Asian Journal of Multidisciplinary Studies

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1 Asian Journal of Multidisciplinar Studies ISSN: (Online) (Print) Impact Factor: 0.92 Volume 3, Issue 7, Jul 2015 Internet Banking: It s Impact on Satisfaction of Retail Banking Customers-A Case of Punjab Aarti Loomba Assistant Professor, Banarsidas Chandiwala Institute of Professional Studies Guru Gobind Singh Indraprastha Universit New Delhi ABSTRACT: Internet Banking removes the traditional geographical barriers as it can reach out to customers of different countries / legal jurisdiction.. The present stud is an attempt to assess the impact of Internet Banking Services on satisfaction of retail banking customers in terms of saving of time, convenience and securit. The stud also attempts to have comparison between the Internet Banking Services provided b public sector, private sector and foreign banks. The findings of the stud indicated that the customers in public sector banks, private sector banks use internet banking because it saves time level of satisfaction is significantl the highest among customers of foreign banks, while it is significantl the lowest among customers of public sector banks. Thus, public sector banks need to check the weaknesses of their internet banking services b making comparisons with those of private sector banks and foreign banks. Kewords: Internet Banking, Retail Banking, Banking Customers 1. INTRODUCTION Internet Banking means a kind of self help financial services provided b the bank for its clients b the medium of internet, including account information inquir, account transfers and online paments etc. Online Banking is the practice of making bank transactions or paing bills via the internet. Thanks to the technolog and internet in particular that no one has to leave the house at all. One can shop online, communicate online and now one can even do banking online. Online banking allows account information, transaction information, instant fund transfer, cheques collection across cities and pa bills with the click of a mouse. Internet Banking is changing the banking industr and is having the major effects on banking relationships. Banking, no longer, is confined to the branches where one has to approach the branch in person, to withdraw cash or deposit a cheque or request a statement of accounts. In true Internet Banking, an inquir or transaction is processed online without an reference to the branch at an time. Providing Internet Banking is increasingl becoming need to have than a nice to have service. The net banking, thus, now is more of a norm rather than an exception in man developed countries due to the fact that it is the cheapest wa of providing banking services. 2. THE PROBLEM AND THE NEED FOR THE STUDY The tremendous advances in technolog and the aggressive infusion of Information technolog has brought in, a paradigm shift in banking operations. For the banks, technolog has emerged as a strategic resource for achieving higher efficienc, control of operations, productivit and profitabilit. For customers, it is the realization of their anwhere, antime, anwa banking dream. This has prompted the banks to embrace technolog to meet the increasing customer expectation and face the tough competition. Since the Internet Banking is a recent phenomenon, its impact has not et been studied b researchers. There are man studies showing adoption of Internet Banking, trends and issues involved and on internet reporting. But there have been ver few empirical studies in India covering this topic. This stud aimed at fulfilling this research gap. 3. REVIEW OF LITERATURE Lustik Olga (2003), in the paper analzed the main criteria for successful inter-bank strateg and brought out benefits of e-banking from the point of view of banks, their clients and the econom in general. Mattila Minna et al (2003), attempted to analze, mature customers internet banking behavior b using the data of a large surve which was collected b means of a questionnaire sent b mail to 3000 individual bank customers in Finland. Suman Yogesh and Kharbanda V.P (2003), in Available online at 185

2 their stud compared the extent of Internet diffusion in India and China. The showed trend in growth of Internet users, computers connected to Internet, Internet users in different categories and fixed line and mobile telephone subscribers in both economies. Guda Neeraja (2005), in the stud, E-business Trends and Issues, analzed the opportunities and challenges presented b the advent of e-business to the business. One of the ke parameters on which companies are being evaluated for their marketing efficienc is how well the can adapt themselves to the Internet and exploits the advantages of e-business. Vijaakumar Jacqueline Gigi (2005), highlighted the era of mobile business or Mobile Commerce in his stud E-Commerce Extends to M-Commerce. Lichtenstein Sharman and Williamson Kirst (2005), in their paper reported ke findings from an interpretive stud of Australian banking consumer experiences with the adoption of Internet banking. The paper provided an understanding of how and wh specific factors affect the consumer decision whether to bank or not to bank on the Internet, in the Australian context. Wang Zhu (2005), explains the market turbulences like the recent dot-com boom/bust ccle, as equilibrium industr dnamics triggered b technolog innovation. When a major technolog innovation arrives, a wave of new firms implements the innovation and enters the market. Robbins Eric (2006), explained that electronic banking products have transformed the financial services industr. Over the last 10 ears, adoption of e-banking products has reached mature levels for some products, while newer e-banking products are still maturing. 4. OBJECTIVES OF THIS STUDY The following are the objectives of the stud: 1. To find out reasons of using internet banking services b bank customers in terms of time saving, eas to operate, increase in status, safe and secure and error free characteristics. 2. To find out popular sources of knowledge for bank customers in terms of advertisements in bank premises, information from friends and colleagues, information from bank officials and business associates. 3. To explore the charges on usage of internet banking services b various banks and its effect on decision of choosing a bank. 4. To measure the extent of satisfaction and dissatisfaction with regard to internet banking services in various public sector, private sector and foreign banks. 5. RESEARCH METHODOLOGY The stud has been conducted to find the impact of internet banking services on customer satisfaction in the state of Punjab. The questionnaire tried to assess the impact on customers satisfaction in terms of time, convenience and securit. The questionnaire tried to assess possible reasons for satisfaction or dissatisfaction with a particular bank. The stud talked about Internet banking charges and tried to know whether imposition of charges affects customers decision of using it. In this stud, a sample of 870 internet banking customers has been taken. All these customers have been selected from selected public, private and foreign sector banks, which are situated in the selected cities of the state of Punjab. These selected cities are Ludhiana, Chandigarh, Patiala, Jalandhar and Amritsar. This stud is based mainl on primar data. The selected banks were SBI, PNB, ICICI, HDFC, Standard Chartered and Citibank. Simple techniques such as averages, frequencies, percentages etc. and advanced techniques like Analsis of variance (ANOVA), z-test, t-test and chi-square tests were applied. 6. RESULTS AND DISCUSSIONS REASONS OF USING INTERNET BANKING SERVICES The customers were asked to rank the reasons of using internet banking services in order of their importance. The ranks were then averaged out in order to know the overall ranking order of the reasons. Their intra and inter-sector comparisons are presented in Table 1. In public sector banks, the customers are used to use internet banking service mainl due to its time saving nature (1.37), followed b eas to operate (2.56) and status smbol (2.74). The third level reasons of using internet banking services came to be error-free technique (4.01) and more safer and secure technolog (4.32). The F-ratio (24.62) indicates that the importance of different groups of reasons of using internet banking services differ significantl. In private sector banks, the major reason of using internet banking services came to be again its time saving nature (1.06), followed b eas to operate (2.54) and increase in status (3.06). The minor reason for using internet banking services is its being safer and secure (4.35) and internet banking being error-free (3.99). In foreign banks, the most common reason of using internet banking services is found to be its easiness to operate (1.64), followed b its time saving nature (1.79) and increase in status (2.29). Though the pattern of importance of different reasons is the same in all the sectors of banking industr but there are sector to sector variations in the importance of reasons. The importance of time saving technique is significantl lower in foreign banks (1.79) as compared to public sector banks (1.37) and Asian Journal of Multidisciplinar Studies, 3(7) Jul,

3 private sector banks (1.06). But the importance of eas to operate, increase in status and error-free technolog is significantl greater in foreign banks in comparison to public and private sector banks. SOURCES OF KNOWLEDGE ABOUT INTERNET BANKING SERVICES IN THE BANKS The respondents were asked to assign ranks to different sources of knowledge of provisions of internet banking services in their banks. The mean scores of ranks of different sources along with F-ratios and t- values are shown in Table 2. In public sector banks, friends/colleagues are the most common source (2.26) of getting knowledge about internet banking services. This source is followed b advertisements in bank premises (2.66) and bank officials (2.69). The least common source of knowledge came to be the letters/circulars sent b banks (4.10) and business associates (3.15). In private sector banks, the most common source of knowledge about internet banking services, is advertisements in bank premises (2.58), followed b bank officials (2.63) and friends/colleagues. The sources of letters/circulars sent b banks (3.75) and Thus, time saving and eas to operate came to be the most important reasons while more safer and secure came to be the least important reason of using internet banking services. Mean rank assigned to different reasons of using internet banking services Reasons Public Sector Private Sector Foreign Sector t-value Mean SD Mean SD Mean SD Pub vs Pub vs Pvt vs For Pvt For A *** 3.51*** 13.35*** B *** 9.27*** C *** 3.42*** 5.53*** D *** 3.07*** E F-ratio 24.62*** 33.61*** 18.14*** C.D Table 1 business associates (3.06) are found to be the least reported sources of knowledge. In foreign banks, it is the friends and colleagues (1.57) who are the best source of knowledge about provision of internet banking services. This source is followed b advertisements in bank premises (2.36) and business associates (2.86). Letters and circulars sent b bank could secure the least importance (4.36). The calculated F-ratios indicate that there are significant differences in importance of different reasons of knowledge within a bank. However, the calculated t-values indicate significant inter-bank variations in the importance of reasons. The importance of friends/colleagues for getting knowledge about internet banking services is significantl higher in foreign banks as compared to those in public and private sector banks while the importance of bank officials and letters/circulars sent b bank as sources of knowledge is significantl higher in private sector banks as compared to public and foreign sector banks. Source of knowledge about provision of internet banking services in the bank (Mean Rank Score) Public Sector Private Sector Foreign Sector t-value Mean SD Mean SD Mean SD Pub vs Pub vs Asian Journal of Multidisciplinar Studies, 3(7) Jul, Pvt vs For Pvt For A *** 4.42*** 8.70*** B * 1.09 C *** 7.49*** D ** 1.33 E *** *** F-ratio 26.58*** 23.88*** 19.62*** C.D Table 2

4 CHARGES ON THE USE OF INTERNET BANKING SERVICES AND ITS EFFECT ON DECISION OF CHOOSING A BANK A perusal of Table 3 shows that the majorit of customers in all the banks i.e percent in public sector banks, percent in private sector banks and percent in foreign banks, reported that their banks use to charge for using internet banking services. When asked whether these charges affect their decision to use the internet banking services, again majorit of them responded positivel. This proportion came to be 66.00, and percent in public, private and foreign sector banks. The pattern of charges and its effect on decision is similar in all the banks as indicated b the non-significant values of chi-square i.e and 2.53 respectivel shown in Table 3 and 4. Internet banking services free of charges as reported b the customers Free of Charges Sector Yes No. No. %age No. %age Public Private Foreign Ch-square 1.34 Table 3 Distribution of customers according to effect of IBS charges on decision to use it Effect on Decision Sector Yes No. No. %age No. %age Public Private Foreign Chi-square 2.53 Table 4 IMPORTANCE OF INTERNET BANKING SERVICES IN CHOICE OF A BANK The respondents were asked regarding the importance of internet banking services in choice of a bank and the responded the attributes which were given weights as under: Extremel = 3 Reasonabl = 2 Moderatel = 1 Can t Sa = 0 Somewhat Unimportant = -1 Totall Unimportant = -2 Then the mean level of importance and its percent level of importance were worked out of a maximum level of 3 i.e. extremel important. The results along with t- values are given in Table 5. It is clear from the Table that the mean level of importance of internet banking services in the choice of a bank is found to be 1.79 i.e % percent in public sector banks whereas the same is 1.71 (57.00%) in case of private sector banks and 2.00 (66.67%) in case of foreign banks. Though the overall level came to be reasonabl important in all the banks but it is significantl higher in foreign sector banks as compared to private sector banks as indicated b the t-value i.e The level of importance of internet banking services in choice of a bank came to be similar in public and private sector banks. Thus, internet banking services are more important in foreign banks. Level of importance of IBS in choice of a bank Sector Mean SD Mean % Overall (Out of Remarks 3) Public Reasonabl Private Foreign t-value Pub vs 1.10 Pvt Pub vs 1.48 For Pvt vs For 2.35* * Reasonabl Reasonabl Table 5 SATISFACTION WITH INTERNET BANKING SERVICES The respondents were asked the level of satisfaction with the internet banking services provided b their banks and the responded the attributes which were given weights as under: Highl Satisfied = 2 Satisfied = 1 Can t Sa = 0 Dissatisfied = -1 Highl Dissatisfied = -2 The mean level and mean percent level of satisfaction were worked out and Asian Journal of Multidisciplinar Studies, 3(7) Jul,

5 presented in Table 6. It is evident that in public sector banks, the level of satisfaction of customers with internet banking services is onl 0.47 i.e percent which overall indicates that the customers of public sector banks are neither satisfied nor dissatisfied with the internet banking services. In private sector banks, the customers are satisfied at the level of 1.28 i.e percent which indicates that customers of private sector banks are somewhat satisfied with the internet banking services. In foreign banks, the mean level of satisfaction among customers came to be 1.52 i.e percent indicating an overall highl satisfactor level with the internet banking services there. The calculated t-values indicate that the level of satisfaction is significantl the highest among customers of foreign banks, while it is significantl the lowest among customers of public sector banks. Thus, public sector banks need to check the weaknesses of their internet banking services b making comparisons with those of private sector banks and foreign banks. Level of satisfaction with IBS provided b the banks Sector Mean SD Mean % Overall (Out of 2) Remarks Public Neither S nor DS Private Somewhat Satisfied Foreign Highl Satisfied t-value Pub vs Pvt 19.85*** Pub vs For 13.31*** Pvt vs For 20.69*** Table 6 7. CONCLUSION In public sector banks, the customers are used to use internet banking service mainl due to its time saving nature (1.37), followed b eas to operate (2.56) and status smbol (2.74). In private sector banks, the major reason of using internet banking services came to be again its time saving nature (1.06), followed b eas to operate (2.54) and increase in status (3.06). In foreign banks, the most common reason of using internet banking services is found to be its easiness to operate (1.64), followed b its time saving nature (1.79) and increase in status (2.29). Thus, time saving and eas to operate came to be the most important reasons while more safer and secure came to be the least important reason of using internet banking services. REFERENCES Guda N., (2005), E-business-Trends and Issues, Indian Journal of Marketing, vol. XXXV, no.7 P.P Lichtenstein S., and Williamson K., (2005), Understanding Consumer adoption of internet banking: An interpretive stud in the Australian banking context, Journal of Electronic Commerce Research, vol.7, no.2, P.P Lustik O., (2003), Electronic banking in Estonia paper provided b facult of economics and business administration, Universit of Tartu (Estonia), vol. no. 21 Mattila M. et al, (2003), Internet banking adoption among mature customers: earl majorit or laggards?, Journal of services marketing, vol.17, no. 5, P.P Prasad and Lavana, (2005), Technolog Management in Banks, Professional banker, October 2005, P.P Raed A. and Cedwn F., (2005), Internet Banking: An empirical investigation into the extent of adoption b banks and the determinants of customer satisfaction in the United Arab Emirates, Journal of Internet banking and commerce, vol.10, no Robbins E., (2006), Has Electronic banking affected the importance of bank location? Journal of financial industr perspectives, Federal Reserve Bank of Kansas cit, Sept Shajahan S. (2005), A Stud on the level of customers satisfaction on various modes of banking services in India, ICFAI Journal of bank Management, Feb, P.P Vijaakumar Jacqueline Gigi (2005), E-commerce extends to M-commerce, Indian Journal of Marketing, vol. XXXV, No. 1, P.P Wang Z., (2005), Technolog Innovation and Market Turbulence: A Dotcom Example, Paper provided b Societ for Economic Dnamics in its series 2006 Meeting Papers, no Asian Journal of Multidisciplinar Studies, 3(7) Jul,