STUDY OF FACTORS AFFECTING THE PERCEPTION OF CUSTOMERS TOWARDS E-BANKING IN SELECT AREAS OF KAKINADA DISTRICT (A.P) DR.RAJASHREE SHINDE* DR. KRISHNA SHARMA** VINEETA DEOLIA*** *Management, S.K.N Sinhgad School of Business Management, Maharashtra, India **Management, S.K.N Sinhgad School of Business Management, Maharashtra, India ABSTRACT The factors, which are critical to the success of e-banking, are investigated. Different pieces of literature report different factors as key to success and generally based on subjective, perceptual data. A detail study of relevant literature is done while conducting a research which provided a basis for survey questions. The data was collected from select area of Kakinada District by using convenience sampling method from 95 respondents. Researchers used Parametric Test as well as Non parametric test to test the hypothesis. Researchers used Chi-Test, T-Test and ANOVAs for testing the hypothesis. Researchers concludes that cost aspect, security aspect are important issues in e-banking. It is also analyzed that there is a close relationship between awareness level and usages of e-banking. It is also examined that it is one of the efficient and cost effective medium of banking and reducing the usages of traditional banking. In terms of security aspect more than 80% respondents reported that there is a need to improve the security measures and digital signature is one of the solution of higher safety. (65% respondents) This paper is a presentation and discussion of the results of a questionnaire survey, which was conducted to investigate the Critical Success Factors (CSFs) in e-banking. KEYWORDS: Electronic Commerce, E-banking, Critical Success Factors, INTRODUCTION AND LITERATURE REVIEW As per prediction of Broadie et al(2007)the e- banking is leading to a paradigm shift in marketing practices resulting in high performance in the banking industry. Delivery of service in banking can be provided efficiently only when the back ground operations are efficient. According to Christopher et al (2006), E banking has become an important channel to sell the products and services and is perceived to be necessity in order to stay profitable in successful. This revolution in the market place has provided an advance form of banking and this research paper is an attempt to know the factors which affect the uses of e-banking. Study 398
reveals that people uses e-banking either knowingly or unknowingly. The term electronic banking or e-banking covers both computer and telephone banking as well as any other form of banking which uses any kind of electronic devices like mobile, ATM etc. It refers to the use of information and communication technology by banks to provide services and manage customer relationship more quickly and most satisfactory (Charity-Commission, 2003). According to Burr (1996) describes it as an electronic connection between the bank and the customer in order to prepare, manage and control financial transactions. The success of electronic banking, as agued by many researchers, depends probably on bank service quality, customer preferences and satisfaction. Recent studies found that consumer behavior is changing partly because of more spare time. (Seitz and Stickel, 2004). In terms of existing literature (covered in greater detail later), some researchers in the field of e-banking have been engaged in quantifying the current provision of electronic services by the banks, from an innovation and marketing point of view Sathye (1999) and Yan and Paradi (1998) have explored the perception of customers about e-banking or adoption of the Internet as a services delivery channel. There are various factors which affect the e-banking and identified by various researchers as stated by Enos, (2001), Turban et al., (2000))that security is one of the most important factor which affect the e-banking either in the form of internet banking or Mobile banking. Convenience way of operating banking transactions: Online banking is a highly profitable channel for financial institutions. It provides customers convenience and flexibility and can be provided at a lower cost than traditional branch banking.( Gregory D. Williamson, 2006) Jun and cai (2001) identified one of the very important service quality dimensions of i-banking service quality is reliability. Liu and Arnett in their study identified time factor as one of the prime factor which affect e-banking. Suganthi et. al, 2001) stated in his research that time saving is also one factor which affect the e-banking. (Beer, 2006) realized in his research that facility of on line payment may increase the uses of e-banking. While (Suganthi et. al, 2001).Suganthi findings emphasis on low transaction cost and (IAMAI s, 2006) research reveals that any time banking facility is one of the factors. Thus by keeping in view the researcher selected few factors of above researcher and examine the reliability and impact of these factors on e-banking operation in select area of Kakinada district. Chang and Twang (2006) investigated factors influencing internet security in Taiwanese banks. They found that security is one of the most important reasons for adoption and application of internet banking. 399
Objectives of Study To know the major factor affecting the success of e-banking in Kakinada District. To know the awareness level of e-banking among genders To know the relationship in awareness level of respondents age group To know the change in banking pattern of customers after e-banking system Hypothesis of the Study 1. There is a no significance relationship in awareness level of respondents and age group 2. There is a no difference in awareness level among genders. 3. There is a no change in banking pattern of customers after e-banking system. 4. There is a no relation in awareness of e-banking and its usages 5. Trust and security is not key aspect in e-banking 5.1 It is easy to hack the accounts Research Methodology The research presented in this paper proceeded as follows: first, a list of possible success factors) in e-banking was extracted using the literature review process. Second, a questionnaire was developed third, a survey was conducted using structured questionnaire and adopting convenience sampling method finally, various statistical methods including descriptive statistics, and,chi Test, One sample t-tests were applied using the SPSS/Win 9.0 statistical package to analyze the data collected. Sample Size: 95 Sampling Method: Convenience Sampling Statistical Tools: Chi-Test, One sample t-test age Method Framework of the factors As mentioned that survey focuses on the finding the customers perception on various factors which motivate them to adopt the e-banking system over the traditional banking system.. Various factors such as as convenience, flexible virtual banking system, reliability, timesaving transaction cost, on-line bill payments, digital signature for security, faster transfer, easy to use, user friendly, low transaction fees, anytime and anywhere banking facility, access to current and historical transaction data, facility of fund transfer to third party 400
are taken for this study. It was the perception of researchers that these factors may affect the e-banking and are considered to examine during the research. Findings and Discussion Hypothesis Testing Hypothesis No.1 of Study H0: There is a no significance relationship in awareness level of respondents and age group H1: V1&V2 are associated with each other Chi-Square Tests Value df Asymp. Sig. (2- sided) Sig. Monte Carlo Sig. (2-sided) 0.05% Confidence Interval Lower Bound Upper Bound Pearson Chi-Square 106.293 a 20.000.006 b.006.006 Likelihood Ratio 21.539 20.366.253 b.253.253 Fisher's Exact Test 25.007.279 b.279.279 N of Cases 96 a. 23 cells (76.7%) have expected count less than 5. The minimum expected count is.01. b. Based on 10000 sampled tables with starting seed 2000000. A chi-square test of independence was performed to examine the relation between age group and awareness level. The relation between these variables was significant, X2(8, N= 95) = 106.293, p<.01. Researchers reject the null hypothesis that there is a no difference in awareness level and age groups. Hypothesis No.2 H0: There is a no difference in awareness level among genders H1: There is difference in awareness among genders Chi-Square Tests Value df Asymp. Sig. (2- sided) Sig. Monte Carlo Sig. (2-sided) 0.05% Confidence Interval Lower Bound Upper Bound Pearson Chi-Square 97.292 a 8.000.007 b.007.007 Likelihood Ratio 12.443 8.133.055 b.055.055 Fisher's Exact Test 13.574.096 b.096.096 N of Cases 96 A chi-square test of independence was performed to examine the relation between genders and awareness level. The relation between these variables was significant, X2(8, N= 95) = 401
97.292,p<.01. Researchers reject the null hypothesis that there is a no difference in awareness level among genders. Hypothesis No.3 H0: There is a no change in banking pattern of customers after e-banking system H1: There is a change in banking pattern of respondents One Sample T-Test One-Sample Statistics N Mean Std. Deviation Std. Error Mean How often you were visiting banks prior to e-banking? How often do you visit banks now 95 2.31 1.082.111 95 2.68 1.074.110 One-Sample Test Test Value = 0 t df Sig. (2-tailed) Mean Difference 95% Confidence Interval of the Difference Lower Upper How often you were visiting banks prior to e-banking? How often do you visit banks now 20.757 94.000 2.305 2.08 2.53 24.349 94.000 2.684 2.47 2.90 The T-test was used in this study to examine the effect the of e-banking on traditional banking usage and as reflected in table there is a significant change in the usage of traditional visit pattern. Researcher observed that calculated value of t is greater than t-table at df of 94 and at significance level of0.05, There was a statistically significant difference between means (p <.05) and, therefore, we can reject the null hypothesis and accept the alternative hypothesis. Hypothesis-4 H0: There is a no relation in awareness of e-banking and its usages H1: V1&V2 are significantly associated with each other 402
Case Processing Summary Cases Missing Total N N N Do you know about e-banking? * How frequently do use e- banking? 95 100.0% 0 0.0% 95 100.0% Count Do you know about e-banking? * How frequently do use e-banking? Crosstabulation How frequently do use e-banking? Total Rarely Frequently Very Frequently 4 Yes 26 33 13 0 72 Do you know about e-banking? No 15 4 2 2 23 Total 41 37 15 2 95 Chi-Square Tests Value Df Asymp. Sig. (2- sided) Monte Carlo Sig. (2-sided) Monte Carlo Sig. (1-sided) Sig. 0.05% Confidence Interval Sig. 0.05% Confidence Interval Lower Bound Upper Bound Lower Bound Upper Bound Pearson Chi- Square 14.270 a 3.003.001 b.001.001 Likelihood Ratio 14.185 3.003.004 b.004.004 Fisher's Exact Test 12.611.003 b.003.003 Linear-by-Linear Association 1.235 c 1.266.296 b.296.296.172 b.172.172 N of Cases 95 a. 3 cells (37.5%) have expected count less than 5. The minimum expected count is.48. A chi-square test of independence was performed to examine the relation between awareness level and its usage The relation between these variables was significant, X2(3, N= 95) = 14.270,p<.01. Researchers reject the null hypothesis that there is a no relation in awareness level and its usage. Hypothesis No. 5 H0: Trust and security is not key aspect in e-banking 403
H1: Trust and security are key aspect Hypothesis No. 5.1 H0: Account hacking is not easy H1: It is easy to hack the accounts ANOVA Sum of Squares df Mean Square F Sig. Trust and security is key aspect in e-banking It is easy to hack the account Between Groups 1.395 1 1.395 1.441.233 Within Groups 90.036 93.968 Total 91.432 94 Between Groups.087 1.087.082.775 Within Groups 98.502 93 1.059 Total 98.589 94 There was a statistically significant difference between groups as determined by one-way ANOVA (F(1,93) = 4.467, p =.0233). When P value is greater than.0.05 so we can reject the null hypothesis because trust and security are key aspect in E-banking. Discussion Enos, (2001), Turban et al., (2000)) that security is one of the most important factor which affect the e-banking either in the form of internet banking or Mobile banking. Researchers agreed and validated that turst and security are key aspect as data reveals. This finding is further supported by June an cai (2001).It provides customers convenience and flexibility and can be provided at a lower cost than traditional branch banking.( Gregory D. Williamson, 2006) Jun and cai (2001) identified one of the very important service quality dimensions of i- banking service quality is reliability. Liu and Arnett in their study identified time factor as one of the prime factor which affect e-banking.(iamai s, 2006) research reveals that any time banking facility is one of the factors. Data further examine the fact that time saving is also one of the important factor which affect the e-banking as mentioned in annexure. Conclusion 404
Researchers concludes that cost aspect, security aspect are important issues in e-banking. It is also analyzed that there is a close relationship between awareness level and usages of e- banking. It is also examined that it is one of the efficient and cost effective medium of banking and reducing the usages of traditional banking. In terms of security aspect more than 80% respondents reported that there is a need to improve the security measures and digital signature is one of the solution of higher safety. (65% respondents reported) as mentioned in annexure. Thus it can be finally concluded that e-banking is growing and majority of people are accepting and using it either knowingly or unknowingly. If security aspects can be improved than it will be more successful model in present banking system. References: 1. Beer Stan (2006). Customers Preference on Internet Banking, Survey (Retrieved from http://www.itwire.com/content/view/4570/53 on 20 March 2009) 2. Burr, W. (1996): Wie Informationstechnik Die Bankorganisation Verändern Könnte, In Lustsik, O (2004), Can E-Banking Services Be Profitable?, Tartu University Press, Estonia 3. Chang, C. and Twang, H. G. (2006). An EmpiricalStudy of Factors Affecting Internet Security forfinancial Industry in Taiwan. Telemetric andinformatics, 23 (4), pp. 343-364. 4. Charity-Commission (2003), Guidelines On Electronic Banking, available at http/www.charitycommission.gov.uk 5. Enos, L. (2001) Report: Critical Errors in Online Banking. e-commerce Times, April 11, Wysiwyg://4/http://www.ecommercetimes.com/perl/story/8867.htm 6. Gregory D. Williamson (2006). Enhanced Authentication In Online Banking, Journal of Economic Crime Management, Volume 4, Issue 2, http://www.utica.edu/academic/institutes/ecii/publications/articles/51d6d996-90f2-f468- AC09C4E8071575AE.pdf on 18 March 2009 7. IAMAI s Report on Online Banking 2006 Retrieved from http://www.iamai.in/research.aspx Fileid=r8_home.htm&rid=8 8. Jun, M. and Cai, S. (2001). The key Determinants of Internet Bank Service Quality: a Content Analysis,International Journal of Bank Marketing, 19(7): 276 291 9. Sathye, M. (1999) Adoption of Internet Banking by Australian Consumer: An Empirical Investigation, International Journal of Bank Marketing, Vol. 17, No. 7, pp. 324-334. 10. Seitz, J and Stickel, E (2002): Internet Banking - An Overview, available at www.euv-frankfurt-0.de 11. Suganthi, Balachandher, and Balachandran, (2001) Internet Banking Patronage: An Empirical Investigation Malaysia. Journal of Internet Banking and Commerce, 6 (1). Retrieved from http://www.arraydecom/commerce/jibc/0103_01.htm 12. Turban, E., Lee, J., King, D., Shung, H. M. (2000) Electronic Commerce, a Managerial Perspective, Prentice Hall, London, UK. 13. Yan, G., Paradi, J. C. (1998) Internet The Future Delivery Channel for Banking Services? In Blanning, R. W., King, D. R. (Eds.) Proceedings of 31st Annual Hawaii International Conference on System Sciences, January 5-8, Internet and Digital Economy Track, IEEE Computer Society, Hawaii, USA. Appendices 405
Age Wise Analysis of Respondents Age Frequency Cumulative 18-20 9 9.4 9.4 9.4 21-29 48 50.0 50.0 59.4 30-39 18 18.8 18.8 78.1 40-49 18 18.8 18.8 96.9 50-59 2 2.1 2.1 99.0 Q.1.3 1 1.0 1.0 100.0 Total 96 100.0 100.0 Analysis of Monthly Income of Respondents Monthly Income Frequency Cumulative Below Rs.20000 32 33.3 33.3 33.3 Rs. 21000 to 30000 29 30.2 30.2 63.5 Rs. 31000 to 40000 13 13.5 13.5 77.1 Rs. 41000 to 50000 5 5.2 5.2 82.3 More than 50000 16 16.7 16.7 99.0 Q.1.4 1 1.0 1.0 100.0 Total 96 100.0 100.0 How often do you use e-banking? How frequently do you use e-banking? Frequency Cumulative Rarely 41 43.2 43.2 43.2 Frequently 37 38.9 38.9 82.1 Very Frequently 15 15.8 15.8 97.9 2 2.1 2.1 100.0 E-banking is efficient and save time Frequency Cumulative Strongly Agree 46 48.4 48.4 48.4 Agree 37 38.9 38.9 87.4 Neutral 12 12.6 12.6 100.0 e-banking is safe Frequency Cumulative Strongly Agree 23 24.2 24.2 24.2 Agree 46 48.4 48.4 72.6 Neutral 20 21.1 21.1 93.7 Disagree 5 5.3 5.3 98.9 Strongly Disagree 1 1.1 1.1 100.0 Trust and security is key aspect in e-banking 406
Frequency Cumulative Strongly Agree 24 25.3 25.3 25.3 Agree 37 38.9 38.9 64.2 Neutral 21 22.1 22.1 86.3 Disagree 13 13.7 13.7 100.0 Security measured should be improved in e-banking Frequency Cumulative Strongly Agree 39 41.1 41.1 41.1 Agree 41 43.2 43.2 84.2 Neutral 9 9.5 9.5 93.7 Disagree 5 5.3 5.3 98.9 Strongly Disagree 1 1.1 1.1 100.0 Reliability is key factor in e-banking operation and usage Frequency Cumulative Strongly Agree 20 21.1 21.1 21.1 Agree 33 34.7 34.7 55.8 Neutral 27 28.4 28.4 84.2 Disagree 11 11.6 11.6 95.8 Strongly Disagree 4 4.2 4.2 100.0 e-banking is cost effective Frequency Cumulative Strongly Agree 13 13.7 13.7 13.7 Agree 31 32.6 32.6 46.3 Neutral 26 27.4 27.4 73.7 Disagree 16 16.8 16.8 90.5 Strongly Disagree 9 9.5 9.5 100.0 Digital Signature may provide more security Frequency Cumulative Strongly Agree 36 37.9 37.9 37.9 Agree 26 27.4 27.4 65.3 Neutral 22 23.2 23.2 88.4 Disagree 7 7.4 7.4 95.8 Strongly Disagree 4 4.2 4.2 100.0 407