the customer perception about internet banking.

B. Research designTo analyses the perception regarding internet banking of the residents of Jalandhar Sample Survey Methods has been employed through other methods are also important. This method is given prime significance in modern research because of its extensive use to study the relationship of different factors, attitudes and practices of society and to explore the problems that cannot be treated by experimental methods.

To collect data, a number of techniques are under the sample survey method i.e. questionnaire. The increasing use of questionnaire is probably due to increased emphasis by social scientists on quantitative measurement to uniformly accumulated data.

a) Area of study The area of the study is different Banks of Jalandhar in order to collect the primary data from the respondents.

b) Study area Study area is Jalandhar.

c) Target segment The customers of internet banking are the target segment.

C. Selection of sampleIt becomes impossible to contact each and every individual of the population due to limitations of essential resources like time and money. Therefore, the study is preferably allowed down to a representation sample to make the study more manageable.Keeping in view the objectives and resource limitation of the study, 50 respondents were considered. Respondents - 70 The selected sample is representative of the population and is accurate and practicable.

D. Sampling planThe following factors will be taken into consideration within scope of sampling plan.

a) 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 customers using internet banking.

b) Sampling size: It indicates the numbers of people to be surveyed. Though large samples give more reliable results than small sample but due to constraints of time and money, the sample size was restricted to 50 respondents.

E. Collection of dataAfter the research problem has been defined and the research design has been chalked out, the task of data collection begins. The data can be collected mainly through primary sources, but it was supplement with secondary data.

a) Primary data collection: Primary data is the data which is collected through observation or direct communication with the respondents in one form or another. These are several methods for primary data collection like Observation Method, Interview Method, through schedules, through questionnaires and so on.

b) Secondary data collection methods:

Secondary data is collected through

Magazines Journals Portals

F. Tools used in data analysisStatistical tools used in this research are:

Pie-charts Columns

3.5 FORMATION OF QUESTIONNAIRE

Quite often the questionnaire is considered as the heart of a survey operation. Hence it should be carefully constructed. It is an investment that is widely used to collect various types of data and consists of long lists of questions designed to collect ant information. It has personally been found that people are more frank in giving replies to a questionnaire than to an interview schedule. Though being less expensive, it has certain limitations like incomplete entries and erroneous responses. But the educational qualification of the respondents is an additional factor which renders this technique the most relied upon. Formation of a good questionnaire involves intensive thinking and deliberation of the problem with predetermined objective and aims properly placed in the questionnaires. The questionnaires framed for the purpose of the study consist of a limited number of questions placed in logical order. So that the objective of the question is clear to the respondents. All the questions are centered on the problem keeping in the mind. The questions were both open and close ended as well as multiple choices.

3.5.1 VARIABLES

The questionnaire designed in this study based on the following internet service quality dimension will be used to measure customer satisfaction with technology based services:

a) Efficiencyb) Reliabilityc) Responsivenessd) Privacye) Fulfillmentf) Customer satisfaction

3.6 HYPOTHESIS

Customer satisfaction H0: Customers are not satisfied with internet banking services provided by banking sector.H1: Customers are satisfied with internet banking services provided by banking sector.

Efficiency H0: Customers are not satisfied with efficiency of internet banking services provided by banking sector.H1: Customers are satisfied with efficiency of internet banking services provided by banking sector.

Privacy H0: Customers are not satisfied with privacy of internet banking services provided by banking sector.H1: Customers are satisfied with privacy of internet banking services provided by banking sector.

Reliability H0: Customers are not satisfied with reliability of internet banking services provided by banking sector.H1: Customers are satisfied with reliability of internet banking services provided by banking sector.

Fulfillment H0: Customers are not satisfied with fulfillment of internet banking services provided by banking sector.H1: Customers are satisfied with fulfillment of internet banking services provided by banking sector.

Responsiveness H0: Customers are not satisfied with responsiveness of internet banking services provided by banking sector.H1: Customers are satisfied with responsiveness of internet banking services provided by banking sector.

3.7 LIMITATIONS OF STUDY

Every study is bound up with limitations and constraints. This research titled “Adoption issues of Internet Banking” is not free from limitations due to limited access to all detailed information required, limited time and lack of uniformity in regards to some terms. The limitations of this study are:

a) The sample size taken for study is small. So the size due to shortage of time, sample taken was small only of 50 persons and may not be sufficient to predict the result with 100% accuracy and hence findings cannot be generalized.

b) The results of the present study are based on perceptions and expectations of the respondents. So sometimes respondents do not give actual response and results of the study look unreliable.

c) There were time and resources constraints to conduct the study since it is very vast concept to be studied.

d) The study was restricted to Jalandhar City only. Wider area covered would have made the more reliable and representative.

e) Consumers were sometime unwilling and hesitated in replying to answer the questionnaire.

f) The website relating to banking are not easy accessible. Hence it does not provide full support to gather information.

g) Staffs of banks are usually busy in attending customers, so full attention was a difficult for them.

CHAPTER - 4

DATA ANALYSIS & INTERPRATATION

ANALYSIS AND INTERPRETATION OF DATA

4.1 Analysis of Questionnaire

The study was conducted and primary data was collected through questionnaire method. Such an analysis helped me a lot in having a better insight to the customers regarding adoption of internet banking. For this purpose, around 70 respondents of the jalandhar city were approached of which 50 respondents have internet bank account and 20 do not have internet bank account and analysis has been shown below:

1. Main reason that you visit your bank.

Response No. of respondents Percentage

To make deposit 23 46%

To get advice for investment 5 10%

To inquire about a balance 5 10%

To withdraw cash 15 30%

Others 2 4%

Total 50 100%

46%

10%10%

30%

4%

1st option2nd option3rd option4th option5th option

INTERPRETATION:

To make a deposit is the main work of the customers for which they often go to their specified banks rather than other reasons giving in the above table. Rather than 30% of the respondents are that who goes to bank for withdraw the cash.

2. How long have you been using the Internet?

Time of using No. of respondents Percentage

Less than 1 month 6 12%

1 to 6 months 11 22%

6 to 12 months 19 38%

More than 1 year 14 28%

total 50 100%

12%

22%

38%

28%

1st option2nd option3rd option4th option

INTERPRETATION:

The above chart shows that 28% of the respondents are using internet for more than 1 year and only 12% are that who are new to the service of internet.

3. Have you purchased any product on Internet?

Response No. of respondents Percentage

Yes 19 38%

No 31 62%

Total 50 100%

38%

62%

YesNo

INTERPRETATION:

The above chart shows those respondents who are aware of purchasing on internet and out of 50 respondents 62% have not purchased any products on internet and 38% have purchased products on internet.

4. Users of online banking service provided by their bank.

Time of using No. of respondents Percentage

Not using Internet Banking 7 14%

Below 1 month 11 22%

1 – 6 months 10 20%

6 months – 1 year 13 26%

Above 1 year 9 18%

Total 50 100%

14%

22%

20%

26%

18%

1st option2nd option3rd option4th option5th option

INTERPRETATION:

This chart indicates that out of 50 respondents 18% of respondents are those who are using the internet banking service provided by their bank from more than 1 year. Others are using less than that 26% respondents covers the population who are using internet banking from more than 6 months to 1 year.

5. Major purpose of using the Online Banking.

Purposes No. of respondents Percentage

Internet account transfer 21 42%

Online bill payments 13 26%

Balance check 6 12%

Request for a cheque book 8 16%

Others 2 4%

Total 50 100%

Internel A\C transfer

Online bill payments

Balance check Request for a cheque book

Others0%

5%

10%

15%

20%

25%

30%

35%

40%

45% 42%

26%

12%

16%

4%

INTERPRETATION:

The column shows that 42% respondents are those who use internet banking service for their internal account transfer and 26% are using for online bill payments. This shows most of the respondents are using online bank service for internal account transfer.

6. Effectiveness of Internet Banking.

Response No. of respondents Percentage

Yes 29 58%

No 21 42%

Total 50 100%

58%

42%

YesNo

INTERPRETATION:

Chart indicates the effectiveness of internet banking for the customers. More of the respondents perceive the internet banking as effective but 42% of them are not.

7. Reason for choosing online banking service.

Reasons No. of respondents Percentage

Convenience 15 30%

Saves time 18 36%

24 hours access to accounts 13 26%

Others 4 8%

Total 50 100%

30%

36%

26%

8%

1st option2nd option3rd option4th option

INTERPRETATION:

This chart indicates that only 36% of the respondents are using the service of internet only because they want to save their time go to their specified bank branch and other 30% are that respondents who feels internet banking service convenience.

8. Satisfaction with Internet banking service provided by banks.

Level of satisfaction No. of respondents Percentage

Very satisfied 17 34%

Satisfied 10 20%

Neutral 8 16%

Unsatisfied 9 18%

Very unsatisfied 6 12%

Total 50 100%

Very satisfied Satisfied Neutral Unsatisfied Very unsatisfied0%

5%

10%

15%

20%

25%

30%

35%34%

20%

16%18%

12%

INTERPRETATION:

The column shows that only 34% of the respondents are very satisfied with the internet banking service provided by their banks and only 12% are those respondents who are very unsatisfied with the service.

9. Do you feel secure with the service of Internet Banking?

Response No. of respondents Percentage

Yes 27 54%

No 23 46%

Total 50 100%

54%

46%

YesNo

INTERPRETATION:

The above chart indicates that 54% of the respondents feel fully secure with the internet banking and other 54% are those respondents who do not feel fully secure with the service.

Out of 70 respondents, the 20 respondents are that who do not have internet bank account. Analysis is given below:

10. Reasons for not opening of an Internet Bank Account.

Reasons No. of respondents Percentage

Concerned about security 9 45%

Haven’t taken time to open A\C 3 15%

Don’t see any real value 5 25%

Not available through my bank 2 10%

Others 1 5%

Total 20 100%

45%

15%

25%

10%5%

1st option2nd option3rd option4th option5th option

INTERPRETATION:

The chart indicates that many of the respondents are that who are concerned about the security of the internet banking because of that they have not opened internet bank account.

11. Do you like to open Internet Bank Account within 12 months?

Response No. of respondents Percentage

Very likely 10 50%

Somewhat likely 2 10%

Neither likely nor unlikely 2 10%

Somewhat unlikely 3 15%

Very unlikely 3 15%

Total 20 100%

50%

10%10%

15%

15%

1st option2nd option3rd option4th option5th option

INTERPRETATION:

Only 50% of the respondents are that who are fully likely to open an internet bank account and others have a little doubt in their mind and they are not fully satisfied with it.

CHAPTER - 5

FINDINGS & SUGGESTIONS

FINDINGS OF THE STUDY

The findings from the research made on adoption issues of internet banking conducted from the respondents are as under:

1. Most of the respondents go to their bank to make their cash deposit and little less than that go for cash withdrawal. Percentage cash withdrawal is less because many of them use ATM for withdrawing cash.

2. Respondents do not feel safe with the security of internet bank service because they feel that their valuable information and cash is not safe while doing online banking.

3. Most of respondents use online banking for internal transfers of cash and less than that for online bill payment and to check their balance.

4. Very less persons are unsatisfied with the service of internet banking. Most of the persons are satisfied.

5. Out of 70 respondents 20 respondents are that who do not have internet bank account because more of them are little concerned about security.

CHAPTER - 6

CONCLUSION

CONCLUSION

More and more banks are coming to realize that internet is a part of banks' alternative delivery channel strategies activities concentrated in the business-to-consumer segment, focused on retaining clients. In Internet banking, security is a primary concern. Security concerns have been addressed from every angle within the architecture of the Internet banking application. Internet banking is now being widely accepted because of the following reasons. It accelerates the process of creating new markets. It reduces operational costs and workforce. The potential of Internet banking is huge. With the increase in connectivity, the number of users will explode. The strategy for banks is to provide value-added services to products to customers utilizing the Internet extensively. Web based banking service or E-Banking, the latest generation of banking transactions, has opened up new window of opportunity to the banks and existing financial institutions. Since its evolution in 90th decade, it is having unprecedented growth.

BIBLIOGRAPHY

BIBLIOGRAPHY

Websites:

http://www.scribd.com/doc/52515071/7/Definition-of-internet-banking www.google.com http://en.wikipedia.org/wiki/Online_banking

Books:

ANNEXURE

QUESTIONNAIRE

This survey is designed to understand Internet users’ perspectives on Internet banking, their experience with Internet banking, and their expectations of Internet banking services. Only summary measures and conclusions from this survey will be reported. Your participation in this survey is greatly appreciated.

1) What is the main reason that you visit your bank branch (please check the single most important reason)?

To make a deposit To get advice for investment options To inquire about a balance To withdraw cash Others

2) How long have you been using the Internet? Less than 1 month 1 to 6 months 6 to 12 months More than 1 year

3) Have you purchased any product on the Internet? Yes No

4) Since how long are you using the online banking system provided by our bank? Not using Internet banking Below 1 month 1 – 6 months 6 months – 1 year Above 1 year

5) What is the major purpose for which you use the online banking?

Internal account transfer

Online Bill Payments

Balance Check

Request for a cheque book

Others. Please specify ____________________

6) Do you feel internet banking so effective? Yes No

7) What were your reasons for choosing our online banking service? (Please select all that apply)

Convenience To save time 24 hours access to accounts Others

8) Overall, how satisfied are you with your Internet banking service? Very satisfied Satisfied Neutral Unsatisfied Very unsatisfied

9) Do you feel secure with the service of Internet banking?YesNo

The following questions were asked to those respondents if they answered "No" to having an Internet bank account.

10) What are the main reasons that you have not opened an Internet bank account yet? (check all that apply)

Concerned about security Haven’t taken time to open an account Don’t see any real value in having this type of account Not available through my bank Others

11) How likely is that you will open an Internet bank account within the next 12 months? Very likely Somewhat likely Neither likely nor unlikely Somewhat unlikely Very unlikely

PERSONAL INFORMATION

Name: _______________

Age: ________

Date of birth: dd\mm\yy ____\____\____

Gender: Male

Female

Qualification: High School Bachelor Masters PhD

Are you currently employed? Yes No

Signature: __________________

I thank you for your participation and hope you have a wonderful day!