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Business Research Management Project Topic: Efficiency of Online Banking Submitted : 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 Specialization: FINANCE and BUSINESS ANALYTICS 1 Table...

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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

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Table of contents

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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

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7. Reliability

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.

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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.

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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.

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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.

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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 EBanking 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.

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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

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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.

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Study results & findings  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.

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 Do you use Online Banking?

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

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 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.

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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.

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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.

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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.

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 What according to you is the likeliness of facing the following issues while using online banking?

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Interpretation of results 1. Multiple Regression for Customer Satisfaction Regression Equation Y = 0.150 + 0.301*X1 -0.060*X2+0.379*X30.306*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 X 3 i.e. User Friendliness has significant impact on the dependent variable.

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 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

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Conclusions & recommendations All the contributing factors towards our comparative study helped us to successfully achieve our research objectives. During our research, we did not confine our learnings just to the research objectives. We got to know about the customers' preferences and behavioral pattern towards Ola and Uber. We performed the data analysis on SPSS, which helped us to obtain accurate results and thereby, make suitable interpretations. It was a major learning experience for us and most importantly, we worked as a team and the report was a result of our joint effort.

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Limitations of the study

 Due to lack of time, we couldn’t gather as many responses as we had hoped for.

 We believe apart from the parameters taken by us, more suitable and relatable parameters could have been added.

 The survey takers who responded were dominated by college students.

 Respondents may not feel encouraged to provide accurate, honest answers.

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Appendices

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Bibliography

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http://www.icommercecentral.com/open-access/the-electronicbanking-revolution-in-india.php?aid=59261

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http://www.academia.edu/Documents/in/Electronic_Banking

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https://www.academia.edu/5337192/_EBANKING_IN_INDIA_AND_ITS_PRESENT_SCENARIO_A ND_FUTURE_PROSPECTS_

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