You are on page 1of 23

“A study on Adoption of Internet Banking by Tricity Customers”

A Marketing Research Proposal

SUBMITTED BY GEET SAHNI MBA (IB) SECOND SEMESTER

SUBMITTED TO DR. TEJINDER PAL SINGH

2

Introduction Over the few decades, Information technology has affected the banking industry highly and has provided a way for the banks to differentiate their products and services. Online banking (or Internet banking) allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society. Online banking solutions have many features and capabilities in common, but traditionally also have some that are application specific. Internet banking (or E-banking) means any user with a personal computer and a browser can get connected to his bank’s website to perform any of the virtual banking functions . In other words it is said that it is updated 'on-line, real time'. The system is updated immediately after every transaction automatically. Internet banking is a system of banking that enables customers to perform various financial transactions on a secure website via the Internet. There are many banks and credit union that operate websites for internet banking. Internet Banking is basically conducted via a personal computer connected to Internet. Apart from it, people can also do financial transactions using Internet banking on their cellular phones or personal digital assistants. All one need is a computer, PDA or cell phone with active internet connection to get going with net banking. Before using net banking, one needs to activate net banking facility with his/her bank. Bank provides a unique user ID and password for its customers to login into the bank website for conducting financial transactions using net banking. For any transaction, one should have an active bank account, appropriate bank balance for transactions, bank account number, customer’s user ID, debit/credit card number,and Internet banking PIN number along with access to the internet.

Why Internet Banking ? • • • • Differentiation of products from the others A combination of regulatory and competitive reasons Stress on branchless banking. Increasing volumes of banking transactions Providing customers with cost effective services

Reserve Bank of India came in 1935. apply for a loan. Banking Companies Act passed in 1949. performing a financial transaction such as an account to account transfer.. the individual becomes interested in the new idea and seeks additional information about it. including bill payments and telegraphic/wire transfers Funds transfers between a customer's own transactional account and savings accounts Investment purchase or sale Loan applications and transactions. Innovative customers those individuals who are at the forefront in buying new products or applying new ideas are the most valuable sources. wire transfer. cheque links. online statements.) Payments to third parties.3 The common features of Internet banking fall broadly into several categories: • • • • • • • • • Transactional (e. Innovations have commercial value only if they meet the needs of customers better than the current products.. Seven more in 1980. History of Internet Banking: Banking in India Started in the year 1786 with “ The General Bank of India ” being the first. Formation of State Bank of India in 1955. Became the central banking authority in 1965. paying a bill. .g. for example in PDF format Viewing images of paid cheques Transaction approval process Features commonly unique to Internet banking include personal financial management support. etc. implementations of recommendations of the Narsimham committee. new account. Nationalization of 14 major banks in 1969. Adoption of Internet Banking: According to Doyle (1998) customers are invariably the best source of ideas. the Individual is exposed to the innovation but lacks complete information about it  Interest: Next. chat) Viewing recent transactions Downloading bank statements. This learning is called the ―Adoption Process‖ and consists of Five stages as follows:  Awareness: First. such as importing data into personal accounting software.g. such as repayments of enrollments Non-transactional (e. Opening up of economy. cobrowsing.

Internet Banking Risks Internet banking creates new risk control challenges for national banks. Communicative — This type of Internet banking system allows some interaction between the bank’s systems and the customer. The OCC has defined nine categories of risk for bank supervision purposes. transferring funds. the following three basic kinds of Internet banking are being employed in the marketplace: Informational — This is the basic level of Internet banking. This level of Internet banking can be provided by the bank or outsourced. strategic. Typically. expected or unexpected. or static file updates (name and address changes).  Trial: The individual makes full use of the innovation  Adoption: The individual decides to continue the full use of the Innovation Types of Internet Banking Understanding the various types of Internet banking products will help examiners assess the risks involved. Transactional — This level of Internet banking allows customers to execute transactions. Since a path typically exists between the server and the bank’s or outsourcer’s internal network. risk is the potential that events. These categories are not mutually exclusive and all of these risks are associated with Internet banking. Appropriate controls need to be in place to prevent. may have an adverse impact on the bank’s earnings or capital. compliance. Customer transactions can include accessing accounts. monitor. Currently.4  Evaluation: Individual mentally applies the innovation to his present and anticipated future situation. Appropriate controls therefore must be in place to prevent unauthorized alterations to the bank’s server or Web site. . loan applications. interest rate. Virus controls also become much more critical in this environment. Because these servers may have a path to the bank’s internal networks. and reputation. etc. price. the risk is higher with this configuration than with informational systems. The risk is relatively low. The interaction may be limited to electronic mail. the bank has marketing information about the bank’s products and services on a stand-alone server. While the risk to a bank is relatively low. and then decides whether to try it. From a supervisory perspective. this is the highest risk architecture and must have the strongest controls. account inquiry. liquidity. paying bills. The risks are credit. the server or Web site may be vulnerable to alteration. foreign exchange. as informational systems typically have no path between the server and the bank’s internal network. transaction. and alert management of any unauthorized attempt to access the bank’s internal networks and computer systems.

loans. liabilities and revenues to changes in interest rates. Customers can reach a given institution from literally anywhere in the world. processes. See the ―Loan Portfolio Management. and from interest-related options embedded in bank products (options risk). . this refers to structural positions and not trading portfolios.‖ booklet of the Comptroller’s Handbook for a more complete discussion of credit risk. Verifying collateral and perfecting security agreements also can be challenging with out-of-area borrowers. Interest Rate Risk Interest rate risk is the risk to earnings or capital arising from movements in interest rates. or otherwise exposed through actual or implied contractual agreements. From an economic perspective. and also the potential impact that changes in interest rates will have on fee income. committed. invested. from changing rate relationships across the spectrum of maturities (yield curve risk). and other relationships from a larger pool of possible customers than other forms of marketing. whether on or off the banks balance sheet. Credit risk is found in all activities where success depends on counterparty. and practices are in place to control the risk associated with such loans. it is challenging for institutions to verify the bonafides of their customers. from changing rate relationships among different yield curves affecting bank activities (basis risk). Internet banking could lead to a concentration in out-of-area credits or credits within a single industry. It arises any time bank funds are extended. They must assure that effective policies. Moreover. In dealing with customers over the Internet. Unless properly managed. which is an important element in making sound credit decisions. In those situations where trading is separately managed. including the ability to react quickly to changing market conditions.5 Credit Risk Credit risk is the risk to earnings or capital arising from an obligor’s failure to meet the terms of any contract with the bank or otherwise to perform as agreed. Greater access to customers who primarily seek the best rate or term reinforces the need for managers to maintain appropriate asset/liability management systems. Internet banking provides the opportunity for banks to expand their geographic range. Internet banking can attract deposits. issuer. Effective management of a portfolio of loans obtained through the Internet requires that the board and management understand and control the bank’s lending risk profile and credit culture. illiquid hedging strategies or products. Interest rate risk arises from differences between the timing of rate changes and the timing of cash flows (repricing risk). the question of which state’s or country’s laws control an Internet relationship is still developing. or borrower performance. absent any personal contact. Evaluation of interest rate risk must consider the impact of complex. a bank focuses on the sensitivity of the value of its assets.

foreign exchange. Foreign Exchange Risk Foreign exchange risk is present when a loan or portfolio of loans is denominated in a foreign currency or is funded by borrowings in another currency. maintain a competitive position. Liquidity risk includes the inability to manage unplanned changes in funding sources.S. Transaction Risk Transaction risk is the current and prospective risk to earnings and capital arising from fraud.‖ booklet of the Comptroller’s Handbook. dollars. social. dealing. The consequences can be unfavorable if one of the currencies involved becomes subject to stringent exchange controls or is subject to wide exchange-rate fluctuations. and the inability to deliver products or services.S. Appropriate management systems should be maintained to monitor. Liquidity risk also arises from the failure to recognize or address changes in market conditions affecting the ability of the bank to liquidate assets quickly and with minimal loss in value. and manage price risk if assets are actively traded. Price Risk Price risk is the risk to earnings or capital arising from changes in the value of traded portfolios of financial instruments. Banks may be exposed to price risk if they create or expand deposit brokering. measure. Banks may be exposed to foreign exchange risk if they accept deposits from non-U. without incurring unacceptable losses. Foreign exchange risk is discussed in more detail in the ―Foreign Exchange. Increased monitoring of liquidity and changes in deposits and loans may be warranted depending on the volume and nature of Internet account activities. and commodities markets. loan sales.6 Liquidity Risk Liquidity risk is the risk to earnings or capital arising from a bank’s inability to meet its obligations when they come due. residents or create accounts denominated in currencies other than U. or securitization programs as a result of Internet banking activities. error. Asset/liability and loan portfolio management systems should be appropriate for products offered through Internet banking. In some cases. equity. banks will enter into multi-currency credit commitments that permit borrowers to select the currency they prefer to use in each rollover period. This risk arises from market making. and . Appropriate systems should be developed if banks engage in these activities. Internet banking can increase deposit volatility from customers who maintain accounts solely on the basis of rate or terms. or economic developments. Foreign exchange risk can be intensified by political. and position taking in interest rate.

Attacks or intrusion attempts on banks’ computer and network systems are a major concern. . Banks must also ensure they have the right product mix and capacity to deliver accurate. because internal system users have knowledge of the system and access. implemented. In such situations. Studies show that systems are more vulnerable to internal attacks than external. Banks may support customers using customer-acquired or bank-supplied browsers or personal financial manager (PFM) software. See OCC Bulletin 99-9. Likewise. Banks that offer financial products and services through the Internet must be able to meet their customers’ expectations. National banks that offer bill presentment and payment will need a process to settle transactions between the bank. High levels of system availability will be a key expectation of customers and will likely differentiate success levels among financial institutions on the Internet. For example.7 manage information. In addition to transaction risk. customers will expect continuous availability of the product and Web pages that are easy to navigate. and reliable services to develop a high level of confidence in their brand name.Terrorists‖ for additional information. timely. Software to support various Internet banking functions is provided to the customer from a variety of sources. Contingency and business resumption planning is necessary for banks to be sure that they can deliver products and services in the event of adverse circumstances. particularly if those lines of business are not adequately planned. Security issues should be considered when the institution develops its contingency and business resumption plans. and monitored. complexity of products and services. liquidity. ―Infrastructure Threats from Cyber. Good communications between banks and their customers will help manage expectations on the compatibility of various PFM software products. its customers. Transaction risk is evident in each product and service offered and encompasses product computing systems. if the main server is inoperable. Banks should have sound preventive and detective controls to protect their Internet banking systems from exploitation both internally and externally. and the internal control environment. settlement failures could adversely affect reputation. and credit risk. the network could automatically reroute traffic to a back up server in a different geographical location. A high level of transaction risk may exist with Internet banking products. Internet banking products connected to a robust network may actually make this easier because back up capabilities can be spread over a wide geographic area. Customers who do business over the Internet are likely to have little tolerance for errors or omissions from financial institutions that do not have sophisticated internal controls to manage their Internet banking business. security and internal controls at the back-up location should be as sophisticated as those at the primary processing site. and external parties.

including CRA and Fair Lending. laws. or nonconformance with. and the voiding of contracts. reduced expansion potential. regulations. the bank should set up a control system to identify unusual or suspicious activities and. Accordingly. so customers can readily determine whether a product or service is insured. Moreover. where applicable. Compliance risk exposes the institution to fines. limited business opportunities. remain synchronized with other delivery channels to ensure the delivery of a consistent and accurate message to customers. national banks will need to make certain that their disclosures on Internet banking channels. payment of damages. . The rules require banks to ensure that customers provide all the required information before accepting transfer instructions. Also.8 Compliance Risk Compliance risk is the risk to earnings or capital arising from violations of. and lack of contract enforceability. reduced franchise value. when appropriate. The BSA funds transfer rules also apply to funds transfers or transmittals performed over the Internet when transactions exceed $3. including Web sites. or ethical standards. are applicable to electronic financial services operations including Internet banking. Application of Bank Secrecy Act (BSA) requirements to cyber banking products and services is critical. Advertising and record-keeping requirements also apply to banks’ Web sites and to the products and services offered. civil money penalties. The record keeping requirements imposed by the rules allow banks to retain written or electronic records of the information. rules. file suspicious activity reports (SARs). Most Internet banking customers will continue to use other bank delivery channels. it is important for national banks to be familiar with the regulations that permit electronic delivery of disclosures/notices versus those that require traditional hard copy notification.000 and do not meet one of the exceptions. The anonymity of banking over the Internet poses a challenge in adhering to BSA standards. Compliance risk also arises in situations where the laws or rules governing certain bank products or activities of the bank’s clients may be ambiguous or untested. Advertisements should clearly and conspicuously display the FDIC insurance notice. Compliance risk can lead to a diminished reputation. Banks planning to allow the establishment of new accounts over the Internet should have rigorous account opening standards. prescribed practices. Federal consumer protection laws and regulations. National banks should carefully review and monitor all requirements applicable to electronic products and services and ensure they comply with evolving statutory and regulatory requirements.

The resources needed to carry out business strategies are both tangible and intangible. management should consider whether the product and technology are consistent with tangible business objectives in the bank’s strategic plan. Sufficient levels of technology and MIS are necessary to support such a business venture. and control risk in the Internet banking business. Strategic Risk Strategic risk is the current and prospective impact on earnings or capital arising from adverse business decisions. banks may offer new products and services via the Internet. In some cases. competitive. the strategic vision should determine the way the Internet banking product line is designed. especially the Internet. This risk is a function of the compatibility of an organization’s strategic goals. the business strategies developed to achieve those goals. It is important that management understand the risks and ramifications of these decisions. improper implementation of decisions. The bank also should consider whether adequate expertise and resources are available to identify. regulatory. implemented. A bank needs to collect enough information to identify customers and determine whether a particular transaction is prohibited under OFAC rules. the resources deployed against these goals. . Accordingly. Before introducing a Internet banking product. technological. Internet banking businesses must comply with OFAC requirements. and managerial capacities and capabilities. and other environmental changes. Management must understand the risks associated with Internet banking before they make a decision to develop a particular class of business. and monitored. The organization’s internal characteristics must be evaluated against the impact of economic. The bank’s technology experts. those engaging in Internet banking must have a strong link between the technology employed and the bank’s strategic planning process. The planning and decision making process should focus on how a specific business need is met by the Internet banking product. operating systems. should contribute to the decision making and planning process. or lack of responsiveness to industry changes. See the FFIEC Information Systems Examination Handbook (IS Handbook) for a discussion of OFAC. New technologies. They should ensure that the plan is consistent with the overall business objectives of the bank and is within the bank’s risk tolerance. delivery networks. They include communication channels. Because many banks will compete with financial institutions beyond their existing trade area.9 The Office of Foreign Asset Control (OFAC) administers laws that impose economic sanctions against foreign nations and individuals. monitor. could bring about rapid changes in competitive forces. rather than focusing on the product as an independent objective. along with its marketing and operational executives. This includes blocking accounts and other assets and prohibiting financial transactions. and the quality of implementation.

adequate disclosures must be made so that customers can distinguish between insured and noninsured products. financial loss. ―Technology Risk Management‖ for additional guidance on this topic. timely services. Regular testing of the business continuity plan. marketing concepts need to be coordinated closely with adequate disclosure statements. untimely responses to customer inquiries. is one way to educate potential customers and help limit reputation risk. Hypertext links are often used to enable a customer to link to a third party. including communications strategies with the press and public. Well-designed marketing. Reputation risk exposure is present throughout the organization and includes the responsibility to exercise an abundance of caution in dealing with customers and the community. This affects the institution’s ability to establish new relationships or services or continue servicing existing relationships. This risk may expose the institution to litigation. Similarly. The risk planning process is the responsibility of the board and senior management. Customers must understand what they can reasonably expect from a product or service and what special risks and benefits they incur when using the system. National banks should carefully consider how connections to third parties are presented on their Web sites. A bank’s reputation can suffer if it fails to deliver on marketing claims or to provide accurate. Risk Management Financial institutions should have a technology risk management process to enable them to identify. will help the bank ensure it can respond effectively and promptly to any adverse customer or media reactions. Such links may reflect an endorsement of the third party’s products or services in the eyes of the customer. The marketing program must present the product fairly and accurately. including disclosures. monitor. Examiners should refer to OCC Bulletin 98-3. National banks need to be sure that their business continuity plans include the Internet banking business. approve. This can include failing to adequately meet customer credit needs. and control their technology risk exposure. or violations of customer privacy expectations. and monitor Internet banking . measure. It should be clear to the customer when they have left the bank ’s Web site so that there is no confusion about the provider of the specific products and services offered or the security and privacy standards that apply. The board should review. As such. Internet banking services that are poorly executed or otherwise alienate customers and the public can damage a bank’s reputation.10 Reputation Risk Reputation risk is the current and prospective impact on earnings and capital arising from negative public opinion. or a decline in its customer base. A national bank should not market the bank’s Internet banking system based on features or attributes the system does not have. They need to possess the knowledge and skills to manage the bank’s use of Internet banking technology and technology-related risks. providing unreliable or inefficient delivery systems.

The bank the performance standards. Senior management should have the skills to evaluate the technology employed and risks assumed. . the risks assumed. Management should have the skills to effectively identify.11 technology-related projects that may have a significant impact on the bank’s risk profile. and how those risks are managed. and monitoring have caused many national banks to outsource all or parts of their Internet banking operations. and control risks associated with Internet banking. As part of the design process. Monitoring system performance is a key success factor. They should determine whether the technology and products are in line with the bank’s strategic goals and meet a need in their market. The board should receive regular reports on the technologies employed. If the bank does not have the expertise to fulfill this responsibility internally. it should consider contracting with a vendor who specializes in this type of business or engaging in an alliance with another provider with complementary technologies or expertise. Technology: In-House or Outsourced? The different levels of complexity associated with certain areas involving security. Management should have the skills to effectively evaluate Internet banking technologies and products. Periodic independent evaluations of the Internet banking technology and products by auditors or consultants can help the board and senior management fulfill their responsibilities. Banks should periodically reassess their sources of technology support to determine whether a given solution continues to fit their business plan and is flexible enough to meet anticipated future needs. a national bank should include effective quality assurance and audit processes in its Internet banking system. Internal Controls Internal controls over Internet banking systems should be commensurate with an institution’s level of risk. and see that they are installed appropriately. Regardless of whether technology services are provided in-house or through a third-party servicer. As in any other banking area. national banks need to have a strong link between their technology provider and their strategic planning process. planning. monitor. This will enable the bank to link new products and services with the existing technology and product mix. operations. Regular audits of the control systems will help ensure that the controls are appropriate and functioning properly. measure. Measuring and monitoring risk is the responsibility of management. management has the ultimate responsibility for developing and implementing a sound system of internal controls over the bank’s Internet banking technology and products. Implementing the technology is the responsibility of management. select the right mix for the bank.

especially those provided over the Internet. national banks contract with a vendor to operate their Internet banking Web sites at the vendor’s location. The banking industry also recognizes that the Internet must be secure to achieve a high level of confidence with both consumers and businesses. A variation is to outsource the service. their card associations. National banks typically fulfill their responsibility to assure their vendors have sound internal controls by obtaining internal or third-party audit reports. This option may be especially well suited for banks that do not have the technical expertise to develop this service in-house. products. National banks need to monitor their vendor’s operational performance. operating systems. such banks need to place additional emphasis on their due diligence to ensure that security is not compromised.12 There are pros and cons to offering technology-based products and services in house versus contracting with a vendor. financial condition. The vendor will typically provide the service and maintenance for the turnkey system. Other banks may choose to purchase a ―turnkey‖ system from a vendor. Several companies are responding to the developing markets for Web pages. In this arrangement the vendor typically provides the hardware. it is important for the national bank to have personnel with an appropriate level of specialized expertise. Examiners should refer to the IS Handbook for a complete discussion of outsourcing issues. Larger national banks with substantial resources may choose to purchase computer hardware and operating systems and/or develop the necessary application software in-house. Internet banking applications. and capability to stay current with evolving technologies. This option may provide the greatest flexibility to customize product offerings. is fundamental to maintaining a high level of public confidence not only in the individual bank and its brand name but also in the banking system as a whole. and bill presentment and payment services. some are start-up companies with unproven products. They should have a formal service agreement with the vendor that clearly addresses the duties and responsibilities of the parties involved. or track records. National banks need to perform due diligence before selecting a vendor to provide Internet banking services. services. However. Many in the banking industry expect significant growth in the use of the Internet for the purchase of goods and services and electronic data interchange. . and vendors are working to develop an Internet payment infrastructure to help make electronic commerce secure. Whatever the source of Internet banking technology. and applications software necessary to enable the bank to offer the particular product or service to its customers. to monitor and manage the business. consistent with risk. Issues in Internet Banking Financial institutions. and services. Using this option. Sound management of banking products and services.

This theory also predicts involuntary behaviors. It determines the impacts of three factors namely attitude.2001). If the behavior is voluntarily controlled by the individual. 1989). 1999. and Theory of Planned Behavior 1(Ajzen. 2005). subjective norms and perceived behavior control on how individual’s tend to behave 13 (Tuchila. such as Theory of Reasoned Action 6(Fishbein and Ajzen. 2002. Karjaluoto. The theory of planned behavior 1(Ajzen. 2007). Technology Adoption Model 5(Davis. it can accurately explain the factors influencing technology adoption 20 (Laukkanen and Cruz. Several theories are offered in this respect. R. 1995). Attitude is the general feeling of people about the . Behavioral intention to use technology is explained by people's attitudes toward that behavior and subjective norms. 1999) namely as the delivery of banks' information and services to customers via different delivery platforms that can be used with different terminal devices such as a personal computer and a mobile phone with browser or desktop software. Subjective norm refers to individual's perception related to opinions of society about doing or not doing the behavior 12(Taylor and Todd. This theory also predicts involuntary behaviors. 2002) and the internet is a main delivery channel for electronic banking and its value to customers and banks is continuously increasing7 (Karjaluoto. telephone or digital television. It determines the impacts of three factors namely attitude. If the individual voluntarily controls the behavior. It is important to identify factors that cause people to accept new technologies and information systems and use them. The Theory of Reasoned Action is one of the most important theories that are used to explain human behavior’s 19(Pedersen. 1991) extends on the former by adding perceived behavioral control into the model as a determinant of behavioral intention and behavior. The theory of planned behavior 21(Ajzen. it can accurately explain the factors influencing technology adoption 8(Laukkanen and Cruz.13 Literature Review The concept of electronic banking has been defined in many ways 1(Daniel. 1991). 2009). 1983). Attitude is the general feeling of people about the desirability or undesirability of a particular issue or behavior. 2009). 1975). Electronic banking is a larger concept than banking via the internet 7(Karjaluoto. 1991) extends on the former by adding perceived behavioral control into the model as a determinant of behavioral intention and behavior. subjective norms and perceived behavior control on how individual’s tend to behave22 (Rao and Troshani. Theory of Innovation Diffusion (Rogers. Mattila. Behavioral intention to use technology is explained by people's attitudes toward the behavior and subjective norms. and Decomposed Theory of Planned Behavior 12(Taylor and Todd. 1995). (2000).

Intention to use. Mass media influences are non-personal communication channels such as print media. The construct perceived control of behavior is the individual's perception about ease or difficulty of doing behaviour and indicates the individual's perceptions about required skills. Subjective norm refers to individual's perception related to opinions of society about doing or not doing the behaviour 23 (Taylor and Todd. and a sense of personal ambition. broadcast media. and network media29 (Kotler. 1991). and love. self worth. and needs of potential adopters 27(Moor and Benbasat. Compatibility refers to the degree to which an innovation is perceived as being consistent with existing values. technology support becomes easily and readily available as e-commerce applications such as internet banking services become more feasible 32(Shih and Fang. and opportunities in doing the behaviour. perceived usefulness and compatibility. behavioural intention is in turn. 1995). past experiences. 1989). Subjective nom and perceived behavioural control 25(Luarn and Lin.14 desirability or undesirability of a particular issue or behaviour. 2000). 1995). Government support can play an intervention and leadership role in the diffusion of innovation 31(Tan and Teo. Self-efficacy refers to individual’s self-confidence in his or her ability to perform a behaviour 30(Compeau and Higgins. Attitude comprises of perceived ease of use. 2006). Finally. is determined by the attitude toward behaviour. Family influences emphasize on the relationship between the people under the family control where from parents. a person acquires an orientation toward religion. Perceived behaviour control is composed of three control beliefs: self-efficacy. 2000) and . which is described as the perceived usefulness and its perceived ease of use. government support and technology support. Perceived ease of use refers to the degree to which a person believes that using a particular system would be free of effort. 28 Al-Majali and Nik Mat (2010) decomposed the subjective norms further into two normative beliefs namely family influences and mass media influences. politics and economics. From the technology acceptance model 24(Davis. Robinson. subjective norm and perceived behavioral control. 2005). From the bank’s perspective these are mainly related to cost savings 33(Sathye 1999. This resulted in increased power to explain behavioural intentions and accurate understanding of behavioural events 26(Pedersen. the behaviour to use a new service for instance is determined by the intention to use and perceived behavioural control. resources. 2005). According to their decomposed theory of planned behaviour. while perceived usefulness refers to the degree to which a person believes that using a particular technology will enhance his performance. 2004). Internet banking brings a number of benefits for both the provider and the customer. explained by the attitude towards the use of the system. in turn.

Further.. 2000) as well as there is quick and continuous access to information which helps in reducing costs. Perceived behavior control is composed of three control beliefs: self-efficacy. internet banking requires access to a computer and access to the internet which is an additional cost to the client. Moreover. 2004). . the behavior to use a new service for instance is determined by the intention to use and perceived behavioral control.. customers may not be IT conversant to use internet banking. Benefits for the end users are numerous and include mainly convenience of the service (time saved and globally accessible service). government support and technology support. 2004). Self-efficacy refers to individual’s self-confidence in his or her ability to perform a behavior 2(Compeau and Higgins. 2005). Internet banking brings a number of benefits for both the provider and the customer. Robinson. Attitude comprises of perceived ease of use. 2000). From the bank’s perspective these are mainly related to cost savings 10(Sathye 1999. However. more effective marketing and communication at lower costs are among the benefits of internet banking services 36(Tuchila. internet banking is seen as a means to better administer funds 37(Tuchila. For businesses and enterprises. 1991). perceived usefulness and compatibility. subjective norm and perceived behavioral control 14(Luarn and Lin. 2000). Behavioural intention has a positive influence on internet banking services adoption in Singapore and Thailand respectively. Government support can play an intervention and leadership role in the diffusion of innovation 11 (Tan and Teo.. in particular. is determined by the attitude toward behavior. This resulted in increased power to explain behavioral intentions and accurate understanding of behavioral events (Pedersen. 1995). 2000). customers are still reluctant to use of internet banking. 12 Taylor and Todd (1995) extend the theory of planned behavior by breaking down the structure of attitude. lower cost of transaction and more frequent monitoring of accounts among others (Pikkarainen et al. mass customization. Compatibility refers to the degree to which an innovation is perceived as being consistent with existing values. 2004).15 internet banking remains one of the cheapest and more efficient delivery channels 34 (Pikkarainen et al. 2005). in turn. as they are concerned with security aspects of the system. Intention to use. subjective norm and perceived behavioral control. Further. and needs of potential adopters 9(Moor and Benbasat. Other rationales for the adoption of such services are related to competition as it helps to retain existing customers and attract new ones 35(Robinson. past experiences. in many cases. According to their decomposed theory of planned behavior. 2000) and internet banking remains one of the cheapest and more efficient delivery channels (Pikkarainen et al.

To identify the factors those influence the customers for using mobile as an Internet banking tool. To identify the benefits of Internet banking for customers 2. 3.16 Research Problem  Which factors influence the customers' propensity to use electronic banking as a primary banking channel. Why some customers find the new channels unacceptable and which obstacles should be eliminated in order to convince the customers about the advantages of using Internet banking. To identify the factors why people do not adopt Internet banking services .  What are the main characteristics of the heavy users of electronic banking and what are the main obstacles for further adoption of electronic banking. Research Objectives 1. The most important issue in exploring the first problem is comparing the influence of demographic factors and attitudes towards banking-related issues to the selection of the main banking channel.

17 Hypothesis 1. 2. 3. Perceived Perceived risk PR ease of use PEU Perceived usefulnes PU Internet Banking IB . H3: Perceived risks have a negative impact on use of Internet Banking. H2: Perceived ease of use has a positive effect onuse of Internet Banking. H1: Perceived usefulness has a positive effect on use of Internet Banking.

Although there are limitations of using students as subjects. which influence the adoption of Internet banking services by customers. .30 ages. Panjab University. it begins to explain the phenomena so the study becomes somehow explanatory. which have been described. student sample reflects current and future banking customers. Since conclusions are presented in order to explain the effective factors. Chandigarh. Second. This test compares the means for two groups of cases. they are appropriate in this study for several reasons. The questionnaire of Lockett & littlers study (1997) can be replicated with some minor changes  Some interviews with banking professionals and academicians will also be used in the study Sampling Technique: The sample for this study is the students from an University Business School. Internet users are generally low with majority of them between 20. First they are good surrogate for banking customers. Sample Size: 100 Data Analysis: Now the data that is to be collected through the survey is presented and analyzed statistically using the independent samples t. aiming to find out and describe the effective factors. by stating the existing theories related to this subject. Here using independent samples t-test. the means of personal characteristics and internet banking characteristics in two groups of users and non users.18 Research Methodology The research problem of this project indicates that this study is mainly descriptive. it offers an easy way to obtain the raw data for the further analysis. Data Collection:  Empirical data for the study is to be collected with the help of questionnaires. and is used to test whether the difference in means of one variable in two groups of respondents is significantly different from zero. Second. It also provides a basic understanding of the effective factors in adoption of a new technology. it saves times and costs since the respondents can be randomly selected. they are current bank customers have experience with traditional banking services and are most likely familiar with the IB.test. Convenience sampling method was used. First. The reasons of using this sampling type are twofold.

19 Analysis Analysis Statistical Package for Social Sciences (SPSS) version 16 was used as the analysis tool. The demographic profile of the respondents is shown in table 1.897 0. the reliability scores of all the constructs were found to exceed the given constraint. a reliability score or alpha that is 0.60 or above is sufficient.942 0. of items 6 8 3 Reliebility 0. As shown in Table 2. a popular method for measuring reliability suggests that for any research at its early stage. Table 2: Reliability Determinants PU PEU PR No.978 . Reliability is determined by Cronbach’s coefficient alpha (α).

20 Results This study examines the influence of H1. we could investigate our research model in different time periods and make comparisons. This shows that bank customers anchor their online banking adoption intention to the beneficial outcomes and ease of use process of the system. Customers are not ready to take any risk on using the new system. This finding refers to the fact that consumers use online banking for the benefits and also due to its easiness in use which provides in comparison to other banking delivery channels. Likewise bank customers are likely to adopt IB when it is easy to use. H2 and H3 of IB. Banks can highlight benefits such as IB conveniences in their promotional and advertising activities. but it suffers from one setback. This finding is in line with other studies. the results have supported the hypothesis that PU and PEU have positive effect on the use of IB and PR have negative effect on the use of IB. 9. there is still room for further investigation into the adoption of IB services. The replication of this study on a wider scale with more IB customers and with different national cultures is essential for the further generalization of the findings. Practical implication of these results is that banks need to highlight the benefits of IB. The results of the regression analysis conducted on the factors indicate that PR. Conclusion The result of this study shows that PU. and enhance IB security to improve consumers’ trust. This study meets the desired objective. As expected. PU and PEU on online banking were found to be the most influential factors explaining the use of online banking services. Security and privacy are two elements in the PR. Although IB provides flexibility in performing financial transaction.This study was conducted to explore the factors influencing intentions to adopt IB services. They also need to make the consumers aware about the system by providing them about the details of the benefits associated with it and also ensuring security of the system. As such. Also it shows that PU and PEU has positive relation with IB use supporting the hypotheses. The result shows that PR is negatively related to the adoption of IB use which supports the hypothesis and is in line with the previous studies. The relatively small size of the sample limits generalization of the outcome of the study. . customer’s intention to adopt it would be greater. By using a longitudinal study in the future. however individuals are still reluctant to adopt the system because of the risk associated with it. make IB easy to use. fast and easy. When online banking is perceived as useful. thus providing more insight into the phenomenon of online banking adoption. PEU and PR are the important determinants of online banking adoption.

(2000). G.. 1-42. 4. Sathye. Laukkanen. Warshaw. MIS Quarterly. 12. Management Science. C (1995). M. International Journal of Bank Marketing. Canada Report (2003) at www. 17(7). (1999).P. 72 – 83.D. P. Development of an instrument to measure the Perceptions of Adopting an Information Technology Innovation 10.D. (2002). 319-340. Electronic banking in Finland: Consumers beliefs. R. 13.C. Servicii bancare prin internet. & Teo. and Obaidat. Belief. P. Compeau. J ournal of the Association for Information Sciences. MA: Addison-Wesley. Bagozzi. and Benbasat. (1989). perceived ease of use. S. Factors influencing the adoption of Internet banking. Application of social cognitive theory to training for computer skills. 324-334. 6(2). Davis. J. Tan. attitudes. 982-1003 5. Perceived usefulness.com/ice /archives/2003_05. and user acceptance of computer technology. Fishbein. 6(2). 2. International Journal of Bank Marketing.. 3. Daniel. Reading. 35(8). (1995). 6. in Filipe. Provision of electronic banking in the UK and the Republic of Ireland. Organizational Behavior and Human Decision Processes. Ajzen. H. 197-211. (1999). T. (1975). intentions and behaviours. 11. User acceptance of computer technology: A comparison of two theoretical models. F. (2009). E. 13(3). The theory of planned behavior.21 References 1. M. Information Systems Research. (1991). attitudes. e-Business 9. M. Moore. (1989).A. R. and Todd. Taylor. Tuchila. D.. Adoption of internet banking by Australian consumers: an empirical investigation. 118-143. Karjaluoto. 50. F.. T. 7. intention and behavior: An Introduction to theory and research. and Higgins. Davis. University of Jyväskylä 8. P. Understanding information technology usage: a test of competing models. 144-176. E-finance Romania 14. Ekos Research Associates Inc. 17(2). (2000). Unpublished doctorial dissertion .S. (Eds). I. I. 1. Comparing consumer resistance to mobile banking in Finland and Portugal. and Cruz. Ajzen.R.html . M. I (1991). Information Systems Research.ladlass.

The International Journal of Bank Marketing.. 5. Journal of Internet Banking and Commerce. Karjaluoto. V. (2006). 26(5). V.C. 16-28.259 25. Markets and Institutions-A contemporary introduction to Financial Services. Electronic banking in Finland: Consumers beliefs. 6.in/ 18. Hilgert (2004). J. Al-Majali. and Hilgert. Sinkneyhttp://www. Application of decomposed theory of planned behavior on internet banking adoption in Jordan. 22(4). Norhazlin.M. Essays on customers in . An examination of individual’s perceived security and privacy of the internet in Malaysia and the influence of this on their Intention to use ecommerce: Using an extension of the technology acceptance model. 22. 22(4).internetbanking. Santha. 34-45. Nik Kamariah Nik Mat (2010). and Mazzon J. Hemandez. 72-88. 19. (2002). intentions and behaviours. Sharma. Lallmahamood. Journal of Internet Banking and Commerce. South-Western College Publishing. (2009). P. E-banking in Malaysia: A note on evolution of services and consumer reactions. Unpublished doctorial dissertion . (2005).167-182. B. 27. Kolodinsky. University of Jyväskylä 26. 1. The International Journal of Bank Marketing. and Lin. (2007).M. Luarn. Bank Frauds-Prevention & Detection.A. H. The adoption of commercial innovations in the former Central and Eastern European markets: The case of internet banking in Estonia. Scott William L.308. The diffusion of internet banking among Singapore consumers. M. (2003). Kerem and Nilson (2008)..G. 353-370.J. Balachandher. (2008). 28. Eriksson. M. Toward an understanding of the behavioural intention to use mobile banking.. The adoption of electronic banking technologies by US consumers. International Journal of Bank Marketing. p. (1999). 16.B. H. Journal of Global Strategic Management.A. 15(2). The adoption of electronic banking technologies by US consumers. and Barton Cunningham.22 15. Hogarth and Marianne A. J. 21(1). M. Jeanne M. Computers in Human Behaviour. Gerrard. What determines Turkish customers’ acceptance of internet banking? Marketing. K. 238-245. Hogarth. Kose. 238 . Mattila. J.14. 26(3). 25(2). 12(3). 24. (2000). p. 21. and Prasad.R. (2004). attitudes. R. 23. Determination of reasons affecting the use of internet banking through logistic regression analysis. H. J. (2001). 17.10. 20. M.M. Adoption of internet banking: proposition and implementation of an integrated methodology approach.. Celik. Journal of International Banking and Commerce 5(1). (2001). The International Journal of Bank Marketing. 29. International Journal of Bank Marketing. P. Universal law Publishing. I. A.

D. University of Jyväskylä. J. Riivari. Diffusion of innovations. . & Pearson. 36. K. B. (2002). Mobile banking: a powerful new marketing and CRM tool for financial service companies all over Europe. Internet banking: A customer-centric perspective. Unpublished Jyväskylä.23 the dawn of interactive banking. (2001). E. New York. Robinson.10 (1). Uygulamal Çok Dekenli statistiksel Analiz. (2005). doctoral dissertion. S. and Seetanah. Journal of Theoretical and Applied Electronic Commerce Research. Rogers. 29-73. and Balachandran. Nsouli. B. and Troshani. An exploratory study into the adoption of internet banking in a developing country: Malaysia. 61-73. (2008). Hüseyin. Padachi.. Internet Magazine. D. S.. 34. Finance and Development. 31. Journal of Internet Commerce. Analyzing the factors that influence the adoption of internet banking in Mauritius. 30.. S. (1983). Journal of International Banking and Commerce. Rao. NY. Proceedings of the 2007 Computer Science and IT Education Conference. Cem Web Ofset.S. (2002). Nor. 33. E-banking patronage: An empirical investigation of Malaysia.M. G. 39(3).G. Proceedings of the 35th Hawaii International Conference on System Sciences.10. Sciglimpaglia. Bank to the future. 11-20. (2000). 4354. Tathdil. (2008). Challenges of the e-banking revolution. (2007).M.6(1). 2(2). 1. J. Journal of Financial Services Marketing. 32. Balachandher. A conceptual framework and propositions for the acceptance of mobile services. (1992). I. Suganthi. Ankara. and Ely. 37. K. The Free Press. S. K.. Rojid. 7(1). Schaechter.Türkiye. 35.