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Abstract- Internet banking or online banking has revolutionized an integral activity of our modern twenty first century lives –
‘banking’. Internet banking is conducted through a PC, PDA, a hand-held communication gadget or any mobile device offering
Internet connectivity but with the development of Hi-Tech asynchronous technologies and secured electronic transaction technologies,
however, more banks have come forward to use Internet banking both as a transactional as well as an informational medium. Even
after having so many advantages, still some factors are there, which affects its usage. There are some of the psychological and
behavioral factors which affect the adoption of any new innovation such as Internet banking include consumer awareness, ease of use,
security, accessibility, techno phobia or simply reluctance to change, preference for personalized services and cost of adopting the
innovation. This research paper was focused on to identify the factors that are the barriers for the usage of internet banking services
and also to study the perception of customer about internet banking. The study was exploratory in nature and sample size considered
for the study was 100 respondents, those were having account in that banks, which provide the Internet Banking facility, but they are
not using it. The primary data was analyzed by factor analysis and identify the nine factors i.e. cost, reliability, processing barriers,
security issues, technological incontinence, lack of infrastructure, conventional approach, risk and resistance, which were the barriers
in the usage of Internet Banking services in the semi-urban areas.
Index Terms: Internet banking, online banking, mobile device, consumer awareness, Internet Banking facility, Internet Banking
services, semi-urban areas, processing barriers, security issues, technological incontinence, lack of infrastructure, conventional
approach, psychological and behavioral factors.
I. INTRODUCTION
ne of the technologies which really brought information revolution in the society is Internet Technology and is rightly regarded
as the third wave of revolution after agricultural and industrial revolution. Advent and adoption of Internet by the industries has
removed the constraint of time, distance and communication making globe truly a small village. Financial sector being no exception,
numerous factors such as competitive cost, customer service, increase in education and income level of customers, etc. influence
banks to evaluate their technology and assess their electronic commerce and internet banking strategies. In the last three decades, the
Internet has grown to become one of the most amazing technological and social accomplishments of the last century. Millions of
people, most of them are not computer coordination researchers or experts, now they are using this complex, interconnected network
of computer. The computers are located in almost every country of the world. Every year, billions of dollars change hands over the
Internet in exchange for all kinds of products and services. All of this activity occurs with no central point or control, which is
especially ironic given that the Internet began as a way for the military or maintains control while under attack. The opening of the
Internet to business activity helped dramatically increase the growth, however there was another development that worked hand in
hand and with the commercialization of the Internet to spur its growth. That development was the World Wide Web (Schneider,
2007). The Internet is rapidly turning out to be a tool of world wide communication. The increasing use of Internet earlier promoted
producers and entrepreneurs to sell their products online. It has also become an important source of information and knowledge. Due
to this, many banking and finance organizations have come up with the idea of Internet banking or online banking.
Internet banking allows banking from anywhere, anytime and is used for transactions, payments, etc. over the internet through a bank,
a credit union or society’s secure website. Internet banking, a client has one-to-one interaction with the bank’s website, and in such a
situation it is essential on the part of bank to provide high quality services over the internet. As compare to traditional banking,
Internet banking involves non-human interactions between customers and online bank information system. Customer satisfaction,
customer retention and new customer acquisition are the key factors in Internet banking system (Khan, Mahapatra and
Sreekumar,2009). Internet Banking is a term used to describe banking transactions that are performed via a secured Internet
application. These transactions include such things as paying bills, transferring funds, viewing account statements and paying down
loans and mortgages. Although Internet Banking has been popular among young Internet-savvy people for many years, its popularity
is expected to grow rapidly as Internet usage grows internationally and people discover the many advantages that it provides.
Internet Banking can be defined as a facility provided by banking and financial institutions that enable the user to execute bank related
transactions through Internet. The biggest advantage of Internet banking is that people can expend the services sitting at home, to transact business. Due to which, the account holder does not have to personally visit the bank. With the help of Internet banking many
transactions can be executed by the account holder. When small transactions like balance inquiry, record of recent transaction, etc. are
to be processed, the Internet banking facility proves to be very handy. The concept of Internet banking has thus become a revolution in
the field of banking and finance. (Scholasticus) .In India all the large banks has introduced Internet banking services, but adaption
of this service is less because access to the Internet was limited, high-speed Internet connection were rare and e-business
applications were clunky. Customer has discovered that they are able to pay bills, transfer funds and check transactions 24 hours a
day from the comfort of their homes. Many banks provided financial incentives to encourage clients to adopt self-service banking
channels over "at the teller" full service banking. In addition to Internet Banking, this included the use of Automated Teller
Machines (ATM) and Interactive Voice Recognition (IVR) telephone banking services. From the perspective of banking products and
services being offered through Internet, Internet banking is nothing more than traditional banking services delivered through an
electronic communication backbone, viz, Internet. But, in the process it has thrown open issues which have ramifications beyond what
a new delivery channel would normally envisage and, hence, has compelled regulators world over to take note of this emerging
channel. Some of the distinctive features of internet banking are: it removes the traditional geographical barriers as it could reach out
to customers of different countries / legal jurisdiction, it has added a new dimension to different kinds of risks traditionally associated
with banking, heightening some of them and throwing new risk control challenges, and security of banking transactions, validity of
electronic contract, customers’ privacy etc., which have all along been concerns of both bankers and supervisors have assumed
different dimensions given that Internet is a public domain, not subject to control by any single authority or group of users.
II. LITERATURE REVIEW
Almost everyone who you come across these days seems to be using Internet banking and the traditional customer bank manager
relationship has been replaced by a password. Internet banking is not only convenient for customers, it also negates the need for
keeping some bank branches open for 24 hours a day to provide unparalleled customer service. In addition to that providing the
Internet banking option for a bank may require some amount of initial investment, but the costs can be covered soon due to the speed
with which customers can be handled and the cut backs on overtime and establishment costs. Internet banking also reduces the amount
of administrative work that is otherwise required to manage a bank branch. Based on the large number of people who are turning
towards Internet banking, future plans of opening branches across cities can be curbed to some extent, making large investments
unnecessary. In fact, today everything is possible on Internet banking starting from request of a new check book, statement
downloads, transfer of monies, e-payments and more. Added to that is the freedom from travelling all the way to the branch and
avoiding the traffic are reason enough for the customer to choose Internet banking over traditional banking options. The i-banking,
now is more of a norm rather than an exception in many developed countries due to the fact that it is the cheapest way of providing
banking services (Arunachalam and Sivasubramanian, 2007). Internet banking is a new delivery channel for banks in India. The ibanking
channel is both an informative and a transactional medium. However, i-banking has not been popularly adopted in India as
expected (Ravi et al., 2007).
The findings of this study shown that the level and nature of customer participation had the greatest impact on the quality of the
service experience and issues such as customers’ zone of tolerance, the degree of role understanding by customers and emotional
response potentially determined, expected and perceived service quality (Broderick and Achirapornpuk,2002). This study suggested
that consumer perceptions of transaction security, transaction accuracy, user friendliness and network speed are the critical factors for
success in Internet banking ( Liao and Cheung,2003).