Asian Research Consortium

Transcription

1 Asian Research Consortium Asian Journal of Research in Banking and Finance Vol. 5, No. 4, April 2015, pp ISSN Asian Journal of Research in Banking and Finance An Evaluation of Indian E-Banking Industry (A Case Study of State Bank of India: Lucknow Circle, Uttar Pradesh) Dr. Bimal Jaiswal*; Dr. Manjari Awasthi**; Ms. Saloni Bhasin*** Abstract *Assistant Professor, Department of Applied Economics, Faculty of Commerce, University of Lucknow, Lucknow, U.P., India. **Guest Faculty, Institute of Management Sciences, University of Lucknow, Lucknow, U.P., India. ***Research Scholar, Department of Applied Economics, University of Lucknow, Lucknow, U.P., India. DOI NUMBER: / Today s world is entering into the Internet age which has transformed it into a global village thereby making significant contributions in the banking industry. Banks offer e-banking services to defend or expend market share or cost-saving strategy to reduce paper work and personnel. Without offering attractive and economical E-banking services, no bank can ever strive in this competitive world. It is also an essential part of the study to identify those e-banking services having more users which directly and indirectly affect the business of banks. The present study is a modest attempt to focus on the various dimensions of e-banking services and highlight the current scenario of E- banking services of State bank of India. The study is descriptive and analytical in nature and based on secondary data. The selected parameters on the basis of which the extent of e-banking services reaching to the Lucknow circle masses is studied are Mobile banking services, Retail internet banking, Corporate internet banking, Green Channel Counter, Green remit card, Self service kiosks and state bank collect. The study concludes that with regard to Lucknow circle that State Bank of 45

2 India is successfully utilizing the benefits of e-banking channels for its profitability particularly Internet banking in 14 circles of SBI. Keywords: Mobile banking, Retail internet banking, Green channel counters, Green Remit card, Self service kiosks. 1. Introduction The Indian Banking industry faces a highly globalised, liberalised, privatised and ever-changing environment so it becomes difficult to cope with the traditional forms of transacting banking businesses thus arousing the felt need for technological advancements. Electronic banking has emerged as a very comprehensive form of the developments in information technology by providing ATMs at our doorsteps and allowing assessibility of banking services 24 x 7. Today people prefer plastic cards than carrying handsome cash in their wallets. Today s world is entering into the Internet age which has transformed it into a global village thus making significant contributions in the banking industry. Banks offer e-banking services to defend or expend market share or cost-saving strategy to reduce paper work and personnel. The internet also provides banks with substantial opportunity to extend their customer reach beyond existing boundaries. However the nature often open network and evolution of electronic commerce exposes banks to significant competition from both banking and non banking firms. According to the Basel Committee Report on banking supervision, E-banking is defined as The provision of retail and small value banking products and services through electronic channels, such products and services can include deposit taking, lending, account management,the provision of financial advice, electronic bill payment products and services such as electronic money. In a general term, it is surrounding internet banking, telephone banking, mobile banking etc and its scope is still rapidly growing. Global Experience of E-Banking: Globally, Finland was the first country in the world to have taken a lead in e-banking. The Scandinavian countries have the largest number of internet users. It has widespread in Australia, Korea, Spain and Switzerland. Regulation and supervision in response to specifically the use of internet banking activities and challenges thrown by the internet banking, regulators and that supervisors from various countries have prepared their own mechanism of regulation. There is a matrix of legislation and regulation in United States there is no specific legislation for regulating e- banking activities. In Sweden no formal guidance has been given to examiners by the Sveriges bank on E -banking. RBl guidelines apply equally to internet banking activities. Bank of Finland generally monitor the ongoing development of internet banking without active participation. The Reserve Bank of New Zealand applies the same approach to the regulation of both internet banking activities and traditional banking activities. The Monetary Authority of Singapore (MAS) drafted an Internet Banking technology Risk Management Guidelines in September 2002 which calls upon all banks providing internet banking to establish a sound and robust risk management process. The Hong Kong regulatory approach towards E-banking is less specific in nature. The Hong Kong Monetary Authority expects their banks to undertake a rigorous analysis of the security aspects of their system by getting it reviewed by qualified independent experts. India does not have specific regulatory laws for E-banking. Moreover, certain guidelines 46

3 have been issued to banks to recognise the risk arising from electronic modes. Banks offering the E-banking services in India need to comply with the guidelines. 2. E-banking and RBI RBI has been gearing up to regulate and supervise the technologically dominated financial system. In 1998, it availed the technical assistance project of Department of International development. Financial sector reform initiatives specially amid at strengthening the operational efficiency of banks related to the voluntary retirement scheme and enlargement of the reach and scope of the Electronic Fund Transfer Facility (EFT). The measures pertaining to financial institution includes operational and regulatory issues concerning transition to universal banking, a transparent mechanism for corporate debt restructuring,coordination between banks and financial institution amended guidelines for asset liability management and classification and valuation of investment. RBI has played a proactive role in the implementation of these measures in the banking sector. Its based initiatives are focused on better housekeeping, improved customer service. It has come out with a financial sector technology vision document, the approach to be followed for its implementation for the medium term period about three years. This document helped banks in financing their IT plans with the overall approach, for the banking sector, as envisioned by the RBI. 3. Review of Literature Review of literature helps in bridging significant gaps in knowledge regarding the State Bank of India s Internet banking landscape in India which becomes the base for selecting issues and dimensions to be undertaken in the present research. The various studies reviewed are as follows:- Aastha Gupta (2013) of the Department of Commerce, Arya Kanya Mahavidyalaya, Shahbad founded in her study that the Indian banking system has undergone a significant transformation over time in terms of diversity and innovation. The MICR technology provides faster cheque collection and clearing facilities to customers in India, but there are only 64 MICR clearing centres working in India than 1103 Non-MICR clearing centres thus necessitating the increase of MICR clearing houses and modification of the Non-MICR clearing centres in MICR clearing centres to enhance payment system. Card based transactions are recording phenomenal growth in India but is not ensuring quality service to the Indian customers as bulk of complaints are registered in RBI's banking ombudsman offices. Hence, RBI should enhance the quality and security of card based transactions. Mr. Arun Kaushik in his study E-Banking system in SBI states that internet banking provides greater reach to customers. Feedback can be easily obtained as internet is virtual in nature. The SWOT analysis indicates the various strengths of SBI such as quality customer service, greater reach, customer loyalty, easy access to information, 24 hours access, easy online applications etc. There is a need for SBI to multiply the number of strengths while attempting at minimising the major weaknesses such as lack of awareness of internet banking among the customers, obsolesce of technology related to security, complicated procedures of availing internet banking facilities, lack of knowledge among the employees of SBI. 47

4 Manushree S in her paper tiltled An Implementation of Core Banking solution with special reference to SBI, Shivamogga highlightened the importance of Core Banking solution as it empowers banks to transform their business, leveraging agile new generation technologies. The survey was conducted to fulfil the objective of the investigation and the response has been collected from Banker and 50 customers of the SBI, shivamogga Branch. The study is analysed with the help of primary data collected from personal interviews from customer of the bank. It has been concluded from the study that the introduction of Core Banking Solution which helped in knowing the growth of SBI Bank which shows that the introduction of Core Banking Solution has made significant impact on the SBI shivamogga Branch. The growth percentage would further be increased in the bank given effective services on Core Banking Solution and also educating and increasing awareness level of Core Banking Solution to the customer of the SBI bank. Gupta (2008) in his study in Jaipur city has indicated various challenges in E-Banking such as non awareness of the e-banking facility, lack of trust on such facilities, concern about safety and security. Its suggestions include educating and creating awareness among the rural masses regarding the e-banking technology, banks to be transparent about charges, installing e-banking facility wherever ATMs are installed and setting up a network of all banks through a single network. Dr. Nishikant Jha and Shraddha Bhome in their article on A study of Green Banking Trends in India discussed the concept of green banking and its importance. It says that Ethical banking avoids lot of paper work as one gets go green credit cards, go green mortgages and also all the transactions done through online Banking. Creating awareness to business people about environmental and social responsibility and enabling them to do an environmental friendly business practice. Overall Green banking is really a good way for people to get more awareness about global warming; each businessman will contribute a lot to the environment and make this earth a better place to live. Dr Roshan and Dr Rajni Saluja in their study on E-Banking: The Indian Scenario recommend banks to ensure full security of customer funds and to avoid technical defaults, if any by employing well trained and expert technicians in field of computers, so that loss of data can be avoided. 1. Methodology 4.1 Study Area: Lucknow Circle 4.2 Data Base and Methodology The methodology of the study is both descriptive and analytical in nature and makes use of secondary data. The descriptive methodology is used to describe the business of e -banking services of State Banks of India (Lucknow circle) for the year including its 14 circles as Mumbai, Lucknow, Hyderabad, Chennai, New Delhi, Bengal, Bhopal, Chandigarh, Patna, Bhubhaneswar, Bangalore, Ahmedabad, North East and Kerala. Selected Variables: The study is also of Analytical nature because the achievements made by Mobile banking services, Retail internet banking, Corporate internet banking, Green Channel 48

5 Counter, Green remit card, Self service kiosks and state bank collect has to be analysed for determining the extent of e-banking services reaching to the Lucknow circle masses. 4.3 Sources of Data The study is descriptive and evaluative based on secondary data analysis. The secondary data have been collected mainly through the databases of State Bank of India. The website of SBI like state bank annual result in press release , various journals like the Banker and the Journal of Indian Institute of Bankers and the news papers like the Hindu,The times of India etc have also been referred. Statistical Techniques Used: The trends in the availability of e-banking services provided by State bank of India are reaching to the users examined through tables with the help of Microsoft Excel. 2. Objectives of the Study To present the current status of E-banking in SBI and the extent of Internet banking services offered. To draw attention towards the services of E-Banking of State bank of India and examine the achievements of the selected services with respect to Lucknow circle. To focus on the problem and their solutions of RBI legislation regarding E- banking. 3. Analysis and Interpretation Table 1: Mobile Banking Service MOBILE BANKING SERVICE ( ) (in terms of Users) Circle Net Registration Registrations Rank MUMBAI LUCKNOW HYDERABAD CHENNAI NEW DELHI BENGAL BHOPAL CHANDIGARH PATNA BHUBANESWAR BANGALORE AHMEDABAD NORTH EAST KERELA Table-1 shows the Circle-wise net registrations of Mobile Banking services during It can be seen that Lucknow Circle stands second with net registrations of Mobile Banking Services. 49

6 Mumbai has achieved highest net registrations while Hyderabad stand third. Kerela is having the lowest net registrations of mobile banking services standing at fourteen position. On the other hand Bangalore at 11 th position, Ahmedabad at 12 th and North East have very low net registrations in mobile banking. Table 2: Retail and Corporate Internet Banking INTERNET BANKING Retail Internet Banking Corporate Internet Banking Circle Budget Total Budget Total AHMEDABAD 80,000 1,19,844 10,000 4,758 BANGALORE 1,18,000 97, BENGAL ,14, BHOPAL ,38,004 12, BHUBANESWAR , CHANDIGARH ,63, CHENNAI 1,63,000 1,69,603 10,000 6,491 NEW DELHI 1,47,000 2,02,838 12,000 7,534 HYDERABAD 1,90,000 2,60,809 9,000 7,664 KERELA 64,000 65,917 9,000 2,907 LUCKNOW 67,000 1,07,360 6,000 4,172 MUMBAI 1,95,000 2,97,152 16,000 8,481 NORTHEAST 33,000 70,527 3,000 1,904 PATNA 60,000 1,93,834 5,000 3,221 Table-2 shows Circle-wise Retail and Corporate internet banking during The budget for Retail Internet Banking in Mumbai is maximum i.e.1,95,000 and minimum in North East. Mumbai is again having highest achievement in Retail Internet Banking. Bhubaneswar has the lowest users for Retail Internet Banking. Apart from this, Lucknow circle is at 10 th position signifying that Retail Internet banking has less users in comparison to Mobile banking. Corporate banking service is having highest users in Mumbai circle and lowest in North-east. The Corporate internet banking service is in a better position than Retail internet banking standing at 8 th position in Lucknow circle indicating that users are preferring Corporate internet banking than Retail internet banking. 50

7 Table 3: Green Channel Counter GREEN CHANNEL COUNTER (GCC) ( ) CIRCLE GCC TRANSACTION (%age) RANK BANGALORE MUMBAI HYDERABAD BHUBANESHWAR NORTH-EAST CHENNAI KERELA BENGAL CHANDIGARH LUCKNOW AHMEDABAD DELHI BHOPAL PATNA Table-3 shows Circle-wise Green channel counters of State bank of India. It depicts that Lucknow Circle is at 10 th position in respect of Green Channel Counter. Bangalore has achieved highest GCC Transaction while Patna has the lowest Green channel counter transactions standing at fourteen position. Table 4: Green Remit Card GREEN REMIT CARD ( ) CIRCLE GRC ISSUED UPTO AUGUST 2014 RANK HYDERABAD 7,59,228 1 MUMBAI 4,54,891 2 BANGALORE 4,10,515 3 CHENNAI 3,75,020 4 LUCKNOW 2,74,288 5 CHANDIGARH 2,71,177 6 DELHI 2,34,617 7 KOLKATA 2,33,952 8 BHUBANESHWAR 2,29,552 9 KERELA 2,04, AHMEDABAD 1,36, PATNA 27, GUWAHATI 24, BHOPAL 24, Table-4 shows Circle-wise Green Remit card issued by State Bank of India during It can be seen from the above table that Lucknow circle is at 5th position in respect of Green Remit Card. Hyderabad has the highest number of users of Green Remit Card while Bhopal circle has the lowest users of Green Remit card among all the fourteen circles. 51

8 Table 5: Self Service Kiosks SELF SERVICE KIOSKS ( ) CIRCLE SSKs ISSUED SEPT 14 DAILY AVG. RANK TRANSACTION KOLKATA NORTH-EAST BHUBANESHWAR CHENNAI MUMBAI AHMEDABAD KERELA BHOPAL BANGALORE LUCKNOW HYDERABAD DELHI PATNA CHANDIGARH Table-5 shows Circle-wise Self Service kiosks issued by State Bank of India during The above table exhibits that Lucknow Circle is at 10 th position with regard to Self Service kiosks. In Kolkata circle, highest number of Self Service kiosks were issued while Chandigarh circle indicates lowest Self Service kiosks issued standing at fourteen position. Table 6: Performance of Lucknow Circle PERFORMANCE OF LUCKNOW CIRCLE (in terms of Users) PRODUCT ACHIEVEMENT BUDGET Mobile Banking Services 4,85,162 5,00,000 Retail Internet Banking 2,15,659 67,000 Corporate Internet Banking 8,194 6,000 State Bank Collect Green Remit Card 1,78,208 8,17,000 Self Service Kiosk (per day avg. Transaction.) Points of Sale 5,566 9,000 Cash@POS 1,376 4,200 Table-6 shows the performance of Lucknow Circle, State Bank of India indicating that highest number of users 4,85,162 are opting mobile banking services in ,second highest usesr for retail internet banking and then followed by 1,78,208 users for green remit card. On the other hand there is lowest users for State Bank Collect ie.23 users followed by Self Service Kiosks ie.31 and cash@pos ie.1376.the above table also shows that Green Remit Card has the highest budget for ie. 8,17,000 while State Bank Collect has the lowest budget ie. 90 for 52

9 The mobile banking service users are highly appreciating among all the e-banking services of State Bank of India. 4. Major Findings Lucknow circle has achieved second position among all the 14 circles in Mobile banking services, at 5 th position in Green Remit Card service, at 8 th position in Corporate Internet Banking and at 10 th position in the rest three services such as Retail Internet Banking, Green Channel Counter as well as Self- Service Kiosks. Mumbai circle has done appreciable job in stands first with regard to Mobile banking Retail banking and Corporate Banking whereas it is at 2 nd position in Green Remit Card and Green Channel Counter but there may be certain reasons that why it stand 5 th position in Self Service Kiosks. In all the services, Kerela circle is not performing up to the mark as shown by the above tables. In Retail banking services corporate banking Mobile banking and Green Remit Card there are less users whereas in Green Channel Counter and Self Service Kiosks it is performing far better. In Bhubaneswar circle, Self service kiosks and Green channel counter are at 3 rd and 4 th position respectively and there are more number of users of these services than Mobile banking services, Retail internet banking, corporate internet banking and Green Remit card services. Among all the services, retail internet banking and corporate internet banking have very less users. Patna circle is having very less users among all the services excepting Retail internet banking where it is having quite a large number of users standing at 4 th position. Bhopal circle has large number of users in corporate internet banking instead of other services which shows that there is less development of E-Banking in Patna circle. Chandigarh circle has satisfactory users among all the services except Self-Service kiosks where it has lowest number of users. After analysing the above data and information, it would be justified that Mumbai circle s performance in E-banking services of State bank of India is highly satisfactory amongst all the circles. 5. Recommendations The adoption of best international practices, its association with internet banking and methods which will help reduce E-banking risk. The bank should have a proper infrastructure and schedules for backing up data. Business continuity should be ensured by having disaster recovery sites. 53

10 Monitoring against Threats: The banks should acquire tools for monitoring systems and the networks against intrusions and attacks. There should be customisation of Internet banking services with respect to age, gender, occupation, etc. Proper guidance and support should be given to people who are not technology savy by organising seminars and workshops so as to make the customers ware and literate about the usage of e-banking services. 6. Conclusion In electronic Services, the banking sector of India is a growing phenomenon. Today all the banks and banking groups are striving to attract their customers with attractive e-banking services. So without providing appropriate e-banking services, the success of any bank is difficult in the competitive era and mainly the growth of e-banking depends upon the success of its acceptance by its customers. With this view a study is conducted reflecting the growth of E-Banking services provided by State Bank of India s Lucknow circle. Its performance is evaluated with the help of services provided by e-banking of SBI. The study analyses that Lucknow circle s E-banking business is growing rapidly and is standing at a good position amongst all the services. The Mobile banking service is the most preferred service of E-banking of State Bank of India (Lucknow circle). Although Green Remit card is the second most preferred service of State bank of India s E-banking services which could be a progressive factor of development of the SBI. Due to rapid economic development of India, E-banking is occupying a major position in the development of corporate sector which can be justified because the third most preferred service of State bank of India is Corporate internet banking. Lucknow being a capital of Uttar Pradesh, educationl hub and largest number of users of Mobile banking services but still Retail banking services, Green channel counters and Self-service kiosks are not very satisfactory. There might be lack of awareness of these services among the masses. The study, thus, concludes that with regard to Lucknow circle that State Bank of India is successfully utilizing the benefits of e-banking channels for its profitability particularly Internet banking in 14 circles of SBI. 7. Limitations of the Study The major limitations of the study are as follows The study is prepared based on the data collected from the secondary sources and documents published by the government. So, any manipulation in secondary data will lead to wrong analysis. The study does not cover all the issues of E-banking because of time constraint but an attempt is made to cover all the important issues in this study. 54

11 11. Relevance of the Study As our study investigates the various dimensions of E-banking in SBI so as to acknowledge the various developments and trends in SBI, the findings of the study would throw ample light on the services provided by SBI through Internet Banking as well as the performance and growth potential of budget services of SBI. Hence, the study will be helpful to the academic research scholars, policy makers, Practical Bankers, Business and Industry Executives and SBI Officials to gain an insight into the future challenges so as to improve the bank performance. 12. References Aastha Gupta Electronic mode of payment-a Study of Indian Banking System International Journal of Enterprise Computing and Business Systems, Vol. 2 (2) July Basel Committee Report on banking supervision. Bhasin Niti, Monetary, Banking and financial developments in India to (new century publication New Delhi, India). Kaushik A. K E-Banking system in SBI Zenith International Journal of Multidisciplinary Research, Vol. 2, No. 7, pp , July Lal R, Saluja Rajni, E-banking: The Indian Scenario, Asia Pacific Journal of Marketing & Management, Vol. 1(4), pp 16-25, Maheshwari S.N., Banking Law and Practice, Kalyani Publications, Ludhiana. Manjushree S, An Implementation of Core Banking solution with special reference to SBI, Shivamogga, Sai Om Journal of Commerce & Management,Vol.1(2),pp , Rangarajan, C Inaugural address at the 18th Bank Economists Conference, Reserve Bank of India Bulletin, December, XLIX (12), Reserve bank of India, Mumbai. Report on tend and progress of banking of India, RBI, various years. Sabhaya R, Bhalala A, Chovatiya P Study on Pre and Post impact of E-Banking on Banking operation Galaxy International Interdisciplinary Research Journal Vol.2 (3), , March State Bank of India, Annual Report Uppal R. K., Internet Banking in India: Emerging Risks and New Dimensions, Prime Journal of Business Administration & Management, Vol. 1 (3) (2001). 55