A PROJECT REPORT

ON
CUSTOMERS' PERCEPTION TOWARDS
INTERNET BANKING IN TWIN CITY OF
ODISHA
SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR
THE AWARD OF THE
DEGREE OF BACHELOR OF COMMERCE
TO
UTKAL UNIVERSITY

SUBMITTED BY :
NAMEARPITA SAHOO
College RollNo – BC18 -120
UNIVERSITYRoll No – 1803010120490051
+3 3 rd YEAR COMMERCE (6th Semester)

GUIDED BY :
SMT. ANUPAMA MISHRA
Lect. in Commerce
DEPARTMENT OF COMMERCE

RAGHUNATHJEW DEGREE COLLEGE,

CUTTACK,753001

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Nameof Project:-CUSTOMERS' PERCEPTION TOWARDS
INTERNET BANKING IN TWIN CITY OF ODISHA

Name of the Student :- ARPITA SAHOO

Class :- +3 3rd Yr Commerce

(6th Semester)
College Roll No :- BC18 - 120

University Roll No :- 1803010120490051

Signature of External Signature of the

Internal

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 DECLARATION

I, Arpita Sahoo +3 3 Year Commerce (6” Semester),

bearing Roll No. 1803010120490051 and College
Roll No. BC18-120 of RAGHUNATH JEW DEGREE
COLLEGE, Cuttack have done my project work on
“CUSTOMERS’ PERCEPTION TOWARDS INTERNET
BANKING IN TWIN CITY OF ODISHA” as per the
syllabus of CBCS Course of Utkal University, Vani
Vihar, Bhubaneswar for completion of my 6th
Semester under the guidance of ANUPAMA MISHRA,
Lecturer in Commerce, RAGHUNATH JEW DEGREE
COLLEGE Cuttack.

(Arpita Sahoo)

+3 3rd Year Commerce

(6th Semester)

Roll No. BC18 -120

University Roll No-1803010120490051

SMT. ANUPAMA MISHRA Lecturer In Commerce

Raghunathjew Degree College, Cuttack

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 CERTIFICATE
This Is To CertifyARPITA SAHOOUniversity Roll
Regd.No. 1803010120490051 A Student Of B.Com
Has Done This Project work On “CUSTOMERS’
PERCEPTION TOWARDS INTERNET BANKING IN
TWIN CITY OF ODISHA” And Submitted In Partial
Fulfillment Of The Requirements The Award Of The
Degree of Bachelor of Commerce To Utkal
University Under My Supervision.

The Project Work Is The Record Of Original Work

Done By Him To The Best Of My Knowledge.

Cuttack

Date

Smt . ANUPAMA MISHRA

Supervisor

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 ACKNOWLEDGMENT
I take this opportunity to extend my sincere gratitude to
all those who shared their knowledge and effort to help
me the completion of the project report.To begin with I
extend my heart-full thanks to my Faculty Supervision .
Anupama Mishra Lecturer in Commerce, and other
Faculties of the Department of Commerce for the patient
and support in this work.

I also express my sincere gratitude to our Principal.

Finally, I am also grateful to my Parents and Friends for

their support and encouragement with extended to me
throughout this work.

ARPITA SAHOO

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 CONTENTS

SL. NO CHAPTERS PAGE NO

INTRODUCTION
01. & 6
REVIEW OF LITERATURE

02. RESEARCH METHODOLOGY 36

CONCEPTUAL
03. & 38
THEORETICAL DISTRIBUTION

ANALYSIS
04. & 47
INTERPRETATIONS

TESTING
05. OF 50
HYPOTHESIS

CONCLUSION, SUGGESTIONS
06. & SCOPE FOR FURTHER 53
RESEARCH

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CHAPTER – I
INTRODUCTION
&
REVIEW OF
LITERATURE

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 INTRODUCTION
The word bank was borrowed in Middle English from Middle French banquet,
from Old Italian banca, from Old High German banc, bank "bench, counter".
Benches were used as desks or exchange counters during the Renaissance by
Florentine bankers, who used to make their transactions atop desks covered by
green tablecloths. One of the oldest items found showing money-changing
activity is a silver Greek drachm coin from ancient Hellenic colony Trapezus on
the Black Sea, modern Trabzon, c.350–325 BC,presented in the British Museum
in London. The coin shows a banker's table (trapeze) laden with coins, a pun on
the name of the city. In fact, even today in Modern Greek the word Trapeza
(Τράπεζα) means both a table and a bank. Another possible origin of the word is
from the Sanskrit words ( ㌹) 'byaya' (expense) and 'onka' (calculation) =
byaya-onka. This word still survives in Bangla, which is one of Sanskrit's child
languages. + =  . Such expense calculations were the biggest
part of mathematical treatises written by Indian mathematicians as early as 500
B.C. The word ―Bank is originally derived from German word ―Bank
meaning a joint stock fund which was Italianized into ―Banco when the
German‘s were masters of a great part of Italy. This appears to be more possible.
Banking activities were sufficiently important in Babylonia in the second
millennium B.C. that written standards of practice were considered necessary.
These standards were part of the Code of Hammurabi – the earliest known
formal laws. Deposits were not of money but of cattle, grain or other crops and
eventually precious metals. Nevertheless, some of the basic concepts underlying
today‘s banking system were present in these ancient arrangements. A wide
range of deposits was accepted, loans were made, and borrowers paid interest to
lenders. Similar banking type arrangements could also be found in ancient
Egypt. These arrangements stemmed from the requirement that grain harvests
be stored in centralized state warehouses. Depositors could use written orders
for the withdrawal of a certain quantity of grain as a means of payment. This
system worked so well that it continued to exist even after private banks dealing
in coinage and precious metals were established. Modern-day banking can be
traced to practices in the Medieval Italian cities of Florence, Venice, and Genoa.
The Italian bankers made loans to princes, both to finance wars and their lavish
lifestyles, and to merchants engaged in international trade. The Bardi and
Peruzzi families were dominant in Florence in the 14th century and established
branches in other parts of Europe to facilitate their trading activities. Much of
the international business of the medieval banks was carried out through the use
of bills of exchange. At the simplest level, this involved a creditor providing
local currency to the debtor in return for a bill stating that a certain amount of
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another currency was payable at a future date – often at the next big
international fair. Because of the church prohibition on directly charging
interest, the connection between banking and trade was essential. The bankers
would take deposits in one city, make a loan to someone transporting goods to
another city, and then take repayment at the destination. The repayment was
usually in a different currency, so it could easily incorporate what is essentially
an interest payment, circumventing the church prohibitions. For example, a
Florentine bank would lend 1000 florins in Florence requiring repayment of
40,000 pence in three months in the bank‘s London office. In London, the bank
would then loan out the 40,000 pence to be repaid in Florence at a rate of 36
pence per florin in three months. In six months, the bank makes 11.1 percent –
that‘s an annual rate of 23.4 percent. It is also interesting to note that a double-
entry bookkeeping system was used by these medieval bankers and that
payments could be executed purely by book transfer. Banking in the modern
sense of the word can be traced to medieval and early Renaissance Italy, to the
rich cities in the north like Florence, Lucca, Siena, Venice and Genoa. The
Bardi and Peruzzi families dominated banking in 14th century Florence,
establishing branches in many other parts of Europe. One of the most famous
Italian banks was the Medici Bank, set up by Giovanni di Bicci de' Medici in
1397. The earliest known state deposit bank, Banco di San Giorgio (Bank of St.
George), was founded in 1407 at Genoa, Italy. Bank is a financial institution
and a financial intermediary that accepts deposits and channels those deposits
into lending activities, either directly by loaning or indirectly through capital
markets. A bank is the connection between customers that have capital deficits
and customers with capital surpluses. Due to their influence within a financial
system and an economy, banks are generally highly regulated in most countries.
Most banks operate under a system known as fractional reserve banking where
they hold only a small reserve of the funds deposited and lend out the rest for
profit. They are generally subject to minimum capital requirements which are
based on an international set of capital standards, known as the Basel Accords.
The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in
Siena, Italy, which has been operating continuously since 1472. It is followed
by Berenberg bank of Hamburg (1590) and Sveriges Riksbank of Sweden
(1668). Banking in its modern sense evolved in rich cities of Renaissance Italy,
such as Florence, Venice and Genoa. In the history of banking, a number of
banking dynasties— among them notably Medici, Fugger, Welser, Berenberg,
Baring and Rothschild—have played a central role over many centuries. During
the 17th and 18th centuries the Dutch and British improved upon Italian
banking techniques. A key development often credited to the London
goldsmiths around this time was the adoption of fractional reserve banking. By
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the middle of the 17th century, the civil war had resulted in the demise of the
goldsmiths‘ traditional business of making objects of gold and silver. Forced to
find a way to make a living, and having the means to safely store precious metal,
they turned to accepting deposits of precious metals for safekeeping. The
goldsmith would then issue a receipt for the deposit. At first, these receipts
circulated as a form of money. But eventually, the goldsmiths realized that since
not all of the depositors would demand their gold and silver simultaneously,
they could issue more receipts than they had metal in their vault. Banks became
an integral part of the US economy from the beginning of the Republic. Five
years after the Declaration of Independence, the first chartered bank was
established in Philadelphia in 1781.
At first, bank charters could only be obtained through an act of legislation. But,
in 1838, New York adopted the Free Banking Act, which allowed anyone to
engage in banking business as long as they met certain legal specifications. As
free banking quickly spread to other states, problems associated with the system
soon became apparent. For example, banks incorporated under these state laws
had the right to issue their own bank notes. This led to a multiplicity of notes –
many of which proved to be worthless in the all too common event of a bank
failure. The collapse of the Ohio Life Insurance and Trust Company and a bank
panic in the fall of 1857 led to an economic crisis. More than 5,000 businesses
failed during the first year of the panic. The collapse of Jay Cooke and Co., the
largest bank in the U.S. at that time, in September 1873 triggered a panic on the
stock exchange. Cooke‘s bank was the exclusive agent for the sale of Northern
Pacific Railroad bonds. When the firm could not sell a sufficient number of
railroad bonds to investors to cover its obligations, the stock market reacted
negatively, and runs on several other large financial institutions led to their
failure. The Coinage Act of 1873 depressed the price of silver, hurting the
interests of U.S. silver mines and further contributing to the country‘s economic
problems. This economic crisis led to a recession that lasted until 1879. Some
important dates and events making significant impact on the history of banking:
1837: Michigan and New York pass the first free banking laws
1846: The Independent Treasury System is established.
1863: Congress passes the National Banking Act in USA
1865: The Civil War ends and the nation has a dual banking system
1873: The collapse of a large bank leads to a recession; the country undergoes
repeated financial crises through the rest of the century

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 1908: Congress sets up the National Monetary Commission to look into the
country‘s financial system.
1913: The Federal Reserve Act establishes a new central bank for the nation—
the Federal Reserve System.
Banking roots in India are found from 1786. From 1786 to this date, we can
discuss the history of Indian Banking in some phases :
Phase 1: Early phase of Indian banks, from 1786 to 1969
The first bank in India, the General Bank of India, was set up in 1786. Bank of
Hindustan and Bengal Bank followed. The East India Company established
Bank of Bengal (1809), Bank of Bombay (1840), and Bank of Madras (1843) as
independent units and called them Presidency banks. These three banks were
amalgamated in 1920 and the Imperial Bank of India, a bank of private
shareholders, mostly Europeans, was established. Allahabad Bank was
established, exclusively by Indians, in 1865. Punjab National Bank was set up
in 1894 with headquarters in Lahore. Between 1906 and 1913, Bank of India,
Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of
Mysore were set up. The Reserve Bank of India came in 1935.
During the first phase, the growth was very slow and banks also experienced
periodic failures between 1913 and 1948. There were approximately 1,100
banks, mostly small. To streamline the functioning and activities of commercial
banks, the Government of India came up with the Banking Companies Act,
1949, which was later changed to the Banking Regulation Act, 1949 as per
amending Act of 1965 (Act No. 23 of 1965). The Reserve Bank of India (RBI)
was vested with extensive powers for the supervision of banking in India as the
Central banking authority.
Phase 2: Nationalization of banks and the banking sector Reforms, from 1969 to
1991
The government took major initiatives in banking sector reforms after
Independence. In 1955, it nationalized the Imperial Bank of India and started
offering extensive banking facilities, especially in rural and semiurban areas.
The government constituted the State Bank of India to act as the principal agent
of the RBI and to handle banking transactions of the Union government and
state governments all over the country. Seven banks owned by the Princely
states were nationalized in 1959 and they became subsidiaries of the State Bank
of India. In 1969, 14 commercial banks in the country were nationalized. In the
second phase of banking sector reforms, seven more banks were nationalized in

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1980. With this, 80 percent of the banking sector in India came under the
government ownership.
Phase 3: New phase of Indian banking system, with the Reforms after 1991
This phase has introduced many more products and facilities in the banking
sector as part of the reforms process. In 1991, under the chairmanship of M
Narasimham, a committee was set up, which worked for the liberalization of
banking practices. Now, the country is flooded with foreign banks and their
ATM stations. Efforts are being put to give a satisfactory service to customers.
Phone banking and net banking are introduced. The entire system became more
convenient and swift. Time is given importance in all money transactions.
Nationalization Process
 1955: Nationalization of State Bank of India
 1959: Nationalization of SBI subsidiaries
 1969: Nationalization of 14 major banks
 1980: Nationalization of seven banks with deposits over Rs 200 Corer Banks
in India In India, banks are segregated in different groups.
Each group has its own benefits and limitations in operations. Each has its own
dedicated target market. A few of them work in the rural sector only while
others in both rural as well as urban. Many banks are catering in cities only.
Some banks are of Indian origin and some are foreign players. Banks in India
can be classified into:
 Public Sector Banks
 Private Sector Banks
 Cooperative Banks
 Regional Rural Banks
 Foreign Banks
One aspect to be noted is the increasing number of foreign banks in India. The
RBI has shown certain interest to involve more foreign banks. This step has
paved the way for a few more foreign banks to start business in India. Reserve
Bank of India (RBI) The central bank of the country is the Reserve Bank of
India (RBI). It was established in April 1935 with a share capital of Rs 5 crore
on the basis of the recommendations of the Hilton Young Commission. The
share capital was divided into fully paid shares of Rs 100 each, which was

12 | P a g e
entirely owned by private shareholders in the beginning. The government held
shares of nominal value of Rs 220,000. The RBI commenced operation on April
1, 1935, under the Reserve Bank of India Act, 1934. The Act (II of 1934)
provides the statutory basis of the functioning of the Bank. The Bank was
constituted to meet the following requirements:
 Regulate the issue of currency notes
 Maintain reserves with a view to securing monetary stability
 Operate the credit and currency system of the country to its advantage
Internet banking has actually been around longer than most people think. It was
introduced in the 1980's, but it really did not become popular until the mid
1990's. The term online became popular in the late '80s and refers 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. Online services
started in New York in 1981 when four of the city‘s major banks (Citibank,
Chase Manhattan, Chemical and Manufacturers Hanover) offered home banking
services. Services never became popular except in France where the use of
videotex (Minitel) was subsidised by the telecom provider and the UK, where
the Prestel system was used. The UK‘s first home online banking services were
set up by the Nottingham Building Society (NBS) in 1983 ("History of the
Nottingham" Retrieved on 2007-12-14.). The system used was based on the
UK's Prestel system and used a computer, such as thebe Micro, or keyboard
(Tan data Td1400) connected to the telephone system and television set. The
system (known as 'Home link') allowed on-line viewing of statements, bank
transfers and bill payments. In order to make bank transfers and bill payments, a
written instruction giving details of the intended recipient had to be sent to the
NBS who set the details up on the Home link system. Typical recipients were
gas, electricity and telephone companies and accounts with other banks. Details
of payments to be made were input into the NBS system by the account holder
via There have been significant developments in the e-financial services sector
in the past 30 years. According to Devlin (1995), until the early 1970s
functional demarcation was predominant with many regulatory restrictions
imposed. One main consequence of this was limited competition both
domestically and internationally. As a result there was heavy reliance on
traditional branch based delivery of financial services and little pressure for
change. This changed gradually with deregulation of the industry during 1980s
and 1990s, whilst during this time, the increasingly important role of
information and communication technologies brought stiffer competition and
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pressure for a faster pace of change. Online services started in New York in
1981 when four of the city‘s major banks (Citibank, Chase Manhattan,
Chemical and Manufacturers Hanover) offered home banking services. Services
never became popular except in France where the use of videotex (Minitel) was
subsidised by the telecom provider and the UK, where the Prestel system was
used. The UK‘s first home online banking services were set up by the
Nottingham Building Society (NBS) in 1983 ("History of the Nottingham"
Retrieved on 2007-12-14.). The system used was based on the UK's Prestel
system and used a computer, such as thebe Micro, or keyboard (Tan data
Td1400) connected to the telephone system and television set. The system
(known as 'Home link') allowed on-line viewing of statements, bank transfers
and bill payments. In order to make bank transfers and bill payments, a written
instruction giving details of the intended recipient had to be sent to the NBS
who set the details up on the Home link system. Typical recipients were gas,
electricity and telephone companies and accounts with other banks. Details of
payments to be made were input into the NBS system by the account holder via
There have been significant developments in the e-financial services sector in
the past 30 years. According to Devlin (1995), until the early 1970s functional
demarcation was predominant with many regulatory restrictions imposed. One
main consequence of this was limited competition both domestically and
internationally. As a result there was heavy reliance on traditional branch based
delivery of financial services and little pressure for change. This changed
gradually with deregulation of the industry during 1980s and 1990s, whilst
during this time, the increasingly important role of information and
communication technologies brought stiffer competition and pressure for a
faster pace of change. Digital economy. This fast emerging economy is bringing
with it rapidly changing technologies, increasing knowledge intensity in all
areas of business, and creating virtual supply chains and new forms of
businesses and service delivery channels such as e-banking. As a direct
consequence of the emergence of the digital economy, the balance of power
seems to be shifting to the customers. Customers are increasingly demanding
more value, with goods customized to their exact needs, at less cost, and as
quickly as possible. To meet these demands, businesses need to develop
innovative ways of creating value which often require different enterprise
architectures, different IT infrastructures and different way of thinking about
doing business. This transformation of business from an old company to a new
agile electronic corporation is not easy and requires a lot of innovative thinking,
planning and investment.

Internet Banking in India

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In this internet age, internet banking is the most preferred choice of banking for
majority of customers. Be this customer be an individual or a body corporate.
The financial products and services have become available over the Internet,
which has thus become an important distribution channel for a number of banks.
Banks boost technology investment spending strongly to address revenue, cost
and competitiveness concerns. A study on the Internet users, conducted by
Internet and Mobile Association of India (IAMAI), found that about 23% of the
online users prefer IB as the banking channel in India, second to ATM which is
preferred by 53%. Out of the 6,365 Internet users sampled, 35% use online
banking channels in India. This shows that a significant number of online users
do not use IB, and hence there is a need to understand the reasons for not using
it. Until the advent of ATMs, people were unaware and/or not directly affected
by the technological revolutions happening in the banking sector. ATMs
became the major revelation for customers, since it offered the facility to avoid
long queues in front of the cashiers in banks. It also provided them the
flexibility of withdrawing money— anytime, anywhere. In the study by IAMAI,
it was found that the people are not doing financial transactions on the
banks‘ Internet sites in India because of reasons such as security concerns
(43%), preference for face-to-face transactions (39%), lack of knowledge about
transferring online (22%), lack of user friendliness (10%), or lack of the facility
in the current bank (2%). 13 The Reserve Bank of India constituted a working
group on Internet Banking. The group divided the internet banking products in
India into 3 types based on the levels of access granted. They are:
•Information Only System:
General purpose information like interest rates, branch location, bank products
and their features, loan and deposit calculations are provided in the banks
website. There exist facilities for downloading various types of application
forms. The communication is normally done through e-mail. There is no
interaction between the customer and bank's application system. No
identification of the customer is done. In this system, here is no possibility of
any unauthorized person getting into production systems of the bank through
internet.
•Electronic Information Transfer System:
The system provides customer-specific information in the form of account
balances, transaction details, and statement of accounts. The information is still
largely of the 'read only' format. Identification and authentication of the
customer is through password. The information is fetched from the bank's

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application system either in batch mode or offline. The application systems
cannot directly access through the internet.
•Fully Electronic Transactional System: This system allows bi-directional
capabilities. Transactions can be submitted by the customer for online update.
This system requires high degree of security and control. In this environment,
web server and application systems are linked over secure infrastructure. It
comprises technology covering computerization, networking and security,
interbank payment gateway and legal infrastructure.
The six primary drivers of Internet banking is very well defined by Dr. Mishra
(Mishra, 2002), 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 As of 2013, India has the third largest number of
Internet users.
It is next to the United States and China in terms of sheer number of users.
While there is no concrete data available, India is expected to have in excess of
125 million users by 2013 end. Due to large population of India, there are a
significant number of users of Internet in India, which shows the possibilities of
Internet Banking in India. Although percentage wise the number is too low
compared to developed countries of the world.
E- Banking play a pivotal role in E-Commerce but it has tremendous challenges
as well as noted by Saleh M. Nsouli and Andrea Schaechter (Nsouli and
Schaechter, 2002) 5 in their article Challenges of the "E-Banking Revolution"
of Finance and Development (September 2002, Volume 39, Number 3) If we
talk about financial inclusion in India, then as per RBI Bulletin published in
February 2013, there are about 95,000 bank branches, about equal number of
ATMs across the country and 278 million debit cards. Yet a large proportion of
our population remains financially excluded. Data indicates that only about 40
percent of the adult population in the country has a bank account; only 25,000
plus villages have a bank branch out of the 600,000 villages in the country.
Only 13 percent of the people have a debit card and only two percent have a
credit card.

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1) E-Commerce : E-commerce refer to conduct through electronic network,
divided into Two parts E-finance and E- money.
2) E-Finance : E-finance is providing financial services through electronic
channels.
3) E-Money :E-money means store value or prepaid payment mechanism.
4) E-Banking: E-Banking which providing banking products and services
through Electronic delivery channels.
5) Other Financial Services: Other financial services include insurance, online
brokering and other E-commerce related services.
Implies a service that allows customers to use some form of computer to access
account Specific information and possibly conduct transactions from a remote
location. (Such as at home or at the workplace( Electronic banking is a generic
term encompassing internet banking, telephone banking, mobile banking tec. ref.
(E-banking in India challenges and opportunities edited by R.K. Uppal and
Rimpi Jatana) In other words; it is a process of delivery of banking services and
products through electronic channels such as telephone, internet, cell phone etc.
The concept and scope of E-banking is still evolving. The world is changing at a
staggering rate and technology is considered to be the key driver for these
changes around us. An analysis of technology and its uses show that it has
permeated in almost every aspect of our life. Many activities are handled
electronically due to the acceptance of information technology at home as well
as at workplace. Slowly but steadily, the Indian customer is moving towards the
internet banking. The ATM and the Net transactions are becoming popular. But
the customer is clear on one thing that he wants net-banking to be simple and
the banking sector is matching its steps to the march of technology. E-banking
or Online banking is a generic term for the delivery of banking services and
products through the electronic channels such as the telephone, the internet, the
cell phone etc. The concept and scope of e-banking is still evolving. It facilitates
an effective payment and accounting system thereby enhancing the speed of
delivery of banking services considerably. Several initiatives have been taken
by the Government of India as well as the RBI(Reserve Bank of India); have
facilitated the development of e-banking in India. The government of India
enacted the IT Act, 2000, which provides legal recognition to electronic
transactions and other means of electronic commerce. The RBI has been
preparing to upgrade itself as regulator and supervisor of the technologically
dominated financial system. It issued guidelines on the risks and controls in
computer and telecommunication systems to all banks, advising them to

17 | P a g e
evaluate the risks inherent in the systems and put in place adequate control
mechanisms to address these risks. Internet banking (or E-banking) means any
user with a personal computer and a browser can get connected to his banks
website to perform any of the virtual banking functions. In internet banking
system the bank has a centralized database that is web-enabled. All the services
that the bank has permitted on the internet are displayed in menu. Once the
branch offices of bank are interconnected through terrestrial or satellite links,
there would be no physical identity for any branch. It would be a borderless
entity permitting anytime, anywhere and anyhow banking. The network which
connects the various locations and gives connectivity to the central office within
the organization is called intranet. These networks are limited to organizations
for which they are set up. SWIFT is a live example of intranet application. E-
banking provides enormous benefits to consumers in terms of ease and cost of
transactions, either through Internet, telephone or other electronic delivery.
Electronic finance (E-finance) has become one of the most essential
technological changes in the financial industry. E-finance is the provision of
financial services and markets using electronic communication and computation.
In practice, e-finance includes epayment, e-trading, and e-banking. Electronic
banking is one of the truly widespread avatars of E-commerce the world over.

Types of Internet Banking:

Understanding the various types of Internet banking will help examiners assess
the risks involved. Currently, the following three basic kinds of Internet banking
are being employed in the marketplace.
1) Informational: This is the basic level of Internet banking. Typically, the
bank has marketing information about the bank‘s products and services
on a stand-alone server. The risk is relatively low, as informational
systems typically have no path between the server and the bank‘s internal
network. This level of Internet banking can be provided by the banks or
outsourced. While the risk to a bank is relatively low, the server or web
site may be vulnerable to alteration. Appropriate controls therefore must
be in place to prevent unauthorized alterations to the bank‘s server or web
site.
2) Communicative: This type of Internet banking systems consists of the
interaction between the bank‘s system and the customer. The interaction
maybe limited to electronic mail, account enquiry, loan applications, or static
file updates (name and address change). Because these servers may have a
path to the bank‘s internal networks, the risk is higher with this configuration
than with informational systems. Appropriate controls need to be in the place
18 | P a g e
to prevent, monitor, and alert management of any unauthorized attempt to
access the bank‘s internal networks and computer systems. Virus controls
also become much more critical in this environment.
3) Transactional: This level of Internet banking allows customers to execute
transactions. Since a path typically exists between the server and the bank or
outsourcer‘s internal network, this is the highest risk architecture and must
have the strongest controls. Customer transactions can include accessing
accounts, paying bills, transferring funds etc.
Various authors define E-Banking differently but the most definition
depicting the meaning and features of E-Banking are as follows.
1. Banking is a combination of two, Electronic technology and Banking.
2. Electronic Banking is a process by which a customer performs banking
Transactions electronically without visiting a brick-and-mortar institutions.
3. E-Banking denotes the provision of banking and related service through
Extensive use of information technology without direct recourse to the bank
by the customer.
E-banking is a borderless entity permitting anytime, anywhere and anyhow
banking. This facilitates us with all the functions and many advantages as
compared to traditional banking services. During this step of the process,
controls that could mitigate or eliminate the identified risks, as appropriate to
the organizations operations, are provided. The goal of the recommended
controls is to reduce the level of risk to the IT system and its data to an
acceptable level.
Internet Banking Services:
Online banking facilities offered by various financial institutions have many
features and capabilities in common, but also have some that are application
specific.
1) ATM Automated Teller Machine (ATM): These are cash dispensing
machine, which are frequently seen at banks and other locations such as
shopping centers and building societies. Their main purpose is to allow
customer to draw cash at any time and to provide banking services where
it would not have been viable to open another branching. An automated
teller machine or automatic teller machine (ATM) is computerized
telecommunications device that provides a financial institution‘s
customers a method of financial\ transactions in a public space without
the need for a human clerk or bank teller. On most modern ATMs, the
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 customer identifies him or herself by inserting a plastic ATM card with a
magnetic stripe or a plastic smartcard with a chip that contains his or her
card number and some security information, such as an expiration date or
CVC (CVV). Security is provided by the customer entering a personal
identification number (PIN). Using an ATM, customers can access their
bank accounts in order to make cash withdrawals (or credit card cash
advances) and check their account balances. Many ATMs also allow
people to deposit cash or checks, transfer money between their bank
accounts, pay bills, or purchase goods and services.
2) Electronic Funds transfer (EFT) Between the customers own checking
and savings accounts, or to another customer's account. Without personal
visit to bank through internet customer can transfer the money to his or
her own account or to the person account. In 1994, RBI appointed a
committee to review the mechanization in the banks and also to review
the Electronic Clearing Service (ECS) –credit clearing facility should be
made available to all corporate bodies for making repetitive low value
payment like dividend, interest, refund, salary, pension or commission.

NEFT – National Electronic Fund Transfer NEFT full form is National

Electronic Fund Transfer, and it is a system of transfer between two
banks on net settlement basis which means that each individual transfer
from one account to another account is not settled or processed at that
same moment, it is done in batches. A lot of transactions are settled in
one go in each batches. Presently, NEFT services are available from 8:00
am to 6:30 pm on weekdays (Mon – Fri) and from 8:00 am – 12:30 pm on
Saturday. Any NEFT Transfer done between 8 am – 5 pm generally gets
settled on the same day, but if you deposit the money after 5 pm, then that
will be settled the next working day. In case of Saturday, any money
deposited between 8 am – 12 noon can be expected to reach the
beneficiary account the same day.

RTGS – Real Time Gross Settlement RTGS full form is Real Time Gross
Settlement and it is a system of money transfer between two banks in real
time basis, which means the moment one bank account transfer the
money to another bank account, its settled at that time itself on real time
basis between the banks, but the beneficiary bank has to make the final
settlement to the bank account within two hours of getting the money.
RTGS is the fastest possible money transfer between two banks in India
through a secure channel.

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3) Electronic Bill payment (EBP): Bill Payment Service Banks Bill Pay is
the easiest way to manage bills. A/c holder can pay their regular monthly
bills i.e. telephone, electricity, mobile phone, insurance etc. at anytime,
anywhere for free. Saves time and effort. Make bill payments at
customer‘s convenience form their home or office. Lets a/c holders check
their hill amount before it is debited form their account. No debits to
account without their knowledge. No more missed deadlines, no more
loss of interest – a/c holder can schedule their bills in advance, avoid
missing the bill deadlines as well as earn extra interest on their money.
Track payment history – all payments to a biller are stored automatically
for future reference. No queuing up at collection centers or writing
cheque any more! Just a few clicks and customers account will be debited
for the exact amount they as EBP attracts the customers because of the
fast and efficient bill payment. Most of the Indian banks are trying to
adopt the EBP portal. ICICI started a portal called Billjunction.com.
Banks tie up with MTNL, Airtel, Orenge, Vodafone, reliance etc.

4) Phone Banking: Customer can now dial up the bank‘s designed

telephone number and by dialing ID number will be able to get
connectivity to bank‘s designated computer. The software provided in the
machine interactive with the computer asking him to dial the code
number of the service required by the customer and suitable answers to
the customer. By using automatic voice recorder (AVR) for simple
queries and transactions and manned phone terminals for complicated
queries and truncations, the customer can actually do entire non-cash
relating banking on telephone…anywhere anytime!

5) Tele-Banking: Tele banking is another innovation which provided the

facility of 24 hour banking to the customer. Tele banking is based on
voice processing facility available on bank computers. The caller usually
a customer calls the bank anytime and can inquire balance in his account
or other transaction history. In this system, the computers at bank are
connected to a telephone link with the help of a modem. Voice processing
facility is provided in the software. This software identifies the voice of
caller and provides him suitable reply. Some banks also use telephonic
answering machine but this is limited to some brief functions. This is
only telephone answering system and now Tele banking. Tele banking is
becoming popular since queries at ATMs are now becoming too long.

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6) Mobile Banking: With the increase in mobile penetration among
masses, banking activities can be transacted easily through mobile
banking. This is the latest and most innovative platform offered for
banking for the customers. A versatile multifunctional, free service that is
accessible and viewable on the monitor of mobile phone. According to
Reserve bank of India (RBI) data, a total of 3.7 crores mobile transactions
took place between February and November 2012, jumping around 1.7
times in volumes over this 10-month period. These transactions saw
nearly a three-fold increase in value over the same period. Increasing
Smartphone adoption and initiatives such as media promotions and
customer education programs for mobile banking have led to this uptrend.
For customers, mobile banking is convenient while banks benefit through
a low-cost channel.

With mobile phone penetration of over 80 per cent, India has a huge
potential for mobile banking. But on the global landscape, mobile
payments have a long way to go in India. According to the MasterCard
Mobile Payments Readiness Index (MPRI), India ranked 21st among 34
countries with the score of 31.4 on a scale of 100. The index is a
datadriven survey of the global mobile payments landscape. It relies on
an analysis of 34 countries and their readiness to use three types of
mobile payments: person to person, mobile e-commerce and mobile
payments at the point of sale (POS).

7) Net Banking / On-line Banking: The advent of the Internet and the
popularity of personal computers presented both an opportunity and a
challenge for the banking industry. For years, financial institutions have
used powerful computer networks to automate million of daily
transactions; today, often the only paper record is the customer‘s receipt
at the point of sale. Now that their customers are connected to the Internet
via personal computers, banks envision similar advantages by adopting
those same internal electronic processes to home use. Banks view online
banking as a powerful‖ value added‖ tool to attract and retain new
customers while helping to eliminate costly paper handling and teller
interactions in an increasingly competitive banking environment. In India
first one to move into this area was ICICI Bank. They started web based
banking as early as august 1997. Net banking is a web-based service that
enables the banks authorized customers to access their account
information. It allows the customers to log on to the banks website with
the help of bank‘s issued identification and personal identification
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number (PIN). The banking system verifies the user and provides access
to the requested services, the rage of products and service offered by each
bank on the internet differs widely in there content. Most banks offer net
banking as a value-added service. Net banking has also led to the
emergent of new banks, which operate only through the internet and do
not exists physically, Such banks are called ―virtual banks or ―Internet
Only banks. A couple of years ago, there was a belief even among
bankers that customers opening new accounts wanted the online banking
facility, just to feel good and very few of the m actually used that services.
Today, bankers believe that the trend from nice to have is changing to
need to have. After all it depends on how busy a person is. Services
provided through Internet Banking 1) Account information 2) E-cheques
(Online Fund Transfer) 3) Bill Payment Service 4) Requests &
Intimations 5) Demat Account share trading.

8) Credit Card: Credit cards introduced in America in 1950, a

businessman Frank Menomara invited some of his friends for dinner in a
hotel. At the time of payment he realizes that the wallet is not in his
pocket! He forgot it at home. That day he decided to search a full proof
system to avoid such troublesome situation. In India it is introduced in
1966 as a branch of ―Dinner Club. In 1980 credit card facility provided
by central bank first time in India. Credit card is a small piece of plastic
which gives the facility to purchase anything without money with
particular limit of amount. According to the category of credit card the
cash withdrawal limit, the limit of purchase and the credit period is
depends. It works like plastic money. The risk of pick pocketing and the
money lost risk is totally rubbed by credit card. Credit card avoids the
tension of carrying lot many money in the pocket. Customer feels free
while journey or while purchase. Credit card gives us facility to use
money without sufficient balance in the customer‘s bank account. After a
month customer has to pay. So credit card not only gives as security but
also provides the money in advance!

9) Debit Card: Debit card works same as credit card. Customer can
purchase anything by it. Cash withdrawal is also possible. The only
difference is that debit card can use with the customer‘s own account
balance. According to account balance the customer can use his own
money and purchase the goods. If the sufficient balance is not in the bank
account then customer cannot use it. Now almost every bank providing
Debit card facility and almost every customer can have credit card but the
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credit card facility is not provided to every customer or not free of charge.
Of course there are number of categories for debit card also like master
card, VISA card. At present plastic money and all types of cards are very
popular and it is in a increasing way!

10) DIGI Cash (Digital Cash): Devid Chaum, a mathematician and

banking privacy expert found the DIGI cash. This is known as E-cash,
which is equivalent as Cash. Customer has to open his account at a Digi-
cah licensed bank. Once the account is established, the customer can use
E-cash that is stored on the user‘s computer hard drive. By using
proprietary software, E-cash can be spending with net merchant or
anybody whose computer is set up to deal with E-cash. With public key
cryptography, the digital cash made secured. It register and verified while
every transaction. Digital cash is the fastest way for on line purchase.

11) Net Cash: This concept is similar to E-cash or Digital cash, except it
does not require any special software to use. Net Cash can transmit across
the internet user by using encryption scheme known as PGP (Pretty Good
Privacy). To use net cash, a party must send a cheque or money order to
the company‘s headquarters. The company returns coupons via e-mail.

12) E-Zwich: E-Zwich is the brand name and electronic the common
platform that enables loading and spending of E-cash and also allows the
settlement of interbank claims in addition to on-line transactions.
Customers are able to use offline transactions in under develop area
where electricity and communication infrastructure is lacking. All
transactions includes between customer card and another card in a POS
(Point of scale) or ATM.

13) MICR Clearing: MICR means magnetic ink character reader or

recognition. It is a recognition technology adopted mainly to facilitate the
processing of cheque in the banks. The process was demonstrated to the
American Bankers Association in July 1956 and it was almost universally
implemented by 1963. MICR characters are printed with magnetic ink or
toner. Magnetic printing is issued so the characters can be reliably read
through the computer system. In India MICR was introduced in 1987 in
four metro cities of the country. NMICR is now available in almost every
banking center where volume of clearing transaction is large.

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14) Account information: Bank provides summary of all bank accounts.
Allow transaction tracking which enables retrieval of transaction details
based on cheque number, transaction amount, and date. Provide account
statement and transaction reports used on user-defined criteria. Customers
can even download and print the statement of accounts.

15) E-Cheques (Online Fund Transfer) An electronic cheque is an

electronic copy (scanned image) of a real cheque, which is then
transferred by email. In addition to the cheque's 'real' signature, the
transfer must be digitally signed using the sender's private key to
authenticate the transfer. Customer can transfer funds: Transfer funds
between accounts, even if they are in different branches‘ cities Customer
can also transfer funds to any person having an account with the same
bank anytime, anywhere, using third party funds transfer option.

16) Requests and Intimations Can electronically submit a request for:

Cheque-book Stop payment instructions Opening a fixed deposit Opening
a recurring deposit Intimate for the loss of ATM card Register online for
phone and mobile banking Cheque status Online application for debit
card Issue a DD or a Banker‘s cheque form account at special rates. Just
select the account to be debited form and give details of the amount,
location and beneficiary. The demand draft will be couriered to a/c holder
at their mailing address. Customers can get their applications for issuance
of Letters of Credit and Bank Guarantees processed online Book your
Railways Ticket Online.

17) Demat Account and Share Trading: Demat is commonly used

abbreviation of Dematerialization‘, which is a process whereby securities
like share, debentures are converted from the material‘ (paper documents)
unto electronic data and stored in the computer of an electronic
Depository. A depository is a security banks, where dematerialized
physical securities are held in custody, and form where they can be traded.
This facilitates faster, risk-free and low cost settlement.

18) Share Trading: In share trading a customer can buy and sell securities
online without stepping into a broker‘s office. Once the share is
dematerialized then the trading can be done from home or office. As
demat a/c are directly linked to the customer‘s bank a/c, so there is no
need to write cheque for the payments or to fill up the slips to deposit the
cheque. Amount for the purchase and sale of securities is automatically
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debited or credited to their bank a/c. it also brings the same convenience
while investing in Mutual funds also Hassle free and Paperless.

19) Electronic Clearing Service ECS is an electronic mode of funds

transfer from one bank account to another. It can be used by institutions
for making payments such as distribution of dividend interest, salary,
pension, among others. It can also be used to pay bills and other charges
such as telephone, electricity, water or for making equated monthly
installments payments on loans as well as SIP investments. ECS can be
used for both credit and debit purposes. The Electronic Clearance Service
(ECS) scheme provides an alternative method of effecting bulk payment
transactions like periodic (monthly or quarterly or half-yearly or yearly)
payments of interest, salary, pension, commission, dividend, refund by
Banks, Companies, Corporations, Government Departments. The
transactions under this scheme move from a single User source (i.e.
Banks, Companies, Corporations, Government Departments) to a large
number of Destination Account Holders (Customers or Investors). This
scheme obviates the need for issuing and handling paper instruments and
thereby facilitates improved customer service by the Banks and
Companies, Corporations, Government Departments effecting bulk
payment.

20) CTS-2010: Cheque Truncation System (CTS) or Image-based

Clearing System (ICS), in India, is a project undertaken by the Reserve
Bank of India – RBI, for faster clearing of cheques. CTS is basically an
online image based cheque clearing system where cheque images and
Magnetic Ink Character Recognition (MICR) data are captured at the
collecting bank branch and transmitted electronically. Truncation means,
stopping the flow of the physical cheques issued by a drawer to the
drawee branch. The physical instrument is truncated at some point en
route to the drawee branch and an electronic image of the cheque is sent
to the drawee branch along with the relevant information like the MICR
fields, date of presentation, presenting banks etc. Cheque truncation,
would eliminate the need to move the physical instruments across
branches, except in exceptional circumstances. This would result in
effective reduction in the time required for payment of cheques, the
associated cost of transit and delays in processing, etc., thus speeding up
the process of collection or realization of cheques.

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 Benefits For Banks:
Banks can expect multiple benefits through the implementation of CTS,
like faster clearing cycle means realization of proceeds of cheque possible
within the same day. It offers better reconciliation/verification process,
better customer service and enhanced customer window. Operational
efficiency will provide a direct boost to bottom lines of banks as clearing
of local cheques is a high cost low revenue activity. Besides, it reduces
operational risk by securing the transmission route. Centralized image
archival system ensures data storage and retrieval is easy. Reduction of
manual tasks leads to reduction of errors. Customer satisfaction will be
enhanced, due to the reduced turnaround time (TAT). Real-time tracking
and visibility of the cheques, less fraudulent cases with secured transfer
of images to the RBI are other possible benefits that banks may derive
from this solution for Customers: CTS / ICS substantially reduces the
time taken to clear the cheques as well enables banks to offer better
customer services and increases operational efficiency by cutting down
on overheads involved in the physical cheque clearing process. In
addition, it also offers better reconciliation and fraud prevention. CTS /
ICS uses cheque image, instead of the physical cheque itself, for cheque
clearance thus reducing the turnaround time drastically.

21) Other General Features (Non-Transactional) of Internet Banking A

bank customer can perform some non-transactional tasks through online
banking, including –
 Viewing account balances
 Viewing recent transactions
 Downloading bank statements, for example in PDF format
 Ordering cheque books
 Download periodic account statements
 Download applications for M-banking, E-banking etc.
 Loan applications and transactions, such as repayments of enrollments.
When Internet has entered into our daily life, the most dimensions of our lives
such as education, communication, business, etc, were overshadowed by this
novel phenomenon. One of these dimensions is to handle banking affairs
through the Internet (Shirali & Shahreza, 2007). Technology has brought about
a complete paradigm shift in the functioning of Indian banks and delivery of
their services. Gone are the days when every banking transaction required a
visit to the bank. Now a day most of the transactions can be done just by sitting
in the home and customers need not visit the bank branch for anything.
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Technology is no longer an enabler, but a business driver. The growth of the
internet, mobiles and communication technology has added a different
dimension to the banking services. (Pikkarainen, Karjaluoto, and Pahnila 2004)
define Internet banking as an Internet portal, through which customers can use
different kinds of banking services ranging from bill payment to making
investments‘. According to (Richard Nyangosi & Arora, Sumanjeet Singh,
2009) banking through electronic channels has gained much popularity in recent
years. This system, popularly known as 'e-banking', provides faster delivery of
banking services to a wide range of customers. Information technology is
becoming an important factor in the future development of financial services
industry, and especially in banking industry (Nami. M. R, 2009). Due to the
competition among the banks in Odisha, the banks want to provide the services
which are more efficient, rapid and enhanced the banking system. Therefore, the
objective of e-banking is to create such working environment where customers
can easily find about the information they require for performing financial
transactions.
Electronic Banking (E-banking) or Internet banking means any user with a
personal computer and a browser can get connected to his bank’s website to
perform any of the virtual banking functions. In Internet banking system, the
bank has a centralized database that is web-enabled. All the services that the
bank has permitted on the Internet are displayed in menu. Once the branch
offices of bank are interconnected through terrestrial or satellite links, there
would be no physical identity for any branch. It would be a borderless entity
permitting anytime, anywhere and anyhow banking. What Is E-Banking or
Internet Banking? Electronic banking is one of the truly widespread avatars of
E-commerce the world over. In simple words, e-banking implies provision of
banking products and services through electronic delivery channels. Various
authors define E-Banking differently but the most definition depicting the
meaning and features of E-Banking are as follows: “E-Banking is a combination
of two, Electronic technology and Banking.” “Electronic Banking is a process
by which a customer performs banking transactions electronically without
visiting a brick-and-mortar institutions.” “E-Banking denotes the provision of
banking and related service through extensive use of information technology
without direct recourse to the bank by the customer.”
Types Of Electronic Banking In India
The following three basic kinds of Internet banking are being employed in the
marketplace:

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1. Informational: This is the basic level of electronic banking. Typically, the
bank has marketing information about the bank’s products and services on a
stand-alone server. Risk involved in such kind of Internet banking is relatively
low, as informational systems typically have no path between the server and the
bank’s internal network. This level of Internet banking can be provided by the
bank or outsourced. While the risk to a bank is relatively low, the server or
website may be vulnerable to alteration. Appropriate controls therefore must be
in place to prevent unauthorized alterations to the bank’s server or website.
2. Communicative: This type of electronic banking system allows some
interaction between the bank’s systems and the customer. The interaction may
be limited to e-mail, account inquiry, loan applications, or static file updates
(name and address changes). Because these servers may have a path to the
bank’s internal networks, the risk is higher with this configuration than with
informational systems. Appropriate controls need to be in place to prevent,
monitor and alert management of any unauthorized attempt to access the bank’s
internal networks and computer systems. Security against virus attacks also
become much more critical in this environment.
3. Transactional: This level of electronic banking allows customers to execute
transactions. Since a path typically exists between the server and the bank’s or
outsourcer’s internal network, this is the highest risk architecture and must have
the strongest controls. Customer transactions can include accessing accounts,
paying bills, transferring funds, etc.
The Indian banking system has undergone a technological change over time.
The banking system in India has created position for itself in the modern
forceful global bubble where adoption of new and innovative technological
development carries the key to additional room of banking business and its
future improvement. The outstanding types of innovation in technology and
solid amalgamation with information communication technology (ICT)
prepared an archetype transfer in the Indian banking industry.
Technology itself formed its own world in the global digital economy. Internet
banking is an online system which enable customers or businesses to access
their bank accounts, do their banking transaction online, getting information
about banking products and services. The innovative initiation of internet
banking has empowered banks with innovative ways of delivering their banking
services to customers. Information communication technology (ICT) is
becoming an important factor in the future development of financial services
industry, and in particular banking industry. The dynamic forces behind the

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rapid renovation of banks are going through certain important changes in
innovations in ICT.
The growing applications of computerised networks to banking reduced the cost
of transaction and increased the speed of service to a large scale. In today’s
digital global economy, there is competition around the world in different sector
or industry and with the explosion of new sectors in the present world, banks
are changing their strategies to reach customers worldwide with ease and in a
cost effective manner. Therefore banks are adopting the latest technology in
order to deliver their banking and financial service product to the customers
with a cost effective manner. Now days in order to provide more benefits to
customer and to increase the performance of banks they are adopting the cost
effective distribution channel to distribute their financial or banking service to
the customer. Through internet banking banks want to keep the existing
customers as well as to attract new customers for their banks. Internet banking
uses the internet platform or internet services as electronic delivery channel in
order to deliver their banking services such as balance enquiry, printing
statement, fund transfer to other bank accounts, utility bill payments and so on
and new banking services such as online payment or electronic payment without
visiting to bank branches. As banking technology has focused on reducing cost
of distribution, internet banking enable customers to go for banking at a remote
place without visiting the bank branches. Now a days many customers are
migrating towards the adoption of this distribution channel and in India all most
all private and public banks are providing internet banking service facilities to
give more value added services to their customers. The objectives of internet
banking include cost manage through reduction in operating cost, performance
improvement by making the service available at all times of the day, wider
coverage by enabling the access to service from any location, revenue growth
through better quality and additional non-financial services, and customer
convenience through personalized services. Internet banking infrastructure
investment include the promise of transaction cost reduction by limiting
overheads associated with bank staff and bank branch costs and to provide
better services to customers who increasingly desire 24 hour banking.(Khalfan,
et al (2006)).
Internet Banking facilitates a convenient and successful move toward to handle
personal finances, as it is accessible 24x7 hours without visiting the bank and
from any remote locations. By using the internet platform, for providing
banking services, convenience of customers are taken into account and this not
only help the customers but also it increases the efficiency of the banking
operation. It provides a boundary less banking i.e. doing transaction from

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anywhere in the world or within anywhere in the country. Internet banking is
limited by operational timings, no geographical barriers and the services can be
offered at a very small cost. Day by day there is an increase in number of users
accessing internet in Odisha for other activities i.e. email, information search etc,
the number of financial transactions carried out over Internet remains low. It is
observed that potential users either do not adopt internet banking or do not use it
continually after adoption. Most of the banks’ websites are getting accessed by
huge number of customers in Odisha but only a very number of customers make
online transactions. Although the use of Internet banking by customers is
increasing in India but the adoption rate of Odisha is slower in comparison to
other states as per the views of bankers of Odisha. Due to the slow adoption
rates, the transformation of banking services from ‘bricks and mortar’ to ‘clicks
and mortar’ is yet to eventuate to the degree it was supposed to be adopted or
predicted in comparison to the adoption in developed countries Among the
customers mind internet banking is still ranked in less important than the other
financial distribution channels i.e. ATM, Tele banking, branch banking etc. In
order to be successful, banks must understand to what extent customers are
adopting or using Internet Banking services.
Banks must regularly monitor the customer’s requirements frequently to
understand the factors affecting their intention to adopt internet banking
services. Sathye (1999) found that consumers will not be ready to change from
present familiar ways of banking to Internet banking unless their specific need
is satisfied. Researchers suggested banks for considering influence of socio
economic conditions that affects income and levels of affluence, and the
consumers’ ability to use internet banking need to be considered. Lee and Lee’s
(2001) recent study shows that adopters of Internet banking tend to be more
highly educated, more wealthy and younger with good knowledge of computers
and especially familiarity with internet usage. Venkatesh and Morris, (2000),
investigated gender differences in the overlooked context of individual adoption
and sustained usage of technology in the workplace.
Further banks must demonstrate the benefits of Internet banking. But due to
limited number of studies that have been conducted in understanding users’
adoption, availability of information in this context is found limited in Odisha.
In India private banks were the first to implement internet banking services and
the pioneer player exploring the adaptability of the internet tools in the Indian
banking industry. Banks can connect to the customers at any place and at any
time though the internet applications. It is also playing a major role in marketing
strategies resulting in high performance in the banking industry. Customers get
satisfaction from the internet banking system when they derive maximum

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convenience and compatibility while transacting online. Banks adopting internet
banking service are very much interested in knowing customers experience to a
larger extent than just finding customer satisfaction. From this perspective it is
very much essential to assess the customers experience for electronic banking
product and services.
Customers perceive the internet banking service as main feature in doing
banking and evaluate the service on different parameters like convenience, 24x7
access, security, trust etc. The relative success of Internet Banking to date can
be gauged by identifying the number of active users and anticipated future
adopters. All major banks have introduced their internet banking services and
are constantly investing and expanding their products and services in Odisha.
Privacy, security and Trust are found to be the most important issues that inhibit
customers from using Internet banking in Odisha. Few research or no research
have been conducted in Odisha on factors that influence customer’s attitude and
their behavioural intention to use internet banking. This research is an attempt
to know customers attitude towards internet banking and the findings of this
research study will help the public and private sector bank in developing their
marketing strategies to endorse banking products and services over the Internet
in future.

REVIEW OF LITERATURE

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Review of a few important research papers is made in the following paragraphs
with an important objective to identify the research gap that exists at present.
A.Samsunisa (2015) The researcher has identified that different age group of
customers have different perception toward the e-banking services and the
usage level of these banks customer is different. So bank should concentrate on
all the age group of customers for betterment of e- banking services. It has also
seen that different occupation group of customers have different perception
toward the e-banking services. There are good number of customers in every
group like student, service class, business class and professionals who are keen
and interested in using the e-banking services.
Dr. M. Abdul Hakkeem and Y. Moydheen Sha (2015) in their analysis it was
observed that particular age group have used these services and the satisfaction
of the customer majorly influenced the convenience, awareness, and
responsiveness. In the present technology society, most of the banking customer
prefer and switch to e-banking facilities. So the banker may improve their
services, loyalty to customers and their retention by increasing awareness of
other age groups and concentrating on the factors contributing customer
satisfaction.
Vandana Tandon Khanna & Neha Gupta (2015) The study shows the factors
such as technology acceptability, safety, availability, user friendliness and
accessibility highly depends on the demographic profile of the population size.
Most of marketing decision in terms of enhancing the effectiveness of delivery
channels can be taken by considering these factors.
R. Elavarasi (2014) The researcher has identified which commercial bank
provides better service with regards to e-banking services to customers and also
identified satisfaction level of customer view about internet banking website of
banks. The data analysis shows that age, educational qualification, occupation,
income level of customer is significant factor that decide usage of e-banking
services of various banks in the study area. The findings were to increase
awareness among people; SBI should advertise and conduct special awareness
programs to make E- Banking services more popular among customers.
Tavishi and Santosh Kumar (2013) in their study “An Empirical Study on
Technology Adoption by Indian Banks” studied the factors influencing the
customers for the adoption of internet banking and mobile banking in India and
hence investigate the influence of perceived usefulness, perceived eases of use
and perceived risk on use of internet banking and mobile banking.

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Sabita Paul (2013) in his work The Adoption of Electronic Banking (E-Banking)
in Twin City, India described the current and prompt technological revolution
altering the whole world which has crucial impact on the banking sector based
on data, collected from customers of different commercial banks of Twin City.
Prema C (2013) in her research article “Factors Influencing Consumer Adoption
of Internet Banking in India”, examined the process of internet banking services
and stresses that marketing experts should emphasize these benefits and its
adoption provides and awareness can also be improved to attract consumers’
attention to internet banking services.
Rahmath Safeena et.al, (2012) in his study “Technology Adoption and Indian
Consumers: Study on Mobile Banking” identified that the evolution of e-
banking started from the use of Automatic Teller Machines (ATMs) and
telephone banking (tele-banking), direct bill payment, electronic fund transfer
and the revolutionary online banking transformation from the traditional
banking to e-banking has been a ‘leap’ change.
Neena Brar & Jaspreet Singh (2012) While investigating all the variables and
the responses by consumers, this study reveals that the perception of the
consumers can be changed and can be made positive by awareness program,
friendly usage, fewer charges, proper security, and the best response to the
services offered.
Rahmath Safeena et.al, (2011) in their research work “Internet Banking
Adoption in an Emerging Economy: Indian Consumer’s Perspective” analyzed
the factors influencing the consumer’s adoption of internet banking in India and
hence investigates the influence of perceived usefulness, perceived ease of use
and perceived risk on use of Internet Banking.
According to Ozuru et al. (2010) “The importance of electronic payment system
in any country can never be over emphasized, due to the dramatic
transformation in technological advancements that is being experienced by the
global financial industry”.
Singhal and Padhmanabhan (2008); Salawu et al. (2007) There is faster delivery
of information from the customer and service provider, thus differentiating
Internet enabled electronic banking system from the traditional banking
operation.

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 CHAPTER – II

RESEARCH
METHODOLOGY

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 RESEARCH METHODOLOGY
The study is collected based on the primary data collected from a population
100 people. Primary data collected will be the fundamental source to gain
knowledge related to the topic which enables us to approach the research
problem.There are number of approaches for a researcher to undertake data
collection and it depends upon the questions, depth and the time period of the
research. Depending upon the research question and objectives, a researcher
may choose different methods for the study i.e. Experiment, longitudinal study,
cross sectional study, survey or case study. In this study data is collected from a
sample of 100 people via a questionnaire. Survey data is entered into a
statistical package, SPSS(Statistical Package for Social Sciences) for analysis
and graphical presentation of the results. The collected data is tested for
reliability /validity, frequencies and percentagedistributions of respondents’
demographic information developed in tables checks if the responses are
representative of the larger population of twin city or not. Keeping in view the
objectives of the research study, the required statistical technique is used for
data analysis.

OBJECTIVES OF THE STUDY-

1. To identify and describe the factors on customers’ perception or attitude
towards adoption of internet banking in Twin City.
2. To explore customer value perceptions in internet banking.
3. To study the perception and usage level of respondents towards Electronic
banking services in Twin City.
4. To state the present situation of the Electronic Banking in Twin City.

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CHAPTER – III
CONCEPTUAL
&
THEORETICAL
DESCRIPTION

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 CONCEPTUAL & THEORETICAL
DESCRIPTION
Indian banking system has gone through a radical change through the years
where deregulation, technology innovations, liberalization, privatization and
globalization are considerably affecting the banking services. Techno-
innovation has transformed the banking business offering ATMs, credit cards,
internet-banking, EFTs etc. along with other aspects of transformation, are
replacing conventional products and services and creating new scale in banking
environment. The twenty-first century is characterized by the use of ICT which
has revolutionized our operational and livelihood patterns. The financial
services industry has recently been open to historic transformation. So-called e-
developments are budding and advancing quickly in all areas of financial
intermediation and financial markets i.e. e-finance, e-money, e-banking, e-
brokering, e-insurance, e-exchanges, e-supervision etc. IT is the most important
factor in the future development of banking, influencing banks’ marketing and
business strategies. An innovative age of banking, called as Internet banking,
where customers do their financial transactions electronically through the
devices i.e., PC, Laptop, Notebooks at convenient hour without restricted to the
bank operation hours. The success of internet baking adoption depends on the
customer attitudes towards this technology and their behavioural intention to
use it.
Factors’ affecting customer attitude and intention to use is a major concern for
banks in order to provide a cost effective delivery channel. Many countries and
particularly western countries have investigated the factors affecting customer
acceptance and adoption of Internet banking (Lassar et al., 2005; Kolodinsky et
al., 2004 in U.S), Europe (e.g. Littler and Melanthiou, 2006; Pikkarainen et al,
2004; Howcroft et al., 2002; Karjaluoto et al., 2002; Daniel, 1999), Australia
(e.g. Lichtenstein and Williamson, 2006; Sathye 1999),and Asia (e.g. Yiu et al.,
2007; Chan and Lu, 2004; Suh and Han, 2002). These researches about
customer attitude and acceptance of internet banking has led to several
technology acceptance theoretical models which origins its root from
Information Technology or Information Communication Technology, sociology
and psychology. In context of Odisha, there is few research regarding factors
affecting customer attitude towards internet banking.
The present study aims, to investigate the world of Internet Banking through the
eyes of the consumer, and by so doing seeks to increase the understanding of
consumer attitude formation and behaviors towards internet banking. The
research attempts to provide a specific understanding of internet banking from a
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consumer point of view and will provide success factors that influence the
customers' attitude to use Internet banking as a main banking distribution
channel in Odisha. Basing on the outcome of the research the banks in Odisha
can design their strategic in promoting their financial services delivery through
the Internet platform. In Odisha, now a days customer’s are motivated towards
using electronic banking and shifting from branch banking to branchless
banking, which provides many benefits, challenges, and also opportunities for
the banking sector. In Odisha there is need for informational as well
technological change in the banking industry. The study mainly focused on
customer attitude and behavioral intention to use internet banking. Courtier &
Gilpatric (1999) recommended that banks and financial companies must survey
customers’ requirements on a regular basis in order to understand factors that
can affect their intention to adopt or use internet banking. Researchers (I. Brown,
Hoppe, Mugera & Newman, 2004) suggested banks for considering influence of
national factors while introducing their services. For example a socio-economic
condition that affects income and levels of affluence and the consumer’s ability
to use internet banking need to be considered, further banks must be equipped
with necessary technological infrastructure and resources to demonstrate the
potential benefits of this new channel. But due to the limited number of studies
that have been conducted in understanding users’ adoption or usage intention,
availability of information in this context found limited for many states of India,
including Odisha.
Ravi et.al (2007), pointed out internet banking has not been widely accepted as
expected in India. Malhotra & Singh (2007) suggested that banks with high
customer base or banks with younger age, private ownership and lower branch
intensity possess high probability of adoption of this new technology. Banks
with lower market share also perceive internet banking technology as a means
to increase the market share by attracting more and more customers through this
new channel of delivery. Sathye (1999) note that low awareness of Internet
banking is a critical factor in causing customers not to adopt internet banking.
Currently all banks in India are in the process of building world-class
Information Technology infrastructure. When banks invest heavily on
technology, they must ensure that the facilities they provide match with the
needs of the clients. Without understanding the preferences of the customers,
whatever investment banks make on technology will result in the loss of both
money and customer base. So, the present study will provide many implications
to bankers in understanding the customer preferences and help the banks to
achieve better customer satisfaction. Therefore, research effort, especially an
empirical study on the development of e-banking application is apparently in

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need. Further, there have been many studies published in many foreign
countries on e-banking and internet banking based on customers’ perspective,
but the number of studies on this area in Indian context is meager. Therefore,
this study is significance to bridge this gap. Davies F, Luiz M & Bruce C (1996),
used neural network techniques for analyzing customers’ perception towards
ATM services. They analyzed the impact of input layer (explanatory variables)
on the hidden layer characteristics, through the out layer i.e. endogenous
variables like level of satisfication with ATMs services, frequency of use etc.

This study has adopted the implementation of neural network in finding the
customer adoption of internet banking or not. Neural network can bring together
the psychometric and econometric approaches to the measurement of adoption
of internet banking. it will define the user types as adopter or non-adopter and
will give an idea how the bank will address the needs of each segment. This
study also aims at determining factors underlying the adoption of internet
banking by customers in Odisha. Once factors are identified for the adoption of
internet banking, banks can design their marketing strategies to cope with
challenges of attracting more customers towards usage of internet banking on
order to reduce the operational cost as well as increased efficiency in delivering
services to customers. The findings from this research will enrich the existing
literature knowledge base in understanding customer attitudes towards the
adoption of internet banking. The study deals with customer attitude as well as
the actual usage behaviour. Customer attitude towards adoption of internet
banking, rather than just behavioral intention to use. Moreover, the influence of
external variables is examined. TAM is one of the most utilized models for
studying IS acceptance (Al-Gahtani, 2001; Venkatesh and Davis, 1996; Davis et
al., 1989). The current study proposes the application of the technology
acceptance model (TAM) to capture factors which have significant impact on
the acceptance of Internet banking. Banks need to understand which factors may
influence and attract customers to use internet banking, so that they can build
long relationships with existing customers.
In the present banking environment, banks are competing for the same customer
segment and resources being spent in terms of channel development and other
efforts are made to attract the same customer for adoption of different banking
channel. Different drivers contribute to the growth of internet banking i.e.
change in demographic scenario –younger consumers entering into the market.
Customers’ are concerned about the cash crime so they will continue to drive
for the adoption of internet banking. Internet browsing will reduce cost of

40 | P a g e
financial transaction and enable new players to offer financial services.
Economic meltdown or global banking recession may have an impact on
adoption of internet banking.
Now a day’s bank is facing challenges in proper segmentation of the customer
demographics or psychographics with respect to adoption of internet banking.
There has been no such study in respect to bank selection criteria or service
selection criteria in Odisha. As banks are adopting changes in technology, an
life style of consumers and thought process of customers are changing rapidly
this study will give light in understanding the psychographic factors that are
responsible for the customers for adopting the internet banking services.
Advantages and Disadvantages of Online Banking

As financial technology progressed, traditional banks began to explore the

option of offering online services. There’s no doubt that online banking can be
convenient — whenever you turn on your computer or smartphone, your bank is
there waiting for you — but there are other advantages, and disadvantages, as
well.

Advantages of Online Banking

Some advantages of online banking go hand-in-hand with simply being online;

others are competitive advantages provided by online banks taking advantage of
their cost structure. The most prominent benefits provided by online banking
include:

 24/7 account and service access

 Speed and efficiency
 Online bill payment
 Low overhead can mean low fees
 Low overhead can mean high interest rates on deposit accounts

Here’s a look at these advantages one by one.

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

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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.

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Disadvantages of Online Banking

No one type of bank can be the best at everything. In spite of their many
advantages, there are some drawbacks to using online banks as well. Here are
some of the downsides of working with an online bank:

 Technology issues
 Security issues
 Inefficient at complex transactions
 No relationship with personal banker
 Inconvenient to make deposits

Read on to learn more about these disadvantages.

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.

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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.

The invention of internet influenced banking sector also. Internet totally

changed the face, figure and the personality of the bank! Internet has challenged
the physical identity of Banks. Banking has broken the shackles of time and
place, as internet has made banking possible 24hours in every corner of world!
Banks are now not big or small by building and banks are now not the meter of
few and fix hours of services. The world is changing at a staggering rate and
technology is considered to be the key driver for these changes around us. An
analysis of technology and its uses shows that it has permeated in almost every
aspect of our life. Many activities are handled electronically due to the
acceptance of information technology at home as well as at work place. Slowly
but steadily, the Indian customer is moving towards the internet banking.
Internet Banking transactions are slowly taking over the Physical Banking
Transaction happening at the counters. Customer always looks for simplicity
and ease in any service he wants to avail and the banking sector is matching its
steps to the march of technology to make financial life easy for its customers. E-
banking or Online banking is a generic term for the delivery of banking services
and products through the electronic channels such as the telephone, the internet,
the cell phone etc. The concept and scope of ebanking is still evolving. It
facilitates an effective payment and accounting system thereby enhancing the
speed of delivery of banking services considerably. Several initiatives have

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been taken by the Government of India as well as the RBI (Reserve Bank of
India); have facilitated the development of e-banking in India. The government
of India enacted the IT Act, 2000, which provides legal recognition to electronic
transactions and other means of electronic commerce. The RBI has been
preparing to upgrade itself as regulator and supervisor of the technologically
dominated financial system. It issued guidelines on the risks and controls in
computer and telecommunication systems to all banks, advising them to
evaluate the risks inherent in the systems and put in place adequate control
mechanisms to address these risks. The biggest invention is the invention of
internet. The invention of internet changes the personality of bank and banking.
It gives the modern touch to the banking services and it carries number of other
possibility of modern banking with it.
E-banking is defined as the automated delivery of new and traditional banking
products and services directly to customers through electronic, interactive
communication channels. E-banking includes the systems that enable financial
institution customers, individuals or businesses, to access accounts, transact
business, or obtain information on financial products and services through a
public or private network, including the Internet. Customers access e-banking
services using an intelligent electronic device, such as a personal computer (PC),
personal digital assistant (PDA), automated teller machine (ATM), kiosk, or
Touch Tone telephone. While the risks and controls are similar for the various
ebanking access channels, this booklet focuses specifically on Internet- based
services due to the Internet's widely accessible public network. Accordingly,
this booklet begins with a discussion of the two primary types of Internet
websites: informational and transactional.

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 CHAPTER – IV
ANALYSIS
&
INTERPRETATIONS

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 ANALYSIS & INTERPRETATIONS
There are number of approaches for a researcher to undertake data collection
and it depends upon the questions, depth and the time period of the research.
Depending upon the research question and objectives, a researcher may choose
different methods for the study i.e. Experiment, longitudinal study, cross
sectional study, survey or case study. In this study data will be collected from a
sample of 100 people via a questionnaire. Survey data will be entered into a
statistical package, SPSS (Statistical Package for Social Sciences) for analysis
and graphical presentation of the results. The collected data will be tested for
reliability /validity, frequencies and percentage distributions of respondents’
demographic information developed in tables will check if the responses are
representative of the larger population of twin city or not. Keeping in view the
objectives of the research study, the required statistical technique will be used
for data analysis.
The research carried out here is explorative in nature because the data that is
already available and is mainly regarding the foreign markets. The study
intended to conduct this research in the domestic market, which is in the twin
city of Odisha, India (BHUBANESWAR & CUTTACK) and hence data is
needed regarding the consumers from this region specifically. Therefore, first
hand research is carried out by exploring the consumer characteristics in this
region specifically on a sample of around 100 people who have bank accounts
in public sector or private sector banks. The data has been collected with the
help of self-administered questionnaire. Judgmental sampling technique has
been used. The data so collected has been arranged in a tabular form. Keeping
in view the objectives of the study, simple statisticaltechniques have been used
for data analysis.
The total sample is consisting of 100 respondents. So, our calculation mainly
based on 100 respondents. The demographic profile or the result of data
analysis is described in table below. Maximum of the respondents belong to the
age group in between 18 to 35 (62 %) and so far as their gender distribution of
the respondents is concerned 69% are male and 31% are female. The majority
of respondents are belonging to the graduation degree (58%). Thus, it appears
that the respondent profile is known by its youngness and its high level of
education.

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 DEMOGRAPHIC PROFILE
DEMOGRAPHIC CHARACTERISTICS NO. OF PEOPLE
AGE
18-35 62
35-45 19
45-55 8
ABOVE 55 11
GENDER
MALE 69
FEMALE 31
EDUCATION
Ph.D 2
MASTERS 21
GRADUATION 35
OTHERS 42

A large numbers of customers are using the modern banking facilities such as
ATM, E- banking facilities etc. But still then we find some people prefer the
traditional banking system which is one of the important features in the banking
customers. But one thing which we find from the study that ATM is the most
popular electronic channel for banking that is used by the people may be
separately or jointly with the traditional banking. About 90% of people are
using it. Like the E-banking it is also one of the main attractions of the people.
Though a large no of respondents (65%) are using the internet, still then, more
than 50% customers prefer traditional banking rather than E- banking which we
find as one of the most important characteristic of the behavior in banking
customers but basically they belong to the old generation. Another notable thing
we find that though ATM is the most popular form of transaction among the
banking customers, it is used either separately or jointly with the traditional
banking system attracting more and more customers and traditional banking is
popular among the people basically among the old generation people who don‘t
have any computer knowledge. The data shows that more and more young
generation people prefer to E-banking particularly ATM rather than traditional
banking
branch. Among old generation there are very less people who use ATM and
using E-service. Basically two important things play a dominating role in E-
banking in Odisha i.e. Education level and people‘s knowledge about computer.
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These two things are having their great influence on the e-banking. Besides,
education and the knowledge in computer levels seem to be the twin important
concepts that influence the adoption of E-banking in Odisha. It is also clearly
found from the survey that young generations are more in favor of on line
banking system where as in the contrary the old generation lack some interest in
it as they feel it somewhat insecure, sometimes due to the internet hacking . So
they are the strong supporters of traditional banking with some moderate change
along with first service process. But they are in favour of ATM system.

COMPUTER KNOWLEDGE & BANKING PREFERENCE

Computer Literate ATM Traditional Mobile Banking E-Banking
Banking
No knowledge in 32.5% 32.5% 0% 0%
computer
Average knowledge in 37.5% 20% 22.5% 17.5%
computer
Advanced knowledge 22.5% 12.5% 22.5% 22.5%
in computer
Expert in computer 7.5% 2.5% 17.5% 17.5%

The people who filled the questionnaire had to fill in the following details and
answer the following questions :-
1. Name.
2. Age.
3. Occupation.
4. Income.
5. Customer of which bank.
6. Are you aware of Internet Banking or E-Banking services?
7. Do you find it easy to operate E-banking facilities?
8. How often do you use the E-Banking services?
9. Do you find it safe and secure to do banking activities over the internet?
10.Do you believe internet banking has brought about any positive/negative
changes in world and in their lives? If yes then how?
10. Does it save your save your time and cost?
11. Remarks (If any).

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CHAPTER – V
TESTING
OF
HYPOTHESIS

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 TESTING OF HYPOTHESIS
Null hypothesis (H0) There is no significant relationship between family
income group, ease of using E-banking services and perception regarding E-
Banking.
Alternative Hypothesis (H1) There is a significant relationship between family
income group, ease of using E-banking services and perception regarding E-
Banking.

1.To study the relation of family income and awareness level of respondents
regarding E-Banking.
TABLE 1. Showing the Relationship between Family Income and Awareness
Level Awareness level about E-Banking
Family Income Yes No Total
<1 Lakh 11 2 13
1-2 Lakh 21 3 24
2-3 Lakh 43 0 43
>3 Lakh 19 1 20
Total 94 6 100

From the above table it is clear that 94 (94.5%) respondents were aware about
E-Banking. Only 6 (6%)
respondents were not aware about E-banking services.

2.To study how many people are using E-banking services frequently?
TABLE 2. Showing the No. of Respondents who are using the E-Banking
Services frequency of usage of E-Banking
Family Income Yes No Total
<1 Lakh 5 6 11
1-2 Lakh 14 8 22
2-3 Lakh 31 12 43
>3 Lakh 14 4 18
Total 64 30 94

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Out of 94 respondents who were aware about E-banking Services only 64
(68.09%) were using the E-banking Services. One reason for not using the E-
banking services by the other respondents is that people were less educated in
these areas. So they hesitated using computer and Internet. And alsofew of them
found it more complex and risky hence they preferred the traditional method of
banking system i.e., the offline mode of banking system.
3. To know the opinion of respondents whether they considered E-Banking as a
time saving process.
TABLE 3. Showing the respondents’ views regarding time saving & cost
effective nature of e-banking Income Level * E- Banking is Time Saving &
Cost effective (Cross tabulation)

Count E-banking is time saving and cost-effective

Income level Highly Agree Neutral Disagree Highly Total
agree disagree
<1 lac 5 3 1 3 1 13
1-2 lac 11 6 2 4 1 24
2-3 lac 26 5 3 6 2 42
>3 lac 11 4 1 2 3 21
Total 53 18 7 15 7 100

From above data it is clear that 53 + 18= 71% respondents viewed E-Banking as
time saving & cost effective process. 7% respondents were neutral. 22%
respondents had negative views.

4. To know the opinion of respondents about Easy to use in E-banking

TABLE 4. Showing respondent‘s views regarding easy to use of e-banking
services according to their Income Level * Easy to use of E-Banking Services
(Cross tabulation)
Count Easy to E-banking service
Income level Highly Agree Neutral Disagree Highly Total
agree disagree
<1lac 4 2 1 4 2 13
1-2 lac 10 4 2 6 2 24
2-3 lac 26 6 3 6 1 42
>3 lac 8 4 1 4 4 21
Total 48 16 7 20 9 100

From the table 4, result is 48 + 16 = 64% respondents said E-Banking is Easy to

use. 29% respondents disagreed that E-Banking was easy to use; it may be

52 | P a g e
because these people may have less knowledge about computer and information
technology so it may be a time consuming process.

5. To know the opinion of respondents whether E-Banking Provides safety and

security
TABLE 5. Showing respondent‘s views regarding e-banking provides safety
and security Income Level * E-Banking Provides Safety and Security (Cross
tabulation)

Count Easy to E-banking service

Income level Highly Agree Neutral Disagree Highly Total
agree disagree
<1lac 6 3 1 2 1 13
1-2 lac 11 6 3 2 2 24
2-3 lac 24 8 6 3 1 42
>3 lac 11 4 3 2 1 21
Total 52 21 13 9 5 100

From table 5 it is clear that 52 + 21= 73% respondents said E-banking provides
safety & security. Only 14% respondents had negative views. Others were
neutral on this.

Type of E-Banking services used by the respondents

TABLE 6. Showing the frequently used e-banking services by the respondents.
MOST OFTEN < 1Lakh 1-2 Lakh 2-3 Lakh >3 Lakh Total
USED
SERVICES
ATM 9 26 33 20 88
BILL 7 32 21 16 76
PAYMENT
FUND 10 12 26 10 58
TRANSFER
ONLINE 4 38 8 9 59
INVESTMENT
ONLINE 6 9 27 13 55
SHOPPING
CREDIT 2 11 22 17 52
CARD
E-TICKETING 9 14 17 13 53
BANK 8 16 43 22 89
STATEMENT
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From the above table it is clear that most of the respondents frequently used
ATM, Bill payment along with generation of bank statement through E-Banking
services.

Therefore by looking at the results of the test conducted we can infer that the
Alternate Hypothesis H1 is true and hence it is prove that there is a significant
relationship between family income group, ease of using E-banking services
and perception regarding E-Banking.

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 CHAPTER – VI
CONCLUSION, SUGGESTIONS
& SCOPE FOR
FURTHER RESEARCH

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 CONCLUSION
It can be concluded that around 70 - 80 % of people had positive perception &
were satisfied with E-Banking Services. Customers were not using all E-
banking services frequently due to ignorance about computer and internet. This
made them hesitant to use e banking services. Banks must take up better
promotional and communicational strategies to spread the awareness among
existing customers regarding e banking and build positive perception which
would lead to higher level of usage and satisfaction of E-banking services.
Based on the above findings, it can be concluded that technology has greatly
influenced the bank customers encouraging them to conduct banking in an
innovative manner. They have good awareness regarding ATMs and credit card
whereas it is low in internet and mobile banking. Further, variability of
awareness of ATMs is less among the three groups of bank customers and
among the different age, education and income groups whereas for all other e-
banking delivery channels, variability of awareness is high among different
categories. Adoption of ATMs was highest followed by internet banking, credit
card and mobile banking, whereas as droppage rate is high in the case of credit
cards followed by mobile banking, internet banking and ATMs. Further it is
revealed that variability of adoption of all the selected e-banking products is
high among the three groups of bank customers where new generation bank
customers are ahead of Odisha based scheduled bank and nationalized bank
customers. Variability of adoption of ATMs and internet banking is high among
the different age groups; here youngsters are leading; whereas it is low for
credit cards and mobile banking. It is further found that adoption of ATMs and
internet banking is dependent on education where highly educated have high
rate of adoption. Income is closely associated with the adoption of ATMs,
internet banking and credit cards where the high income groups are ahead of
others but the picture is different in mobile banking proving that it is the
cheapest e-banking delivery channel.
The study reveals that users of e-banking delivery channels have strong positive
perception towards technology used in banking which is reflected in their
adoption and usage of the same whereas non users clearly exhibited their
disinterest and ignorance in using various technology driven banking channels.
The study also identifies four perceptual factors such as convenience, perceived
risk, speed of operations and accessibility which influences the adoption of
ATMs wherein convenience, speed of operations and accessibility are positively
associated with the adoption of ATMs whereas perceived risk has negative
influence. In the case of internet banking also, four perceptual factors were

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identified wherein the factors 'convenience' and 'cost effectiveness' have strong
positive influence and 'perceived risk' and 'personal contact' have negative
influence on internet bank adoption. It is further revealed that users' different
experiences with e-banking delivery channels and their satisfaction go hand in
hand in the sense that those who have less difficulties exhibited high level of
satisfaction and vise versa. In the case of all the selected e-banking delivery
channels except credit cards, users do not have much difficulties and they are
fairly satisfied with the same. In the case of credit cards, most of the users
frequently experience high interest rates, hidden charges and charges on late
payments which leads to low level of satisfaction of credit cards. It is important
to note that this study shows that e-banking technologies cannot be aggregated
into a single category and thus a "one size fits all" marketing approach will not
work across various e-banking products and services. Seeing an advantage in
using a new technology would lead to an increase in the likelihood of adopting
it. This was the case for all e-banking technologies examined. This study
support that customers prefer a mix of banking delivery channels over a single
channel. The results of the study also point to the existence of a large, untapped
target market which may be left behind in the state as the e-banking revolution
moves ahead. This digital divide among bank customers offers great
opportunities to the banks. A random approach by the Odisha banking industry
and Government may help increase the adoption rate among those of lower
socio-economic status. The research findings clearly suggest that the drive
towards ease of banking and convenience is favoured by the customer and
therefore banks should find alternative strategic routes designed to improve
service delivery either human based or technology based. Mobile banking has
immense possibilities and it is waiting for the right combination of technology
and business model to storm the world of banking. It will assist in making
financial inclusion possible by opening the doors of banking to the common
man through mobile handsets. It is important to understand that no technology
can replace human interface. Computers cannot be made to work smarter than
human beings in the foreseeable future. Personal choices, intuitions, likes,
dislikes etc. will keep playing a dominant role in the way people interact with
their service providers, customers and other counter parts. Technology will
facilitate the transactions but it will be the man or woman behind the technology
who will matter the most and have the last word.
There has been a sea change across the banking and financial sector in India in
the last ten years, the major credit for which is attributable to the Information
Processing and Communication Technology, commonly known as IT. It has
changed the way in which banking business is being done today. Bankers are

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now convinced that to 'create and retain a customer is the key to succeed in this
competitive market. Therefore banks refocus on their core asset the customer.
IT has changed the entire scenario of customer bank relationship, adding growth
to bank business and convenience to customers. Technology has already helped
in providing various delivery channels to customers. Now the customers no
longer have to go inside the bank for their regular banking needs. The options
are many to go to the nearest ATM or to the nearest internet enabled computer
for access to their account or they can use their own mobile handsets for doing
banking transactions. Computerization has reduced processing time in banking
transactions. A cheque now deposited gets cleared quickly. From the above
mentioned result it is evident that, challenge that lies ahead for banks is fourfold.
The bank has to create a mass awareness campaign about the various merits of
internet banking among customers, so that internet banking will be used as an
alternative channel for delivering financial services. They need to satisfy
customer needs , face up to increased competition from within the sector and
from new entrants coming into the financial services market and they must
continually invent new products and services in light of the technological
change and innovation. Internet banking could well develop in future to
function as a shopping centre for various financial products such as insurance
policies, pension funds, stock etc. Banks feel that customers lack the necessary
confidence in internet banking so they have to use customer centric techno-
innovative approach in building customer loyalty towards the adoption of
internet banking.

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 SUGGESTIONS
Based on the above findings and conclusion on e-banking awareness, adoption,
experience and satisfaction, the following suggestions are made to make further
improvements in these aspects of e-banking.
1. The use of e-banking delivery channels is still not up to the mark as expected
by the banks. This requires awareness building among the customers about the
benefits of these services. Customers should be properly educated about the
mechanism of using these services.
2. The banks have to initiate steps to educate the customers about new banking
services / new products, ATMs, online banking, mobile banking etc. The banker
may have to conduct different programs like customers day, customer meet and
customer campaign in which they can directly interact with their customers and
educate them about their new products /services.
3. Banks should take prompt and timely action to ensure the smooth functioning
of ATMs. Customers should be relieved from their apprehensions and make
them feel comfortable while using ATMs.
4. There is the need for banks to continuously persuade their customers to use
ATMs for withdrawal of money. Even though most of the ATMs provide the
service of accepting deposits, many users do not avail of this service as they
have apprehensions on its security aspect. It is very essential that bank officials
should make necessary arrangements which will enable the customers to make
their deposits through ATMs in a safe and secure manner. This will become a
major breakthrough in the growth phase of ATMs as it will relieve the
customers from depending their bank branches to make cash deposits.
5. For ensuring security, banks must appoint watch and ward staff who would
also be able to guide the customers for availing services at ATMs. Steps should
also be initiated to avoid the problem of technical breakdown which is common
in some of the ATM centers through regular inspection and preventive measures.
6. For adoption of internet banking, it is necessary that the banks offering this
service make the consumers aware about the availability of such a service and
explain how it adds value to their banking needs.
7. Both users and non users experience higher risk in using internet banking.
Bank managers should impart more information on various security and privacy
measures adopted by them to the customers. Proper implementation of
information security will be of utmost importance for banks to remain in
business. Internet banking option is prone to fraud. Phishing for personal
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information over the web is common and difficult to uncover. Customer
awareness education on how to use internet banking safely and precautions to
take while sending sensitive information over the internet would help reduce
fraud.
8. Banks should ensure safety and confidentiality while delivering services
through internet banking. By customer education, bank managers can remove
some disbelieves that non users have with regard to internet banking. So the
challenge to all banks will be to expand the internet banking user base and
slowly increase the range of services to the customers.
9. Since mobile banking has great growth potential in the future as it provides
greater accessibility to the bank customers, banks should initiate urgent steps to
encourage the customers to avail of the wide range of services delivered through
mobile banking now. Banks should grow from the initial level of SMS banking
to WAP banking as it opens up more opportunities to the customers to conduct
any banking transactions through their mobile handsets.
10. Since bank customers exhibited a lukewarm response towards credit cards
due to high interest rates, hidden charges and unreasonable charges on late
payments banks should make necessary restructuring by way of reducing the
interest rates and removing the unnecessary charges.
11. Branchless banking procedures can be challenging for people who are
illiterate or unfamiliar with technology. Making customer aware of how best to
use banking services is critical. While this is the responsibility of bank, RBI and
government can create the appropriate climate through a well-planned media
campaign.
12. Customer awareness campaigns are necessary in each location where
branchless banking has taken root. The banking correspondents' roles and
responsibilities should be explained to existing and potential customers by the
principal banks. Practical demonstration on how to use their cards, mobile
phones and authentications while transacting should all be part of customer
awareness training. When inclusion of a large number of clients is targeted
through banking correspondents, financial literacy campaigns are particularly
important. The information passed on to customers at awareness events will
increase their comfort level and make them knowledgeable of their rights and
responsibilities.

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 SCOPE FOR FURTHER RESEARCH
This study opens up new areas for further research in many related areas. Some
of them are listed below;
i. Diffusion of internet banking in India
ii. Effectiveness of ATM usage- A cost benefit analysis
iii. Problems and Prospects of Credit card usage
iv. Implementation of Core Banking Solution- Major Challenges
v. Mobile Banking Adoption- Opportunities and Challenges

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3. VandanaTandon Khanna1 &Neha Gupta (2015) “Customer’s Perception
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4. Tavishi and Santosh Kumar (2013), An empirical Study on Technology
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