A

DISSERTATION
ON
Impact of E-Banking on customer satisfaction in SBI, Jaipur

Submitted To
The Department of Economic Administration and Financial Management
University of Rajasthan, Jaipur

In Partial Fulfillment of the Requirement for Degree of M.COM (EAFM)

(2022-2023)

Supervised By Submitted By
Dr. Sunita Mathur Naincy Chaturvedi
Associate Professor M.COM (IV Semester)
Head, Department of EAFM Department of EAFM
Kanoria P.G Mahila Mahavidyalaya Kanoria P.G Mahila Mahavidyalaya
Jaipur Jaipur

Department of Economic Administration and Financial Management

Kanoria PG Mahila Mahavidyalaya, Jaipur
 CERTIFICATE

This is certified that the dissertation work entitled “Impact of E-Banking on Customer
Satisfaction in SBI Jaipur” submitted to Department of EAFM, University of Rajasthan, Jaipur
in partial fulfillment of the requirement for the award of degree of Master of Commerce in
EAFM is a record of the original work done by Naincy Chaturvedi (17/75873) under my
supervision and guidance.

Date: Dr. Sunita Mathur

Associate Professor
Head, Department of EAFM
Kanoria P.G Mahila Mahavidyalaya, Jaipur
 CANDIDATE DECLARATION

I hereby declare that the work, which is being presented in the dissertation, entitled “Impact of
E-Banking on Customer Satisfaction in SBI Jaipur” submitted by me to the Kanoria P.G
Mahila Mahavidyalaya, Jaipur in partial fulfillment of the requirement for the award of the
Degree of “M.COM” in EAFM.

I further declare that the work reported in the dissertation is a result of my own original effort
and to the best knowledge and the information is purely for academic interest.

Naincy Chaturvedi
M.COM IV Semester
Department of EAFM
 Acknowledgement

First of all,I would like to express my gratitude to Almighty God for enabling me to complete
this dissertation on “An Impact of E-Banking on Customer Satisfaction In SBI,Jaipur”.

Successfully completing any type of project requires help from a number of persons.I have also
taken help from different people for the preparation of this project.Now,there is little effort to
show my deep gratitude to that helpful person.

I convey my sincere gratitude to my academic supervisor Dr. Sunita Mathur.Without her kind
direction and proper guidance this study would have been a little success. In every phase of the
project her supervision and guidance shaped this dissertation to be complete perfectly.

And last but not the least, I am extremely thankful to my institute KANORIA P.G. MAHILA
MAHAVIDYALAYA and its Teaching Staff of Department of EAFM for their timely support in
the successful completion of the dissertation.

Naincy Chaturvedi
 TABLE OF CONTENTS

Chapter No Content Page No

1. Introduction 1

2. Review of Literature 32

3. Research Methodology 33

4. Profiles of State Bank of India 36

5. Analysis and Interpretation 52

6. Major Findings and suggestions 59

 PREFACE

E-banking refers to Electronic banking is a service that allows customers to access their bank
information, conduct financial transactions, make deposits, withdrawals and pay bills through the
internet without having to physically visit their bank. It makes the regular transactions for a
customer speedy and time efficient with little or no paperwork involved.

The first chapter deals with E-banking in India, the Global E-banking Scenario,E-banking
scenario, Electronic banking concepts,E-banking strategies, E-banking transactions and trend,
Electronic banking and its Evolution, Porter’s Five Forces of E-banking Industry.

This second chapter deals with Review of Literature related to Articles, Journals, News and
Books. The purpose of this review is to identify key findings,trends and gaps in existing research
in order to establish the context and significance of the study.

This third chapter deals with the Research methodology which involves Research, Methodology,
Benefits of Research Methodology, Sample Design, Research Design, Nature of data,
Hypothesis, Data Collection Method, Objectives and Limitations of the study.

This fourth chapter deals with Profiles of State Bank of India which involves Introduction,
History of SBI, Organizational structure of SBI, facilities provided by SBI,Main concerns and
Methods which are transferred to funds by SBI.

This fifth chapter “analysis and interpretation” deals with analyzing the collecting data with
different statistical tools,with the use of a statistical package for social science. Since, it is a
comparative study.

The six chapter deals with summary of findings and suggestions, implication for future research
and conclusion.Based on the analysis and interpretation, the researcher provides various
suggestions for the improvement of E-banking services.
 CHAPTER - 1
INTRODUCTION

E-Banking in India
The technological innovation of the electronic channel of service delivery has brought in a level
playing field for businesses by eliminating geographical, regulatory, and industrial barriers. There
are four electronic commerce activities internet users perform.These activities require a banking
relationship and are: shopping, banking, investing, and online electronic payment for Internet
services.Banks are using new tools and techniques to find out their customer’s needs and
satisfaction and offer them their beneficial products and services to make it convenient. The
financial service providers are trying to provide their services to the Customers in the comfort of
their homes. E-banking has emerged as a convenient channel for these service providers. The
enormous increase of the internet is changing the way businesses interact with consumers as most
businesses are now conducted using the internet. It is this introduction of e-commerce as a means
of payment that has urged banks to take a leap from the traditional banking services, offering a
service strongly through the medium of internet, which has come to be known as internet banking
or e-banking.
E-banking refers to Electronic banking is a service that allows Customers to access their bank
information, conduct financial transactions, make deposits, withdrawals and pay bills through the
internet without having to physically visit their bank. E-banking is one of the most recent
technological innovations, which is becoming a need for every common man so it is becoming
“Need to Have'' service. It makes the regular transactions for a customer speedy and time efficient
with little or no paperwork involved.

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 Source: www.linkerspray.com

Existing literature on internet banking in India indicates that despite its growing use and adoption
by many banks, no significant effort has been made to understand whether the customers whom the
technology is meant for are satisfied or not and what are the demographic characteristics of the
ones who have adopted the technology.

Internet banking is an electronic payment system that enables customers of a financial institution
to conduct financial transactions on a website operated by the institution, such as a retail bank,
virtual bank, credit union or building society. Online banking is also referred to as Internet
banking, e-banking, virtual banking and by some other terms. This new channel has added a new
dimension to the concept of customer satisfaction and how it can be affected in a positive way. All
organizations exist and strive to become an integral part of the lives of their customers and
therefore always strive harder to keep satisfying their customers through better channels of
delivering their offerings. There are many factors which have an impact on customer satisfaction,
one of the most important being service quality. Due to the varying nature of the products offered
in the manufacturing sector and in the services sector the definition and measurement of service

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quality, it was seen, could not be the same for both. Especially, in the present era, with the
emergence of the internet as a major channel of service delivery, the need for a scale to measure
the service quality in electronic media of services was felt strongly. Hence, service quality was
taken up by the research scholars specifically in terms of the e-services which led to the
development of various models that helped in measuring e-service quality in the services sector.

History of E-Banking
The story of technology in banking started with the use of punched card machines like Accounting
Machines or Ledger Posting Machines. The use of technology, at that time, was limited to keeping
books of the bank. It further developed with the birth of online real time system and vast
improvement in tele-communications during late1970’s and 1980’s.It’s resulted in a revolution in
the field of banking with “convenience banking” as a buzzword. Through Convenience banking,
the bank is carried to the doorstep of the customer.

The concept of electronic banking systems began when the first automated teller machines (ATMs)
were installed in the 1970s.ATM machines allowed deposits to be made from remote locations -a
convenience for customers who otherwise would have had to withdraw cash personally from their
bank. According to D.K.Murthy and K.R. Venugopal in the book “Indian Financial System,”the
advantages offered by Atm machines quickly spilled over to encompass other areas of bank
services,computerizing manual systems for greater efficiency and time savings.The concept behind
ATM machines gave rise to smart cards intranet and internet banking,EFT(electronic funds
transfer) and POS (point of sale) systems,phone banking and other electronic services.

The 1990’s saw the birth of distributed computing technologies and Relational Data Base
Management System. The banking industry was simply waiting for the technologies. Now with
distribution technologies, one could configure dedicated machines called front-end machines for
customer service and risk control while communicating in the batch mode without hampering the
response time on the front-end machine.

While financial institutions took steps to implement e-banking services in the mid-1990s, many
consumers were hesitant to conduct monetary transactions over the web. It took widespread
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adoption of electronic commerce, based on trailblazing companies such as America Online,
Amazon.com and eBay, to make the idea of paying for items online widespread. By 2000, 80
percent of U.S. banks offered e-banking. Customer use grew slowly. At Bank of America, for
example, it took 10 years to acquire 2 million e-banking customers. However, a significant cultural
change took place after the Y2K scare ended. In 2001, Bank of America became the first bank to
top 3 million online banking customers, more than 20 percent of its customer base. In comparison,
larger national institutions, such as Citigroup claimed 2.2 million online relationships globally,
while J.P. Morgan Chase estimated it had more than 750,000 online banking customers. Wells
Fargo had 2.5 million online banking customers, including small businesses. Online customers
proved more loyal and profitable than regular customers. In October 2001, Bank of America
customers executed a record 3.1 million electronic bill payments, totaling more than $1 billion. In
2009, a report by Gartner Group estimated that 47 percent of U.S. adults and 30 percent in the
United Kingdom bank online.

The modern first bank was the Hindustan Bank, which was founded in 1770 and liquidated
between 1829 and 32. The first limited liability banking company was an Indian general bank
founded in 1786.

The largest and oldest bank which is still in existence is the State Bank of India (SBI). Established
in mid-June 1806, it began operations as Calcutta Bank. In 1809 it was renamed Bengal Bank. It
was one of three banks founded by the presidential government; the other two were Bombay Bank
in 1840 and Madras Bank in 1843. Independent, became the State Bank of India in 1955. For many
years, the Presidential Bank, like its successors, served as a quasi-central bank until the Reserve
Bank of India was established in 1935, under the Reserve Bank of India Act in 1934.

In 1960, the State Bank of India gained control of eight state-owned banks under the State Bank of
India (Subsidiary) Act of 1959. However, the merger of these affiliated banks and SBI came into
effect on April 1, 2017. Nationalized 14 major private banks, one of the major banks was the Bank
of India. In 1980, six more private banks were nationalized. These nationalized banks are the
majority of lenders in the Indian economy. They dominate the banking sector because of their size
and extensive network.

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The Indian banking sector is broadly classified into scheduled and non scheduled banks. The
scheduled banks are those included under the 2nd Schedule of the Reserve Bank of India Act,
1934. The scheduled banks are further classified into: nationalized banks; State Bank of India and
its associates; Regional Rural Banks (RRBs); foreign banks; and other Indian private sector banks.
The SBI has merged its Associate banks into itself to create the largest Bank in India on 1 April
2017. With this merger SBI has a global ranking of 236 on Fortune 500 index. The term
commercial banks refer to both scheduled and non-scheduled commercial banks regulated under
the Banking Regulation Act, 1949. Overall, the supply, product range and reach of banking
services in India are quite mature, although reach in rural and poor areas of India remains a
challenge. The Government has developed initiatives to address this issue through the State Bank
of India expanding its branch network and through the National Bank for Agriculture and Rural
Development (NABARD) with facilities like microfinance.

On the suggestions of The All India Rural Credit Survey Committee, The Imperial Bank of India
became nationalized and State Bank of India got into life in 1955 below the SBI Act 1955. Under
SBI (Subsidiary Banks) Act 1959 8 banks of the princely states State Bank of Bikaner, Bank of
Indore, State Bank of Jaipur, Bank of Mysore, Patiala State Bank, Travancore Bank, Hyderabad
State Bank and State Bank of Saurashtra have become subsidiaries of SBI.

14 banks having deposits of greater than Rs.50 crores every have been nationalized in 1969 and
different 6 banks with deposits of Rs.2 hundred crores and greater have been nationalized in 1980.
Rest of the banks persevered to function as Private Banks.

In 1993 under the liberalization policy of the government, RBI set up new guidelines to form
private sector banks. The banks established post liberalization are known as new generation private
sector banks. The essential banks installed at some stage in this era are HDFC Bank, ICICI Bank,
AXIS Bank (previously called UTI Bank), and Kotak Mahindra Bank, Yes Bank etc. Liberalization
policy has opened the doors for foreign banks also.

5
The new concept of a payment bank was introduced by the RBI on the recommendation of
Nachiket Mor Commission in 2014. In 2015, RBI granted key approvals to 11 institutions Set up
payment banks in India. Paying banks have to be networked from the start. There are some
restrictions on the paying bank, for example, the deposit amount is limited to Rs. 1 lacs, they
cannot grant loan or issue credit cards, may not establish subsidiaries to carry out non-banking
activities, and at least 25% of branches must be opened in unbanked regions.

Global E-banking Scenario

The advent of the Internet has initiated an electronic revolution in the global banking sector. The
dynamic and flexible nature of this communication channel as well as its ubiquitous reach has
helped in leveraging a variety of banking activities. New banking intermediaries offering entirely
new types of banking services have emerged as a result of innovative e-business models. The
Internet has emerged as one of the major distribution channels of banking products and services,
for the banks in the US and in the European countries. Initially, banks promoted their core
capabilities i.e., products, services and advice through the Internet. Then, they entered the
e-commerce market as providers/distributors of their own products and services. More recently,
due to advances in Internet security and the advent of relevant protocols, banks have discovered
that they can play their primary role as financial intermediaries and facilitators of complete
commercial transactions via electronic networks especially through the Internet. Some banks have
chosen a route of establishing a direct web presence while others have opted for either being an
owner of a financial services centric electronic marketplace or being participants of a non-financial
services centric electronic marketplace. The trend towards electronic delivery of banking products
and services is occurring partly as a result of consumer demand and partly because of the
increasing competitive environment in the global banking industry. The Internet has changed the
customers' behaviors who are demanding more customized products/services at a lower price.
Moreover, new competition from pure online banks has put the profitability of even established
brick and mortar banks under pressure. However, very few banks have been successful in
developing effective strategies for fully exploiting the opportunities offered by the Internet. For
traditional banks to define what niche markets to serve and decide what products/services to offer
there is a need for a clear and concise Internet commerce strategy. Banking transactions had
already started taking place through the Internet way back in 1995. The Internet promised an ideal

6
platform for commercial exchange, helping banks to achieve new levels of efficiency in financial
transactions by strengthening customer relationships, promoting price discovery and spend
aggregation and increasing the reach. Electronic finance offered considerable opportunities for
banks to expand their client base and rationalize their business while the customers received value
in the form of savings in time and money.

Global E-banking industry is covered by the following four sections:

E-banking Scenario: It discusses the actual state, prospects, and issues related to E-banking in
Asia with a focus on India, US and Europe. It also deals with the impact of E-banking on the
banking industry structure.
E-banking Strategies: It reveals the key strategies that banks must implement to derive maximum
value through the online channel. It also brings guidance for those banks, which are planning to
build online businesses.
E-banking Transactions: It discusses how the Internet has radically transformed banking
transactions. The section focuses on cross border transactions, B2B transactions, electronic bill
payment and presentment and mobile payments. In spite of all the hype, E-banking has been a
non-starter in several countries.
E-banking Trends: It discusses the innovation of new technologies in banks.

E-banking scenario
The banking industry is expected to be a leading player in E-business. While the banks in
developed countries are working primarily via the Internet as non-branch banks, banks in the
developing countries use the Internet as an information delivery tool to improve relationships with
customers. While in the US, according to UNCTAD, online banking is growing at an aIn early
2001, approximately 60 percent of E-business in the UK was concentrated in the financial services
sector, and with the expected 10-fold increase of the British E-business market by 2005, the share
of the financial services will further increase. Around one fifth of Finnish and Swedish bank
customers have a banking annual rate of 60 percent and the number of online accounts has
approximately reached 15 million by 2006.
Banks have established an Internet presence with various objectives. Most of them are using the
Internet as a new distribution channel. Financial services, with the use of the Internet, may be

7
offered in an equivalent quantity with lower costs to the more potential customers. There may be
contacts from each corner of the world at any time of day or night. This means that banks may
enlarge their market without opening new branches. The banks in the US are using the Web to
reach opportunities in three different categories i.e., to market information, to deliver banking
products and services, and to improve customer relationships.
In Asia, the major factor restricting the growth of E-banking is security, in spite of several
countries being well connected via the Internet. Access to high-quality E-banking products is an
issue as well. Majority of the banks in Asia are just offering basic services compared with those of
developed countries. Still, E-banking seems to have a future in Asia. It is considered that
E-banking will succeed if the basic features, especially bill payment, are handled well. Bill
payment was the most popular feature, cited by 40 percent of respondents of the survey. However,
providing this service would be difficult for banks in Asia because it requires a high level of
security and involves arranging transactions with a variety of players.
In 2001, over 50 percent of the banks in the US were offering E-banking services. However, large
banks appeared to have a clear advantage over small banks in the range of services they offered.
Some banks in the US were targeting their Internet strategies towards business customers. Apart
from affecting the way customers received banking services; E-banking was expected to influence
the banking industry structure. The economics of E-banking was expected to favor large banks
because of economies of scale and scope, and the ability to advertise heavily. Moreover, E-banking
offered entry and expansion opportunities that small banks traditionally lacked.
In Europe, the Internet is accelerating the reconfiguration of the banking industry into three
separate businesses: production, distribution and advice.

This reconfiguration is being further driven by the Internet, due to the combined impact of:
● The emergence of new and more focused business models.
● New technological capabilities that reduce the banking relationship and transaction
relationship.
● High degree of uncertainty over the impact that new entrants will have on current business
models.
Though E-banking in Europe is still in the evolutionary stage, it is very clear that it is having a
significant impact on traditional banking activities. Unlike in the US, though large banks in Europe

8
have a competitive edge due to their ability to invest heavily in new technologies, they are still not
ready to embrace E-banking. Hence, medium-sized banks and start-ups have an important role to
play on the E-banking front if they can take concrete measures quickly and effectively.

E-banking strategies
Though E-banking offers vast opportunities, yet even less than one in three banks have an
E-banking strategy in place. According to a study, less than 15 percent of banks with transactional
websites will realize profits directly attributable to those sites. Hence, banks must recognize the
seriousness of the challenge ahead and develop a strategy that will enable them to leverage the
opportunities presented by the Internet.
No single E-banking strategy is right for every banking company. But whether they adopt an
offensive or a defensive posture, they must constantly re-evaluate their strategy. In the fast-paced
e-economy, banks have to keep up with the constantly evolving business models and technology
innovations of the Internet space. Early e-business adopters like Wells Fargo not only entered the
E-banking industry first but also showed flexibility to change as the market developed. Not many
banks have been as e-business-savvy. But the pressure is now building for all banks to develop
sound e-business strategies that will attract and retain increasingly discriminating customers.
The major problem with the banks, which have already invested huge amounts in their online
initiatives, is that their online offerings remain unprofitable. Though banks have enrolled some
existing customers in their online programs, they are not getting customers in large numbers. This
has made banks wonder whether there is any value in the online channel. Just enrolling customers
for online banking may not be sufficient until and unless they use the site actively. Banks must
make efforts to increase their site usage by customers and effectively coordinate the online channel
with branches and call centers. Then only they will be able to derive maximum value that includes
cost reduction, cross-selling opportunities, and higher customer retention.
Customers have some rational reasons for staying offline. Some of these reasons include usability
features of the site, concerns about security and frequent complaints that signing up is complicated
and time-consuming. Banks can solve these problems by refocusing investment on improving the
site's basic functionality and user-friendliness, and avoiding advanced features that most customers
neither understand nor value. Developing advanced features that appeal to a relatively small
number of customers, creates far less value than strengthening core capabilities and getting

9
customers to use them. Banks must make efforts to familiarize customers with their sites and show
them how easy and efficient the online channel is to use.
Integrating the online channel with the rest of the bank is another important issue that banks must
focus upon. This is important because nearly all the value of the online channel is realized offline _
in cross sales completed in other channels and in cost reductions. An actively used online channel
should also serve as a medium to sell banking services for the branch staff, the call center, and the
relationship manager. Integrated channels working together are far more effective than a group of
channels working without any coordination.
To facilitate this integration, banks must formulate paths that people in various customer segments
are likely to take among the channels. The interactions in each channel can then be worked around
these paths. For example, a call center representative must work out which channel(s) the customer
used before coming to her, and which channel(s) the customer is likely to visit next. Each channel
must have entry and exit points that must welcome customers and then send to other channels.
Hence, the overall goal of banks is to create a seamless multi channel experience.
On the other hand, those banks that are planning to build their online businesses will have to
understand several strategic issues like do they have the right business model for E-banking? How
should they price their E-banking products and services? Bankers planning to move into E-banking
have to explore different options, make investments and have to develop a variety of partnerships.
They have to put their time and efforts into identifying the best opportunities. In the case of
traditional banks, if they are too aggressive in using price incentives to build their e-business, they
risk the profitability of their traditional business. However, if they do not offer sufficient price
incentives for customers to bank online their efforts to build a sound e- banking business may not
fructify.
Banks have to be creative in rethinking organizational structures and management processes.
Traditional banks that are conservative in nature may find it difficult to attract and retain online
talent. Moreover, getting people in the traditional business to help build an e-enterprise would not
be an easy task. To make all this happen, requires a major revision of incentive systems, planning
and budgeting processes, and management roles. Banks can exploit the opportunities provided by
the Internet if they demonstrate courage, use their imagination, and take decisive action.
While most of the banks have started focusing on E-banking activities, a new challenge in the form
of mobile banking has emerged. M-Banking is both an additional opportunity for banks to offer

10
their online services and an additional channel from which to access new customers and cross-sell
to existing customers. Rapidly changing lifestyles of customers and their demand for more speed
and convenience has subdued the role of branch banking to a certain extent. With the proliferation
of new technologies, dis-intermediation of traditional channels is being witnessed. Banks can go
beyond their traditional role as a channel for banking/financial services and can become providers
of personalized information.
They can successfully leverage m-banking to:

● Provide personalized products and services to specific customers and thus increase customer
loyalty.
● Exploit additional sources of revenue from subscriptions, transactions and third-party
referrals.

M-Banking gives banks the opportunity to significantly expand their customer relationships
provided they position themselves effectively. To leverage these opportunities, they must form
structured alliances with service affiliates, and acquire competitive advantage in collecting,
processing and deploying customer information.

E-Banking Transactions

The introduction of new technologies has radically transformed banking transactions. In the past,
customers had to come physically into the bank branch to do banking transactions including
transfers, deposits and withdrawals. Banks had to employ several tellers to physically make all
those transactions. Automatic Teller Machines (ATMs) were then introduced which allowed people
to do their banking on their own, practically anytime and anywhere. This helped the banks cut
down on the number of tellers and focus on managing money. The Internet then brought another
venue with which customers could do banking, reducing the need for ATMs. Online banking
allowed customers to do financial transactions from their PCs at home via the Internet. Now, with
the emergence of Wireless Application Protocol (WAP) technology, banks can use the
infrastructure and applications developed for the Internet and move it to mobile phones. Now
people no longer have to be tied to a desktop PC to do their banking. The WAP interface is much
faster and convenient than the Internet, allowing customers to see account details, transaction
details, make bill payments, and even check credit card balance.

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The cost of the average payment transaction on the Internet is minimum. Several studies found that
the estimated transaction cost through mobile phones is 16 cents, a fully computerized bank using
its own software is 26 cents, a telephone bank is 54 cents, a bank branch, $1.27, an ATM, 27 cents,
and on the Internet it costs just 13 cents. As a result, the use of the Internet for commercial
transactions started to gain momentum in 1995. More than 2,000 banks in the world now have
transactional websites and the growth of online lending solutions is making them more cost
efficient. Recent developments are now encouraging banks to target small businesses as a separate
lending category online.

Banks are increasingly building payment infrastructure with various security mechanisms (SSL,
SET) because there is tremendous potential for profit, as more and more payments will pass
through the Internet. However, the challenge for banks is to offer a payments back-bone system
that will be open enough to support multiple payment instruments (credit cards, debit cards, direct
debit to accounts, e-checks, digital money etc.) and scalable enough to allow for a stable service
regardless of the workload.

The market for Electronic Bill Presentment and Payment (EBPP) is growing. According to a study,
18 million households in the US are expected to pay their bills online by 2003 compared to 2
million households in 2001. As more bill payers are getting online, several banks are making
efforts to find ways to meet the growing needs of EBPP. Established banks can emerge as key
online integrators of customer bills and can capitalize on this high potential market. Growing with
the popularity of EBPP is also the paying of multiple bills at a single site known as bill
aggregation. Offering online bill payment and aggregation will increase the competitiveness and
attractiveness of E-banking services and will allow banks to generate service-fee income from the
billers.

In the B2B segment, the customer value proposition for online bill payment is more compelling.
B2B e-commerce is expected to grow from $406 bn in 2000 to $2.7 tn by 2004, and more than half
of all transactions will be routed through online B2B marketplaces. There is a need for automated
payment systems to reduce cost and human error, and enhance cash-flow management. To meet
this need, a group of banks and non-financial institutions led by Citibank and Wells Fargo have
formed a company called Financial Settlements Matrix (FSMx). It provides business buyers and

12
sellers with access to secure payment processing, invoicing and other services that participating
financial services firms offer.

A B2B marketplace would provide minimum value to its customers if it just matches buyers and
sellers, leaving the financial aspects of transactions to be handled through traditional non-Internet
channels. Hence, the marketplace must be capable of providing the payments processing, treasury
management services, payables/receivables data flows, and credit solutions to complete the full
cycle of a commercial transaction on the Internet. The web-based B2B e-commerce offers
tremendous opportunities for banks, payment technology vendors and e-commerce companies to
form strategic alliances. This new form of collaboration between partners with complementary
core competencies may prove to be an effective business model for e-business.

E-Banking Trend

Internet banking is gaining ground. Banks increasingly operate websites through which customers
are able not only to inquire about account balances and interest and exchange rates but also to
conduct a range of transactions. Unfortunately, data on Internet banking are scarce, and differences
in definitions make cross-country comparisons difficult. Even so, one finds that Internet banking is
particularly widespread in Austria, Korea, the Scandinavian countries, Singapore, Spain, and
Switzerland, where more than 75 percent of all banks offer such services (see chart). The
Scandinavian countries have the largest number of Internet users, with up to one-third of bank
customers in Finland and Sweden taking advantage of E-banking.

In the United States, Internet banking is still concentrated in the largest banks. In mid-2001, 44
percent of national banks maintained transactional websites, almost double the number in the third
quarter of 1999. These banks account for over 90 percent of national banking system assets. The
larger banks tend to offer a wider array of electronic banking services, including loan applications
and brokerage services. While most U.S. consumers have accounts with banks that offer Internet
services, only about 6 percent of them use these services.

To date, most banks have combined the new electronic delivery channels with traditional brick and
mortar branches ("brick and click" banks), but a small number have emerged that offer their
products and services predominantly, or only, through electronic distribution channels. These

13
"virtual" or Internet-only banks do not have a branch network but might have a physical presence,
for example, an administrative office or non-branch facilities like kiosks or automatic teller
machines. The United States has about 30 virtual banks; Asia has 2, launched in 2000 and 2001;
and the European Union has several—either as separately licensed entities or as subsidiaries or
branches of brick and mortar banks.

Electronic Banking and its Evolution

Online banking started in the 80's. The term online became famous in the late 80's. Online banking
in the youth includes the use of terminals, keyboards, and televisions (or screens) picture) to access
the banking sector by telephone lines. Online services began in New York in1981 when four of the
city's major banks (Citibank, Chase Manhattan, Chemical and Makers Hanover) offered banking
using a video text system. After that, the concept of videotext became popular in France. In the
United Kingdom, the first online home banking service was discovered by Nottingham Building
Society (NBS) in 1983. It is supported on the UK Prestel system and uses computers, such as BBC
Micro or keypad (Tandata) connected to telephone and television systems. It gives customers the
choice to pay their gas, electricity and phone company bills and accounts with other banks. It was
the Stanford Federal Credit Union that provided internet banking services to all of its customers.

Online banking refers to the use of the Internet as an offshore distribution channel for banking
services, such as opening a term account or transferring money to different accounts, etc.
Moreover, this is a desirable opportunity for banks where the key to success is customer
acceptance. There is an evolution in the development of banking services over the Internet. At a
basic level, online banking involves a bank setting up an internet site to provide information about
the bank's products and services. At an advanced level, this involves providing conveniences such
as access to accounts, remittances, semi-integrated additional processes, and access to other
financial services such as investments and insurance Dangerous. There is an advantage for
customers as it provides the ability to manage their banking transactions without the need for a
bank teller. Services through Internet banking are payments by e-tax; account access to view
balances, online stock trading, online money transfers, and electronic bill payment
systems rail reservations, money transfers from customer accounts to other accounts, applications
for loans, etc. The online banking channel is very convenient compared to the bank branch system

14
because the parties involved can access their accounts at any time. Banks have taken advantage of
the Internet by offering online services in recent years.

Researchers identified three functional levels of Internet banking as information, communication,

and transaction. At the information level, it has been established that banks have marketing
information about the bank's products and services on an autonomous server. The risk is very low
because the information system does not have a path between the server and the internal network
of the bank. The communication level of online banking allows some interaction between the
bank's systems and the customer. This engagement is limited to emails, account inquiries, loan
applications, static file updates, and does not allow any money transfers. Transaction-level online
banking allows a bank's customers to electronically transfer funds to/from their accounts, pay bills
and perform other banking transactions online. There is a higher level of risk in the trading levels
compared to the other two.

15
Porter’s 5 forces of E–Banking industry

Source: www.noteslearning.com

Threat of New Entrants

Despite the regulatory and capital requirements associated with setting up a new bank, between
1977 and 2002, an average of 215 new banks were opened each year. With so many new banks
entering the market every year, the threat from new entrants is very high. However, due to bank
mergers and bank failures, the average total number of banks is decreasing by about 253 banks per
year. One of the main reasons for this, arguably the biggest barrier to entering a bank, is unsecured.
Because the industry handles other people's money and financial information, new banks will have
a hard time getting started. Due to the nature of the industry, people are more willing to trust large,

16
well-known and established banks that they consider trustworthy. The banking industry has
undergone a process of consolidation in which the major banks sought to meet all of their
customers' financial needs under their roof. This consolidation reinforces the role of trust as a
barrier to entry for new banks looking to compete with the big banks, as consumers are more likely
to allow one bank to hold all of the money, both their accounts and meet their financial needs. In
general, barriers to entry into the banking industry are relatively low. While new entrants into the
field of providing the confidence and full services of a large bank are nearly impossible, opening a
smaller bank that operates at the regional level is quite easy.

Power of Suppliers
Capital is the primary resource on any bank and there are four major suppliers (various other
suppliers [like fees] contribute to a lesser degree) of capital in the industry.
● Customer deposits
● Mortgages and loans
● Mortgage-backed securities
● Loans
By utilizing these four major suppliers, the bank can be sure that they have the necessary resources
required to service their customers' borrowing needs while maintaining enough capital to meet
withdrawal expectations. The power of the suppliers is largely based on the market, their power is
often considered to fluctuate between medium to high.

Power of Buyers
The individual doesn`t pose much of a threat to the banking industry, but one major factor
affecting the power of buyers is relatively high switching costs. If a person has one bank that
services their banking needs, mortgage, savings, checking, etc, it can be a huge hassle for that
person to switch to another bank. To try and convince customers to switch to their bank they will
often lower the price of switching, though most people still prefer to stick with their current bank.
The internet has greatly increased the power of the consumer in the banking industry.

The internet has greatly increased the ease and reduced the cost for consumers to compare the
prices of opening/holding accounts as well as the rates offered at various banks. ING Direct has

17
introduced a high-yielding savings account to get shoppers' attention, but it goes one step further
and makes it much easier for customers to transfer money from their current bank to ING. ING
succeeded in this attempt because it was able to keep switching costs very low in terms of time and
capital.

Availability of Substitutes
Some of the biggest threats to alternatives in the banking industry come from non-financial
competitors, not from competing banks. The industry does not suffer the real threat of alternatives
in terms of deposits and withdrawals, but insurance, investment trusts and bonds are part of many
banking services that are also offered by non-banks. In addition, there is a threat of payment and
loans are relatively high for the industry. For example, well-known electronics retailers, jewelry
stores, car dealers, etc. tend to offer preferential lending to "big" merchandise. Often, these
non-banking entities offer payments at lower interest rates than consumers receive from traditional
bank loans.

Competitive Rivalry
Banking industry is considered to be highly competitive. The financial services industry has been
around for hundreds of years, and almost everyone in need of banking services is already using
financial services. For this reason, banks must try to trick customers from competing banks. They
do this by offering lower funding, higher interest rates, investment services, and more convenience
than their competitors. Bank competition often competes for which banks can offer both the best
and fastest services, but as a result, the ROA (return on assets) of banks is declining. Given the
nature of the industry, the banking sector is likely to be further integrated.Large banks tend to
prefer to buy or merge with other banks rather than spending money on marketing or advertising.

Features of E-Banking
ATM and the Net transactions are becoming popular. But the customers are 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.

18
Electronic banking services and solutions fall into a few broad categories, including transactional
Services, non-transactional services, administrative services and wire transfers. Transactional
services include EBPP (electronic bill presentment and payment), transfer of funds between
different user accounts, investment sale or purchase, loan transactions and applications.
Non-transactional services provided by electronic banking systems include web chat with online
bankers,viewing online statements and accessing bank information services online.Administrative
services are also provided online, including interest rate calculation, depreciation, adjustment of
fees and others.
With Internet banking services, you can conduct an array of banking transactions. The prominent
ones are as under.

● Check Account Balances & Statements

You can log into the internet banking account to check your account balance at any time.
You can check for recent transactions or download statements from years ago.
● 24x7 Fund Transfer
You can transfer money within the same or different banks through internet banking via
facilities like RTGS, IMPS, NEFT, and UPI. You can also initiate overseas fund transfers.
● Bill Payments & Recharge
You can pay various utility bills like electricity, landline, gas, property tax, etc., and set up
standing instructions for automatic payments. You may also recharge your DTH and mobile
phone connection, pay credit card bills and loan EMIs conveniently.
● Order Cheque Books & Cards
Another feature of internet banking is the provision to place orders for new cheque books
and bank cards. You can apply for primary and add-on debit cards and credit cards online
and get swift delivery.
● Open deposit accounts
Banks also allow you to open fixed and recurring deposits through the internet banking
platform. You can choose your preferred type of term deposit and tenure, and earn higher
interest rates than those provided on your savings account.
● Apply for Loans
You can apply for personal loans, home loans, and auto loans through the net banking
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 portal. You can also access all the necessary information about the loan before sending your
loan application.
● Make Bank RelationshipInvestments
Whether you wish to invest in mutual funds, bonds, shares, or other market products, you
can do so through internet banking. You can also link your bank account to your investment
accounts for instant credit and debit of funds.
● Security
Banks take various measures to ensure you enjoy a secure internet banking experience.
Security features of internet banking systems include multi-factor authentication, virtual
keyboard, spending limits and session timeouts. You also receive SMS and email alerts
when you log into the internet banking platform to ensure your account is secured from
fraudulent activities.
● File Tax Returns
Some banks also allow you to file your income tax returns on their internet banking
platform. All you need to do is log in, select the income tax e-filing option and file your
taxes.

Development of E-Banking in India

The financial reforms that were initiated in the early 1990s and the globalization and liberalization
measures brought in a completely new operating environment to the banks. The bankers are now
offering innovative and attractive technology-based services and products such as ‘Anywhere
Anytime Banking’, ‘Tele-Banking’, ‘Internet Banking’, ‘Web Banking’, etc. to their customers to
cope with the competition. The process started in the early 1980s when the Reserve Bank of India
(RBI) set up two committees in quick succession to accelerate the pace of automation of operations
in the banking sector. A high-level committee was formed under the chairmanship of Dr. C.
Rangarajan, then Governor of RBI, to draw up a phased plan for computerisation and
mechanization in the banking industry over a five-year time frame of 1985–1989. The focus by
this time was on customer service and two models of branch automation were developed and
implemented. Having gained experience in the earlier mode of computerization, the second
Rangarajan committee constituted in 1988 drew up a detailed perspective plan for Computerization
of banks and for extension of automation to other areas such as funds transfer, e-mail, BANKNET,
SWIFT, ATMs, E -banking, etc. The Government of India enacted the Information Technology
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Act, 2000 (generally known as IT Act, 2000), with effect from 17 October 2000 to provide legal
recognition to electronic transactions and other means of electronic commerce. RBI had set up a
‘Working Group’ on e -banking to examine different aspects of e-banking. The Group had focused
on three major areas of E – banking such as (1) technology and security issues, (2) legal issues and
(3) regulatory and supervisory issues. RBI had accepted the recommendations of the ‘Working
Group’, and accordingly issued guidelines on ‘internet banking in India’ for implementation by
banks. The ‘Working Group’ has also issued a report on e-banking covering different aspects of
E-banking.

E-Banking in India is currently at a nascent stage. While there are scores of companies specializing
in developing e-banking software, security software and website designing and maintenance, there
are few online financial service providers. ICICI bank is the first one to have introduced e -banking
for a limited range of services such as access to account information, correspondence and, recently,
funds transfer between its branches.ICICI is also getting into e-trading, thus offering a broader
range of integrated services to the customer. Several finance portals for provision of non-banking
financial services, e-trading and e-broking have come up. Commercial applications such as
Electronic Bill Presentment (EBP) and Procurement systems may not be introduced in India
immediately, but are likely to have a greater impact than the retail applications. The corporate
sector is adequately computerized and has already recognized the important role of e-commerce in
future. Increasingly, companies are setting up websites even where there are no immediate tangible
benefits to them from doing so.

Status of E-Banking in India

In the Indian context, many publications throw light over the importance of e -banking and also its
prospects for the Indian banking industry. Unnithan and Swatman (2001) studied the drivers for
change in the evolution of the banking sector, and the move towards electronic banking by
focusing on two economies, Australia and India. The study found that Australia is a country with
internet-ready infrastructure as far as telecommunication, secure protocols, PC penetration and
consumers’ literacy are concerned. India, by comparison, is overwhelmed by weak infrastructure,
low PC penetration, developing security protocols and consumer reluctance in the rural sector.
Although many major banks have started offering E -banking services, the slow pace will continue
until the critical mass is achieved for PC, internet connections and telephones. However, the

21
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 E -banking. Rao and
Prathima (2003) provided a theoretical analysis of E -banking in India, and found that as compared
to the banks abroad, Indian banks offering online services still have a long way to go. For online
banking to reach a critical mass, there has to be a sufficient number of users and the sufficient
infrastructure in place. Various authors have found that E -banking is fast becoming popular in
India (Gupta, 1999; Pegu, 2000; Dasgupta, 2002). However, it is still in its evolutionary stage. By
the year 2006–2007, a large sophisticated and highly competitive E -banking market will develop.
Almost all the banks operating in India are having their websites, but only a few banks provide
transactional E -banking. A survey carried out by Malhotra and Singh (2006) shows that only 48%
of the commercial banks operating in India as on March-end 2005 offers e -banking.

In India, a comparatively less number of studies has been conducted on the current status of e
-banking and customer satisfaction compared to other countries. Thus, there is a lot of scope for
the research to present new ideas concerning e -banking in India which may be useful to the Indian
banking industry. There are a series of papers that observe that e -banking has revolutionized the
banking industry and the banking industry is under pressure to offer new products and services.
However, to succeed in today’s electronic markets a strategic and focused approach is required.

Internet Users in India

The role of the internet is becoming inevitable to corporate and society. Across the world,
governments and corporations are increasingly working towards the better utilization of the
internet. The internet which was initially perceived as a communication media is now
metamorphosing into a powerful business media (Sakkthivel, 2006). According to the Internet &
Online Association of India (IOAI), the Indian internet population is currently over 25 million and
is expected to grow to 100 million by 2007 (Survey by New Media Review, 2005). In July 2005,
Internet World Stats reported that there were 39,200,000 internet users in India representing 3.6%
of the population. (Internet World Stats, August 2005). Even with millions of web users in its
cities, the internet penetration rate for India remains well below 5%. Despite India’s technology
outsourcing power, the country’s internet penetration rate is low. JuxtConsult, a research firm
based in New Delhi, surveyed urban internet users in April 2005 by talking to 30,000 Indian web

22
users about their lifestyle and their web use. There are about 17.5 million urban dwellers in India
who use the internet consistently with an additional 5.2 million who use it occasionally.

The role of the internet is becoming inevitable to corporate and society. Across the world,
governments and corporations are increasingly working towards the better utilization of the
internet. The internet which was initially perceived as a communication media is now
metamorphosing into a powerful business media (Sakkthivel, 2006). According to the Internet &
Online Association of India (IOAI), the Indian internet population is currently over 25 million and
is expected to grow to 100 million by 2007 (Survey by New Media Review, 2005). In July 2005,
Internet World Stats reported that there were 39,200,000 internet users in India representing 3.6%
of the population. (Internet World Stats, August 2005). Even with millions of web users in its
cities, the internet penetration rate for India remains well below 5%. Despite India’s technology
outsourcing power, the country’s internet penetration rate is low. JuxtConsult, a research firm
based in New Delhi, surveyed urban internet users in April 2005 by talking to 30,000 Indian web
users about their lifestyle and their web use. There are about 17.5 million urban dwellers in India
who use the internet consistently with an additional 5.2 million who use it occasionally.

Thus, in India, slowly but steadily, the Indian customer is moving towards e -banking. A number
of banks have either adopted e -banking or are on the threshold of adopting it. The banks started e
-banking initially with simple functions such as getting information about interest rates, checking
account balances and computing loan eligibility. Then, the services are extended to online bill
payment, transfer of funds between accounts and cash management services for corporations.
Recently, banks have started to facilitate payment of e-commerce transactions by directly debiting
bank accounts or through credit cards. It will add to the revenues of the bank.

Challenges in Digital Banking

During COVID, the dependency on digital banking increased. Digital banking has promoted
technology-based account opening, digital lending, wealth and investing. Banking is more
accessible, and customer appetite for better technology is growing. However, with the growing
demand and digital banking pressure, banks are being challenged to cope with the new customer
behavior in various facets of digital banking compliance. Here is a quick overview.

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Security Concerns
With digital banking gaining momentum for customer convenience, the threat of fraud in financial
transactions leaves both customers and banks exposed to swindlers. Banks are working towards
spreading awareness amongst customers on the nature of threats that customers could face. They
must never diverge confidential financial information to unknown callers/emails/messages. They
should practice due diligence while performing financial transactions and change the secure
credentials/passwords from time to time. Banks operate on layered security checks enabling
customers to stop at any point if doubtful of a transaction. Banks advise customers never to click
unknown links without checking Uniform Resource Locator (URL). For banking transactions the
official banking app or the official website of the bank must be used. Frauds are a constant threat
attempting to get confidential information through.

Vishing: Sharing financial information under the pretext of KYC upgradation, unblocking account,
SIM card, debit/ credit card. Phishing: Spoofed emails/SMS, designed in such a way that
customers think it is from the bank.

Remote Access: Customers unknowingly download an application on their mobile/computer

giving access to customer data. Misusing UPI 'collect request', by sending fake messages to collect
money.

Fake bank numbers/e-wallets/incorrect search engine results/ frauds through social media.

Banks need to take special measures by taking customers into confidence with information on
what they must-dos and not do to protect them from becoming victims of these fraudulent
activities.

Technical Issues
Failed connectivity and lack of consistent and accurate data is a major concern with banks. Banks
are working towards pre-empting the problems with greater demand load rising from digital
technologies. Relying on technically upgraded systems as customer expectations are rising and
improved and speedy banking is the minimum expectation. Banks should deploy SaaS teams of
engineers to scale the infrastructure based on core banking systems that are somewhat outdated to
meet the new technologies of today. They must ensure that the banking digital service can upgrade

24
and embrace future technologies. Banks should keep front-end focus ramping with new-age
technology and innovation and prepare to be future-ready to meet customer pressure. In UPI
payments too, banks should be able to control technical decline (TD). UPI downtimes need to be
efficiently managed by banks.

Lack of Personal Relationships

Customer service is an important factor through which banks retain and gain their new client base.
A bad experience with the service provider not mitigated at the right time by the relationship
officer can be a damper on the bank's reputation. With technology being the first face in digital
banking, non-human bots and customer care helplines are gradually replacing the personalized
service that customers still love. These automated services can frustrate customers to the point of
quitting. Most online banking apps are creating sets of possible questions for customers, hoping to
solve problems. But not all questions address specific problems customers throw. People lack time
and are mostly impatient. They prefer being attended to immediately. Therefore, when someone
wishes to know what the loan-taking process involves, they are directed to a list of similar
questions that irritate and demotivate customers to another service provider. Personalized support
cannot be completely removed and will need to exist alongside AI. Customers cannot be made to
wait in long queues and quick attendance must be the lookout. The automated system needs greater
improvement, supporting the exact customer query.

Growing Customer Expectations

Customers are switching rapidly to innovative online products and services. The increasing rise in
India's digital payment through Unified Payments Interface (UPI) worth INR 10.4 lakh in August
2022 is proof of this transformation. Online banking and mobile banking also took off rapidly
during the pandemic. Customers are looking for faster and better performance from their banking
apps. Legacy technologies need to be revamped by a younger agile workforce operating with risk
tolerance. Amping security further at every level and diminishing vulnerabilities will increase
customer trust.

25
 Source: link.springer.com

Role of E-Banking in the Banking sector

Electronic banking (e-banking) is the newest delivery channel of banking services. The definition
of e banking varies amongst researches partially because electronic banking refers to several types
of services through which a bank’s customers can request information and carry out most retail
banking services via computer, television or mobile phone (Daniel, 1999; Mols, 1998; Sathye,
1999). Burr, 1996, for example, describes it as an electronic connection between the bank and
customer in order to prepare, manage and control financial transactions. Electronic banking can
also be defined as a variety of the following platforms: (a) Internet banking (or online banking), (b)
telephone banking, (c) TV-based banking, (d) mobile phone banking, and (e) PC banking (or
offline banking). In this paper, the ATM (Automated Teller Machine) channel is also added to the
research.

26
The channels comprise two major groups: the traditional channels and e-channels. (1) The
traditional channels are defined on the basis of the type of human assistance: teller, retail or
corporate manager. (2) E-channels are divided into 4 sub-groups on the basis of how the channel is
seen by clients, with some exceptions based on the technological processes of transaction
execution: Internet-based (online bank for corporate clients Telehansa.net, online bank for private
clients Hanza.net, offline bank for large corporate clients Telehansa), card-related (ATM –
Automated Teller’s Machine and POS –payment terminal), Phone channels (call center, IVR,
mobile bank) and Automated channels (“virtual” bank core channels where direct debit and
incoming payments are affected).. Services are one of the primary benefits which a customer looks
for while adopting a new channel. The consumers consider the benefits and weigh them against the
costs associated. The Internet offers a lot of benefits to consumers, like any time anywhere
banking, updated information, convenience, faster transaction, etc.

E – Banking services are replacing traditional services and creating a new scale in transformation.
In the initial stage, e- channels were introduced in metropolitan cities and urban areas, but recently
some banks have started focusing on rural and semi urban areas. New private sector banks are
taking the lead in capturing the rural and semi urban sector.

The different e- channels such as ATMs, Credit and debit cards, Tele-banking, Mobile – banking,
online – banking and Smart Cards, are changing the face of the retail banking sector. New private
sector banks and foreign banks are attracting customers in a big way. The potential customers and
big companies are shifting their accounts from traditional banks (not fully computerized) to E -
banks (fully computerized and provide different e – channels). If traditional banks, mostly public
sector banks, do not transform their business by introducing IT, their survival will become
difficult, as now-a-days IT is not a matter of convenience but a survival factor. Therefore, e –
banking services are a potent factor for transformation in this e – age.

Classification of Internet Banking in India

The Reserve Bank of India (RBI), the central bank in India, constituted a working group on
Internet Banking. The group divided the internet banking products in India into the following three
types based on the levels of access granted:

27
Information-Only System
General purpose information like interest rates, branch location, bank products and their features,
loan and deposit calculations are provided on the bank's 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 the bank's application system. No
identification of the customer is done. In this, there is no possibility of any unauthorized person
getting into the production systems of the bank through the Internet.

Benefits
In recent time E-banking has spread rapidly all over the globe. All Banks are making greater use of
E-banking facilities to provide better service and to excel in competition. The spread of E-banking
has also greatly benefited the ordinary customer in general and the corporate world in particular.
The following points summarize benefits of E-Banking

Benefits to customers
General customers have been significantly affected in a positive manner by E-banking. Many of
the ordinary tasks have now been fully automated resulting in greater ease and comfort.

● Customer’s account is extremely accessible with an online account.

● Customers can withdraw at any time through ATMs that are now widely available
throughout the country.
● Besides withdrawing cash, customers can also have mini bank statements and balance
inquiries at these ATMs.
● Through Internet Banking, a customer can operate his account while sitting in his office or
home. There is no need to go to the bank in person for such a matter
● E banking has also greatly helped in payment of utility bills. Now there is no need to stand
in long queues outside banks for this purpose.
● All services that are usually available from the local bank can be found on a single website.
● The Growth of credit card usage also owes greatly to Ebanking. Now a customer can shop
worldwide without any need of carrying paper money with him.

28
 ● Banks are available for 24 hours a day, seven days a week and they are only a mouse click
away.

Benefits to Banking industry

Banking industry has also received numerous benefits due to growth of E-Banking infrastructure.
They are highlighted below:

● The reach and delivery capabilities of computer networks, such as the Internet, are far
better than any branch network.
● Many repetitive and tedious tasks have now been fully automated resulting in greater
efficiency, better time usage and enhanced control.
● The rise of E-banking has made banks more competitive. It has also led to expansion of the
banking industry, opening of new avenues for banking operations.
● Electronic banking has greatly helped the banking industry to reduce paper work, thus
helping them to move the paperless environment.
● Electronic banking has also helped banks in proper documentation of their records and
transactions.
● The reach and delivery capabilities of computer networks, such as the Internet, are far
better than any branch network.

Benefits to Society
Electronic Banking as already stated has greatly serviced both the general public and the banking
industry. This has resulted in creation of a better enabling environment that supports growth,
productivity and prosperity. Besides many tangible benefits in form of reduction is cost, reduced
delivery time, increased efficiency, reduced wastage, E-banking electronically controlled and
thoroughly monitored environment discourage many illegal and illegitimate practices associated
with banking industry like money laundering, frauds and embezzlements.

E-banking has helped banks in better monitoring of their customer base. It is a useful tool in the
hand of the bank to devise suitable commercial packages that are in conformity with customer
needs. E-banking provides an opportunity to the banking sector to enlarge their customer base, a

29
consequence of increasing the volume of credit creation which results in better economic
conditions. Besides all this E-banking has also helped in documentation of the economic activity of
the masses.

Disadvantages:
The following are the disadvantages of E-banking

Bank Relationship:
A traditional bank provides the opportunity to develop a personal relationship with that bank.
Getting to know the people at your local branch can be an advantage when a customer needs a loan
or a special service that is not normally offered to the public. A bank manager usually has some
discretion in changing the terms of a customer's account if the customer’s personal circumstances
change. They can help customers solve problems such as reversing an undeserved fee. The banker
also will get to know the customer and his unique needs. If the customer has a business account,
this personal relationship may help if the customer needs capital to expand. It’s easier to get the
bank’s support if there is someone who understands the customer's business and vouches for his
operating plan.

Transaction Issue:
Sometimes a face-to-face meeting is required to complete complex transactions and address
complicated problems. A traditional bank can host meetings and call in experts to solve a specific
issue. Moreover, international transactions may be more difficult (or impossible) with some direct
banks. If a customer deposits cash on a regular basis, a traditional bank with a drive-through
window may be more practical and efficient.

Service Issues:
Some direct banks may not offer all the comprehensive financial services such as insurance and
brokerage accounts that traditional banks offer. Traditional banks sometimes offer special services
to loyal customers such as preferred rates and investment advice at no extra charge. In addition,
routine services such as notarization and bank signature guarantee are not available online. These
services are required for many financial and legal transactions.

30
Security
Direct banks are subject to the same laws and regulations as traditional banks and accounts are
protected by the FDIC. Sophisticated encryption software is designed to protect your account
information but no system is perfect. Accounts may be subject to phishing, hacker attacks,
malware and other unauthorized activity. Most banks now make scanned copies of cleared checks
available online which helps to avoid and identify check fraud. It enables verification that all
checks are signed by the customer and that dollar or euro amounts have not been changed. The
timely discovery of discrepancies can be reported and investigated immediately.

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 CHAPTER - 2
REVIEW OF LITERATURE

Ansari, Seharish J. & Khan, Nisar A. (2017) have tried to analyze the progress and challenges of e
banking in India from 2011 to 2016, also throwing some light on the status of retail electronic
payments in the post-demonetization period. Their study shows that the number of internet users
has increased from 2,231,957,359 to 3,424,971,237 in 2016, which is around 53.45% increase
during the period. Also, the penetration of the internet as a ratio of population has increased from
31.8 % in 2011 to 46.1% in 2016. There has been a continuous increase in the number of debit card
and credit card users. The number of transactions through credit cards increased at a CAGR of
22.25% whereas the number of transactions through debit cards increased at a CAGR of 12.33%
during the period of study. Post demonetisation i.e., from November 2016 to May 2017, RTGS
(real time gross settlement), NEFT (national electronic fund transfer) and UPI (unified payments
interface) increased at a CAGR of 4.72%, 1.95% and 60.50% respectively. Mobile banking
declined continuously. Their study also mentions the challenge of increasing the number of
internet users and the requirement of banks to be able to meet the expectations of these tech savvy
people.

Stephen F. Bored in May(2018) had studied about the “Is the saving and Loan.” This article tells
about the savings and loan crisis. Proposed solutions are discussed in the context of the industry as
it currently stands. With a somewhat similar liability structure to that of banks (mainly short-term
deposits), the asset structure of S&Ls is quite different. Whereas banks assets consist of short-term
loans, S&L assets consist largely of long-term loans, such as home ownership mortgages.
Therefore, in the absence of adequate hedging measures, S&Ls are more vulnerable to interest rate
risk, which can lead to lower profits when interest rates rise.

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 CHAPTER-3
RESEARCH METHODOLOGY

Research
Research is defined as human activity based on intellectual application in the investigation
of matter. The primary purpose for applied research is discovering, interpreting, and the
development of methods and systems for the advancement of human knowledge on a wide
variety of scientific matters of our world and the universe. The term research is also used to
describe an entire collection of information about a particular subject.

Methodology
It is the method followed while conducting the study on a particular project.Through this
methodology a systematic study is conducted on the basis of which the basis of a report is
produced.It is a written game plan for conducting research.Research methodology has many
dimensions.It includes not only the research methods but also considers the logic behind the
methods used in the context of the study and explains why only a particular method or technique
has been used.It also helps to understand the assumptions underlying various techniques and by
which they can decide that certain techniques will be applicable to certain problems and others will
not.Therefore, in order to solve a research problem,it is necessary to design a research
methodology for the problems as the some may differ from problem to problem.The methodology
adopted for studying the objectives was surveying the in house customers of these two banks in the
city of Delhi.

Benefits of Research Methodology

● Other researchers who want to replicate the research have enough information to do so.
● Researchers who receive criticism can refer to the methodology and explain their approach.
● It can help provide researchers with a specific plan to follow throughout their research.
● The methodology design process helps researchers select the correct methods for the
objectives.

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 ● It allows researchers to document what they intend to achieve with the research from the
outset.

Research Design
This research is descriptive and quantitative in nature which is collected through google forms and
online articles related to the study.It is based on the combination. Google forms were circulated
with questions with the best of our teammates' knowledge and creativity to gather data. In this
research paper we also used secondary data because the comparative study of Private sector Banks
and public sector banks is largely secondary in nature.

Sample Design
For the present study purpose,simple convenient random sampling has been selected.This
particular survey was directed at only in Mysore city and customers using E-banking service in
State Bank of India(SBI).The sample size is of 50 respondents consisting of customers who are
availing of E-banking services in SBI.

Nature of Data
The secondary data has been collected from industry journals, News Articles,Bank websites and
Research papers. This data was used to analyze the balance sheet figure of the bank.
Google from collecting data through various channels of social media platforms namely:
● Whatsapp
● Facebook
● Instagram

Hypothesis of study - From the above objectives the following set of hypotheses were framed.
● Efficiency has a significant positive association with customer satisfaction.
● Responsiveness has a significant positive association with customer satisfaction.

Data Collection method

In this method quantitative methods are used.Because it was a formal, objective,systematic process
in which numerical data are utilized to obtain information.Quantitative research made it suitable

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for the study was that the researcher used structured interview instruments to collect the data.The
respondents have been selected through non-probability sampling method i.e convenience
sampling,as it was not possible to get access to the list of e-banking customers to conduct random
sampling.

Objectives of the study

The following objectives are formulated for the present study are-
● To analyze the awareness among customers about E-banking Services of SBI in Mysore
City.
● To study the reasons for customers preferring E-banking services.
● To suggest the remedial measure to improve the quality of services of E-banking.
● To identify the various dimensions of internet banking service quality.
● To examine the relationship between the customer satisfaction and the various internet
banking service quality dimensions.
● To study the impact of the internet banking service quality dimensions on the satisfaction
of customers.
● “Identify customers’’ level of satisfaction with service delivery given the introduction of
electronic banking services.
● To identify the electronic banking services offered by banks and its usage by customers.

Limitations of Study
The sector is very vast and it was not possible to cover every nook and corner of this sector. Some
of the limitations of the study are:
● Study is conducted only in some selected Branches of Jaipur location.
● Authenticity of the collected data from different interviewees.
● No possible way the researcher can ensure that the interviewees always understood the true
context of each question.

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 CHAPTER - 4
PROFILES OF STATE BANK OF INDIA

Introduction of State Bank of India

State Bank of India (SBI) is an Indian multinational public sector bank and financial services
statutory body headquartered in Mumbai, Maharashtra. SBI is the 49th largest bank in the world by
total assets and ranked 221st in the Fortune Global 500 list of the world's biggest corporations of
2020, being the only Indian bank on the list. It is a public sector bank and the largest bank in India
with a 23% market share by assets and a 25% share of the total loan and deposits market.It is also
the fifth largest employer in India with nearly 250,000 employees. On 14 September 2022, State
Bank of India became the third lender (after HDFC Bank and ICICI Bank) and seventh Indian
company to cross the ₹ 5-trillion market capitalization on the Indian stock exchanges for the first
time.

The largest and oldest bank which is still in existence is the State Bank of India (SBI). Established
in mid-June 1806, it began operations as Calcutta Bank. In 1809 it was renamed Bengal Bank. It
was one of three banks founded by the presidential government; the other two were Bombay Bank
in 1840 and Madras Bank in 1843. Independent, became the State Bank of India in 1955. For many
years, the Presidential Bank, like its successors, served as a quasi-central bank until the Reserve
Bank of India was established in 1935, under the Reserve Bank of India Act in 1934.

In 1960, the State Bank of India gained control of eight state-owned banks under the State Bank of
India (Subsidiary) Act of 1959. However, the merger of these affiliated banks and SBI came into
effect on April 1, 2017. Nationalized 14 major private banks, one of the major banks was the Bank
of India. In 1980, six more private banks were nationalized. These nationalized banks are the
majority of lenders in the Indian economy. They dominate the banking sector because of their size
and extensive network.

The Indian banking sector is broadly classified into scheduled and non- scheduled banks. The
scheduled banks are those included under the 2nd Schedule of the Reserve Bank of India Act,
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1934. The scheduled banks are further classified into: nationalized banks; State Bank of India and
its associates; Regional Rural Banks (RRBs); foreign banks; and other Indian private sector banks.
The SBI has merged its Associate banks into itself to create the largest Bank in India on 1 April
2017. With this merger SBI has a global ranking of 236 on Fortune 500 index. The term
commercial banks refer to both scheduled and non-scheduled commercial banks regulated under
the Banking Regulation Act, 1949. Overall, the supply, product range and reach of banking
services in India are quite mature, although reach in rural and poor areas of India remains a
challenge.

The Government has developed initiatives to address this issue through the State Bank of India
expanding its branch network and through the National Bank for Agriculture and Rural
Development (NABARD) with facilities like microfinance.

On the suggestions of The All India Rural Credit Survey Committee, The Imperial Bank of India
became nationalized and State Bank of India came into life in 1955 below the SBI Act 1955.
Under SBI (Subsidiary Banks) Act 1959 8 banks of the princely states State Bank of Bikaner,
Bank of Indore, State Bank of Jaipur, Bank of Mysore, Patiala State Bank, Travancore Bank,
Hyderabad State Bank and State Bank of Saurashtra have become subsidiaries of SBI.

14 banks having deposits of greater than Rs.50 crores ever have been nationalized in 1969 and
different 6 banks with deposits of Rs.2 hundred crores and greater have been nationalized in 1980.
Rest of the banks persevered to function as Private Banks.

In 1993 under the liberalization policy of the government, RBI set up new guidelines to form
private sector banks. The banks established post liberalization are known as new generation private
sector banks. The essential banks installed at some stage in this era are HDFC Bank, ICICI Bank,
AXIS Bank (previously called UTI Bank), and Kotak Mahindra Bank, Yes Bank etc. Liberalization
policy has opened the doors for foreign banks also.

The new concept of a payment bank was introduced by the RBI on the recommendation of
Nachiket Mor Commission in 2014. In 2015, RBI granted key approvals to 11 institutions Set up

37
payment banks in India. Paying banks have to be networked from the start. There are some
restrictions on the paying bank, for example, the deposit amount is limited to Rs. 1 lacs, they
cannot grant loan or issue credit cards, may not establish subsidiaries to carry out non-banking
activities, and at least 25% of branches must be opened in unbanked regions.

The bank descends from the Bank of Calcutta, founded in 1806 via the Imperial Bank of India,
making it the oldest commercial bank in the Indian subcontinent. The Bank of Madras merged into
the other two presidency banks in British India, the Bank of Calcutta and the Bank of Bombay, to
form the Imperial Bank of India, which in turn became the State Bank of India in 1955. Overall the
bank has been formed from the merger and acquisition of more than twenty banks over the course
of its 200 year history. The Govern royal charters. Ent of India took control of the Imperial Bank
of India in 1955, with Reserve Bank of India (India's central bank) taking a 60% stake, renaming it
State Bank of India.

On 16th Aug 2022 an attempt to facilitate and support start-ups in the country, the State Bank of
India (SBI) announced the launch of its first "state-of-the-art" dedicated branch for start-ups in the
country in Bengaluru.

History of State Bank of India

The roots of the State Bank of India lie in the first decade of the 19th century when the Bank of
Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The Bank of Bengal
was one of three Presidency banks, the other two being the Bank of Bombay (incorporated on 15
April 1840) and the Bank of Madras (incorporated on 1 July 1843). All three Presidency banks
were incorporated as joint stock companies and were the result of these three banks receiving the
exclusive right to issue paper currency till 1861 when, with the Paper Currency Act, the right was
taken over by the Government of India. The Presidency banks amalgamated on 27 January 1921,
and the re-organised banking entity took as its name Imperial Bank of India. The Imperial Bank of
India remained a joint-stock company but without Government participation.

Pursuant to the provisions of the State Bank of India Act of 1955, the Reserve Bank of India,
which is India's central bank, acquired a controlling interest in the Imperial Bank of India. On 1
July 1955, the Imperial Bank of India became the State Bank of India. In 2008, the Government of

38
India acquired the Reserve Bank of India's stake in SBI so as to remove any conflict of interest
because the RBI is the country's banking regulatory authority.

In 1959, the government passed the State Bank of India (Subsidiary Banks) Act. This made eight
banks that had belonged to princely states into subsidiaries of SBI. This was at the time of the First
Five Year Plan, which prioritized the development of rural India.

The government integrated these banks into the State Bank of India system to expand its rural
outreach. In 1963 SBI merged State Bank of Jaipur (est. 1943) and State Bank of Bikaner
(est.1944).

SBI has acquired local banks in rescues. The first was the Bank of Bihar (est. 1911), which SBI
acquired in 1969, together with its 28 branches. The next year SBI acquired National Bank of
Lahore (est. 1942), which had 24 branches. Five years later, in 1975, SBI acquired Krishnaram
Baldeo Bank, which had been established in 1916 in Gwalior State, under the patronage of
Maharaja Madho Rao Scindia. The bank had been the Dukan Pichadi, a small moneylender,
owned by the Maharaja. The new bank's first manager was Jall N. Broacha. In 1985, SBI acquired
the Bank of Cochin in Kerala, which had 120 branches. SBI was the acquirer as its affiliate, the
State Bank of Travancore, already had an extensive network in Kerala.

National Institute of Design Ahmedabad,designed the SBI logo in 1971.

There was, even before it actually happened, a proposal to merge all the associate banks into SBI
to create a single very large bank and streamline operations.

The first step towards unification occurred on 13 August 2008 when State Bank of Saurashtra
merged with SBI, reducing the number of associate state banks from seven to six. On 19 June
2009, the SBI board approved the absorption of State Bank of Indore, in which SBI held 98.3%.
(Individuals who held the shares prior to its takeover by the government held the balance of 1.7%.)

The acquisition of State Bank of Indore added 470 branches to SBI's existing network of branches.
Also, following the acquisition, SBI's total assets approached ₹10 trillion. The total assets of SBI

39
and the State Bank of Indore were ₹9,981,190 million as of March 2009. The process of merging
of State Bank of Indore was completed by April 2010, and the SBI Indore branches started
functioning as SBI branches on 26 August 2010.

On 7 October 2013, Arundhati Bhattacharya became the first woman to be appointed Chairperson
of the bank. Mrs. Bhattacharya received an extension of two years of service to merge into SBI the
five remaining associate banks.

Current Scenario of E-Banking

The Indian banking system consists of 12 public sector banks, 22 private sector banks, 44 foreign
banks, 43 regional rural banks, 1,484 urban cooperative banks and 96,000 rural cooperative banks
in addition to cooperative credit institutions. As of September 2021, the total number of ATMs in
India reached 213,145 out of which 47.5% are in rural and semi-urban areas.

According to the RBI, bank credit stood at Rs. 116.8 lakh crore (US$ 1.56 trillion) on 31st
December 2021.

As of February 2022, credit to non-food industries stood at Rs. 114.10 trillion (US$ 1.53 trillion).

In FY18-FY21, bank assets across sectors increased. Total assets across the banking sector
(including public and private sector banks) increased to US$ 2.48 trillion in FY21.

In FY21, total assets in the public and private banking sectors were US$ 1,602.65 billion and US$
878.56 billion, respectively.

RBI has decided to set up Public Credit Registry (PCR), an extensive database of credit
information, accessible to all stakeholders. The Insolvency and Bankruptcy Code (Amendment)
Ordinance, 2017 Bill has been passed and is expected to strengthen the banking sector. Total equity
funding of the microfinance sector grew 42% y-o-y to Rs. 14,206 crore (US$ 2.03 billion) in
2018-19.

As of February 21, 2022, the number of bank accounts—opened under the government’s flagship
financial inclusion drive ‘Pradhan Mantri Jan Dhan Yojana (PMJDY)’— reached 44.63 crore and
deposits in the Jan Dhan bank accounts totaled Rs. 1.58 trillion (US$ 21.25 billion).

40
Rising income is expected to enhance the need for banking services in rural areas, and therefore,
drive the growth of the sector.

India is the world's largest market for Android-based mobile lending apps, accounting for ~82% of
all online lenders worldwide. India currently has 887 active lending apps.

The digital payments revolution will trigger massive changes in the way credit is disbursed in
India. Debit cards have radically replaced credit cards as the preferred payment mode in India after
demonetization. In January 2022, Unified Payments Interface (UPI) recorded 4.62 billion
transactions worth Rs. 8.32 trillion (US$ 111.8 billion).

The volume of digital payments in India has increased by 33% year-on-year (YoY) during the
financial year (FY) 2021-2022. A total of 7,422 crore digital payment transactions were recorded
during this period, up from 5,554 crore transactions seen in FY 2020-21, said the Ministry of
Electronics and IT.

NPCI’s unified payment interface (UPI) was the most used platform for digital transactions during
the period, accounting for 452.75 crore transactions with a value of ₹8.27 lakh crore, until the end
of February.

According to NPCI, the total volume of UPI transactions during the month of February was almost
twice the transactions seen a year ago. In February 2021, 229.2 crore UPI transactions worth ₹4.25
lakh crore were made. This shows that the use of UPI on a monthly basis in particular has almost
doubled in the last year.

The use of digital payment apps in India has grown considerably, especially after the pandemic,
which forced people to stay indoors and order food and other items through online platforms. To
avoid contact with delivery agents, many of the online stores and aggregator platforms had blocked
cash payments.

PhonePe with 212 crore transactions was the leading UPI app during February with Google Pay
right behind it with 152.4 crore transactions, as per NPCI data.

India has been the leading market in terms of digital payments since 2019. According to a March
2021 report by ACI Worldwide, India was the leading market for real-time payments transactions
with 2550 crore payments, followed by China (1570 crore) and South Korea (600 crores). The US
with 120 crore transactions was ranked 9th.

41
In the last few months, RBI has implemented several rules to make online transactions more
secure. Last September, it implemented an additional factor of authentication (AFA) for all
recurring credit or debit card payments. It was followed by a mandate on card-on-file-tokenization
that requires all payment companies to replace card details with an alternative code called a token.

Organizational structural in State Bank of India

The organization of the State Bank of India can be discussed under the following heads:

Capital
The state Bank of India has an authorized capital of Rs. 20 crore which has been divided into 20
lakh shares of Rs. 100 each. The issued capital of the State Bank is Rs. 5.6 crore. The shares of the
State Bank are held by the Reserve Bank, insurance companies and the general public. At the end
of March 2001, the paid-up capital and the reserves of the State Bank were Rs. 13461 crore.

Management
The management of the State Bank of India is under the control of a Central Board of Directors
consisting of 20 members.These members play a vital role in organizing the bank's structure and to
provide good customer satisfaction to the customers.
The break-up of the Central Board is as given below:

● A Chairman and a Vice-Chairman are to be appointed by the Central Government in

consultation with the Reserve Bank.
● Two Managing Directors are to be appointed by the Central Board with the approval of the
Central Government.
● Six directors are to be elected by the private shareholders.
● Eight directors are to be nominated by the Central Government in consultation with the
Reserve Bank to represent territorial and economic interests. Not less than two of them
should have special knowledge in the working of cooperative institutions and of the rural
economy.
● One director is to be nominated by the Central Government.
● One director is to be nominated by the Reserve Bank.

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 Source: www.wallstreetmojo.com

Subsidiary Banks
Through the State Bank of India (Subsidiary Banks) Act, 1959, major state- associated banks were
converted into subsidiary banks of State Bank of India. At present, there are seven subsidiary
banks of the State Bank of India:

● The State Bank of Bikaner and Jaipur

● The State Bank of Hyderabad
● The State Bank of Mysore
● The State Bank of Patiala
● The State Bank of Saurashtra
● The State Bank of Travancore
● The State Bank of Indore.

The State Bank of India holds not less than 55 per cent of the issued capital of each subsidiary
bank.

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Objectives of State Bank of India
The main objectives of State Bank of India are as follows:

Objectives
The State Bank of India has been established to operate on the normal commercial principles, with
the only difference that, unlike other commercial banks in the country, it takes into consideration
and responds in a progressively liberal manner the financial requirements of cooperative
institutions and small scale industries, particularly in the rural areas of the country.

The main objectives of the State Bank are:

● To act in accordance with the broad economic policies of the government.

● To encourage and mobilize savings by opening branches in rural and semi-urban areas and
to promote rural credit.
● To establish government partnership in the provision of cooperative credit.
● To extend financial help for the establishment of licensed warehouses and cooperative
marketing societies.
● To provide financial help to the small scale and cottage industries.
● To provide remittance facilities to the banking institutions.

The State Bank of India acts as an agent of the Reserve Bank in all those places where the latter
does not have its branches.

Functions of State Bank of India

The functions of the State Bank of India is largely divided into two main categories. These are
ordinary banking functions and central banking functions. Both these categories are broadly
divided into many subcategories.

Central Banking Functions

SBI acts as an agent to the RBI, where there are no branches of RBI available. Accordingly, there
are many functions which are rendered by the SBI. These are.
● Maintaining the currency

44
 ● Government’s bank
● Bank’s banker
● Acts as a clearing house
● Maintaining the currency

RBI is reporting for maintaining its own currency. But the offices of RBI are only available in big
cities. But the branches of SBI are available everywhere in the country. The network of SBI works
in rural as well as urban areas.
In such places, RBI maintains its currency with SBI. The currency is withdrawn from these
branches whenever required by RBI.

Government’s Bank

SBI caters to the needs of both the government, central as well as the state. On behalf of the
government, it receives the money and deposits it. It collects the charges on behalf of the
government like tax collection and other payments. It also grants advances and loans to the
government.

Bank’s Bankers

Many commercial banks have their accounts with SBI. These banks resort to help SBI whenever
they face a financial shortage. It also discounts the bills for these commercial banks. Due to this
function, SBI is also considered as the banker’s bank but only in a limited sense.

Acts as a Clearinghouse

In places where RBI has no branches, SBI acts as a clearinghouse for them. There, it facilitates the
services of interbank settlements and many other services. All the banks have accounts with SBI,
so the process of clearing becomes easier for SBI.

General Banking Functions

● There are many functions of SBI beyond the above-mentioned services. These services are
rendered by SBI under section 33A. These are:

45
 ● It accepts deposits from the people in the form of savings, fixed, current, and recurring
deposit accounts.
● Based on the security of stocks, securities, SBI gives advances and loans to the public.
● SBI gives the facility of drawings, accepting, and buying and selling the bills of exchange.
● It also issues and circulates the letters of credit.
● SBI also invests in funds or any special kind of security.
● The bank also acts as a trustee, executor, or otherwise, based on the circumstances.
● It is also entrusted with selling and purchasing of either movable or immovable properties
that come in the bank.
● SBI also functions for selling and buying of gold and silver.
● For the general public, it helps in the opening of public provident fund accounts.
● It underwrites any issue related to the securities or the debentures that are authorized.
● It provides the facility of shipping finance as well as various factoring services.
● There are many leading bank schemes in which SBI participates.

Main Concerns of SBI in Internet Banking

In a survey conducted by the Online Banking Association,member institutions rated security as the
most important issue of online banking. There is a dual requirement to protect customers privacy
and protect against fraud Banking Security Online Banking via the World Wide Web.

This provides an overview of Internet commerce and how one company handles secure banking
for its financial institution clients and their customers.

Some basic information on the transaction of confidential data is presented in Security and
Encryption on the Web.PC Magazine Online also offers a primer: How Encryption Works.A
multi-layered security architecture comprising firewalls,filtering routers, encryption and digital
certification ensures that your account information is protected from unauthorized access.
● Firewalls and filtering routers ensure that only the legitimate Internet users are allowed to
access the system.

46
● Encryption techniques used by the bank would ensure that privacy of data flowing between
the browser and the infinity system is protected.
● Digital certification procedures provide the assurance that the data you receive is from the
infinity system.

Facilities Provided by SBI in Internet Banking

Credit Cards
Credit cards are one form of electronic banking.They have advanced technology,it is no longer
necessary to go to the bank to complete many simple banking transactions.With increasing
regularity,banks offer services at times and locations that are more convenient for
customers.Banking options such as accessing account information and transferring funds are
available day or night.Many banks offer these electronic services to customers for no change.

Automated Telephone Systems

It allows bank customers to access account information and services24 hours a day,seven days a
week. Bank customers wishing to use the automated telephone system need a touch-tone telephone
line to communicate with the bank’s computer.After entering bank account numbers and other
information used to verify identity,bank customers can check account balances,transfers funds,
find service locations, and perform other routine tasks.Many banks also provide customer service
staff to assist with any additional information.

Internet Banking
It allows customers to access their bank accounts from any computer with Internet access.
Customers wishing to use Internet banking must first apply at their local bank for access to the
encrypted network. In addition to allowing basic functions like account balance checking,Internet
banking usually allows customers to pay bills and make electronic bill transfers.

Electronic Cheque Conversion

Some retail outlets can process paper cheques electronically.When a customer pays a merchant
with a cheque, the merchant scans the cheque into a computer and pulls the bank and account

47
information from the cheque.The merchant returns the voided cheque to the customer and sends
the cheque information electronically.After receiving the information,the bank transfers the money
from the customer account to the merchant account.Cheques can also be processed electronically
after being mailed to a utility company or other vendor.

Direct Deposit
Direct deposit eliminates the need for your employer or other source of income to provide you
with a paper cheque.It allows you to authorize specific payments you are expecting on a regular
basis to be deposited in your account automatically. You also may authorize direct withdrawals for
bills or services you pay regularly,such as utilities or mortgages.This means the funds will be
automatically withdrawn from your account to pay the bill on the date you choose.Direct
withdrawals should only be authorized with parties or companies you trust to prevent fraudulent
withdrawal your funds.

Automated Teller Machines(ATM)

Our financial institution can provide you with a card,generally referred to as an ATM or Debit
Card,that allows you to use an automated teller machine.With an ATM, you have access to your
funds 24 hours a day. You may Also make deposits using the ATM to utilize an ATM, insert your
card into the machine and enter into a security code,called a PIN. You may then withdraw cash or
deposit checks,money orders or cash in your account. Some ATM’s,especially those not owned by
your bank,may charge a fee for their services and will notify you before completing your
transaction.

Online Banking
Most financial institutions allow you to register an account with its online banking services. Once
enrolled,log into your bank’s secure website from any computer using your user name and
password,or PIN.You may view your available account balance,see a detailed list of cleared and
pending transactions and view your latest bank statement also,you may request to transfer funds
between your own accounts or transfer funds to another party.Most banks also have an online
bill-paying service,allowing you to pay a bill quickly and securely.

48
Debit Card Purchases
You can use your debit card to make purchases over the Internet, at a store or by phone. The
process is similar to using a credit card and eliminates the need to write a check or carry a large
amount of cash. Funds are transferred almost immediately from your account to the account of the
company from which you purchase items.This helps to make transactions quicker and easier.
Various methods of funds transfer by SBI electronically

Electronic Clearing System(ECS)

ECS is a retail funds transfer system to effect payments(utility bills, dividends,interest,etc). ECS
helps corporates,government departments,public sector undertakings,utility service providers to
receive and pay bulk payments.

Real Time Gross Settlement(RTGS)

The term real-time gross settlement (RTGS) refers to a funds transfer system that allows for the
instantaneous transfer of money and/or securities. RTGS is the continuous process of settling
payments on an individual order basis without netting debits with credits across the books of a
central bank. Once completed, real-time gross settlement payments are final and irrevocable. In
most countries, the systems are managed and run by their central banks.

National Electronic Funds Transfer(NEFT)

Bank offers National Electronic Fund Transfer system (NEFT) which enables an efficient, secure,
economical and reliable system of transfer of funds from bank to bank as well as from remitter's
account in a particular bank to the beneficiary's account in another bank across the country.Another
electronic payment system in which payment instructions between banks are processed and settled
on deferred net settlement (DNS) basis at fixed times during the day. There is no minimum or
maximum stipulated transaction value for using this facility.

Internet Banking
Internet banking is one of the popular e-banking modes has changed the banking operations and
offer virtual banking services to the clients on 24x7 basis.It is also called as convenient
banking,since the customer can have access to his bank account from anywhere at any

49
time,through the bank’s website.The customer is allowed online access to account details and
payment and funds transfer facilities. Net banking services of a bank can be accessed through a
Personal Identification Number(PIN) and access password as in the case of ATMs.

Core Banking Solutions

Core Banking Solutions(CBS) is networking of branches, which enables Customers to operate
their accounts,and avail banking services from any branch of the Bank on CBS network, regardless
of where he maintains his account. The customer is no more the customer of a Branch.He becomes
the Bank’s Customer.Another interesting fact regarding CBS branches are inter-connected with
each other.Therefore,Customers of CBS branches can avail various banking facilities from any
other CBS branch located anywhere in the world.

Impact of Internet Banking on Traditional Services

E-banking transactions are much cheaper than those made by branch or telephone. Old systems,
cultures and buildings will not catch these new people. Instead, they will be able to adapt and
respond. E-banking offers consumers a wide range of options. Consumers will not be inclined to
be honest. Gateway providers may be attracted to the most important share of banking benefits.
Banks can indeed be brilliant wedding vendors. They can just bring two groups together e.g. buyer
and seller, payer and paymaster. The products will be supplied by monoclines, experts in their
field. Traditional banks may simply leave the payment and payment business even if this is in
doubt. Traditional banks will find it difficult to emerge. Not only will they fail to make a financial
investment unlike being able to offer stocks, they will not be able to earn extra money in the stock
market. This compares with the situation of Internet firms that seem to be easier to attract
investors. E-banking is just a bank that offers a new delivery channel. It simply provides
consumers with another service (as do ATMs).Customers want a full bank that works with multiple
delivery methods. The initial cost of e-bank is high. Establishing a trusted product is very
expensive as it requires significant advertising costs in addition to the purchase of expensive
technology (as security and privacy are key to gaining customer approval). Esevele banks have
found that commercial banks only make a profit when a significant weight gain is achieved. As a
result, many e-banks limit themselves to providing better services. E-Banking transactions require
a specific interface to communicate with a banking customer. Everything electronically is made

50
using other connectors. Electronic devices that interact with customers and interact with other
banking systems are called electronic delivery channels. Results Documentation Once the risk
assessment has been completed (threat-sources and vulnerabilities identified, risks assessed, and
recommended controls provided), the results should be documented in an official report. 270
International Journal of Advanced Research in Commerce, Management & Social Science
(IJARCSMS).

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 CHAPTER- 5
ANALYSIS AND INTERPRETATION

State Bank of India is an Indian multinational, public sector banking and financial services
statutory body headquartered in Mumbai.SBI is the 43rd largest bank in the world. It is a public
sector bank and the largest bank in India with a 23%market share by assets and a25% share of the
total loan and deposits market.The bank descends from the Bank of Calcutta,founded in 1806 via
the Imperial Bank of India,making it the oldest commercial bank in the Indian Subcontinent.
The Bank of Madras merged into the other two presidency banks in British India,the Bank of
Calcutta and the Bank of Bombay,to form the Imperial Bank of India Making it the oldest
commercial bank in the Indian Subcontinent.The Bank of Madras merged into the other two
presidency banks in British India,the Bank of Calcutta and the Bank of Bombay, to form the
Imperial Bank of India,which in turn became the State Bank of India in 1955.
The rich heritage and legacy of over200 years,accredits SBIas the most trusted Bank by Indians
through generations.SBI, the largest Indian through generations. SBI,the largest Indian Bank with
1/4 market share,serves over44 crore customer through its vast network of over 22,000
branches,58,500 ATMs,66,000 BCoutlets,with an undeterred focus on innovation, and customer
centricity,which stems from the core values of the Bank-Service,Transparency,Ethics,Politeness
and Sustainability. The Bank has successfully diversified businesses through its11 subsidiaries i.e.
SBI General Insurance, SBI Life Insurance, SBI Mutual Fund, SBI Card etc. It has spread its
Presence globally and operates across time zones through 233 offices in 32 foreign countries.
The SBI’s popular services covered under E-Banking include:Automated Teller Machines(ATM)
Credit Cards, Debit Cards, Smart Cards, Electronic Funds Transfer System, Mobile Banking,
Internet Banking, Telephone Banking, E-Lobby etc.

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Data Analysis and Interpretation

Table1-Gender of Respondents

Gender NO. of Respondents Percentage

Male 36 72

Female 12 24

Total 48 96

The above table1 shows that 24% of the respondents are female, 72% of the respondents are male.
It can be seen that that majority of the respondents are male (72%).

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 Table-2 Educational Level of Respondents

Educational Level NO. of Respondents Percentage

SSLC 6 12

PUC 4 8

Under-graduation 25 50

Post graduation 15 30

Total 50 100

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Table 2 shows that 12% of the respondent’s educational level is SSLC, 8% of the respondent’s
educational level is PUC/equivalent, 50% of the respondents are undergraduates, and 30% of the
respondents are Postgraduates. It interprets that the majority of the respondents are undergraduates.

Table-3 Respondents Have Type of aAccount of SBI Bank

Type of Account No. of Respondents Percentage

Savings Account 38 76

Current Account 3 6

FD Account 6 12

RD Account 3 6

Total 50 100

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The above table 4 shows that 76% of the respondents have a savings account, 6 % of the
respondents are current account holders, 12% of the respondents are FD accounts, 6% of the
respondents are RD accounts. Majority of the respondents have savings accounts in the SBI bank.

Table-4 Respondents that know about E-Banking services

Particulars No. of Respondents Percentage

ATM/Debit Card 30 60

Credit Card 2 4

Internet Banking 8 16

Mobile Banking 10 20

Total 50 100

From the above table 8 shows that 60% of the respondents are well known about ATM /debit card
services of the SBI, 4% of the respondents are aware of Credit Card Services, 20% of the

56
respondents are known about Internet Banking and 16% of the respondents are aware of Mobile
Banking Services. It interprets that the majority of the respondents are aware of ATM card
services.

Table-5 Respondents Use Mode of Internet Banking

Particulars No.of Respondents Percentage

Computer 4 8

Mobile 43 86

Other Sources 3 6

Total 50 100

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The above table 5 shows that 8 % of the respondents are using computer mode of internet banking,
86% of the respondents are using mobile mode of internet banking 6% of the respondents are using
other source mode of internet banking. It reveals that the majority of the respondents are using
Mobile mode of internet banking.

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 CHAPTER - 6
Major Findings and Suggestions

Findings
● Majority of the respondents are male (72%).
● Majority of the respondents are undergraduate(50%).
● Majority of the respondents who participated in the survey have a savings account in
SBI(76%).
● Majority of the respondents are aware of the ATM/Debit card facility provided
bySBI(60%).
● Majority of the respondents use Mobile mode of Internet banking (94%).

Suggestions
● The bank staff have to provide good services to the customers.
● Proper training facilities have to be provided to the staff, so that they can give valid
answers to the customers.
● The bank needs to educate the customers regarding the E-banking technology.
● The bank has to inform the customers frequently about online security techniques.
● Banks should hold demonstrations and provide training to customers to explain about its
usage,effectiveness etc.,for the usage of all types of E-banking services.
● Banks should encourage the usage of E-banking services by giving incentives.
● Banks are providing various types of services but customers are not utilizing it in a proper
manner.
● They have to utilize the facilities given by banks.

Conclusion
Studying the project we came to know that Internet banking is clearly the way forward for the
State Bank of India. It provides comfort to customers at the same time it provides cost cutting to
SBI by eliminating physical documentation. Internet banking saves time for banks as well as those

59
of customers. At present banking sectors provide different services through E-banking systems.
The customer is looking for quality services which can provide satisfaction.
This study states that internet banking provides greater reach to customers. Feedback can be
obtained easily as the internet is virtual in nature. Customer loyalty can be gained. Personal
attention can be given by the bank to customers and quality service can be served. Banks should
know that No system is perfect, however a system of such a type will need to be very secure. This
is a system which holds account details and customers' wealth. If such a system was not trusted
and not reliable, then SBI would face serious laws and would lose business. It can be easily
concluded that technological development in the banking industry positively improves their
services, competitiveness, branding and also loyalty.

As the group’s final conclusion,e-banking has its own advantages and disadvantages. The main
advantage of implementing e-banking is an increase in customer satisfaction.This is because
customers do not have to go to the branches in order to access their accounts,make withdrawals
and deposits.They can also check it any time of the day,a feature that physical branches do not
offer thus creating a good relationship with the bank and the customer.E-banking is also
advantageous not only for customer but also for the bank because it reduces costs in setting up a
Branch and the resources to process transactions.They can also service more people than ever
before. All these benefits are the reasons why many banks are already investing in banking.

In this report, we discussed how the new payment methods impact on banks in three categories.
Here, we summarize them and try to make suggestions to banks for survival. Transactions between
the individuals would be made more convenient by the emergence of Mondex-type smart cards.
On the other hand, banks will lose fees for person-to person money transfer and fees for ATM
transactions. Though adoption rate of the smart cards can not be predicted, banks have to look at
other business functions by aggressively joining smart cards projects. As the smart cards
proliferate, they would make money by issuing the smart cards and transfer money from banking
account to the cards Emerging methods for transactions between consumer and company can be
divided into three methods:-

● Expansion of Credit Card Method

● Digital Check and Internet Banking

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 ● Smart Card and Digital Money

The impact to the banks are different in each case. For case (1), opportunities to make loans for
consumers will increase due to the increase of credit card use. Banks should leverage the
information on customers to gain profit.

For case (2), though Digital Check will make business chances for banks by motivating consumers
to open accounts, handling charges from normal types of money transfer will decrease. Internet
banking will bring about new opportunities for banks to gain handling charge from customers by
expanding the customer base and will reduce the operational cost of banks drastically. However,
since the entry barrier to Internet banking is low, banks which fail to make a strategy about Internet
banking will decline.

For case (3), banks can enjoy new opportunities to gain handling charges to deal with Digital
Money. On the other hand, banks may lose all information, handling charge and credit business by
Smart Card and Digital Money. Banks have to promote the favorable methods and join to construct
the new rules to profit all the participants when they promote these methods. By netting through
EDI, transactions between companies will be compressed and the companies might take over some
portion of the settlement function that banks have traditionally conducted. Banks would lose
money, and lose control on companies by losing information on the business movements
accompanied with the transactions. In order to overcome the threat, banks should expand their
business area by acquiring the knowledge of the technology and business related to the EDI and
providing total integrated finance systems to companies. We found new payment methods are not
only a threat but also a potential benefit to banks, which is somewhat contradictory to what we
might have expected. Banks should realize the profit and cost to promote new payment systems
and to not deal with new payment methods at all. They also should realize how they can leverage
the expertise on settlement and technology in order to survive.

The main disadvantage of E-banking is the security problems that surround it. It’s a fact that
making transactions online poses a much bigger risk compared to making transactions in a
physical branch. This is due to risk compared to making transactions in a physical branch. This is
due to the hacking problems and identity theft. Addition to these risks,technical difficulties could
also arise.Sometimes the bank’s website goes down,and if this happens it will be a hassle for the

61
customer because he/she has to go to a branch or make phone calls- which is usually busy due to
other customers also making a call.Another case that has happened was an unpredicted rise in
customer that the servers of the bank were not able to cope with.A customer may also run into a
bad service.E-banking has existed for long starting with automatic teller machines (ATM) in the
late 1960s. Over time, more and more concerns are associated with electronic banking, as the
industry branched out to phone and online banking.Electronic banking choose to use, there are
issues with security,accuracy and customer service.

Banks are the main intermediaries in the financial sector.They should be very careful in handling
the funds of their clients, with an effective and proactive I.T. related risk management controls in
place to effectively handle banks should endeavor to have Innovative ways to handle the issues
relating to the IT and communication.

Universal Banking
Universal Banks refer to the banks which offer a wide range of financial services apart from the
traditional function or accepting deposits and granting of loans by commercial banks.In Universal
Banking large banks operate extensive networks of branches,providing money services hold
several claims on firms including equity and participate directly in the corporate management of
firms which depends on banks for funds. Universal Banking is a combination of commercial
Banking, Investment Banking ,insurance and various other activities.

Virtual Banking
Under the branch banking system the large banks operate through a large number of branches.
There is a direct relationship between the customer and Banker.The important type of virtual
banking service includes ATM, POS. Internet Banking, Mobile Banking, Smart Cards etc. with the
help of these modern devices. The customer can transact banking business from anywhere in the
world.

Repo Rate
It is also known as the benchmark interest rate is the rate at which the RBI lends money to the
Banks for a short-term. RBI purchases Govt. securities from banks, payments are made to banks to
inject liquidity in the market.

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Reverse Repo Rate
It is the short-term borrowing rate at which RBI borrows money from banks . RBI sells
Govt.Securities in the market it provides short-term avenues to banks to park their surplus funds.
Absorb liquidity from the market.

63
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