T ABLE OF CONTENTS

LIST OF FIGURES.....................................................................................................................4

LIST OF TABLES......................................................................................................................5

ACKNOWLEDGEMENT...........................................................................................................6

EXECUTIVE SUMMARY.........................................................................................................7

SECTION 1: TRAINING REPORT...........................................................................................8

ABOUT BANKING INDUSTRY IN INDIA.............................................................................9

DIGITALISATION OF INDIAN BANKING INDUSTRY.....................................................11

INTRODUCTION OF THE COMPANY.................................................................................14

History...................................................................................................................................14

Mission and Vision Statement...............................................................................................14

Capital Structure....................................................................................................................14

Amalgamation........................................................................................................................15

The Network..........................................................................................................................15

The Range..............................................................................................................................15

Awards and Recognitions......................................................................................................17

WEEKLY STATEMENT OF WORK UNDERTAKEN..........................................................19

Week 1...................................................................................................................................19

Week 2...................................................................................................................................21

Week 3...................................................................................................................................25

Week 4...................................................................................................................................25

Week 5...................................................................................................................................26

Week 6...................................................................................................................................26

Week 7...................................................................................................................................26

Week 8...................................................................................................................................26

CONCLUSIONS AND RECOMMENDATIONS....................................................................27

Segmentation as per the line of business...............................................................................27

2
 POS machine usage................................................................................................................28

Current Account penetration..................................................................................................29

Line of Business and POS Machine usage.............................................................................30

SECTION 2: RESEARCH PROJECT ON FACTORS AFFECTING BEHAVIORAL

INTENTIONS TOWARDS MOBILE BANKING USAGE......................................................31

Introduction...............................................................................................................................32

Review of Literature..................................................................................................................34

Objective of the study................................................................................................................38

The Survey Instrument...............................................................................................................38

Sampling and Data Collection...................................................................................................40

Data Analysis and Results.........................................................................................................41

Labeling of Factors and Interpretation.......................................................................................44

Conclusions and Managerial Implications.................................................................................45

Limitations and direction for future research.............................................................................46

References.................................................................................................................................46

APPENDIX : QUESTIONNAIRE.............................................................................................49

3
L IST OF FIGURES
1. Figure 1: Technological Milestones in Indian Banks................................................10

2. Figure 2: POS Machine distribution..........................................................................27

3. Figure 3: Current Account Penetration......................................................................28

L IST OF TABLES
1. Table 1: HDFC Customer Segmentation.................................................................22

2. Table 2: Catchment area segmentation.....................................................................27

3. Table 3: Cross Tabulation of line of business and POS machine usage...................30

4. Table 4: Measurement items.....................................................................................39

5. Table 5: Sample demographics.................................................................................40

6. Table 6: KMO and Bartlett's Test.............................................................................41

7. Table 7: Reliability Statistics.....................................................................................41

8. Table 8: Rotation Sums of Squared Loadings............................................................42

9. Table 9: Factor loadings and variables grouping........................................................44

A CKNOWLEDGEMENT
Everyone who makes a project owes a great deal to others, and I am no exception. I would
like to express my appreciation to all those who have made my internship project a
possibility. I am deeply indebted to the employees of HDFC Ltd, Sector 8C, Chandigarh, who
have provided me with a supportive climate needed to complete my project.

I would like to acknowledge the help and encouragement; I received from Ms. Rashmi Singh,
Manager and Mr. Vinod Kumar, Head Relationship Manager of HDFC Ltd, Sector 8C,
Chandigarh, under whose guidance this project has been undertaken. They helped me to
streamline my project and bring into focus the main aspects of my project. They gave me
valuable feedback at all stages of my project and guided me to make amendments where
required and adhere to the standards of excellence.

Furthermore, I would like to express deep gratitude to my institution, University Business

School, Chandigarh and our honorable Chairperson, Prof. Deepak Kapur as well as respected
Summer Placement Coordinator, Dr. Pooja Soni, for their belief in the students and providing
us with a great opportunity of working with esteemed organizations like HDFC Ltd.

I am heartily thankful to all the respondents who spared their precious time to fill out the
research questionnaire. Without their cooperation it would have been impossible to conclude
my research on time. Finally, I would like to thank my friends for the discussions with them
regarding the nitty-gritty of the project. The arguments and debates have been fruitful in
covering maximum aspects essential for a proper evaluation of the subject under study. I have
learnt a lot from my interaction with them.
E XECUTIVE SUMMARY

The aim of the project was to analyze the digitalization of banking industry. The internship
work done in HDFC Ltd. majorly included “Catchment Mining”. The catchment area is the
geographical area from which the bank attracts its main customers, whether prospective or
existing. Catchment mining is an indispensable decision support tool for evaluation and
optimizing the penetration of services of the bank. This helps the bank to better understand
their vicinity and gives an insight of how can their services be offered to more and more
customers.

The major digital products that we tried pitching to prospective clients were POS machines
and PayZapp of HDFC Bank. We also became well versed with the numerous features of
internet banking and mobile banking so that we could resolve the queries of the customers on
the spot.

We surveyed 192 stores/offices of Sector 8, Chandigarh to understand the penetration of

HDFC bank products and encouraged them to “go digital” by either installing POS machines
or using QR Code based payment apps like PayZapp. We inferred that different line of
business have different banking needs and people are not yet become comfortable with the
QR based payment solutions. We also prepared a list of opportunities of opening new
current/saving bank accounts and a separate list was prepared for opportunities of POS
machine installation. This information was aptly used by the Relationship Managers and
Personal Bankers of the branch in order to increase their portfolio.

Parallel to the above project, I also undertook a research on “Behavioral Intentions Toward
Mobile Banking Usage”. In this era of smartphones, I found it relevant to study the intent of
the youth to use Mobile Banking services. More people are now shifting from traditional
methods of banking to digital banking or e-banking and to study this behavior is relevant to
the Banking Industry and economy as a whole.
S ECTION 1: TRAINING REPORT
A BOUT BANKING INDUSTRY IN INDIA
Introduction
As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently capitalised and
well-regulated. The financial and economic conditions in the country are far superior to any
other country in the world. Credit, market and liquidity risk studies suggest that Indian banks
are generally resilient and have withstood the global downturn well.

Indian banking industry has recently witnessed the roll out of innovative banking models like
payments and small finance banks. RBI’s new measures may go a long way in helping the
restructuring of the domestic banking industry.

The digital payments system in India has evolved the most among 25 countries with India’s
Immediate Payment Service (IMPS) being the only system at level 5 in the Faster Payments
Innovation Index (FPII).

Market Size
The Indian banking system consists of 27 public sector banks, 21 private sector banks, 49
foreign banks, 56 regional rural banks, 1,562 urban cooperative banks and 94,384 rural
cooperative banks, in addition to cooperative credit institutions (FY17 data). In FY07-18,
total lending increased at a CAGR of 10.94 per cent and total deposits increased at a CAGR
of 11.66 per cent. India’s retail credit market is the fourth largest in the emerging countries. It
increased to US$ 281 billion on December 2017 from US$ 181 billion on December 2014.

Investments/developments
Key investments and developments in India’s banking industry include:

1. As of September 2018, the Government of India launched India Post Payments Bank
(IPPB) and has opened branches across 650 districts to achieve the objective of financial
inclusion.

2. The total value of mergers and acquisition during 2017 in NBFC diversified financial
services and banking was US$ 2,564 billion, US$ 103 million and US$ 79 million
respectively.

3. The biggest merger deal of FY17 was in the microfinance segment of IndusInd Bank
Limited and Bharat Financial Inclusion Limited of US$ 2.4 billion.

4. In May 2018, total equity funding's of microfinance sector grew at the rate of 39.88 to Rs
96.31 billion (Rs 4.49 billion) in 2017-18 from Rs 68.85 billion (US$ 1.03 billion).
Government Initiatives
As of September 2018, the Government of India has made the Pradhan Mantri Jan Dhan
Yojana (PMJDY) scheme an open ended scheme and has also added more incentives.

The Government of India is planning to inject Rs 42,000 crore (US$ 5.99 billion) in the
public sector banks by March 2019 and will infuse the next tranche of recapitalisation by
mid-December 2018.

Achievements
Following are the achievements of the government in the year 2017-18:

1. To improve infrastructure in villages, 204,000 Point of Sale (PoS) terminals have been
sanctioned from the Financial Inclusion Fund by National Bank for Agriculture & Rural
Development (NABARD).

2. Between December 2016 and March 2017, a major drive was undertaken to boost use of
debit cards, resulting in an increase in the number of Point of Sale (PoS) terminals by an
additional 1.25 million by 2017 end from 1.52 million as on November 30, 2016.

3. The number of total bank accounts opened under Pradhan Mantri Jan Dhan Yojana
(PMJDY) reached 333.8 million as on November 28, 2018.

Road Ahead
Enhanced spending on infrastructure, speedy implementation of projects and continuation of
reforms are expected to provide further impetus to growth. All these factors suggest that
India’s banking sector is also poised for robust growth as the rapidly growing business would
turn to banks for their credit needs.

Also, the advancements in technology have brought the mobile and internet banking services
to the fore. The banking sector is laying greater emphasis on providing improved services to
their clients and also upgrading their technology infrastructure, in order to enhance the
customer’s overall experience as well as give banks a competitive edge.

10
D IGITALISATION OF INDIAN BANKING INDUSTRY
The need for computerization was felt in the Indian banking sector in late 1980s, in order to
improve the customer service, book-keeping and MIS reporting. In 1988, Reserve Bank of
India set up a Committee on computerization in banks headed by Dr. C. Rangarajan.

Banks began using Information Technology initially with the introduction of standalone PCs
and migrated to Local Area Network (LAN) connectivity. With further advancement, banks
adopted the Core Banking platform. Thus branch banking changed to bank banking. Core
Banking Solution (CBS) enabled banks to increase the comfort feature to the customers as a
promising step towards enhancing customer convenience through Anywhere and Anytime
Banking. Different Core Banking platforms such as Finacle designed by Infosys, BaNCS by
TCS, FLEXCUBE by i-flex, gained popularity.

The process of Computerization gained pace with the opening of the economy in 1991-92. A
major driver for this change was propelled by rising competition from private and foreign
banks. Several commercial banks started moving towards digital customer services to remain
competitive and relevant in the race.

Banks have benefitted in several ways by adopting newer technologies. E-banking has
resulted in reducing costs drastically and has helped generate revenue through various
channels. As per last available information, the cost of a bank transaction on Branch Banking
is estimated to be in a range of Rs.70 to Rs.75 while it is around Rs.15 to Rs.16 on ATM,
Rs.2 or less on Online Banking and Rs.1 or less on Mobile Banking. The number of
customer base has also increased because of the convenience in 'Anywhere Banking'.
Digitization has reduced human error. It is possible to access and analyze the data anytime
enabling a strong reporting system.

RBI has been a guiding force for the banks in forming regulations and giving
recommendations to achieve various objectives. Commercial Banks in India have moved
towards technology by way of Bank Mechanization and Automation with the introduction to
MICR based cheque processing, Electronic Funds transfer, Inter-connectivity among bank
Branches and implementation of ATM (Automated Teller Machine) Channel have resulted in
the convenience of Anytime banking. Strong initiatives have been taken by the Reserve Bank
of India in strengthening the Payment and Settlement systems in banks.

Figure 1:
Technological
Milestones in
Indian Banks
Current status in the Digital Space

Indian Government is aggressively promoting digital transactions. The launch of United

Payments Interface (UPI) and Bharat Interface for Money (BHIM) by National Payments
Corporation of India (NPCI) are significant steps for innovation in the Payment Systems
domain. UPI is a mobile interface where people can make instant funds transfer between
accounts in different banks on the basis of virtual address without mentioning the bank
account.

Today banks aim to provide fast, accurate and quality banking experience to their customers.
Today, the topmost agenda for all the banks in India is digitization.

According to the RBI Report in 2016-17 there are 2,22,475 Automated Teller Machines
(ATMs) and 25,29,141 Point of Sale devices (POS). Implementation of electronic payment
system such as NEFT (National Electronic Fund Transfer), ECS (Electronic Clearing
Service), RTGS (Real Time Gross Settlement), Cheque Truncation System, Mobile banking
system, Debit cards, Credit Cards, Prepaid cards have all gained wide acceptance in Indian
banks. These are all remarkable landmarks in the digital revolution in the banking sector.
Online banking has changed the face of banking and brought about a noteworthy
transformation in the banking operations.

National Electronic Funds Transfer (NEFT) is the most commonly used electronic payment
method for transferring money from any bank branch to another bank in India. It operates in
half hourly batches. At present there are 23 settlements.

Real Time Gross Settlement (RTGS) is primarily used for high-value transactions which are
based on 'real time'. The minimum amount to be remitted through RTGS is Rupees Two
Lakhs. There is no upper limit.

Immediate Payment Service (IMPS) is an instant electronic funds transfer facility offered by
National Payments Corporation of India (NPCI) which is available 24 x 7.

The usage of Prepaid payment instruments (PPIs) for purchase of goods & services and funds
transfers has increased considerably in recent years. The value of transactions through PPI
Cards (which include mobile prepaid instruments, gift cards, foreign travel cards & corporate
cards) & mobile wallets have jumped drastically from Rs.105 billion and Rs. 82 billion
respectively in 2014-15 to Rs. 277 billion and Rs. 532 billion respectively in 2016-17.

Challenges

 Security Risks - External threats such as hacking, sniffing and spoofing expose banks
to security risks. Banks are also exposed to internal risks especially frauds by
employees / employees in collusion with customers

 Financial Literacy / Customer Awareness - Lack of knowledge amongst people to use

e-banking facilities is the major constraint in India.
  Fear factor - One of the biggest hurdle in online banking is preference to conventional
banking method by older generation and mostly people from the rural areas. The fear
of losing money in the online transaction is a barrier to usage of e-banking.

 Training - Lack of adequate knowledge and skills is a major deterrent for employees
to deal with the innovative and changing technologies in banks. Training at all levels
on the changing trends in IT is the requirement of the day for the banks.

Way Forward

Business Analytics and Artificial Intelligence (AI) has a potential to bring a major change.
Robotics, enabled by AI, is expected to be the future game changer in the banks. Many
private banks are planning to deploy Robots for customer service, investment advisory and
credit-approval process to improve the services and be cost effective in the long run. Digital
Banking will be the most preferred form of banking in the coming years.
I NTRODUCTION OF THE COMPANY
H istory
The Housing Development Finance Corporation Limited (HDFC) was amongst the first to
receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the
private sector, as part of RBI's liberalisation of the Indian Banking Industry in 1994. The
bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its
registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled
Commercial Bank in January 1995.

M ission and Vision Statement

HDFC Bank's mission is to be a World Class Indian Bank. The objective is to build sound
customer franchises across distinct businesses so as to be the preferred provider of banking
services for target retail and wholesale customer segments, and to achieve healthy growth in
profitability, consistent with the bank's risk appetite. The bank is committed to maintain the
highest level of ethical standards, professional integrity, corporate governance and regulatory
compliance. HDFC Bank’s business philosophy is based on five core values: Operational
Excellence, Customer Focus, Product Leadership, People and Sustainability.

C apital Structure
As on 30 June 2018 the authorized share capital of the Bank is Rs. 650 crore. The paid-up
share capital of the Bank as on the said date is Rs 520,83,15,734 /- which is comprising of
260,41,57,867 equity shares of the face value of Rs 2/- each. The HDFC Group holds 20.86
% of the Bank's equity and about 18.16 % of the equity is held by the ADS / GDR
Depositories (in respect of the bank's American Depository Shares (ADS) and Global
Depository Receipts (GDR) Issues). 33.44 % of the equity is held by Foreign Institutional
Investors (FIIs) and the Bank has 5,48,942 shareholders.

The shares are listed on the BSE Limited and The National Stock Exchange of India Limited.
The Bank's American Depository Shares (ADS) are listed on the New York Stock Exchange
(NYSE) under the symbol 'HDB' and the Bank's Global Depository Receipts (GDRs) are
listed on Luxembourg Stock Exchange under ISIN No US40415F2002.
A malgamation
On May 23, 2008, the amalgamation of Centurion Bank of Punjab with HDFC Bank was
formally approved by Reserve Bank of India to complete the statutory and regulatory
approval process. As per the scheme of amalgamation, shareholders of CBoP received 1
share of HDFC Bank for every 29 shares of CBoP.

The amalgamation added significant value to HDFC Bank in terms of increased branch
network, geographic reach, and customer base, and a bigger pool of skilled manpower.
In a milestone transaction in the Indian banking industry, Times Bank Limited (another new
private sector bank promoted by Bennett, Coleman & Co. / Times Group) was merged with
HDFC Bank Ltd., effective February 26, 2000. This was the first merger of two private banks
in the New Generation Private Sector Banks. As per the scheme of amalgamation approved
by the shareholders of both banks and the Reserve Bank of India, shareholders of Times Bank
received 1 share of HDFC Bank for every 5.75 shares of Times Bank.

T he Network
HDFC Bank is headquartered in Mumbai. As of March 31, 2019, the Bank's distribution
network was at 5,103 branches across 2,748 cities. All branches are linked online on a real-
time basis. Customers across India are also serviced through multiple delivery channels such
as Phone Banking, Net Banking, Mobile Banking, and SMS based banking. The Bank's
expansion plans take into account the need to have a presence in all major industrial and
commercial centers, where its corporate customers are located, as well as the need to build a
strong retail customer base for both deposits and loan products. Being a clearing / settlement
bank to various leading stock exchanges, the Bank has branches in centres where the NSE /
BSE have a strong and active member base. The Bank also has a network of 13,160 ATMs
across India. HDFC Bank's ATM network can be accessed by all domestic and international
Visa / MasterCard, Visa Electron / Maestro, Plus / Cirrus and American Express Credit /
Charge cardholders.

T he Range
HDFC Bank caters to a wide range of banking services covering commercial and investment
banking on the wholesale side and transactional / branch banking on the retail side. The bank
has three key business segments:
 Wholesale Banking
The Bank's target market is primarily large, blue-chip manufacturing companies in the
Indian corporate sector and to a lesser extent, small & mid-sized corporates and agri-
based businesses. For these customers, the Bank provides a wide range of commercial
and transactional banking services, including working capital finance, trade services,
transactional services, cash management, etc. The bank is also a leading provider of
structured solutions, which combine cash management services with vendor and
distributor finance for facilitating superior supply chain management for its corporate
customers. Based on its superior product delivery / service levels and strong customer
orientation, the Bank has made significant inroads into the banking consortia of a number
of leading Indian corporates including multinationals, companies from the domestic
business houses and prime public sector companies. It is recognised as a leading provider
of cash management and transactional banking solutions to corporate customers, mutual
funds, stock exchange members and banks.

 Treasury
Within this business, the bank has three main product areas - Foreign Exchange and
Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the
liberalisation of the financial markets in India, corporates need more sophisticated risk
management information, advice and product structures. These and fine pricing on
various treasury products are provided through the bank's Treasury team. To comply with
statutory reserve requirements, the bank is required to hold 25% of its deposits in
government securities. The Treasury business is responsible for managing the returns and
market risk on this investment portfolio.

 Retail Banking
The objective of the Retail Bank is to provide its target market customers a full range of
financial products and banking services, giving the customer a one-stop window for all
his/her banking requirements. The products are backed by world-class service and
delivered to customers through the growing branch network, as well as through
alternative delivery channels like ATMs, Phone Banking, NetBanking and Mobile
Banking.

The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus
 and the Investment Advisory Services programs have been designed keeping in mind
needs of customers who seek distinct financial solutions, information and advice on
various investment avenues. The Bank also has a wide array of retail loan products
including Auto Loans, Loans against marketable securities, Personal Loans and Loans for
Two-wheelers. It is also a leading provider of Depository Participant (DP) services for
retail customers, providing customers the facility to hold their investments in electronic
form.

HDFC Bank was the first bank in India to launch an International Debit Card in
association with VISA (VISA Electron) and issues the MasterCard Maestro debit card as
well. The Bank launched its credit card business in late 2001. By March 2015, the bank
had a total card base (debit and credit cards) of over 25 million. The Bank is also one of
the leading players in the "merchant acquiring" business with over 235,000 Point-of-sale
(POS) terminals for debit / credit cards acceptance at merchant establishments. The Bank
is well positioned as a leader in various net based B2C opportunities including a wide
range of internet banking services for Fixed Deposits, Loans, Bill Payments, etc.

A wards and Recognitions

Businessworld India's Best 1. Best Bank - Overall

Banks' survey 2016
Dun & Bradstreet Corporate
Award 2017
12th BML Munjal Awards
2017
The Financial Express India's
Best Banks 2016
Finance Asia poll on Asia's
Best Companies 2016
2. Fastest Growing Large Bank
India's Leading Bank - Private Sector
Sustained Excellence in Learning & Development
- Profitability: Rank 1
- Strength & Soundness: Rank 1
Bank of the Year
Best CEO- Aditya Puri
Best at Investor Relations- Rank 1
Most Committed to Corporate Governance- Rank 1
Best Managed Company - Rank 2
Best at CSR - Rank 8

National Payments
Excellence Awards 2016
Asiamoney India Banking
Awards 2017
Business Standard Annual
Awards 2016
The Economic Times
Corporate Excellence Awards
2018
Aadhaar Excellence Awards
2018
NASSCOM AI Game
Changer Awards 2018
BrandZ Top 100 Most
Valuable Global Brands 2019
Governance Now BFSI
Awards 2019.
Bank of the Year
Best Bank in Cheque Truncation System (CTS)
Best Bank in National Automated Clearing House
(NACH)
Best Bank in National Financial Switch (NFS)
Runner up in Rupay Cards
Best Domestic Bank - India
Banker of the year - Mr. Aditya Puri
Company of the Year
• Best Performing Private Bank in Total Aadhaar
Generation & Update
• Best Performing Private Bank in Total Aadhaar
Generation & Update - In House Model
• Best Performing Branch of HDFC Bank in Total
Aadhaar Generation & Update for Kidwai Nagar
Branch, Kanpur, Uttar Pradesh.
Innovative Application in AI - Virtual Agent Engine
HDFC Bank featured for the fifth time in the BrandZ's
Top 100 Global Brands List
-Digital Bank
-Tech Trendsetter
W EEKLY STATEMENT OF WORK UNDERTAKEN

Week 1
The first week of the internship was occupied in understanding the fundamentals of banking
and digitalisation of the banking sector

We learned the following basics of banking:

 Different accounts are there to suit different needs of customers. Requirements of a wine
shop owner and a petrol pump owner would be very different. Manager should
understand those needs and cater accordingly.
 How it is important to place “hooks” on your customer i.e. to sell secondary products
(investments, loans, insurance, etc.) over and above your primary products (saving a/c,
current a/c and term deposits). The “hooks” would not allow your customer to switch to
other banks easily.
 Know Your Customer (KYC) – It does not mean the regulatory requirement that every
account holder or e-wallet holder should meet but from the point of view of a relationship
manager, to actually know your customer, what is his/her potential and how we can raise
business from them. If you are not their primary bank, find out reasons behind that.

Then, we learned why digitalisation is the need of the hour and what its merits are for
customers as well as banks. Following benefits can be listed:
 Benefits to customers
• Simple, interactive and convenient
• 24/7 availability – anytime and anywhere
• Saves a lot of time and cost
• Broad range of services – from opening a FD to blocking a lost debit/credit card
• Earn cashbacks and view different offers or deals
 Benefits to bank
• Saves large sums of money of the bank
• Less workload on the staff
• Less personnel is required because of decreasing workload
• Helps the bank to track customer behavior through analytics
• Great medium to communicate the new offers and schemes of the bank
We were then asked to learn and understand in detail about the different digital platforms of
the HDFC Bank so that we can make our clients understand about the same at the later stages
of the internship program. We learned plethora of features of each platform and their usage in
customers’ daily life. We were astounded by the power of the digital and how it can do
number of complex transactions in just one click.

Given below are the few digital platforms of HDFC Bank and their important features and
significance for the customers:

 PayZapp
HDFC Bank PayZapp, a complete payment solution, gives customers the power to pay in
just One Click. With PayZapp, customers can shop on their mobile
phones at partner apps, buy movie tickets, groceries, compare and book
flight tickets and hotels, shop online and get great discounts at
SmartBuy, send money to anyone in their contact list or to their bank
account, pay bills and recharge their mobile, DTH and data card and many more.
Customers can link their Debit and Credit Card, of any Bank, to PayZapp and enjoy the
most convenient and secure way of payment.

 SmartHub
SmartHub is a comprehensive and integrated payment solution for merchants to now
collect payments through multiple payment modes. Payment modes include Debit Cards,
Credit Cards, Multiple Bank NetBanking, IMPS, NEFT, RTGS, Cash, Cheques and
Demand Draft. Through the SmartHub platform, merchants can now have a one view of
payments collected through all modes of payment in one view. Comprehensive dashboard
gives the merchant in-depth information on nature of transaction,
summaries and reconciliation. The solution is packed with features such
as payment alerts, online response, splitting of payments to various
heads to name a few. The solution offers various merchants need based
customisation. The admin access can be designed to offer user access
management within merchant's organisation.

 NetBanking

20
 HDFC Bank offers their customer a comprehensive range of transactions across multiple
products through its NetBanking channel. Customers can
conduct 200+ transactions from the comfort of their home or
office. Users can check their account balance, book fixed and
recurring deposits, download A/c statement up to 5 years,
transfer money to any bank account, pay bills through BillPay feature, recharge their
Mobile/ DTH connection, and much more in a secure environment.

 Mobile Banking App

Digital and more specifically the mobile has become our most favored tool to meet all our
life needs. HDFC Bank has tapped this idea to introduce their
all new mobile banking app with a slogan “Bank the way you
live”. The app allows users to do 120+ transaction on their
fingertips ranging from mobile and DTH recharge, bill payment, credit card dues
payment, instant money transfer, etc. to managing Demat portfolio, order currency notes
or travel card for foreign travel, making UPI payments, blocking lost cards, opening a FD
and lots more. The updated version of the app allows users to set up a Face ID as a
security option. This app is the most convenient method of e-banking as the mobile
handsets are the most handy and easy to use devices that we have.

Week 2
In the second week of our internship, we were given a brief, about the job role of HDFC’s
Relationship Manager (RM), along with new full time recruited RMs, and the basic
knowledge of different software and databank that HDFC uses.

HDFC Bank works exceptionally by giving priority services to their High Net Worth
customers and giving them state-of-the-art services by assigning relationship managers to
them. As per the table given below, customers are segmented into three major groups as per
their Average Monthly Balance (AMB) or other criteria:

Imperia Premium Preferred Banking Classic Banking

Banking
A minimum Average A minimum Average A minimum Average
Balance of Rs. 10 Lac in the Balance of Rs. 2 Lac in the Monthly Balance of Rs.1
Savings account/s Savings account/s Lac in the Savings
OR OR Account/s
A minimum Average A minimum Average OR
 Balance of Rs. 15 Lac in a
Balance of Rs. 5 Lac in a A minimum Average
Current Account Current Account Monthly Balance of Rs.5
OR OR in a combination of Savings
A minimum Average Monthly
A minimum Average Monthly Accounts and Fixed Deposit
Balance of Rs. 30 Lac in a
Balance of Rs. 15 Lac in a
combination of Savingscombination of Savings
Accounts and Fixed Deposit
Accounts, Current Account
Fixed Deposit
Table 1: HDFC Customer Segmentation Source: HDFC website (w ww.hdfcbank.com)

The following is the job role of a HDFC relationship manager that we understood:

Relationship Manager is responsible for:

 Acquisition of new Preferred customers
 Enhancement of the relationship by cross-selling products and services as per the profile
& need of the customers
 Deepening the size of the relationship with the customers
 Retention of the customers by providing the best possible services and being the
dedicated point of contact for these customers

So that:
 HDFC Bank is the primary banker for these Preferred relationships
 Maximum share of wallet of these customers is with HDFC Bank

Key Results/Responsibility Areas:

Sales: (Acquiring, Enhancing, Deepening and Retention of new and existing

relationships)
 Acquire new customers who meet product criteria and flag them on the system
• Referrals generated from existing customers
• Leads generated by branch staff & personal leads
• Databases
 Increase liabilities size of relationship via:
• Balances in a/c’s of existing customer
• Use FD maturity reports to track maturity of HDFC FDs and prevent
outflow
• Use wallet profile to track FDs in other banks and divert them into HDFC
 on maturity
• Use wallet profile sheet to track accounts and products with other bank
and transfer the same
• Know the customer’s business to proactively provide financial solutions
 Penetration of products across family groups [Customer to Group (CTG)] – CTG is the
group of all the customers who belongs to the same family. A common group ID is
created in which all the customer IDs of the related customers is kept.
 Sales across all product segments-Third Party Products (TPP), Assets, Cards etc.

Portfolio Management
 Identify existing/new customers who meet Preferred product criteria and flag/raise them
on the system and upgrade these customers under the Preferred programme in line with
the Preferred grouping criteria
• Liaising with Personal Banker to flag eligible customers from Classic
portfolio
• Identifying customers through Large Transaction reports (LTR)
• GMs or VPs of all Cat A companies and CSRM salary account companies
which meet programme criteria and have future potential

 Ensure that individual customers are grouped and C ustomer T o G roup (CTG)
Ratio is maintained on the portfolio
• By grouping them with their family members who already hold accounts
with us
• By grouping them with their family members post selling liability products
to the family members, if they do not have banking relationship with us

 Ensure that optimal levels of Income generating Product Group Holding (IPGH) is
reached
• Ensure that within each customer group a minimum number of stipulated
Income Generating products are sold

 Ensure that the Customer Group profitability is achieved

• Manage Band 1 and 2 customers and ensure that they are moved to Band 3
 and above

 Ensure that atleast one income product is sold to each Preferred group in the year
 Regular contact is maintained with all portfolio customers such that 125 customers are
contacted every month and entire portfolio is contacted atleast once every quarter
 Customer interactions are duly updated
 Profile changes (if any) are duly updated
 Ensuring that customers make us their primary bank
• Knowing about where all the customer is currently banking and moving him to
our Bank
• Ensuring that customer scope is done and products targeted accordingly
• Sales to family members and associates which have been grouped together

 Attrition control of customers

• Includes persuading the customer to continue and if required renew FD’s
• Deepen by cross selling ‘sticky products’ like Demat, Bill Pay, Advisory.
• Ensure quality of relationship while racing. Should be capable of
maintaining eligibility
• Regular customer contact to establish needs of the customer and
opportunities to cross-sell

• Monitor large amount movements and account closure from the deposit
accounts and ensure that customer does not attrite
• Ensure that the marketing analytics list on possible attrite, is called and
retained

Customer Services
 Ensure quality customer service is delivered
 Disseminating required product information
 Recording complaints as per the specified process
 Resolving all complaints received from preferred customers within the stipulated TAT’s -
Ensure appropriate customer communication on closures & copy of that to be filed.
 Preventive complaint management - Asking for feedback from customers, who may not
be complaining
 Promoting all direct banking channels and ensuring that the customer is utilizing the
same - Check back on recent customer’s registered to DBC channel and give any specific
help require

Week 3
In the third week, we were briefed about “Catchment Mining Programme”. The catchment
area is the geographical area from which the bank attracts its main customers, whether
prospective or existing. Catchment mining is an indispensable decision support tool for
evaluation and optimizing the penetration of services of the bank. This helps the bank to
better understand their vicinity and gives an insight of how can their services be offered to
more and more customers.

The catchment area of our branch includes Sector 8, 7, 18, 5 and 4. This includes both
commercial and residential area. We were told to mine the commercial area of Sector 8,
Chandigarh and were given a format of the information that we were supposed to collect. The
format included address, name of the business, type of business, contact person, contact
number, banking relationship, POS Machine (Yes/No) and of which bank, and additional
remarks. All these details were required to be filled by personally visiting each and every
store or office.

In the initial days we were accompanied by two of the staff members so that we understand
the way to communicate and learn how to pitch your bank and its services to prospective
customers. In this week we visited 20 shops which mostly included food, beverages, bakery,
and clothing stores, in sector 8B. We were able to generate few leads of installation of POS
Machine. All the data was maintained afterwards in a well structured excel sheet.

Week 4
In this week we surveyed 42 shops of Sector 8B and Sector 8C of Chandigarh. The data was
collected in the above mentioned format. In this week we were able to generate leads of not
only POS installation but also of credit cards, current accounts, etc. Conversing with people
doing business of various kinds gave us the idea about different industries and how do they
operate. We realized that not every business has same kind of banking requirements and we
kept this in mind while pitching our banking services to them. All the data was maintained in
an excel sheet at the end of the week for future reference.
Week 5
During our 5th week we visited 45 shops/offices which mostly consist of study abroad and
immigration consultancy services’ offices. Due to the increasing trend of going out of India
for higher studies, these offices are increasing in numbers. They also provide TOEFL and
IELTS coaching alongside. We pitched them for current accounts and foreign travel cards,
etc. We were able to generate some current account leads from this domain.

Week 6
In this week we visited 42 shops/offices of Sector 8C commercial area. We were surprised by
the fact that, numerous companies ranging from pharmaceuticals, agro industry, etc. to
wedding planners and media/marketing, is operating from small cubicles. Apart from
collecting information as per our said format we tried pitching other products of bank as well
like automobile loans, super premium credit cards, etc. which could be of some utility to
them. We also collected in-general feedback of HDFC Bank and other banks’ services as
well. As per our conversation with them, we observed that, timely response to complaints and
hassle free procedures are few of the factors that increase the customer satisfaction in a
banking industry.

Week 7
This was our last week of “Catchment Mining Programme” and we visited 43 shops/offices
that were engaged in different kinds of business. There were many regional offices of
different companies and all the financial decisions whatsoever are centralized and taken by
the head office only. We find it difficult to negotiate with them but somehow we managed to
get the contact of the headquarters and the concerned person. Throughout our survey we
sometimes faced resistance from the owners as they were hesitant to provide their phone
numbers, bank details, etc. But we were able to convince most of them by politely stating our
purpose of the survey.

In this way, we visited 192 shops/offices in total. We were constantly entering the data into
excel for easy interpretation and analysis at later stages.

Week 8
In the last week of the internship we analyzed and interpreted the data we have been
collecting from the past five weeks in order to get some meaningful insights and to identify
the prospective customers.
C ONCLUSIONS AND RECOMMENDATIONS

S egmentation as per the line of business

Firstly, we segmented the data as per the ‘line of business’ because similar businesses
generally have similar banking needs. As taught by our mentor in the first week of internship
only that different businesses have different banking requirements and that is the reason why
we decided to segment the data on this basis. The following were the number of elements in
each segment:

Line of Business Number of shop(s)

Salon/Spa 12

Clothing 14

Food/Beverage/Bakery 32

Retail Stores 11

Healthcare 11

Gym 3

Vehicle 3

Electronics 10

Education/Coaching 8

Study Abroad 14

Travel Agency 11

Immigration consultancy 7

Professional Services 32

Others 24

TOTAL 192

Table 2: Catchment area segmentation

O bservations and Interpretations:

 Salons, clothing stores, food outlets, general stores and similar business have some
common features like:
• Higher frequency of visitors
• Majority of the customers are from Gen Z or Gen Y
• The amount of the transaction at one point of time is not much high
• Higher acceptance of digital payment methods
 The businesses offering any kind of professional services like CA firm, legal firm, etc.
have features like:
• Low frequency of visitors
• Higher amount of transaction at one point of time
• Resistance to digital payment methods and preference to traditional methods like
cheques, cash, RTGS/NEFT, etc.
 Immigration consultancy, travel agency, study abroad, etc. have following
commonalities:
• Huge amount of dealing in foreign exchange
• Traditional methods are mostly used not the digital ones.
 This segmentation can be used by the managers to pitch the products to the prospective
clients in a better manner and modify the terms and conditions for them as per their needs
wherever possible.

P OS machine usage
We also identified the number of shops/offices as per the POS machine used by them. We
observed that most of them are having POS of HDFC Bank only, but large chunk of the
sample (46%) were not using POS machine at all.

Figure 2: POS Machine distribution

This data can be used to pitch those customers using other bank’s POS machines and
providing them HDFC Bank machines at better installation rates. We prepared a separate
excel sheet with the data of all those commercial establishments that are not using our bank’s
machine or no POS machine at all by making them educated about the multiple benefits of
using these digital and cashless payment methods.

C urrent Account penetration

We also analyzed the HDFC Bank penetration in terms of current account. A pie chart was
prepared to see that.

Figure 3: Current account penetration

 A commendable 46% of our sample are already customers of HDFC Bank

 Major competitors are ICICI Bank and Axis Bank

 New banks like IDFC First Bank and Kotak Mahindra Bank are also tough competitors.

 Customers were happy and contented with the services of HDFC Bank based on the
interaction with them

A separate excel sheet of those not having HDFC accounts was also prepared so that the
managers can use that information to bring new acquisitions to the branch and the bank as a
whole. The data collected is confidential and cannot be shared with the institute. It was for
the purpose of HDFC Ltd, Sector 8C, Chandigarh only.
L ine of Business and POS Machine usage

Table 3: Cross Tabulation of line of business and POS machine usage

The segments were further grouped to reduce the number of segments from 14 to 11. Some
elements were left in the above table as they were not falling in any specific category for the
purpose of better conclusion.

I nterpretations:
 Salon, clothing stores, retails stores, clinics, gyms and food outlets have the highest ratio
in terms of POS Machine usage. Only few of them are still not digitalized but can be
easily pitched for the same. These stores can be motivated to use QR-code based payment
methods as well thus creating a platform for PayZapp.
 Only one-third of Immigration and travel agencies are having POS Machines. Others can
be pursued to install the same and use the SmartHub App.
 In consultancy firms there are not even a single business using POS machine. Even
though the amount of transaction is high but these businesses can be educated about other
e-payment solutions like SmartHub App. The same would be the case for automobile,
electronics retailers and wholesalers, educational institute, etc.
 POS machines involves cost like installation cost, Merchant Discount Rate(MDR), etc.
because of which many clients were reluctant to use it. But they can be taught about other
e-payment methods like QR-code based payment solutions, SmartHub for merchants, etc.
 Government in its recent budget announced that the companies cannot charge for digital
payments. This move can be a booster for digitalisation of business transactions in India.

30
S ECTION 2: RESEARCH PROJECT ON FACTORS
A FFECTING BEHAVIORAL INTENTIONS
TOWARDS M OBILE BANKING USAGE
I ntroduction
Technological advancements have led the providers of financial services to seek out new
modes of service delivery to their customers. The very nature of buying and selling of these
services have changed. Use of mobile devices is amongst the newest channels of service
delivery by banks to their customers. Mobile banking is fulfilling increasingly what is now
becoming the order of the day: A fast seamless anytime and anywhere banking.

To understand mobile banking, we need to first see the larger picture i.e. electronic banking.
Suoranta and Mattila (2004) define electronic banking as “The provision of information and
services by a bank to its customers via electronic wired or wireless channels, for example the
internet, telephone, mobile phone or interactive television (Daniel 1999) .” In this sense,
mobile banking is the subset and the newest emerging channel of electronic banking. It can
also be called as ‘pocket banking’ for the users. (Amin, Hamid, Tanakinjal and Lada, 2006).
Tiwari and Buse (2007) referred to mobile banking as the service offered by the banks in
providing and making available banking and other financial services to their customers
through mobile phones and other similar devices. Services offered include conducting
banking and stock market related transactions, accessing their accounts and using them and
also having a ready access to a source of information tailored for them. A broader and more
general definition of mobile banking is given by Pousttchi and Schurig (2004, pp 1) at the
37th Hawaii International Conference on System Sciences. They defined mobile banking as
“That type of execution of financial services in the course of which - within an electronic
procedure - the customer uses mobile communication techniques in conjunction with mobile
devices.”

Mobile banking was first introduced in the early 2000s through short messaging service and
Wireless Access Protocol (WAP) or General Packet Radio Service (GPRS) enabled mobile
web browsing. The first exposure to mobile banking was not pleasant for its users. The
mobile web browsers functioned slowly and erratically as compared to their internet banking
counterparts, due to limited feature handsets and, much lower speeds of browsing due to
narrow bandwidths. Security concerns were also in existence due to the inability of mobile
phone producers to provide a secure mode of data transmission through mobiles (Riivari,
2005). The scenario has changed considerably today due to newer technology advancements
and the introduction of newer feature rich handsets. Mobile handsets such as iPhones from
Apple and Smart phones from HTC are comparing well with most basic computers and
laptops in terms of their usability. Mobile web browsing speeds have also increased
considerably due to broadband internet facilities being made available for mobile phones at
attractive rates. All these factors have led to a resurgence of mobile banking usage among
customers. The basic function of mobile banking is to allow the users to get information
regarding their account balances through the short messaging service (SMS). (Mallat, Rossi
and Tqunainen 2004). Due to newer technologies such as GPRS and 3G/4G data transmission
services and more and more web friendly features incorporated in mobile handsets, mobile
banking has become lightening fast and very user friendly (Riivari, 2005). In the developed
countries such as the European nations, in addition to the basic services, customers are now
undertaking more comprehensive banking transactions such as fund transfers between
accounts, stock trading, and confirmation of direct payments via the phone’s web browser
(Mallat, Rossi and Tqunainen 2004). European and US Customers today are using or have the
option to use mobile banking not only to access their account information but also to avail
other service options such as payments, deposits, withdrawals and transfers which earlier were
mainly done through local branch banking.

Mobile banking has provided its users, much needed temporal and spatial freedoms which are
major drawbacks for other, more traditional channels. The channel is still in its infancy but the
possibilities are vast as the number of mobile phone users are more than thrice the number of
online computer users (Riivari, 2005). Even in third world countries such as India, mobile
phone penetrationis fargreaterin number than compared to computer users. An interesting thing
to note here is that the traditional channels of conducting banking transactions did not
completely die with the emergence of newer electronic channels. Most consumers have
adopted a mix of traditional as well as electronic channels to satisfy their banking needs. For
example, a consumer may schedule and authorize a payment via mobile banking but may use
internet banking to check the status of the transaction. A consumer may also prefer the
personal touch of the bank employee at the branch while applying for a loan or other similar
financial products. Thus the alternate channels of e-banking should not be regarded as
substitutes of the more traditional forms. Instead, a mix of all the available channels should be
used as complements by the banks in satisfying the complete banking needs of their consumers.
Banks must also judiciously utilize a mix of all the channels to continuously delight their
customers, differentiate their offerings, respond to a dynamic, changing market and to
increase the efficiency and cost effectiveness of their service delivery process.

Mobile phones have truly become integral to people’s lives today. This form of banking
represents vast untapped opportunities for banks to leverage this virtual distribution channel
in an efficient and cost effective way. Banks can now combine information services and
marketing in ways which go way beyond sending a customer a simple SMS message to tell
them their bank balance (Riivari, 2005). Mobile devices have now given marketers a much
needed push in directing their marketing efforts through anytime, anywhere connectivity to
their present and potential customers (Barutcu 2007).

The challenges which banks face regarding mobile banking are the issues regarding security of
mobile banking transactions and how to uniformly provide its mobile banking services over
different types of mobile handsets. But the importance of mobile banking cannot be
undermined as bankers everywhere today, are fast waking up to the opportunities of
anytime, anywhere banking.

According to the Reserve Bank of India’s (RBI) annual report for 2017-18, mobile banking
services witnessed a growth of 92 per cent and 13 per cent in volume and value terms,
respectively. The number of registered customers rose by 54 per cent to 251 million at end-
March 2018 from 163 million at end-March 2017.
R eview of Literature
Mobile banking channels are the newest form of service offerings by the commercial banks to
their customers. Most of the past studies have been done in the context of the developed
nations of the world where internet banking is already widely prevalent. In these countries,
mobile banking services are looked upon as a service add - on to the existing channels of
internet banking. These countries already have a high usage of internet or online banking
prevalent and, it is seen as a logical next step for the customers to avail the mobile banking
services. However, in the context of developing nations, the adoption to newer channels of
banking may not follow the same sequential steps. For example, in a country like India,
where mobile phone penetration is much higher as compared to internet infrastructure, it may
be entirely possible that customers may adopt mobile banking practices before internet
banking and acceptability of mobile banking may be higher than internet banking in the case
of non users of these two technologies.

Previous research done in the context of mobile banking have mainly focused on the
consumer perceptions towards mobile banking and the adoption possibilities of this new
technology by the consumers. Suoranta and Mattila (2004) studied the diffusion pattern and
adoption process of customers of a Finnish bank through administration of postal
questionnaires. The sample respondents were divided into three equal sized groups consisting
of non users, occasional users and regular users of mobile banking services. The study found
out that the users who are more interested in trying out mobile banking services are older than
what was indicated by previous research. The study also found that current users of internet
banking were not enthusiastic about using the mobile banking services which shows that
direct implementation of successful strategies in internet banking may not work in the case of
mobile banking. In a similar study, Amin, Hamid, Tanakinjal and Lada (2006) analyzed the
willingness of the undergraduate students of a Malaysian University towards adoption of
mobile banking technology. Their study tried to find out whether demographic variables such
as age, gender and race had any effect towards the adoption process. The response of 615
students were studied through the one way ANOVA analysis and the study concluded that
differences exist in expectations regarding mobile banking between different age groups of
respondents and also between different religion groups particularly between Muslim and non
- Muslim students. Muslim students preferred reliable and right information disclosed by the
banks and no interest elements in banking transactions whereas non - Muslim students prefer
that there is no Arabic language in the brochure and they were not discriminated against by
the banks. Gender differences between the respondents towards adoption of mobile banking
were not significant.

Most of the studies conducted in the field of adoption of new technology assume
automatically that all innovations are improvements over the existing products, services and
processes. The study by Laukkanen, Sinkkonen, Kivijarvi and Laukkanen, (2007) takes a
slightly different view. The authors investigate the resistance to innovation of mature
consumers and how they differ from that of the younger consumers in the context of mobile
banking. Their different approach is due to the fact that innovations imply a change from the
routine and according to them it is more important to study the reasons of resistance to
change than to focus on the reasons for adopting the innovation. They divide the reasons for
resistance or the barriers into functional and psychological barriers. The functional barriers
are divided into usage (fast, convenient and easy to use), value (economical) and risk (loss of
pin codes, battery life, wrong information, unauthorized access to information) barriers and
the psychological barriers are divided into image (image of mobile banking, perception of
ease or difficulty in usage) and tradition (preference towards traditional channel such as
physical visit to the branch) barriers. The authors designed and administered a questionnaire
based on theory of innovation resistance and a sample of 370 mature customers and 1155
young customers who had no previous exposure to mobile banking were collected and
analyzed using factor analysis. The study showed that the two groups of customers differed
on the barriers of risk, tradition and image. In the mature consumer segment, the value barrier
emerged as the most important barrier. Another recent study by Yang (2009) also
investigated the factors relating to adoption of and resistance towards mobile banking
technology in university students of Taiwan. The study collected responses from 178 students
on items such as system design safety, system base fees, mobile banking services and
transaction fees, reply speed and fees and customer service of three mobile phone systems
such as the STK (System Tool Kit), WAP and GPRS. The Rasch Measurement Model was
used to analyze the responses collected. The study found out that factors such as speed of
transactions and reduction in the transaction fees favored the adoption process of mobile
banking whereas factors such as system configuration safety and system base fees led
towards the resistance against adopting mobile banking services.

It is also interesting to observe how the mindsets of consumers of developing nations differ
from their counterparts in the developed western countries. In this context a study was
conducted in China by Laforet and Li (2005) to find out whether differences exist between
Chinese electronic banking consumers and consumers of other developed Western nations. A
sample of 128 respondents was used for the purposes of this study from six major cities in
China through interview and promptings to a structured questionnaire. Responses were
analyzed through a T-Test. The study found out that large differences exist between Chinese
customers and customers of Western countries in terms of demographic characteristics and
their attitudes toward online and mobile banking. In the case of Chinese customers, the
security risk associated with conducting banking transactions online was found to be a major
deterrent towards the acceptance online and mobile banking services by Chinese customers.
Another factor which emerged from the study hindering the adoption process was a lack of
clear understanding of online and mobile banking services by Chinese consumers.

Since it is not always so that internet banking customers will have a normal tendency

to adopt mobile banking technology, it is interesting to see how the consumer perceptions
regarding these two banking channels differ. A study in Finland by Laukkanen (2007)
focused on how the consumer preference differs between the different characteristics of
internet and mobile banking channels. For the purpose of the study, two questionnaires were
developed: one as administered to internet users and the other to those customers who have
used mobile banking services along with internet banking. 2169 responses from the first
questionnaire and 81 responses to the bill payment by mobile banking were obtained.
Conjoint analysis was then used in order to identify the utilities of the attribute levels and
relative importance of the different attributes and Cluster Analysis was used to group the
individuals into homogenous attribute preference segments. The cluster analysis shows that in
case of internet banking users, at least 5 different customer segments can be found as
compared to 4 different customer segments in mobile banking users. Thus distinct groups in
both user categories emerged. The study also showed that in case of internet users the screen
size, location and response time are the most important channel attributes whereas in case of
mobile phone users location followed by size of the screen and the service response time are
the most important channel attributes. Thus the study showed that the needs of both the user
groups are different. In a similar study conducted by Laukkanen (2007), he attempts to
compare customer value perceptions of internet and mobile banking services of customers of
a Scandinavian bank through qualitative interviews. The responses obtained from these
interviews were classified into attributes, consequences and desired end states. The linkages
thus obtained were then studied and summarized in the form of hierarchical value maps. The
results show that consumers perceived the two channels to be different in terms of their
attributes. The importance differences between these two channels are related to location free
access of the service and the device display.

Barutcu (2007) in his study analyzed the attitudes of Turkish customers towards mobile
marketing tools employed by marketers. The questionnaires were distributed randomly in 11
shopping centers of 4 major Turkish cities and 418 usable responses were collected. The
questionnaire consisted of questions relating to demographic characteristics of the
respondents and their attitude towards mobile marketing. The responses were analyzed
through one sample T – Test, independent samples T – Test, one way ANOVA and the least
significant differences test. The study showed that customers had positive attitude towards all
mobile marketing tools except mobile shopping. Significant demographic and attitudinal
differences emerged towards mobile banking, mobile internet, Location based mobile
services and mobile marketing in general. The study also found out that differences in
attitudes exist between non – internet users and internet users towards mobile internet, mobile
shopping and mobile marketing tools overall.

A study by Laukkanen and Pasanen (2008) examined how the innovators and early adopters
of mobile banking usage differ from customers of online banking services. This study was
done to see whether the mobile banking users form a different customer segment when they
are compared with other online users. Responses were collected through online
questionnaires which were responded to by 320 users of mobile banking and 2355 users of
internet banking. Logistic Regression was then performed to see whether the users of mobile
banking and users of other online banking services could be differentiated due to variables
such as gender, age, size of household, household income education and occupation. The
results showed that mobile banking users can be differentiated from users of internet banking
services through demographic variables of age and gender. Mobile banking users were likely
to be males and older than the customers of internet banking.

Since customers segments of mobile and internet banking are not necessarily same or always
overlapping, the marketers need to address the specific needs of the mobile banking customer
segments through marketing strategies which may not be the same as in the case of internet
banking. Mallat, Rossi and Tqunainen (2004) discuss in their paper the new trends in mobile
financial applications and how these services can be delivered through the mobile networks
to the end user. The paper was written in the European context and discusses about the key
players in those countries such as banks, network operators, content providers, other financial
institutions such as credit card companies, pure click or internet companies, retailers,
software providers and manufacturers of mobile devices. The authors conclude that the
industry of mobile financial services is still in its infancy but with the advent of newer
technology in this field, acceptance and usage of these services by consumers are likely to
increase in the future. Continuing on the same lines of thought, Riivari (2005) writes about
how the European financial service providers are taking advantage of mobile services such as
mobile banking and why has mobile banking become such an important financial tool for
them. The paper through various examples show that main factors leading to the use of
mobile financial services by service providers consist of improvements in customer service,
reduction of cost, increased reactivity of the company, market share increase and reinforcing
the brand image. The author concludes by saying that mobile devices present the service
providers with greater opportunities for offering more personalized services to their
customers.

Pousttchi and Schurig (2004) define a set of customer requirements from mobile banking and
assess the current mobile banking service offerings and discuss their shortcoming and areas
of improvements. In their study, 15 customer requirements were developed and grouped into
four categories such as technical requirements, usability requirements, design requirements
and security requirements and the current forms of mobile banking offerings such as SMS
banking, WAP banking, Mobile banking with Personal Digital Assistants (PDA) and mobile
banking with SIM - toolkit (Subscriber Identity Module Toolkit). The shortcomings of the
current systems are then identified in context to these different service offerings and
improvements to the existing technology have been discussed. A more recent paper dealing
with the challenges of financial service providers in adopting mobile payment channels has
been written by Kapostasy (2008) in the US context. The paper talks about the fast rate at
which mobile phone usage across the US is growing every year and how this has given birth
to a new language and a new form of communication which is the short messaging service.
This has in turn led to a change in the traditional customer segments and the financial service
providers need to sit up and take notice. The service providers have to figure out a way of
replicating the online financial service offerings in mobile banking and at the same time give
something extra in the new language of text messaging to the emerging customers segments
simultaneously taking care of their return on investment and revenue generation possibilities.

The Technology Acceptance Model (TAM) (Davis, 1989) has been used for past research in
mobile banking. The works by Wang, Lin and Luarn (2006) and Lee, Lee and Kim (2007)
have extended the original TAM model and have incorporated factors like perceived risk,
trust, perceived credibility, self efficacy and perceived financial resources to better explain
the intentions of the consumers to use mobile banking services. Through review of the
existing literature on mobile banking it is seen that there exists a need for a study to be
conducted on the perception of mobile banking usage in the Indian context. Most of the
studies have focused on the developed nations and it will be interesting to see whether the
same difficulties are being faced by the customers of such a culturally diverse country such as
India.

O bjective of the study

The objective of my study is to find out the antecedents to the behavioral intentions of Indian
customers, between 17 to 30 years of age, to use mobile banking services.

T he Survey Instrument
The survey questionnaire consists of two parts. The first part consisted of demographic
questions related to gender, age, education and family income. The second part includes
items that measured different facets of mobile banking services which had related to
antecedents of behavioral intents of consumer’s to use mobile banking. All the variables
considered for the study were extensively used in previous mobile and internet banking
literature. Since the main objective of this study was to explore the factors that can possibly
affect consumer behavioral intention, the measurement variables were included in such a
manner that they attempted to capture the maximum number of diverse conceptual
dimensions previously explored in mobile and internet banking literature. 27 measurement
items were obtained regarding the dimensions to be explored.

Variable Factors predicting consumer intention

X1 I have a very positive image of mobile banking services.

X2 I have such an image that mobile banking

services are user friendly.

X3 I have such an image that mobile banking services are easy to use.

X4 Mobile banking will offer me more advantages as compared to handling my

financial matters through other banking channels.

X5 Using mobile banking services would make it easier for me to conduct

transactions.

X6 Using mobile banking services will improve my performance in conducting

transactions.

X7 Mobile banking services are fast to use.

X8 Mobile banking offers faster speed of service delivery compared to the other
banking channels.
X9 Using mobile banking services will reduce my time spent on performing banking
related activities.

X10 Learning to use mobile banking services will be easy for me.

X11 It would be easy for me to become skilful at using mobile services.

X12 Newer technology is more complex to use.

X13 The use of changing PIN codes in mobile banking services is convenient.

X14 A high level of expertise is needed to perform mobile banking

X15 I am more likely to make mistakes while using mobile banking services for my
banking transactions.

X16 I am more likely to make mistakes while paying bills by mobile phone since the
correctness of the inputted information is difficult to check from the screen.

X17 While using mobile banking services, it is possible that the connection may be
lost or the battery of the phone may run out.

X18 While using mobile banking it is likely that I may make mistakes in tapping out
the correct pin codes.

X19 Any new technology is always better than the previous ones

X20 Mobile banking services will be cheaper to use as compared to using other
banking channels.

X21 The charges for using mobile banking services will be economical.

X22 While using mobile banking services my pin codes and other personal
information will be safe from unauthorized third parties.

X23 I would find mobile banking services secure in conducting my transactions.

X24 I would prefer mobile banking to visiting the bank branch and transacting with the
bank officials personally.

X25 I find self-service alternatives better than personal customer service.

X26 I am more likely to use mobile banking services if my colleagues and friends
recommend it to me.

X27 I am more likely to use mobile banking services if my colleagues and friends
are also using it.
Table 4: Measurement items
S ampling and Data Collection
The sampling technique used was convenience sampling and total 124 responses were
collected through Google forms. For the purpose of Factor Analysis sample size should be
equal to or more than four or five times of the number of variables. Thus, for the 27 variables
a sample size of 124 was adequate. The respondents were asked to state their level of
agreement against the series of statements pertaining to the items measuring consumer
perceptions of mobile banking service and behavioral intents, using a 5 point Likert scale
ranging from 5 being “strongly agree” to 1 being “strongly disagree”. The detailed sample
characteristics are shown in Table 5:

Gender

Male 42.7%

Female 57.3%

Age

17-22 48.4%

23-28 50.8%

28 and above 0.8%

Education

Undergraduate 8.9%

Graduate 45.2%

Post-graduate 46%

Annual Household Income

Below 1 lakh 4.1%

1 lakh to 3 lakh 12.9%

3 lakh to 5 lakh 15.3%

5 lakh and above 67.7%

Table 5: Sample demographics

40
D ata Analysis and Results
The 27 variables pertaining antecedents of behavioral intentions of mobile banking usage
were subjected to an exploratory factor analysis using principal component method with
varimax orthogonal rotation. An orthogonal rotation was used for its simplicity. The negative
variables were reverse coded before running the factor analysis in SPSS.

Table 6: KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .755
Bartlett's Test of Sphericity Approx. Chi-Square 1531.91
2
df 351
Sig. .000

This table shows two tests that indicate the suitability of the data for factor analysis. The
Kaiser-Meyer-Olkin Measure of Sampling Adequacy is a statistic that indicates the
proportion of variance in your variables that might be caused by underlying factors. High
values (close to 1.0) generally indicate that a factor analysis may be useful with your data. If
the value is less than 0.50, the results of the factor analysis probably won't be very useful. In
my study KMO measure is 0.755 which is greater than 0.50.

Bartlett's test of sphericity tests the hypothesis that your correlation matrix is an identity
matrix, which would indicate that your variables are unrelated and therefore unsuitable for
factor analysis. Small values (less than 0.05) of the significance level indicate that a factor
analysis may be useful with your data. My data is significant at 0.01 level also.

Both of these indicators suggest that the data is useful for Factor Analysis.

Table 7: Reliability
Statistics
Cronbach's N of Items
Alpha
.807 27

Cronbach’s alpha, α (or coefficient alpha), developed by Lee Cronbach in 1951, measures
reliability, or internal consistency. “Reliability” is how well a test measures what it should.
For example, a company might give a job satisfaction survey to their employees. High
reliability means it measures job satisfaction, while low reliability means it measures
something else (or possibly nothing at all).

Cronbach’s alpha tests to see if multiple-question Likert scale surveys are reliable. These
questions measure latent variables — hidden or unobservable variables like: a person’s
conscientiousness, neurosis or openness. These are very difficult to measure in real life.
Cronbach’s alpha will tell you if the test you have designed is accurately measuring the
variable of interest.

High value of Cronbach’s alpha of 0.807 in my study suggests that the items and the survey
instrument as a whole are reliable to use.

The exploratory factor analysis for behavioral intents was then undertaken using the principle
component measure with varimax orthogonal rotation. The analysis yielded 8 factors that
explained 68.74% of variance as shown in the table below:

Table 8: Rotation Sums of Squared Loadings

Component Total % of Variance Cumulative %
1 4.039 14.958 14.958
2 2.920 10.813 25.772
3 2.592 9.599 35.370
4 2.216 8.206 43.576
5 1.932 7.155 50.732
6 1.812 6.709 57.441
7 1.798 6.661 64.102
8 1.253 4.641 68.743

Factor loadings of each variable were calculated on each of the eight factors and variables
that were loaded heavily on one factor were grouped into that. Three factors were
dropped(X5, X12 and X19) as they were having factor loading of less than 0.40 and were not
loaded on any particular factor. Summary of the remaining variables along with the factor
name is given in the below table:
Factors Items Loadings
Perceived Mobile banking will offer me more advantages as compared
Usefulness to handling my financial matters through other banking 0.635
channels.

Using mobile banking services will improve my performance in 0.662

conducting transactions.
Mobile banking services are fast to use. 0.65
Mobile banking offers faster speed of service delivery
compared to the other banking channels. 0.73

Using mobile banking services will reduce my time spent on

performing banking related activities. 0.653

Perceived Image I have a very positive image of mobile banking services. 0.613

I have such an image that mobile banking services are 0.757

user friendly.
I have such an image that mobile banking services are easy to 0.839
use.
Perceived Ease Learning to use mobile banking services will be easy for me. 0.741
of Use
It would be easy for me to become skilful at using mobile 0.535
services.
The use of changing PIN codes in mobile banking services is 0.603
convenient.
A high level of expertise is needed to perform mobile banking 0.677

Perceived Risk I am more likely to make mistakes while using mobile 0.645
banking services for my banking transactions.

I am more likely to make mistakes while paying bills by 0.642

mobile phone since the correctness of the inputted
information is difficult to check from the screen.
While using mobile banking services, it is possible that the 0.723
connection may be lost or the battery of the phone may run
out.
While using mobile banking it is likely that I may make 0.781
mistakes in tapping out the correct pin codes.

Perceived Value Mobile banking services will be cheaper to use as compared 0.743
to using other banking channels.

The charges for using mobile banking services will be 0.806

economical.
 Self Efficacy I am more likely to use mobile banking services if my 0.833
colleagues and friends recommend it to me.

I am more likely to use mobile banking services if my 0.848

colleagues and friends are also using it.

Perceived While using mobile banking services my pin codes and other 0.9
Credibility personal information will be safe from unauthorized third
parties.
I would find mobile banking services secure in conducting 0.774
my transactions.

Tradition I would prefer mobile banking to visiting the bank branch and 0.755
transacting with the bank officials personally.

I find self-service alternatives better than personal customer 0.503

service.

Table 9: Factor loadings and variables grouping

L abeling of Factors and Interpretation

Perceived Usefulness:

Perceived usefulness is defined by Davis, Bagozzi and Warshaw (1989) as “the degree to
which a person believes that using a particular system would enhance his or her job
performance.” Perceived Usefulness is one of the fundamental elements in the original
Technology Acceptance Model. If a person believes that using a particular technology or
system will increase his performance of that job, he is more likely to use it.

Perceived Image:

Perceived Image can be explained as the customer’s stereotyping of a product or service in

his mind due to associations of some certain cues with the product. Such associations may
result as the product or service’s country-of-origin image, the product category to which the
products belong or could simply be their opinions about the product. The more favorable the
image is in the customer’s mind, the more likely is he to use it.

Perceived Ease of Use:

Previous research has used Perceived Ease of Use extensively both in the original and
extended Technology Acceptance Models (Davis, Bagozzi, and Warshaw, 1989; Venkatesh
and Davis, 1996, Wang, Lin and Luarn, 2006). In simpler sense, Perceived Ease of Use refers
to the degree to which the customer feels a particular technology will be easy to learn and use
(Davis, Bagozzi, and Warshaw, 1989).
Perceived Risk:

In sync with previous theoretical foundations, the study found Perceived Risk to be
associated with the perception of the degree of risk using a new technology or innovation
entails (Ram and Sheth, 1989). For some customers, it may include their fear of making
mistakes while conducting their banking transactions over a mobile device (Laukkanen and
Lauronen, 2005; Kuisma, Laukkanen, and Hiltunen, 2007).

Perceived Value:

Perceived value refers to the customer’s perception that compared to other substitutes, the
technology was more superior on the performance to cost attribute (Laukkanen, Sinkkonen,
Kivijarvi and Laukkanen, 2007).

Self Efficacy:

In this study, Self Efficacy has been defined as “the judging of one’s ability to use mobile
banking services (Wang, Lin, and Luarn 2006).

Perceived Credibility:

In the use of a new technology such as mobile banking, issues of privacy and security
become important. Perceived Credibility has been defined as “one’s judgment on the privacy
and security issues of the mobile banking (Amin, Hamid, Lada, Anis, 2008).

Tradition:

Tradition refers to the degree of change in daily routine that adoption of a new technology
would entail. If daily routine behavior is important in a customer’s life, then tradition will
assume great significance.

C onclusions and Managerial Implications

This study focused on the perceptions of Indian customers towards mobile banking services.
In this parlance, 8 factors were revealed as antecedents to behavioral intentions which are in
accordance with previous research in mobile banking. The eight factors were Perceived Risk
Perceived Usefulness, Perceived Image, Perceived Ease of Use, Perceived Value, Self
Efficacy, Perceived Credibility and Tradition. Some of the factors are new and in addition to
TAM Model.

The study can have important implications for managers. Through the dimensions arrived at
in this study, and their impacts on each other, managers can get a deeper insight into the
psyche of the Indian customer and thus, can design their mobile banking service offerings
more effectively to target a broader segment of potential customer base. Through the help of
the emergent dimensions as a result of this study, managers can realize and cater to customer
needs better and can have a clearer understanding of the relative importance of the factors
affecting behavioral intention of mobile banking usage of customers.
L imitations and direction for future research
The study used student sampling and so the results may not be generalizable. The study can
be extended further incorporating different groups of individuals such as people working in
the corporate sector and mature customer segment. The resulting dimensions then obtained
could be compared across groups to make the results more generalizable.

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A PPENDIX : QUESTIONNAIRE