INTRODUCTION OF ONLINE BANKING

Online banking, also known as internet banking, web banking or home banking, is
an electronic payment system that enables customers of  bank or other financial institution to
conduct a range of financial transactions through the financial institution's website. The
online banking system will typically connect to or be part of the core banking system
operated by a bank to provide customers access to banking services in place of
traditional branch banking. Online banking significantly reduces the banks' operating cost by
reducing reliance on a branch network, and offers greater convenience to customers in time
saving in coming to a branch and the convenience of being able to perform banking
transactions even when branches are closed. Internet banking provides personal and corporate
banking services offering features such as viewing account balances, obtaining statements,
checking recent transactions, transferring money between accounts, and making payments.

Internet banking, sometimes called online banking, is an outgrowth of PC banking. Internet

banking uses the Internet as the delivery channel by which to conduct banking activity, for
example, transferring funds, paying bills, viewing checking and savings account balances,
paying mortgages, and purchasing financial instruments and certificates of deposit. An
Internet banking customer accesses his or her accounts from a browser— software that runs
Internet banking programs resident on the bank’s World Wide Web server, not on the user’s
PC. Net Banker defines a “ true Internet bank” as one that provides account balances and
some transactional capabilities to retail customers over the World Wide Web. Internet banks
are also known as virtual, cyber, net, interactive, or web banks. his is basically the banking
industry's attempt to jump on the "e-business" band wagon. On-line is a term that attempts to
broadly describe today's alternate delivery channels. Different banks - and vendors - will
describe this differently.

Rather than spending too much time on the term, I'd suggest you open a dialogue with your
customers about the types of services they are interested in, and begin to prioritize your
investment in these new services. Ideas would include image delivery via Internet, Internet
Commercial cash management, and on-line bill pay.

MAIN CONCERNS IN ONLINE BANKING

In a survey conducted by the Online Banking Association, member institutions rated security
as the most important issue of online banking. There is a dual requirement to protect
customers' privacy and protect against fraud. Banking Securely: Online Banking via the
World Wide Web provides an overview of Internet commerce and how one company handles
secure banking for its financial institution clients and their customers. Some basic
information on the transmission of confidential data is presented in Security and Encryption
on the Web. PC Magazine Online also offers a primer: How Encryption Works. A multi-
layered security architecture comprising firewalls, filtering routers, encryption and digital
certification ensures that your account information is protected from unauthorized access.

Internet Banking in India

The Internet banking is changing the banking industry and is having the major effects on
banking relationships. Even the Morgan Stanley Dean Witter Internet research emphasized
that Web is more important for retail financial services than for many other industries.
Internet banking involves use of Internet for delivery of banking products & services. It falls
into four main categories, from Level 1 - minimum functionality sites that offer only access
to deposit account data - to Level 4 sites - highly sophisticated offerings enabling integrated
sales of additional products and access to other financial services- such as investment and
insurance.

DRIVERS OF CHANGE

Advantages previously held by large financial institutions have shrunk considerably. The
Internet has leveled the playing field and afforded open access to customers in the global
marketplace. Internet banking is a cost-effective delivery channel for financial institutions.
Consumers are embracing the many benefits of Internet banking. Access to one's accounts at
anytime and from any location via the World Wide Web is a convenience unknown a short
time ago. The six primary drivers of Internet banking includes, in order of primacy are:

 Improve customer access

 Facilitate the offering of more services

 Increase customer loyalty

 Attract new customers

 Provide services offered by competitors

 Reduce customer attrition

The banking industry in India is facing unprecedented competition from non-traditional

banking institutions, which now offer banking and financial services over the Internet. The
deregulation of the banking industry coupled with the emergence of new technologies, are
enabling new competitors to enter the financial services market quickly and efficiently.

HISTORY OF ONLINE BANKING

Precursors

The precursor to the modern home banking services were the distance banking services over
electronic media from the early 1980s. The term 'online' became popular in the late 1980s and
referred to the use of a terminal, keyboard, and TV or monitor to access the banking system
using a phone line. 'Home banking' can also refer to the use of a numeric keypad to send
tones down a phone line with instructions to the bank.

Emergence of computer banking

A 1985 AT&T Home Banking console.

The first home banking service was offered to consumers in December 1980 by United
American Bank, a community bank with headquarters in Knoxville, Tennessee. United
American partnered with Radio Shack to produce a secure custom modem for its TRS-
80 computer that allowed bank customers to access their account information securely.
Services available in its first years included bill pay, account balance checks, and loan
applications, as well as game access, budget and tax calculators and daily newspapers.
Thousands of customers paid $25–30 per month for the service.[1]

Large banks, many working on parallel tracks to United American, followed in 1981 when
four of New York's major banks (Citibank, Chase Manhattan, Chemical, and Manufacturers
Hanover) offered home banking services,[2][3][4] using the videotex system. Because of the
commercial failure of videotex, these banking services never became popular except in
France (where the use of videotex (Minitel) was subsidized by the telecom provider) and the
UK, where the Prestel system was used.

The developers of United American Bank's first-to-market computer banking system aimed
to license it nationally, but they were overtaken by competitors when United American failed
in 1983 as a result of loan fraud on the part of bank owner Jake Butcher, the 1978 Tennessee
Democratic nominee for governor and promoter of the 1982 Knoxville World's Fair. First
Tennessee Bank, which purchased the failed bank, did not attempt to develop or
commercialize the computer banking platform.

Internet and customer reluctance and banking

When the clicks-and-bricks euphoria hit in the late 1990s, many banks began to view web-
based banking as a strategic imperative. In 1996 OP Financial Group, a cooperative bank,
became the second online bank in the world and the first in Europe. The attraction of banks to
online banking are fairly obvious: diminished transaction costs, easier integration of services,
interactive marketing capabilities, and other benefits that boost customer lists and profit
margins. Additionally, online banking services allow institutions to bundle more services into
single packages, thereby luring customers and minimizing overhead.

A mergers-and-acquisitions wave swept the financial industries in the mid- and late 1990s,
greatly expanding bank's customer bases. Following this, banks looked to the Web as a way
of maintaining their customers and building loyalty. A number of different factors are causing
bankers to shift more of their business to the virtual realm.

While financial institutions took steps to implement on-line services in the mid-1990s, many
consumers were hesitant to conduct monetary transactions over the internet. It took
widespread adoption of electronic commerce, based on trailblazing companies such as
America Online, Amazon.com and eBay, to make the idea of paying for items online
widespread. By 2000, 80% of U.S. banks offered on-line. Customer use grew slowly. At
Bank of America, for example, it took 10 years to acquire 2 million on-line customers.
However, a significant cultural change took place after the Y2K scare ended.

In 2001, Bank of America became the first bank to top 3 million online banking customers,
more than 20% of its customer base. In comparison, larger national institutions, such as
Citigroup claimed 2.2 million online relationships globally, while J.P. Morgan Chase
estimated it had more than 750,000 online banking customers. Wells Fargo had 2.5 million
online banking customers, including small businesses. Online customers proved more loyal
and profitable than regular customers. In October 2001, Bank of America customers executed
a record 3.1 million electronic bill payments, totaling more than $1 billion. As of 2017, the
bank has 34 million active digital accounts, both online and mobile. In 2009, a report by
Gartner Group estimated that 47% of United States adults and 30% in the United Kingdom
bank online.

The early 2000s saw the rise of the branch-less banks as internet only institutions. These
internet-based banks incur lower overhead costs than their brick-and-mortar counterparts. In
the United States, deposits at most direct banks are FDIC-insured and offer the same level of
insurance protection as traditional banks.

Online Banking In India

In India, since 1997, when the ICICI Bank first offered internet banking
services, today, most new-generation banks offer the same to their customers.
In fact, all major banks provide on-line services to their customers.

Features of On-Line Banking

On-line or Internet banking has many features both for banks and for customers and Banks.

Banks have number of benefits by introducing I-Banking

1. Greater reach to customers,
2. Quicker time to market,
3. Ability to introduce new products and services quickly and successfully,
4. Ability to understand its customers needs, and 
5. Greater customer loyalty.
Customers
1. View account balance and download statements,
2. Transfer funds between accounts in same bank or other banks,
3. Make payment/receive payments through RTGS,
4. Create fixed deposits,
5. Request for Demand Draft,
6. Order for cheque book,
7. Request debit card,
8. Refill a prepaid mobile card or pay post paid mobile bills,
9. Make investment, purchase or sale of securities, and 
10.  Make payments of utility bills.
These features can be categorized in other ways also:
Transactional Features:
Performing financial transactions like Transfer of funds, payment of utility bills, apply for
loan, investment sale and purchase.
Non-Transactional Features:
1. Account balance.
2. Observation and checking of account transactions for specified period.
3. Banks statements.
4. Check links, cobrowsing, chat.
5. Sending receiving mails about banking services.
6. Instructions for financial products.
The customers should have following:
1. A bank account in which internet banking facility is activated.
2. User ID (This ID is provided by the bank after the account has been opened by the
customer).
3. Bank issues two Pass words one for transactional purposes and second for non-
transactional purposes.
4. Internet connection for accessing the Bank’s Website.
5. Internet operations can be done with the help of user ID and Password. The customers
access to internet banking services by logging on to his/her account by entering the user
ID and Password and perform banking transactions.

Popular services under on-line in India

 ATMs (Automated Teller Machines)

 Telephone Banking

 Electronic Clearing Cards

 Smart Cards

 EFT (Electronic Funds Transfer) System

 ECS (Electronic Clearing Services)

 Mobile Banking

 Internet Banking

 Telebanking

 Door-step Banking

Further, under Internet banking, the following services are available in

India:

 Bill payment – Every bank has a tie-up with different utility companies, service
providers, insurance companies, etc. across the country. The banks use these tie-ups to
offer online payment of bills (electricity, telephone, mobile phone, etc.). Also, most
banks charge a nominal one-time registration fee for this service. Further, the customer
can create a standing instruction to pay recurring bills automatically every month.
 Funds transfer – A customer can transfer funds from his account to another with the
same bank or even a different bank, anywhere in India. He needs to log in to his
account, specify the payee’s name, account number, his bank, and branch along with
the transfer amount. The transfer is effected within a day or so.
 Investing – Through electronic banking, a customer can open a fixed deposit with the
bank online through funds transfer. Further, if a customer has a demat account and a
linked bank account and trading account, he can buy or sell shares online too.
 Additionally, some banks allow customers to purchase and redeem mutual fund units
from their online platforms as well.
 Shopping – With an on-line service, a customer can purchase goods or services online
and also pay for them using his account. Shopping at his fingertips.

ADVANTAGES OF ONLINE BANKING

In addition to being able to bank at any time, from anywhere, there are other advantages to
banking online. You may also be able to:
 Pay bills online
This might be one of the top advantages of online banking because you don’t have to take
time out of your day to go to the bank. You can simply log into your account and pay your
bill online right away. For increased efficiency, you may also set up automated bill payments,
which helps you manage your cash flow when you have monthly payments to and from
vendors.
 Transfer money
You may need to do a rapid money transfer to a client or vendor, or you may need to transfer
money from one account to another. Instead of sending a registered cheque and waiting for it
to clear, you may securely transfer the money online.
 Deposit cheques online
Rather than driving to a bank branch and waiting in line, you may be able to deposit cheques
online in minutes. And because most financial institutions have an app that replicates its
services from your phone, you have the ability to always bank on the go. Plus, some banks
offer 24/7 customer service, so you can speak to a customer service representative at any
time.
 Lower your overhead fees
If your business banks online, your banking fees may be lower, as online banks may not have
to pay for the cost and upkeep of branches, and those savings may be transferred to you. Plus,
they may have more no-fee options that add to your savings.
 24/7 Account and Service Access
Online banks are accessible 24/7, as long as you have an internet connection. Some online
banks, such as Ally Bank, take this perk one step further, giving you 24/7 phone access to a
real-life customer service agent. This can be extremely helpful if you don’t have access to the
internet, or if you feel you need the assistance of a human brain, rather than a computer
algorithm.
 Speed and Efficiency
If you need to transfer money, apply for a new loan, or perform nearly any banking
transaction, you’ll typically have to wait in line at a bricks-and-mortar banking location. With
an online bank, there’s never any waiting. As long as you can log in, you can access your
accounts, request a new credit card, or perform nearly any banking transaction you desire
without driving down to a bank or waiting in line.
 Online Bill Payment
One of the great advantages of online banking is online bill pay. Rather than
having to write checks or fill out forms to pay bills, once you set up your accounts
at your online bank, all it takes is a simple click — or even less, as you can usually
automate your bill payments. With online bill pay, it’s easy to manage your
accounts from one central source and to track payments into and out of your
account.
 Low Overhead Can Mean Low Fees
Online banks don’t have to pay for things like electricity, janitorial services, landscaping, or
rent, so they can pass those savings along to customers. Typically, this means that online
banks can charge fewer fees than traditional banks. For example, most online banks offer a
free online checking account with no deposit, along with other no-fee bank accounts, such as
IRAs. There are a number of online banks with free checking and no minimum balance; if
you’re worried about applying for an account with bad credit, you might be able to open a
bank account online for free, no credit check required, although there might be ongoing fees.

 Low Overhead Can Yield High Rates

In addition to offering low fees, online banks often have the best interest rates, whether you
are looking for a certificate of deposit, a high yield checking account or deposit accounts with
high interest, such as a money market account. Although rates fluctuate, if you look at
a current list of best CD rates or best free online checking account rates, you’ll usually find
that the banks paying the best interest rates are online banks.
 Disadvantages of Online Banking
 Technology Issues
In many ways, an online bank is only as good as your — or their — internet connection. If
there’s a power outage, or if servers go down, you might not have any access to your account
whatsoever. While some banks offer a phone number for customer service, it might be
overwhelmed if online access is down. With a real bank, you can always find someone to talk
to in the branch.
 Security Issues
While many online banks are reputable and well-established, sometimes it can be hard to feel
comfortable with a bank that doesn’t have a physical presence, particularly when large sums
of money are involved. If a website suddenly folds up, what will happen to your money?
There’s also the risk of identity theft — or actual theft — if someone gains unauthorized
access to your account via a hacked or stolen password or log-in credentials.
 Inefficient at Complex Transactions
Online banks might be able to transfer money between accounts or pay bills, but you might
be more comfortable with an international, bricks-and-mortar bank if you have complex
transactions. Worldwide, business-oriented banks like Chase have global transaction
capabilities, such as the ability to send payments to more than 35 different currencies
worldwide, that online banks might not be able to muster. Without a real-world presence,
most online banks can’t even offer the services of a notary public, which require an in-person
visit and necessary for most important financial transactions like buying a home.
 No Relationship With Personal Banker
Over time, you can develop a relationship with a personal banker if you visit a traditional
bricks-and-mortar location. If you’re dealing with an online bank, on the other hand, you’re
typically handed off to an anonymous customer service agent who is unlikely to know you
from the next customer. If you’re really in a bind, financially speaking, having a relationship
with someone who can help and who knows you well can be a major advantage over a strictly
online banking relationship.
 Inconvenient to Make Deposits
It might seem counterintuitive that a bank, whose purpose is to attract assets, makes it hard
for customers to make deposits, but that can be true in the case of some online banks. With an
online bank, you can’t simply drop off cash or a check at a local branch. In fact, some online
banks, like Ally Bank, won’t accept cash deposits at all. Using Ally Bank as an example, to
make a deposit you’ll have to mail a check, transfer money from another bank or another
account, or use the bank’s e-check deposit service.
 STATEMENT OF THE STUDY

Today all the banking sectors are providing lot of services to their customers. Although the
on-line banking services are offered by all the banks , it is a necessity to study whether all
the banking customers are aware of the on-line banking services. To get the highest
satisfaction on the on-line banking channels, a customer should have complete knowledge
and awareness on various products and services offered by the banks and bankers should
have the ability to identify the type of services needed by a customer and render the same to
his satisfaction. We attempted to analyse customer’s awareness towards the on-line banking
services offered by the banks .

1.3 OBJECTIVES OF THE STUDY

 To evaluate the awareness of -Banking among the customers of Banks .

 To analyze the usefulness of Online Banking.

 To know customers is using different on-line facilities.

 To know the cause why customers are using internet banking.

1.4 SCOPE OF THE STUDY

With the modernization and globalization the bank has adopted all the changes and now all
the banks have started adopting the technologies in banking. So, it becomes necessary to
study the nature, growth and extend of On-line services provided by BANKS. The present
study is a modest attempt to know about customers’ awareness regarding On-line services
provided by BANKS. So the findings will help to know the effective awareness towards the
On-line services.
In India, there is less number of studies being conducted to identify how effectively the
online channels are used by banking industry to increase customer satisfaction. Hence, this
study throws light on the on-line services provided by the banks in the study area and this
research study makes an attempt to analyze how banks are attracting the various customers
and how the customers are satisfied with the on-line services provided by the banks. This
study will be helpful to draw up further policy for improving customer satisfaction with on-
line practices and act as a secondary data for further research.

RESEARCH METHODOLOGY

In a view to precede the research in a systematic way the following research methodology
has been used. By means of obtaining detailed opinion of the customers, this research falls
under the category of descriptive research. This study was conducted as a survey that
examined customers’ satisfaction with on-line Banking services in India .
The methodology adopted in the study is both descriptive and analytical .
SAMPLE SIZE : 50 respondents
SAMPLE UNIT : Customers of Sonipat city
SAMPLING TECHNIQUE : Convenient sampling method

DATA COLLECTION METHOD

 PRIMARY DATA:
In order to gather necessary data and also to provide profound insight into the topic
‘Customer awareness on E- banking services of BANKS’ , the researcher considered the
use of questionnaire for consumers in most suitable way.

 SECONDARY DATA:
Secondary data was collected from the existing data sources, catalogues, internet
,magazine, case studies, newspapers , journals , articles ,etc. The information so collected
has been consolidated in a meaningful manner for the purpose.

TOOLS USED FOR DATA ANALYSIS

 PERCENTAGE ANALYSIS
The tool used for data interpretation for the study is percentage analysis , by converting
the received data into percentage and interpreting the results thereof .
 PRESENTATION
For the meaningful representation of the results obtained from the data’s we use bar
diagrams , pie charts and doughnut in this study.

LIMITATION OF STUDY
In any research conducted there shall be some limitations associated with it. Hence ,for the
proper understanding of the project it is inevitable to specify the limitation of the study.
 The study was done in BANKS bank and sample size of 50, the credibility of the project
is not assured.

 Personal bias and prejudice of the respondents could have affected the result of the study.

 Only certain statistical test could be applied to validate the result of the study.

 The study is based on quality and originality of secondary data taken through the official
website of BANKS is considered as another limitation of study.
 QUESTIONARIE OF ONLINE BANKING FOR SATISFACTION

1. Do you use online banking ?

○ Yes
○ No
2. Tell us about your weekly activity :
a) Atm withdrawel
○ 0- less than one week
○ 1-2 times in a week
○ 3-4 times a week
○ 5 and more times a week
b) Cashless trasaction
○ 0- less than one week
○ 1-2 times in a week
○ 3-4 times a week
○ 5 and more times a week
c) Visit to the branch
○ 0- less than one week
○ 1-2 times in a week
○ 3-4 times a week
○ 5 and more times a week
3. What is preferred communication with your bank ?
○ Online via personal computer
○ Online via smart phone
○ Call center
○ Visit to bank
4. Please state whether you agree or not following statement :

d) Online banking makes cheaper

○ Strongly agree
○ Agree
○ Neutral
 ○ Disagree
e) Online banking gives account access 24*7
○ Strongly agree
○ Agree
○ Neutral
○ Disagree
f) Online banking save time
○ Strongly agree
○ Agree
○ Neutral
○ Disagree
g) Online banking is secure way of dealing with bank
○ Strongly agree
○ Agree
○ Neutral
○ Disagree
h) I would never open up an account in a bank without walk in branch
○ Strongly agree
○ Agree
○ Neutral
○ Disagree

5. How often do you use online banking for the following :

i) Online banking
○ Very often
○ Never
j) Checking account balance
○ Very often
○ Never
 k) Operation history
○ Very often
○ Never
l) Paying bills
○ Very often
○ Never
m) Applying for banking service such saving accounts , insurance etc .
○ Very often
○ Never
6. What is the main reason that your typically visit your bank branch ( please choice the
single most important reason ) ?
○ To make a deposit
○ To get advice for investment option
○ To inquire about a balance
○ To withdraw cash
○ Other
7. Are you satisfied with online banking ?
○ Yes
○ No