Professional Documents
Culture Documents
PROJECT REPORT
ON
CUSTOMER PERCEPTION TOWARDS INTERNET
BANKING W.R.F TO PRIVATE AND FOREIGN BANKS
IN INDIA
[USE OF MDS]
UNDER GUIDANCE OF
Dr K SURYA NARAYANA
ASSOCIATE PROFESSOR OF COMMERCE
OSMANIA UNIVERSITY
bonafide work done and submitted by for partial fulfilment for the award
of Bachelor Degree in Commerce by under the guidance of
Dr K SURYA NARAYANA, Associate Professor of Commerce. To the best of
knowledge the matter presented in this project report has not been
submitted earlier to any other university
Principal
ACKNOWLEDGMENT
TABLE1..................................................................................10
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TABLE3..................................................................................12
TABLE4..................................................................................13
TABLE5...................................................................................14
TABLE6...................................................................................15
TABLE7...................................................................................16
FIGURE
FIGURE1.................................................................................10
FIGURE2.................................................................................11
FIGURE3.................................................................................12
FIGURE4.................................................................................13
FIGURE5.................................................................................14
FIGURE6.................................................................................15
FIGURE7.................................................................................16
FIGURE8.................................................................................17
CAHPTER-1
INTRODUCTION
What is bank?
A banker or bank is a financial institution whose primary activity is to act as a payment
agent for customers and to borrow and lend money. It is an institution for receiving,
keeping, and lending money.
What is online banking?
Online banking (or Internet banking) allows customers to conduct financial transactions
on a secure website operated by their retail or virtual bank, credit union.
Need for internet banking: One has to approach the branch in person, to withdraw cash
or deposit a cheque or request a statement of accounts. In true Internet banking, any
inquiry or transaction is processed online without any reference to the branch (anywhere
banking) at any time. Providing Internet banking is increasingly becoming a "need to
have" than a "nice to have" service. The net banking, thus, now is more of a norm rather
than an exception in many developed countries due to the fact that it is the cheapest way
of providing banking services
Banks have traditionally been in the forefront of harnessing technology to improve their
products, services and efficiency. They have, over a long time, been using electronic and
telecommunication networks for delivering a wide range of value added products and
services. The delivery channels include direct dial – up connections, private networks,
public networks etc and the devices include telephone, Personal Computers including the
Automated Teller Machines, etc. With the popularity of PCs, easy access to Internet and
World Wide Web (WWW), Internet is increasingly used by banks as a channel for
receiving instructions and delivering their products and services to their customers. This
form of banking is generally referred to as Internet Banking, although the range of
products and services offered by different banks vary widely both in their content and
sophistication.
1
India’s banking sector is growing at a fast pace. India has become one of the most
preferred banking destinations in the world. The reasons are numerous: the economy is
growing at a rate of 8%, Bank credit is growing at 30% per annum and there is an ever-
expanding middle class of between 250 and 300 million people (larger than the
population of the US) in need of financial services. All this enables double-digit returns
on most asset classes which is not so in a majority of other countries. Foreign banks in
India achieving a return on assets (ROA) of 3%, their keen interest in expanding their
businesses is understandable – even more so when compared with the measly 1%
average ROA for the Top 1000 banks in the world.
From the perspective of banking products and services being offered through Internet,
Internet banking is nothing more than traditional banking services delivered through an
electronic communication backbone, viz, Internet. But, in the process it has thrown open
issues which have ramifications beyond what a new delivery channel would normally
envisage and, hence, has compelled regulators world over to take note of this emerging
channel. Some of the distinctive features of i-banking are:
1. It removes the traditional geographical barriers as it could reach out to customers of
different countries / legal jurisdiction. This has raised the question of jurisdiction of law /
supervisory system to which such transactions should be subjected,
2. It has added a new dimension to different kinds of risks traditionally associated with
banking, heightening some of them and throwing new risk control challenges,
3. Security of banking transactions, validity of electronic contract, customers’ privacy,
etc., which have all along been concerns of both bankers and supervisors have assumed
different dimensions given that Internet is a public domain, not subject to control by any
single authority or group of users,
4. It poses a strategic risk of loss of business to those banks who do not respond in time,
to this new technology, being the efficient and cost effective delivery mechanism of
banking services,
5. A new form of competition has emerged both from the existing players and new
players of the market who are not strictly banks.
2
Why this research: An analysis of the differences in risk perceptions between bank
customers using Internet Banking and those not using Internet Banking was done and it
showed that risk perceptions in terms of financial, psychological and safety risks among
customer not using the internet was more meaningful than those using internet banking.
Customers not preferring to use internet banking thought that they would be swindled
when using this service, and therefore, are particularly careful about high risk expectation
during money transfers from and between accounts. Only 37% of Indian Internet users
come from Top 10 cities i.e. Mumbai, Bangalore, Delhi, Calcutta, Chennai, Pune,
Hyderabad, Ahmedabad, Surat and Nagpur. Another day and another number. As per
IAMAI and I-cube, the number of active Internet user (i.e. ones who logon to Internet
atleast once a month) is now 32 million and numbers who have used Internet atleast once
stands at 46 million. Maximum of the person who are going on for internet banking lies
in the age bracket of 26-35. but the rise in the age the level of users become low.
Approximately 17% of female use internet banking. This a matter of concern for a banks
what are the causes why this is happening.
Although many major banks have started offering i-banking services, the slow pace will
continue until the critical mass is achieved for PC, internet connections and telephones.
However, the upsurge of IT professionals with growing demands is pressuring the
government and bureaucracy in the country to support and develop new initiatives for a
faster spread of i-banking. But then to there is a fear in mind of customer using internet
as a medium for the banking transaction.
Private and foreign banks are trying to turn more and more customer towards the
usage if internet for the banking transaction. This study is basically to know the relation
of various independent variables on the customer usage of internet for banking.
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CHAPTER-2
OBJECTIVE OF THE STUDY
4
CHAPTER-3
LITERATURE REVIEW
In India still there is lack of users for internet as a medium for banking purpose, but the
banking system are upgrading and bringing many electronic banking medium for
customers so that banking can be made more convenient.
[1] Joseph et al. (1999) investigated the influence of internet on the delivery
of banking services. They found six underlying dimensions of e-banking service quality
such as convenience and accuracy, feedback and complaint management, efficiency,
queue management, accessibility and customization. Jun and Cai (2001) identified 17
service quality dimensions of i-banking service quality. These are reliability,
responsiveness, competence, courtesy, credibility, access, communication, understanding
the customer, collaboration, continuous improvement, content, accuracy, ease of use,
timeliness, aesthetics, security and divers features. They also suggested that some
dimensions such as responsiveness, reliability and access are critical for both traditional
and internet banks. Jayawardhena (2004) transforms the original SERVQUAL scale
to the internet context and develops a battery of 21 items to assess service quality in e-
banking. By means of an Exploratory Factor Analysis (EFA) and a Confirmatory Factor
Analysis (CFA), these 21 items are condensed to five quality dimensions: access, website
interface, trust, attention and credibility.
From the provider perspective, there are target quality and delivered quality. The focus
of process- or supply-led quality definition is rather internal than external, and it is
defined as conformance to requirements. It lays emphasis on the importance of the
management and the supply-side quality, and there is an important role of the process in
5
[2] IAMAI report on online banking 2006. 43% of online banking user haven’t
started online financial transaction because of security reasons, 39% haven’t started
because they prefer face to face, 22% haven’t started because they don’t know how to
use, for 10% sites are not user friendly and for 2% banks are not providing the facility of
internet banking. According to research 68% of the customers can not say that when they
will be starting the financial transactions through internet.
Maximum numbers of online banking users are male and maximum of them are in age
the group of 25-35. Numbers of female users are very less i.e. 17% only. More than 60%
of the people who are having account with have accounts in 3-4 banks.
Only 37% of Indian Internet users come from Top 10 cities i.e. Mumbai, Bangalore,
Delhi, Calcutta, Chennai, Pune, Hyderabad, Ahmedabad, Surat and Nagpur . Another day
and another number. As per IAMAI and I-cube, the number of active Internet user (i.e.
ones who logon to Internet atleast once a month) is now 32 million and numbers who
have used Internet atleast once stands at 46 million.
6
Customers perceive the quality of services of Internet banking based on the performance
of online delivery systems – not on the processes in which the delivered service is
developed and produced. Because customers perceive Internet banking service quality
based on relatively standardized outcomes determined by online systems, customer
attitudes toward that outcome reflect overall quality of services delivered
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CHAPTER-4
RESEARCH METHODOLOGY
RESEARCH TYPE
We use descriptive research and exploratory research design in our studies. Descriptive
research is also called Statistical Research. The main goal of this type of research is to
describe the data and characteristics about what is being studied. The idea behind this
type of research is to study frequencies, averages, and other statistical calculations.
Although this research is highly accurate, it does not gather the causes behind a situation .
Descriptive research is used to obtain information concerning the current status of the
phenomena to describe "what exists" with respect to variables or conditions in a
situation. Here we also tried to find out the main cause why there is perceptual blocking
of the Indian customers towards internet banking. The methods involved range from the
survey which describes the status quo, the correlation study which investigates the
relationship between variables, to developmental studies which seek to determine
changes over time.
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DATA COLLECTION
Primary Data: Structured Questionnaire
Secondary Data: Online Database, Journals, Surveys
SAMPLING
We have used convenience sampling technique. It is also called haphazard or accidental
sampling. Members of the population are chosen based on their relative ease of access.
To sample friends, co-workers, or shoppers at a single mall, are all examples of
convenience sampling. Sometimes called grab or opportunity sampling, this is the
method of choosing items arbitrarily and in an unstructured manner from the frame.
Though almost impossible to treat rigorously, it is the method most commonly employed
in many practical situations.
TOOLS
Statistical : SPSS
Techniques : MDS and Multiple Regression
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CHAPTER-5
Table 1
Figure1
From the above interpretation we can say that age group between 18-25 own
a internet of 27%while % who don’t own an internet is 3%, similarly %
between 26-35 own an internet of 51% while 1 %don’t own internet, 36-45
own an internet of 20% while 2%don’t own, 46-60 own 8%internet while
4% don’t own, 61and above own 1 %internet, 3%don’t own. Finally we can
see that age group 26-35 own maximum % of internet.
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Q2) The time you are using internet
A) less then a month
B) 1 to 6 months
C) 6 to 12 months
D) More than a year
Table 2
Figure2
From the above interpretation we can say that all the younger have been
using internet since last one year but age group between 36-45, 46-60and 61
and above have started using internet in recent . finally we can the age
group between 26-35 are the maximum users of the internet .
11
Q3) Frequency of visiting your bank branch per month?
a) Less than 1
b) 1 to 3 times
c) 3 to 8 times
d) 8 to 12 times
e) over 12 times
Table3
Figure3
From the above inerpretation we can say that in comparison to all the above
age groups maximum no. of time that is being visited to the bank is of age
group between 26-35 that’s is around 12 times in a month .
12
Q4) the main reason that you typically visit your bank branch (please choose the single
most important reason)?
to make a deposit
to get advice for investment options
to inquire about a balance
to withdraw cash
other
Table 4
Figure4
From the above interpretation we can say that the reason for visiting bank
maximum no. of time is basically is for the cash withdrawl that to is done by
the agr group between 26-35 that is of 17.
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Q5) the e-banking facilities provided by your bank?
ATM
Online banking
Telephone banking
Mobile banking
SMS banking
Figure5
From the above itnerpretation we can say that all the above age gropus says
that the mostly all the facilites is provided by their banks wheteher it be atm
online, telephone , mobile expcept to the person who belong to the age group
of 61 and above .
14
Q6) what banking services do you use which your Internet bank offers? (Please check
all you are currently using)
Figure6
From the above interpreatation we can that the perosn use internet bank
offers basically for seeking product and rate information and seconly for
checking balance and then they use for to download loan information ,then
to dowmload personal bank transaction activities .
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Q7) what was the single most important reason that you chose this particular bank as
your Internet bank? (Please choose one)
I have a traditional bank account with the same bank
The brand name of the bank
The excellent service offered by this bank
Others
Figure7
From the above interpretation we can say that the reason for choosing
particular bank for internet bank account is beacause of the excellent
services offered by the bank and second most improtant reason is that of
brand name of the bank .
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MDS
After filling up the 63 column and 120 rows of SPSS data we get the table of responses
of 120 respondents’ perception about our 6 brands and their 9 attributes. We calculate the
weighted mean of every column and finally we get the 6*10 matrix form of our
weighted mean MDS data, which would be input to SPSS for final MDS output. The
6*10 matrix is given below-
1 2 3 4 5
1 .000
2 2.172 .000
3 2.393 .932 .000
4 1.511 1.407 1.937 .000
5 1.786 1.163 .954 1.361 .000
6 2.061 2.264 2.475 1.540 2.146
6 .000
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The index of fit or R-square and stress should be measured. Thus R-square indicates
goodness of fit, whether stress value represents badness of fit. So for any research higher
value of R-square and lower value of Stress is expected. The high R-square value
represents MDS model is well fitted with the given problem. In our case,
Stress = .01817 RSQ = .99785
1 .02311
2 .01992 .00319
3 .01838 .00154
4 .01698 .00139
5 .01564 .00134
6 .01434 .00130
7 .01327 .00107
8 .01266 .00061
distances
For matrix
Stress = .01817 RSQ = .99785
Stimulus Coordinates
Dimension
Stimulus Stimulus 1 2
Number Name
19
5 HSBC -.7060 .3541
6 yesbank 1.6138 -1.2210
1 2 3 4 5
1 .000
2 2.800 .000
3 3.126 .577 .000
4 1.590 1.590 2.126 .000
5 2.126 .890 .890 1.318 .000
6 2.665 2.800 3.366 1.590 2.800
6 .000
1.5 detuch
1.0
0.5 HSBC
Dimension 2
ICICI
0.0 CITIBANK
hdfc
-0.5
-1.0
yesbank
-1.5
-2 -1 0 1 2
Dimension 1
Figure8
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As we can detuch bank is leading in both d dimensions where as there is a competition
between HSBC Citibank and hdfc. But the least is among the yesbank. Icici bank is close
to positive response but here we can see that there is some areas where the bank has to
work on to improve.
For your choice of an Internet bank, please indicate how much each of the following
factors (were) are important for you:
MEAN OF ALL RANKS
Statistics
Statistics
Table 7
Security is the main reason why people are not opening the internet bank acounts where
as the second highest goes to they don’t want to try new thing.
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QUESTIONNAIRE
Name …………………………………………………………………..
Age 18-25______
Gender MALE FEMALE
Occupation …………………………………………………………….
4) The main reason that you typically visit your bank branch (please choose the single
most important reason)?
to make a deposit
to get advice for investment options
to inquire about a balance
to withdraw cash
other
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ATM
Online banking
Telephone banking
Mobile banking
SMS banking
What are the most important reasons you opened an Internet bank account? (Please
prioritize the following list in the order of importance.
Curiosity
Better rates
Online shopping
What banking services do you use which your Internet bank offers? (Please check all you
are currently using)
23
For those who didn’t use internet banking
The main reasons that you have not opened an Internet bank account yet? (check all that
apply)
For your choice of an Internet bank, please indicate how much each of the following
factors (were) are important for you:
1. Better rate and lower service charge
2. Bank familiarity
5. Security of Transaction
8. Variety of features and services that are offered(for example; bill payment,
account reconciliation, electronic bill payment)
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CHAPTER-6
There is still a lot needed for the banking system to make reforms and train there
customers for using internet for there banking account. Going through the survey the
main problem lies that still customer have a fear of hacking of accounts and thus do
not go on for internet banking. Banks are trying there level best by providing the best
security options to the customers but then to there is lot of factors which betrays a
customer from opening an internet bank account.
Banks are providing free internet banking services also so that the customers can be
attracted. By asking the bank employs we came to know that maximum numbers of
internet bank account holders are youth, business man and HNI’s.
We can see the time is changing and we he passage of time people are accepting
technology there is still a lot of perceptual blocking which hampers the growth it’s
the normal tendency of a human not to have changes work on the old track, that’s
also one of the reason for the slow acceptance of internet banking accounts.
Give proper training to customers for using i-banking
Create a trust in mind of customers towards security of there accounts
Provide a platform from where the customers can access different accounts at
single time without extra charge.
Make there sites more users friendly.
Customers should be motivated to use I banking facilities more.
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CHAPTER-7
LIMITATIONS
Time Constraints.
Budgetary Constraints.
The participants comprised a small sample, which can be generalized across the
sector.
No actual branches.
26
BIBLOGRAPHY
BOOKS
1) Marketing research by BERRY G.C
2) Marketing Research by Malhotra N.K. , fifth edition
SITES
(http://www.icmrindia.org/free%20resources/casestudies/banking1.htm#b1
www.hdfcbank.com/
www.hsbc.co.in/
www.icicibank.com/
www.yesbank.in/
www.db.com
en.wikipedia.org/wiki/Perceptual_mapping
www.rocw.raifoundation.org/fashion/BAfashion-mktg/brandpositioning/lecture-notes/lecture-
04.pd
en.wikipedia.org/wiki/Multidimensional_scaling
27
REFERENCES
1. Sparks, Evan (26 June 2017). "Nine Young Bankers Who Changed America: Thomas
Sudman". ABA Banking Journal. Archived from the original on 21 November 2019.
Retrieved 12 March 2019.
2. ^ Cronin, Mary J. (1997). Banking and Finance on the Internet, John Wiley and
Sons. ISBN 0-471-29219-2 page 41 from Cronin, Mary J. (1998). Banking and Finance
on the Internet. ISBN 9780471292197. Archived from the original on 2021-08-14.
Retrieved 2008-07-10.
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