Business Research Management

Project
Topic: Efficiency of Online Banking

Submitted by:

Raj Shishodia (35)

Tanya Bansal (48)

Submitted to: Prof Sayanti Bannerjee

In Partial Fulfillment for the award of the degree

Post Graduate Diploma in Management

2018-2020

Specialization: FINANCE and BUSINESS ANALYTICS

1
Table of contents

2
 Executive summary
The purpose of this study was to examine the relationship between the
dimensions of E-Banking service quality and customer satisfaction to determine
whether there is a significant difference among the customer satisfaction drawn
from traditional banking and online banking. The findings show that reliability,
efficiency, and ease of use; responsiveness, communication, security and
privacy all have a significant impact on customer satisfaction, with reliability
being the dimension with the strongest impact. Knowing the relative
importance of service quality dimensions can help the banking industry focus
on what satisfies customers the most.

We trying to find out what portion of survey takers use online banking for the
following services provided:

1. Pay bills
2. Bank transfer
3. Insurance
4. To check bank statements
5. To block debit/credit card

We also tried to understand the satisfaction level of survey takes with respect to
the following factors:

1. Speed
2. Accuracy
3. User-friendliness
4. Time taken
5. Level of Security
6. Range of services offered
7. Reliability

3
We further asked the respondents what according to them is the likeliness of
facing the following issues while using online banking:

1. Connection delay
2. Server unavailable
3. Transaction error
4. OTP not received
5. Account blocked
6. Page Expired

We have collected primary data for our research purpose. Out of the different
methods of data collection under primary data collection, we have opted for
questionnaire approach. The number of responses received were 65. After
receiving the responses, we performed analysis on the information received.
The analysis was done on SPSS software, wherein we performed t-test,
factor analysis and multiple regression.

4
 Acknowledgement
The success and final outcome of this project required a lot of guidance and
assistance from many people and we are extremely privileged to have got this
all along the completion of our project. All that we have done is only due to
such supervision and assistance and we would not forget to thank them.

We respect and thank Ms. Prof. Sayanti Bannerjee, for providing us an

opportunity to do the project work about the Efficiency of Online Banking and
giving us all support and guidance, which helped us complete the project duly.
We are extremely thankful to her for providing valuable support and guidance.

We owe our deep gratitude to her for taking keen interest on our project work
and guiding us all along, till the completion of our project work by providing all
the necessary information.

I am thankful to and fortunate enough to get constant encouragement, support

and guidance from all Teaching staffs of New Delhi Institute of Management
which helped us in successfully completing our project work.

We offer thanks to our parents who have been a key support in every phase of
our lives and have offered their constant unconditional support.

5
 Problem definition
The recent shift from Traditional to Modern Banking has been quite popular,
but only among a particular section of the society. Through this research we try
to understand the problems associated with internet banking and why there is
hesitation among a part of the population for the same. Through this research
we hope to understand the efficiency of online banking system and find out the
problem areas.

6
 Study background
Electronic Banking in simple terms means, it does not involve any physical
exchange of money, but it's all done electronically, from one account to another,
using the Internet. Internet banking is just like normal banking, with one big
exception. You don't have to go to the bank for transactions. Instead, you can
access your account any time and from any part of the world, and do so when
you have the time, and not when the bank is open. For busy executives,
students, and homemakers, e-banking is a virtual blessing.

Various developments have taken place in Indian Banking. Among the various
developments, technology has influenced the way customer interacts with
banks. Electronic channels and products such as ATMs, cards, internet banking
and mobile banking are offered along with traditional branch channel.
Differences in the usage of channels exist between developed countries and
developing countries. Evidence suggests that there is a shift from traditional
channel to electronic channels. For example, usage of digital banking in
developed countries is more than 90 percent and diffusion of digital channels in
developing countries range from 11 percent to 25 percent. The study by
Capgemini in his report “World Payments Report 2014” indicate that non-cash
transactions have reached 334 billion transactions. There is greater propensity
of customers to move towards digital channels. Banks which develop digital
capabilities are going to benefit. Customers recognize greater convenience
through digital channels. However, banks will need to cope up with issues of
customer service and frauds which are associated with digital channels.

The paper offers important contributions to the existing literature on electronic

banking. It is evident that significant developments are taking place on the front
of electronic banking which we categorize as revolution. India is no exception

7
to the revolution in electronic banking. Regulators are forming specialized
organization with an objective to focus retail electronic payment products. In
this regard, the major milestone has been the formation of National Payments
Corporation of India. While the role of regulator in promoting retail, electronic
payments has been examined, the role of specialized organizations with an
objective of oversight functions warrant investigation. NPCI has played a major
role in the growth of electronic payments. We assess the development in India
by tracking the progress by comparing the periods before and after the
formation of NPCI in India.

8
 Review of literature
E-Banking

Historically, the launching of the first Automated Teller Machine (ATM) in

Finland marked the start of a new banking channel, which made Finland the
leading country in E-Banking, before it became widely used in any other
developed and developing countries. More recently, E-Banking, or the
distribution of financial services via electronic systems, has spread among
customers due to rapid improvement in IT and through competition between
banks (Mahdi, Rezaul, & Rahman, 2010).

Lustsik (2004) defines E-Banking services as a variety of e-channels for doing

banking transactions through Internet, telephone, TV, mobile, and computer.
Banking customers’ desires and expectations with regard to service are
expanding, as technology advances and improves. These days, the customer
wants to operate and do his or her banking transactions at any location without
going to the bank, at any time without being limited to the bank’s working
hours, and to do all his or her payments (purchasing, bills, stocks) in a fast and
cost-effective way. Consequently, financial services quality ought to be
characterized by independence, elasticity, freedom, and flexibility, to
accommodate these desires (Khalfan & Alshawaf, 2004).

In India, E-Banking is still mostly limited to the Internet and mobile telephones.
With that in mind, we are defining the concept as the ability to conduct banking
and financial transactions electronically via the Internet or mobile telephone
applications.

Customer Satisfaction

A number of varying definitions have been proposed to clarify customer

satisfaction. Yet the notion of comparing post product/service performance with

9
pre-formed expectations seems to be common to most definitions. Oliver
(1981) defines satisfaction as an emotional post consumption evaluative
judgment concerning a product or service. Similarly, Tse and Wilton
(1988) defined customer satisfaction as a “consumer response to the evaluation
of the perceived difference between expectations and final result after
consumption” . Satisfaction can also be described as the feedback of a post
purchase assessment of certain service/product’s quality, and compared with the
expectation of the prior-purchasing stage (Kotler & Keller, 2011).

In contrast, other researchers have observed that the impact practiced within the
purchasing and consuming stage of the product/service may also have an
important effect on the customer’s judgments toward satisfaction. Thus,
customer satisfaction is a customer’s feeling of pleasure or displeasure after he
or she has distinguished a performance of a product/service with respect to his
or her expectancy (Keller & Lehmann, 2006).

Consistent with these definitions, and in so far as this study is concerned,

customer satisfaction is the attitude of the customer formulated in response to
using any form of E-Banking services. Accordingly, E-Banking attributes may
increase, decrease, or keep the same customer satisfaction.

Customer Satisfaction and E-Banking

One main objective of this research is to understand to what extent the quality
of electronic services offered by banks would affect the satisfaction of the
customer in the Lebanese banking sector. According to Grönroos (1998), there
is a steady and positive relationship that gathers both the E-service quality and
customer satisfaction. Indeed, Parasuraman, Zeithaml, and Berry (1988) also
conclude in a study that the relationship between quality of service and
customer satisfaction is very sturdy and durable. A number of additional studies
point out to a relationship between customer satisfaction and E-Banking

10
services. In their research, Asiyanbi and Ishola (2018)demonstrated that the
satisfaction degree of customers in the banking sector increases when using E-
Banking services. Similarly, Ranaweera and Neely (2003) verified that the
quality of E-service is the first step of customers’ satisfaction .

Dimensions of E-Banking Service Affecting Customer Satisfaction

With a number of studies converging to show a relationship between E-Banking

service and customer satisfaction, the question becomes the following: What
aspects or dimensions of E-Banking service affect customer satisfaction and in
what ways? Our review of the literature reveals that these aspects could be
grouped under efficiency, reliability, privacy and security, and responsiveness
and communication.

Speed in performing E-Banking services is a determining factor of customer

satisfaction according to Parasuraman, Zeithaml, and Berry (1985). Efficiency
in terms of quick speedy service is also confirmed. Liao and Cheung (2002) find
reliability as one of the most important features that customers seek in
evaluating their E-Banking service quality.

With respect to privacy and security, a number of elements were identified and
studied by researchers including maintaining the confidentiality of operations,
refraining from sharing personal information, and insuring a good level of
security for the customer’s information.

According to Madu and Madu (2002), responsiveness is the readiness to support

the bank’s customers and deliver them a rapid service. This kind of service can
be shaped into four forms. First, the E-Banking system can control and operate
the service properly. Second, the E-Banking channels can guide customers
toward proceeding properly in case of any failing operations. Third, it can also
cover a rapid solution for any possible error in E-Banking transactions.

11
 Study scope & objectives

 To find out about people’s banking habits and what portion of them have
shifted from traditional to modern banking

 Security concern of online banking and the related trust issues

 The level of difficulty faced by those who indulge in online banking

 To find the how common technical glitches are in online banking

12
 Research frame work

We have applied all 3 research designs to our report:

 Exploratory
 Descriptive
 Casual

Under exploratory, we have done literature review, clarified our research

problem and developed hypotheses.

Under descriptive, we have tried to understand the preference of

customers towards online banking.

Under casual, we have tested our hypotheses using SPSS and drew
conclusions.

Data collection methodology

We have used convenience sampling design for our research. Due to the time
constraint, despite our consistent efforts to circulate the questionnaire to a large
population its reach was limited to our professional and personal connections.

13
GRAPHICAL REPRESENTATION OF DATA COLLECTED

 Age Group

It can be observed from the above bar graph that majority of respondents,
more than 50% belong to the age group between 20 to 26 years.

 Occupation

It can be observed from the above pie chart that majority respondents are
students but there is a significant proportion of respondents belonging to
the service too.

14
  Do you use Online Banking?

Graph above shows that 92.3% use online banking for their transactions.

15
 What is the likeliness of you using online banking for the following
services?
(Very Low=1, Low=2, Moderate=3, High=4, Very High=5)

i. Pay bills

Approximately 50% of the survey takers have a very high likeliness of using
online banking to pay their bills. Electronic bill payments allow consumers
to pay their bills online via desktop or mobile devices from one convenient
location. For most people, the biggest benefit of electronic bill pay is the
convenience to easily track their transactions and expenses electronically.

16
 ii. Bank Transfer

Approximately 48% of the survey takers have a very high likeliness of using
online banking for bank transfers. Online banking also allows you to transfer
money between accounts much more quickly and check on your available funds
before spending money. It is more convenient than using the automated phone
service and can save you a trip to the bank.

iii. Insurance

There is high variability among the likeliness of survey takers to use online
banking for insurance purposes. 27% are neutral, while 21% say they have a
very low likeliness.

17
 iv. To check bank statements

Approximately 52% of the survey takers have a very high likeliness of using
online banking for checking their bank statements. You may view your bank
statements quickly and securely with electronic bank statements.

v. To block your debit/credit card

Approximately 41% of the survey takers have a very high likeliness of using
online banking for blocking their debit/credit card, while 24% of the
respondents say they have a high likeliness.

18
 SPSS DATA ANALYSIS AND INTERPRETATION

1. Multiple Regression for Customer Satisfaction

Regression Equation
Y = 0.150 + 0.301*X1 -0.060*X2+0.379*X3-
0.306*X4+0.274*X5+0.015*X6+0.340*X7

Where,
Y represents dependent variable i.e. Satisfaction with Online
Banking and
X represents independent variables i.e.
X1 = Speed
X2 = Accuracy
X3 = User Friendliness
X4 = Time Taken
X5 = Level of Security
X6 = Range of services offered
X7 = Reliability

It can be observed from the regression equation that variable

X3 i.e. User Friendliness has significant impact on the
dependent variable.

19
 Model Summary
R = 0.844
(R)2 = 0.713
Where (R)2 represents coefficient of determination.
(R)2 indicates that the seven independent variables together
explain 71.3 % variation in satisfaction.

 Anova
Ho: There is no significant impact of the coefficients on the
satisfaction
H1: There is significant impact of the coefficients on the
satisfaction

p value 0.000
alpha = 0.05(assumed level of significance)
Since p value is less than alpha ( p < 0.05), therefore H1
accepted i.e. there is significant impact of the coefficients on
the customer satisfaction
 Coefficient Table
Since p value of User Friendliness (0.001) is less than alpha
(0.05) therefore User Friendliness is significant to determine
the impact of satisfaction. P value of remaining 6 variable is
greater than the value of alpha (0.05), therefore the remaining
6 variables are insignificant to determine the impact of
customer satisfaction

20
21
Study results & findings

22
Interpretation of results

23
Conclusions & recommendations

24
Limitations of the study

25
Appendices

26
Bibliography

27
Footnotes

28