Bharat (8nbrj009) Final Report

8/9/2019 Bharat (8nbrj009) Final Report

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A THESIS ONAN INVESTIGATION INTO SEMIURBAN CONSUMERS

PERCEPTION AND LEVEL OF ACCEPTANCE OF INTERNETBANKING AND SMS BANKING w.r.t AXIS BANK, ICICI, SBI,

KARNATAKA, ING VYSYA,HDFC AT RAJAHMUNDRY

MBA Course

A report in partial fulfillment ofthe requirements of

THE MBA PROGRAM

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TABLE OF CONTENTS

1. LIST OF TABLES and ILLUSTRATIONS 7

2. ABSTRACT 8

3. INTRODUCTION 9

4. OBJECTIVES 9

4.1. LIMITATIONS 10

4.2. METHODOLOGY 11-12

4.3. FINDINGS 13

5. INDUSTRY PROFILE 14-23

6. REVIEW OF LITERATURE 24-30

7. RESEARCH DESIGN / METHODOLOGY 31-33

8. RESULTS AND ANALYSIS 34-49

9. CONCLUSIONS 50-52

10. REFERENCES 53

11. APPENDICIES 54-59

12. GLOSSARY ` 60-65

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LIST OF TABLES & ILLUSTRATIONS

Table-1 no of persons having internet at their home -34Table illustrates no of persons having internet according to age group

Table-2 time spending on internet -35Table illustrates time spending on internet

Table-3 Frequency of visiting your bank branch per month -36Table illustrates no of times they visiting the bank

Table-4 The main reason that you typically visit your bank branch -37Table illustrates purpose of visiting the bank

Table-5 The e-banking facilities provided by your bank -38

Table illustrates facilities provided by their bankTable-6 banking services do you use which your Internet bank offers -39Table illustrates basically for seeking product and rate information

Table-7 reason that you chose this particular bank as Your Internet bank -40

Table illustrates choosing particular bank for internet banking

Table-8 E-banking services you use provided by the bank -41

Table illustrates more no of persons using atm services

Table-9 the name of bank you have an internet bank or sms banking account -42

Table illustrates more no of persons using which internet banking account

Table-10 internet banking and sms banking you have a traditional bank account -43

Table illustrates having traditional account

Table-11 reason that you chose this particular bank as internet bank -44Table illustrates reason for using such particular bank

Table-12 most important reasons you opened an internet bank A/C -45

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Table illustrates reason for using internet banking

ABSTRACT

Introduction of new technologies allowed banking institutions to offer new

channels of service outlets like ATM facility, Internet Banking, Telephone Banking

and Mobile Banking. Indian consumers too have access to many new channels to

interact with their bank. Banks race against each other in bringing the latest

technology for the benefit of their customers and themselves. But not many studies

have been conduced to evaluate if Internet Banking channel is utilized properly by

the customers in India. Reasons for customer apathy towards Internet banking

channel, if that exist, have also not been analyzed in an Indian context earlier. As

banking is ranked No. 1 industry in service industry. The industry came with manyrecent technological developments. Almost all public and private banks are offering

internet banking. The problem is why the customers are not using the internet banking

w.r.t public banks and private banks.

An analysis of the differences in consumer perceptions between bank customers

using Internet Banking and sms banking those not using Internet Banking was done and

it showed that risk perceptions in terms of financial, psychological and safety risks

among customer not using the internet was more meaningful than those using internet

banking. Customers not preferring to use internet banking thought that they would be

swindled when using this service, and therefore, are particularly careful about high risk

expectation during money transfers from and between accounts. Only 37% of Indian

Internet users come from Top 10 cities i.e. Mumbai, Bangalore, Delhi, Calcutta,

Chennai, Pune, Hyderabad, Ahmedabad, Surat and Nagpur.

The number of active Internet user (i.e. ones who logon to Internet at least once a

month) is now 32 million and numbers who have used Internet at least once stands at 46

million. Maximum of the person who are going on for internet banking lies in the agebracket of 26-35. but the rise in the age the level of users become low. Approximately

17% of female use internet banking. This matter of concern for banks what are the

causes why this is happening. Although many major banks have started offering I-

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banking services, the slow pace will continue until the critical mass is achieved for PC,

internet connections and telephones.

INTRODUCTION

Tremendous growth of Internet during the mid-nineties prompted banks to utilizeInternet as a medium for offering banking services. In Internet Banking banks

allow their customers to perform banking transactions through their web site in a secure

way. ICICI Bank was the first bank in India which offered this delivery channel,

by kicking off its online banking services in 1996. Other private sector banks like

Citibank, IndusInd Bank and HDFC Bank and Timesbank (now part of HDFC

Bank) started offering internet banking services in 1999. SBI launched its internet

banking services in July 2001. Other public sector banks like State Bank of India,

Bank of Baroda, Allahabad Bank, Syndicate Bank and Bank of India, also rolled theirservices during the same time.

RESEARCH OBJECTIVES

The purpose of this study is to provide a better understanding of the adoption of

technology-based services, and to model customer behavior in the mobile banking and

internet banking context. On the basis of a review of the literature sampling developed

from the theory as well as the various general objectives regarded as pertinent to this

research, the research questions listed below were formulated.

To gain a comprehensive understanding of the phenomenon under investigation, and

in order to be able to provide a sufficient justification for answering that question, a

number of subordinate questions need to be addressed.

In this technology era many customers of the banks are not aware of the recent

technology developments like internet banking. So, it is the need to identify the causes

that why customers are not using internet banking and mobile banking services and also

to examine which segment group of customers is using different e-banking facilities.

To compare the Internet services of different banks that provide to the customers

and to analyze which bank is satisfying its customer needs w.r.t internet banking and

SMS banking.

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Examine whether Theory of Planned Behaviour (TpB) or Technology Acceptance Model

can be applied in Internet banking and sms banking adoption and usage.

LIMITATIONS

1. The study is confined only to the service of SMS and internet banking.

2. The study is confined to only few banks.

3. The analysis is as per the respondents response. So the results may be biased.

4. The study is confined to only city, where the sample size is less.

5. Many customers are not aware for these services.

6. Many customers even though they are not aware of these services, the response

may be bias because feeling inferior to say that they doesnt know.

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RESEARCH METHODOLOGY

RESEARCH TYPE

We use descriptive research and exploratory research design in our studies.

Descriptive Research is also called Statistical Research. The main goal of this type of

research is to describe the data and characteristics about what is being studied. The idea

behind this type of research is to study frequencies, averages, and other statistical

calculations. Although this research is highly accurate, it does not gather the causes

behind a situation.

Descriptive research is used to obtain information concerning the current status of

the phenomena to describe "what exists" with respect to variables or conditions in a

situation. Here we also tried to find out the main cause why there is perceptual blocking

of the Indian customers towards internet banking. The methods involved range from the

survey which describes the status quo, the correlation study which investigates the

relationship between variables, to developmental studies which seek to determine

changes over time.

Statement of the problem Identification of information needed to solve the problem

Selection or development of instruments for gathering the information

Identification of target population and determination of sampling procedure

Design of procedure for information collection

Collection of information

Analysis of information

Generalizations and/or predictions

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SAMPLING

We have used convenience sampling technique. It is also called haphazard or

accidental sampling. Members of the population are chosen based on their relative ease

of access. To sample friends, co-workers, or shoppers at a single mall, are all examples

of Convenience sampling. Sometimes called grab or opportunity sampling, this is the

method of choosing items arbitrarily and in an unstructured manner from the frame.

Though almost impossible to treat rigorously, it is the method most commonly employed

in many practical situations

Sample Unit: Internet Users, sms banking (for banks)

Sample Technique: Convenient sampling

Sample Size: 150

TOOLS

Statistical: SPSS

Techniques: MDS and Multiple Regressions

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FINDINGS AND CONCLUSIONSSuccess is the sweetest thing in this world.the future of banking industry depends on

efforts of all concerned parties such as service providers, service facilitators, regulatory

system and customers. The banking Business has always been different from other

business because it comes under service industry and financial industry category. Every

one making a financial transaction is anxious about the security of his money. Hence the

bank, regulatory authorities and other organizations must try their best to make banking

sector as secure as possible.

The main objective of the study was to identify the factors that were influencing internet banking adoption among customers in India. The survey banking adoption amongcustomers in India. The survey produced empirical confirmation of seven factors whichdid influence internet banking acceptance. The factors produced by survey were: perceived usefulness, perceived ease of use, consumer awareness, consumer security

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concerns, quality of facilities, subjective norms and trust and privacy.The survey instruments reliability and construct validity test results were foundsatisfactory.

Industry Profile

The banking environment has suddenly become quite challenging after the

subprime crisis that surfaced last year and which has resulted in an unprecedented global

liquidity crunch. The flattening of the world has dramatically impacted both the

dynamics and the pace of global banking business. Mergers, acquisitions, consolidation,

expansion, diversification of lines of business, shifting customer orientation and the

changing regulatory environment are building up the pressure for banks to explore newpossibilities by abandoning the familiar and embracing the unconventional. Competition

is compelling banks to be agile and innovate everyday. In this milieu, what really enables

banks to build a lasting competitive advantage is the ability to continuously innovate,

achieve differentiation and respond quickly to dynamic business challenges.

The banking sector has witnessed wide ranging changes under the influence of

the financial Sector reforms initiated during 2008. The approach to such reforms in India

has been one of gradual and non-disruptive progress through a consultative process. The

emphasis has been on deregulation and opening up the banking sector to market forces.The Reserve Bank has been consistently working towards the establishment of an

enabling regulatory framework with prompt and effective supervision as well as the

development of technological and institutional infrastructure. Persistent efforts have been

made towards adoption of international benchmarks as appropriate to Indian conditions.

While certain changes in the legal infrastructure are yet to be effected, the developments

so far have brought the Indian financial system closer to global standards.

BANKING ACTIVITIES

Banks' activities can be divided into retail banking, dealing directly with individuals;

business banking, providing services to mid-size business; corporate banking dealing

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with large business entities; private banking, providing wealth management services to

High Net Worth Individuals; and investment banking, relates to helping customers raise

funds in the Capital Markets and advising on mergers and acquisitions. Banks are now

moving towards Universal Banking, which is a combination of commercial banking,

investment banking and various other activities including insurance.

TECHNOLOGICAL DEVELOPMENTS

Technology has brought about strategic transformation in the working of banks. With

years, banks are also adding services to their customers. The Indian banking industry is

passing through a phase of customers market. The customers have more choices in

choosing their banks. With stiff competition and advancement of technology, the service

provided by banks has become more easy and convenient.THE INDIAN FINANCIAL NETWORK (INFINET)

The Indian Financial Network, a VSAT-based communication back-bone for the

national payment system, was equipped with a full transponder on the INSAT-3B

satellite to carry out its operations. This was spearheaded by the Institute for

Development and Research in Banking Technology (IDRBT), a Hyderabad-based

research institute promoted by the Reserve Bank of India, is currently undergoing major

changes. INFINET can be used for both intra and interbank applications. Banks can

develop and port intra bank applications on their own. Interbank applications are beingdeveloped together by the Reserve Bank of India, IDRBT and member banks.

The network consists of over 700 VSATs located in 127 cities of the country and

utilizes one full transponder on INSAT 3B. Applications such as Real Time Gross

Settlement, Central Funds Management System, Security Settlement System, Electronic

Clearing System and Electronic Funds Transfer, being developed by the RBI will be

ported on the INFINET and in a true sense; the INFINET will become the backbone for

the National Payment Systems. These applications will use the SFMS platform. Some of

the applications, which the members are using on the network, are Any Branch Banking

(Multi Branch Banking), Fast Collection of Cheques, Cash Management Products, ATM

Network, Interbank reconciliation, Corporate E-mails etc.

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The INFINET is the most secure platform that technology can provide. Here are

its salient features:

INFINET being a CUG, it provides a high level of security against intruders.

Outsiders cannot enter or penetrate the network. In the case of VSAT Network, the IP

Addresses for IDUs at the remote VSAT locations are allotted and maintained by the

Hub and cannot be changed by the endusers. This takes care of the network integrity and

In the space segment, the data transmission, even in broadcast mode, is encrypted

using proprietary standards and the packets cannot be opened at any VSAT location

except the one specified as the destination VSAT.

In the case of Leased Line Network (LLN) IPSEC 56 will be used to provide state-of-the-art encryption and security.

Apart from the above layers of network security, there will be a host of in-built

security mechanisms in each application that is deployed on the INFINET - like

password, access control, encryption, digital signatures and certification and in some

applications there will be smart card and/or bio-metric authentication as well.

Application level Security at par with international standards is provided throughSymmetric Key and Public Key Cryptography and IDRBT will act as the Certification

Authority for the Banking and Financial Sector.

INTERNET BANKING (E-BANKING)

Internet banking (or E-banking) means any user with a personal computer and a browser

can get connected to his bank -s website to perform any of the virtual banking functions.

In internet banking system the bank has a centralized database that is web-enabled. All

the services that the bank has permitted on the internet are displayed in menu. Any

service can be selected and further interaction is dictated by the nature of service. The

traditional branch model of bank is now giving place to an alternative delivery channels

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with ATM network. Once the branch offices of bank are interconnected through

terrestrial or satellite links, there would be no physical identity for any branch. It would a

borderless entity permitting anytime, anywhere and anyhow banking. The network which

connects the various locations and gives connectivity to the central office within the

organization is called intranet. These networks are limited to organizations for which

they are set up. SWIFT is a live example of intranet application.

INTERNET BANKING IN INDIA

The Reserve Bank of India constituted a working group on Internet Banking. The group

divided the internet banking products in India into 3 types based on the levels of access

granted. They are: Information Only System: General purpose information like interest rates, branch

location, bank products and their features, loan and deposit calculations are provided in

the banks website. There exist facilities for downloading various types of application

forms. The communication is normally done through e-mail. There is no interaction

between the customer and bank's application system. No identification of the customer is

done. In this system, there is no possibility of any unauthorized person getting into

production systems of the bank through internet.

Electronic Information Transfer System: The system provides customer- specific

information in the form of account balances, transaction details, and statement of

accounts. The information is still largely of the 'read only' format. Identification and

authentication of the customer is through password. The information is fetched from the

bank's application system either in batch mode or off-line. The application systems

cannot directly access through the internet.

Fully Electronic Transactional System: This system allows bi-directional capabilities.

Transactions can be submitted by the customer for online update. This system requires

high degree of security and control. In this environment, web server and application

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systems are linked over secure infrastructure. It comprises technology covering

computerization, networking and security, inter-bank payment gateway and legal

infrastructure.

Automated Teller Machine (ATM): ATM is designed to perform the most important

function of bank. It is operated by plastic card with its special features. The plastic card

is replacing cheque, personal attendance of the customer, banking hours restrictions and

paper based verification. There are debit cards. ATMs used as spring board for

Electronic Fund Transfer. ATM itself can provide information about customers account

and also receive instructions from customers - ATM cardholders. An ATM is an

Electronic Fund Transfer terminal capable of handling cash deposits, transfer between

accounts, balance enquiries, cash withdrawals and pay bills. It may be on-line or 0ff-line.The on-line ATM enables the customer to avail banking facilities from anywhere. In off-

line the facilities are confined to that particular ATM assigned. Any customer possessing

ATM card issued by the Shared Payment Network System can go to any ATM linked to

Shared Payment Networks and perform his transactions.

Credit Cards/Debit Cards: The Credit Card holder is empowered to spend whereverand whenever he wants with his Credit Card within the limits fixed by his bank. Credit

Card is a post paid card. Debit Card, on the other hand, is a prepaid card with some

stored value.Every time a person uses this card, the Internet Banking house gets money

transferred to its account from the bank of the buyer. The buyers account is debited with

the exact amount of purchases. An individual has to open an account with the issuing

bank which gives debit card with a Personal Identification Number (PIN). When he

makes a purchase, he enters his PIN on shops PIN pad. When the card is slurped through

the electronic terminal, it dials the acquiring bank system - either Master Card or VISA

that validates the PIN and finds out from the issuing bank whether to accept or decline

the transactions. The customer can never overspend because the system rejects any

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transaction which exceeds the balance in his account. The bank never faces a default

because the amount spent is debited immediately from the customers account.

Smart Card: Banks are adding chips to their current magnetic stripe cards to

enhance security and offer new service, called Smart Cards. Smart Cards allow

thousands of times of information storable on magnetic stripe cards. In addition, these

cards are highly secure, more reliable and perform multiple functions. They hold a large

amount of personal information, from medical and health history to personal banking and

personal preferences.

CORE BANKING SOLUTIONS

Core Banking Solutions is new jargon frequently used in banking circles. Theadvancement in technology especially internet and information technology has led to

new way of doing business in banking. The technologies have cut down time, working

simultaneously on different issues and increased efficiency. The platform where

communication technology and information technology are merged to suit core needs of

banking is known as Core Banking Solutions. Here computer software is developed to

perform core operations of banking like recording of transactions, passbook

maintenance, interest calculations on loans and deposits, customer records, balance of

payments and withdrawal are done. This software is installed at different branches ofbank and then interconnected by means of communication lines like telephones, satellite,

internet etc. It allows the user (customers) to operate accounts from any branch if it has

installed core banking solutions. This new platform has changed the way banks are

working. Now many advanced features like regulatory requirements and other

specialised services like share (stock) trading are being provided.

REAL TIME GROSS SETTLEMENT (RTGS)

RTGS is an electronic settlement system of Reserve Bank of India without involvement

of papers. To facilitate an Efficient, Secure, Economical, Reliable and Expeditious

System of Fund transfer and clearing in the Banking sector throughout India. Real time

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gross settlement systems (RTGS) are a funds transfer mechanism where transfer of

money takes place from one bank to another on a "real time" and on "gross" basis.

Settlement in "real time" means payment transaction is not subjected to any waiting

period. The transactions are settled as soon as they are processed. "Gross settlement"

means the transaction is settled on one to one basis without bunching with any other

transaction. Once processed, payments are final and irrevocable.

ELECTRONIC CLEARING SERVICEElectronic Clearing Service is another technology enhancement happened in the banking

industry. The customer willing to use this facility is required to fill in the mandate form

from the corporate/any utility service institution for ECS mode of credit and debit. The

customer needs to prepare the payment date and submit it to the sponsor Bank and

after that everything happened electronically, so customer can thereby make payments as

well as receive all incomes electronically.

MOBILE BANKING

Mobile banking (also known as M-Banking, banking, SMS Banking etc.) is a term usedfor Performing balance checks, account transactions, payments etc. via a mobile device

such as a mobile phone. Mobile banking today (2007) is most often performed via SMS

or the Mobile Internet but can also use special programs called clients downloaded to the

mobile device.

Mobile Banking Services:

Account Information

Payments, Deposits, Withdrawals, and Transfers

Investments (Portfolio management services, Real-time stock quotes, personalized

alerts and notifications on security prices)

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LATEST ISSUE APPLICATION SUPPORTED BY BLOCKED AMOUNT

(ASBA)

SEBI has introduced the facility of making application through APPLICATION

SUPPORTED BY BLOCKED AMOUNT process, in book built public issue. ASBA is

an application containing an authorization to block the application money in the bank

account, for subscribing to an issue. If an investor is applying through ASBA, his

application money shall be debited from the bank account only if his/her application is

selected for allotment after the basis of allotment is finalized, or the issue is

withdrawn/failed. In case of rights issue his application money shall be debited from the

bank account after the receipt of instruction from the registrars. Merchant bankers,

Registrars and Self Certified syndicate banks (SCSBs) are advised to provide the ASBA

facility in rights issues with suitable modifications to ASBA process specified by SEBIfor public issue through book building route, as deemed fit. SCSB is a bank which is

recognized as a bank capable of

providing ASBA services to investors. The list of SCSBs is as below:

Axis Bank

Bank of Baroda

Corporation Bank

HDFC Bank

ICICI Bank Ltd IDBI Bank Limited

Kotak Mahindra Bank

State Bank of Bikaner & Jaipur

State Bank of India

Union Bank of India

Yes Bank Limited

The objective of introducing ASBA is to ensure that the investor's funds leave his bank

account only upon allocation of shares in public issues. The ASBA process also ensures

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that only the requisite amount of funds is debited to the investor's bank account on

allotment of shares. In this mechanism, the need for refunds is completely obviated.

The Internet has brought many unique benefits to marketing. Internet marketing is

associated with several business models. The goods are sold directly to consumers (B2C)

or businesses (B2B). E-Shop is the most ubiquitous form of commerce on the World

Wide Web. t involves a company presenting a catalogue of its wares to internet users and

providing facilities whereby such customers can purchase these products. Almost

invariably such a site will contain facilities for ordering and paying for products by

means of credit cards. The Business Model is:

1. Choose a product

2. Pay3. Receive shipping channel

4. Follow up service Consumers

The Internet banking is changing the banking industry and is having the major

effects on banking relationships. Internet banking involves use of Internet for delivery of

banking products & services. It falls into four main categories, from Level 1 - minimum

functionality sites that offer only access to deposit account data - to Level 4 sites - highly

sophisticated offerings enabling integrated sales of additional products and access to

other financial services- such as investment and insurance. In other words a successful

Internet banking solution offers Exceptional rates on Savings, CDs, and IRAs Checking

with no monthly fee, free bill payment and rebates on ATM surcharges Credit cards

with low rates. Easy online applications for all accounts, including personal loans and

mortgages 24 hour account access. Quality customer service with personal attention

DRIVERS OF CHANGE

Advantages previously held by large financial institutions have shrunk considerably. The

Internet has leveled the playing field and afforded open access to customers in the global

marketplace. Internet banking is a cost-effective delivery channel for financial

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institutions. Consumers are embracing the many benefits of Internet banking. Access to

one's accounts at anytime and from any location via the World Wide Web is a

convenience unknown a short time ago. status once the bank goes through a technology

integration effort to enable the customer to access information about his or her specific

account relationship. The six primary drivers of Internet banking includes, in order of

primacy are:

Improve customer access

Facilitate the offering of more services

Increase customer loyalty

Attract new customers

Provide services offered by competitors

Reduce customer attrition

INDIAN BANKS ON WEB

The banking industry in India is facing unprecedented competition from non-

traditional banking institutions, which now offer banking and financial services over the

Internet. The deregulation of the banking industry coupled with the emergence of new

technologies, are enabling new competitors to enter the financial services market quickly

and efficiently.

Indian banks are going for the retail banking in a big way. However, much is still

to be achieved. This study which was conducted by students of IIML shows some

interesting facts:

Throughout the country, the Internet Banking is in the nascent stage of development

(only 50 banks are offering varied kind of Internet banking services).

In general, these Internet sites offer only the most basic services. 55% are so called

'entry level' sites, offering little more than company information and basic marketingmaterials. Only 8% offer 'advanced transactions' such as online funds transfer,

transactions & cash management services.

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LITERATU RE REVIEW

What is bank?

A banker orbankis a financial institution whose primary activity is to act as a payment

Agent for customers and to borrow and lend money. It is an institution for receiving,

Keeping, and lending money.

What is online banking?

Online banking (or Internet banking) allows customers to conduct financial transactionsOn a secure website operated by their retail or virtual bank, credit union.

Need for internet banking:

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, any inquiry or transaction is

processed online without any reference to the branch (anywhere banking) at any time.

Providing Internet banking is increasingly becoming a "need to have" than a "nice to

have" service. The net banking, thus, now is more of a norm rather than an exception in

many developed countries due to the fact that it is the cheapest way of providing banking

services.

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Banks have traditionally been in the forefront of harnessing technology to

improve their products, services and efficiency. They have, over a long time, been using

electronic and telecommunication networks for delivering a wide range of value added

products and services. The delivery channels include direct dial up connections, private

networks, public networks etc and the devices include telephone, Personal Computers

including the Automated Teller Machines, etc. With the popularity of PCs, easy access to

Internet and World Wide Web (WWW), Internet is increasingly used by banks as a

channel for receiving instructions and delivering their products and services to their

customers. This form of banking is generally referred to as Internet Banking, although

the range of products and services offered by different banks vary widely both in their

content and sophistication.

Indias banking sector is growing at a fast pace. India has become one of the mostpreferred banking destinations in the world. The reasons are numerous: the economy is

growing at a rate of 8%, Bank credit is growing at 30% per annum and there is an ever

expanding middle class of between 250 and 300 million people (larger than the

Population of the US) in need of financial services. All this enables double-digit returns

on most asset classes which is not so in a majority of other countries. Foreign banks in

India achieving a return on assets (ROA) of 3%, their keen interest in expanding their

businesses is understandable even more so when compared with the measly 1%

average ROA for the Top 1000 banks in the world. From the perspective of banking

products and services being offered through Internet, Internet banking is nothing more

than traditional banking services delivered through an electronic communication

backbone, viz, Internet. But, in the process it has thrown open issues which have

ramifications beyond what a new delivery channel would normally envisage and, hence,

has compelled regulators world over to take note of this emerging channel. Some of the

distinctive features of i-banking are:

1. It removes the traditional geographical barriers as it could reach out to customers of

Different countries / legal jurisdiction. This has raised the question of jurisdiction of

law /

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become low. Approximately 17% of female use internet banking. This a matter of

concern for a banks

What are the causes why this is happening?

Although many major banks have started offering i-banking services, the slow

pace will continue until the critical mass is achieved for PC, internet connections and

telephones. However, the upsurge of IT professionals with growing demands is

pressuring the government and bureaucracy in the country to support and develop new

initiatives for a\ faster spread of i-banking. But then to there is a fear in mind of customer

using internet as a medium for the banking transaction.

Private and foreign banks are trying to turn more and more customer towards theUsage if internet for the banking transaction. This study is basically to know the relation

of various independent variables on the customer usage of internet for banking.

SMS BANKING SERVICES

According to the euro net mobile banking guide, there are currently close to 400

mobile operators in 133 countries who are signining up 4 to 6 new customers every

second. This implies that more people are going mobile like never before. The novel

method presented in this paper is an interactive SMS banking agent that is incrementally

scalable for banking operations. Hence, a mobile banking solution called SMS banking

that allows people to bank with their mobile phone is presented in this paper.

Introduction

SMS banking is a mobile technology that allows you to request and receive

banking information from your mobile phone via short message service (SMS).

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Individuals or corporate bodies can manage their bank accounts, check their account

balances, perform check requests, money transfers, pay some bills, and perform other

banking transactions using their mobile phones. There are two methods of SMS widely

used in applications; they are the PUSH & PULL (seylan bank, n.d). Push SMS is

sending a message from application (i.e., SMS server in this case) to the mobile phone. It

is a one way message. In other words, its the mobile application that initiates a message.

An example could be a deposit alert, which alerts the user when a deposit is made to

his/her account. Pull SMS is sending a request and obtaining a reply. This is a full duplex

scenario where a user sends a request to the SMS banking application and the application

replies worth the information requested. An example is when a user requests his bank

account balance.

THE NEED FOR SMS BANKING

The telecommunication industry worldwide has scrambled to bring what is

available to networked computers to mobile devices. Presently, the use of electronic

banking is considerably high and as more and more users sign up for electronic banking,

the maturity as regards remote banking is on the increase. With electronic banking, users

can now conveniently carry out banking transactions, but this convenience cannot be

achieved if the user does not have access to the internet, hence, in other words, the usercannot carry out a banking transaction while waiting for a bus, or perhaps while having

lunch in a restaurant. With SMS banking, convenience can be achieved 24hrs a day. This

is because a user has access to his mobile phone all day, at all times. So, to efficiently

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achieve a truly convenient banking mode, a truly mobile mode of banking has to be

explored, hence the need for SMS banking.

HOW SMS WORKS:

SMS works for short message service; its a mobile technology that allows for

sending and receiving text or even binary messages to and from a mobile phone. The

relative ease of use of SMS makes it possible for a user to learn how to send SMS easily.

More than 160 billion SMS are exchanged each month in European countries (mavrakis,

2004). SMS use the special signaling channel instead of the voice channel and is

therefore a very reliable media channel. Mavrakis, 2004 identifies two types of SMS

which can be classified by the origin of the message.

MOBILE ORIGINATED (MO): SMS-MOs are sent from a mobile phone and could

be sent either to another mobile phone (such when a mobile subscriber sends a personal

message to another subscriber) or to a computer application that will process the

message.

MOBILE TERMINATED (MT): SMS-MTs are transmitted to a mobile phone.

They also could send by another mobile phone or generated by a computer application.

The SMS processing computer applications usually runs on corporate serves that are

connected to the SMS network through specialized connectors and gateways connected

to the SMS centers of mobile operators (mavrakis, 2004). These servers are assigned

short numbers instead of the traditional 10-digits mobile numbers. These numbers alsoknown as short codes are usually 4 to 6 digits long. These numbers are operator specific.

Also a premium fee (a fee other than the fixed rates for SMS) can be charges on these

short codes; in other words, users would pay more for sending SMS to short codes.

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DATA MINING IN SMS BANKING

Due to the large number of users and the large amount of financial transactions

expected to be carried out using SMS banking, there is a need for methodologies of

knowledge discovery and data mining (KDD). Data mining is becoming increasingly

common in both the private and public sectors. Industries such as banking, insurance,

medicine, and retailing commonly use data mining to reduce costs, embance research,

and increase sales.

DATA QUALITY

This is one of the biggest challenges of data mining. Data quality refers to the

accuracy and completeness of the data. Data quality is mostly affected by the structureand consistency of the data being analyzed. For example, a user might want to check his

account balance but mistakenly enters a wrong account number, this would most

definitely affect the result he gets from SMS banking application.

INTEROPERABILITY

Interoperability refers to the ability of a computer system or data to work with

other systems or data using common standards or processes. Hence, it should be possible

for an SMS application to use the data gotten from another SMS application.

MISSION CREEP

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a systematic and formalized process, it follows a certain sequence of research actions.

The marketing research process has the following steps.

Formulating the problem

Developing Objectives of the research

Designing an effective research plan

Data collection techniques

Evaluating the data and preparing a research report

APPLYING THE RESEARCH DESIGN PROCESS TO THE THESIS

To identify the consumers perception and level of acceptance of internet banking and

SMS banking

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To formulate the objectives of the research

Preparing the synopsis report

Preparation on review of literature &

Collection of phase -1 data and evaluating the data, Limitations

Presentation of Interim Thesis

Data collection Phase -2

Data Analysis

Formulation of Findings & Making valid recommendation

Preparation & Presentation of Final report

RESEARCH MODEL

Based on the literature review and findings of the qualitative study conducted on afocus group, the researcher developed a research model indicating the acceptance ofinternet banking among customers. The model contained seven factors that theresearcher posits to have an effect on internet banking acceptance . The constructsforconsumer security concerns, customer security awarenesswaswasand trust and privacy was added to the model to make it more relevant for internet banking acceptance. Research constructs and hypotheses posited are given in Table 1.Questionnaire for the survey was designed to gather the respondents personalinformation and views about the factors included in the research model. The survey

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questionnaire contained four sections. Sectionincluded in the research model. The survey questionnaire contained four sections. SectionI contained questions for capturing respondents demographic details. Section II,questions to collect respondents computer and internet usage, Section III, questionsto collect users banking patronage and usage of e-banking channels and finally

Section IV, questions to measure the respondents views on the research model. Intotal, fifty fouritems were added in the survey questionnaire for measuring the seven constructs usedin the research model. Pre-testing of the survey questionnaire was carried out.Respondents in the pre-test mentioned that questions were straight forward and theydid not face any problems in responding.

DATA ANALYSIS

How many persons having internet at their home

AGE OWN AINTERNET

DONTHAVE

INTERNET

18-25 27 3

26-35 51 1

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36-45 20 2

46-60 8 4

61 + 1 3

ILLUSTRATION 1 :

From the above interpretation we can say that age group between 18-25 own a internet

of 27%while % who dont own an internet is 3%, similarly % between 26-35 own an

internet of 51% while 1 %dont own internet, 36-45 own an internet of 20% while

2%dont own, 46-60 own 8%internet while 4% dont own, 61and above own 1

%internet, 3%dont own. Finally we can see that age group 26-35 own maximum % of

internet.

The time you are using internetA) less then a monthB) 1 to 6 monthsC) 6 to 12 monthsD) More than a yearAge A) less than

a monthB) 1 to 6months

C) 6 to 12months

18-25 3 2 12

26-35 0 0 15

36-45 0 3 0

46-60 0 2 8

61+ 1 3 0

ILLUSTRATION 2 :From the above interpretation we can say that all the younger have been using internet

since last one year but age group between 36-45, 46-60and 61 and above have started

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using internet in recent . Finally we can the age group between 26-35 are the maximum

users of the internet.

Frequency of visiting your bank branch per month?

a) Less than 1

b) 1 to 3 times

c) 3 to 8 times

d) 8 to 12 times

e) Over 12 times

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other

AGE DEPOSIT ADVICE BALANCE WITHDRAWAL OTHERS18-25 10 8 13 7 2

26-35 10 4 7 17 4

36-45 3 0 4 7 2

46-60 4 4 5 4 0

61-+ 1 0 2 3 0

ILLUSTRATION 4 :From the above interpretation we can say that the reason for visiting bank maximum no.

of time is basically is for the cash withdrawal that to is done by the age group between26-35 that is of 17.

The e-banking facilities provided by your bank?

ATM

Online banking

Telephone banking

Mobile banking

SMS banking

AGE ATM ONLINE TELEPHONE MOBILE SMS18-25 20 21 12 15 25

26-35 10 29 14 18 30

36-45 2 16 2 15 12

46-60 14 25 2 2 14

61-+ 5 2 2 2 5

ILLUSTRATION 5 :

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ILLUSTRATION 6 :From the above interpretation we can that the person use internet bank offers basically

for seeking product and rate information and secondly for checking balance and then

they use for to download loan information ,then to download personal bank transactionactivities.

What was the single most important reason that you chose this particular bank as

Your Internet bank? (Please choose one)

I have a traditional bank account with the same bank

The brand name of the bank

The excellent service offered by this bank

Others

ILLUSTRATION 7 :

From the above interpretation we can say that the reason for choosing particular bank for

internet bank account is because of the excellent services offered by the bank and second

most important reason is that of brand name of the bank.

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The E-banking services you use provided by the bank?

PARAMETERS NO OF RESPONDENTSAtm 81Online banking 42Telephone banking 19Sms banking 8

ILLUSTRATION 8 :

From the above interpretation we can say that more no of respondents are using ATM

services.

What is the name of bank you have an internet bank or sms banking account with

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BANK NO OF RESPONDENTSAxis 34Icici 58Hdfc 25

Sbi 15Karnataka 13Ing vysya 5

ILLUSTRATION 9 :

From the above diagram we can represent more no of respondents having their internet

banking with Icici .

In addition to your internet banking and sms banking do you have a traditional

bank account?

YES 146

NO 4

ILLUSTRATION 10 :

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From the above diagram we can represent more no of customers are having traditional

account with the same bank.

What was the simple most important reason that you chose this particular bank as

internet bank?

PARAMETERS NO OF RESPONDENTSI have a traditional bank A/c with the same

bank

89

The brand name of the bank 26The excellent service offer by the bank 29

Others 6

ILLUSTRATION 11 :

From the above diagram we can represent customers are having a traditional account

with the same bank and excellent service offered by the bank for this reasons they are

opened internet banking account.

What are the most important reasons you opened an internet bank A/C

PARAMETERS NO OF RESPONDENTSConvenience 24

Curiosity 18

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The Lower Triangular matrix

Raw (unscaled) Data for Subject 1

1 2 3 4 51 6.0002 2.172 6.0003 2.393 0.932 6.0004 1.511 1.407 1.937 6.0005 1.786 1.163 0.954 1.361 6.000

6 2.061 2.264 2.475 1.540 2.146

The index of fit or R-square and stress should be measured. Thus R-square indicates

goodness of fit, whether stress value represents badness of fit. So for any research higher

value of R-square and lower value of Stress is expected. The high R-square value

represents MDS model is well fitted with the given problem. In our case,

Stress = .01817 RSQ = .99785

Young's S-stress formula 1 is useds-stress improvement

1 .02311

2 .01992 .00319

3 .01838 .00154

4 .01698 .00139

5 .01564 .00134

6 .01434 .00130

7 .01327 .00107

8 .01266 .00061

Iterations stopped because S-stress improvement is less than .001000 Stress and squared

correlation (RSQ) in distances For matrix

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Stress = .01817 RSQ = .99785

Configuration derived in 2 dimensions

Stimulus Coordinates

DimensionStimulus Number Stimulus Name

(Banks)

1 2

1 AXIS 1.1537 1.40402 ICICI -1.0363 -0.34863 HDFC -1.5704 -0.12944 SBI 0.5452 -0.05905 KARNATAKA -0.7060 0.35416 ING VYSYA 1.6138 -1.2210

Optimally scaled data (disparities) for subject1 2 3 4 5

1 0.0002 2.800 0.0003 3.126 0.577 0.0004 1.590 1.590 2.126 0.0005 2.126 0.890 0.890 1.318 0.0006 2.665 2.800 3.366 1.590 2.800

Data collected from the survey were analyzed and interpreted using various

statistical techniques usually employed in positivistic study. Statistical analysis wascarried out using SPSS (Statistical Package for Social Sciences) version 14.0.Descriptive analysis techniques like average, percentage, frequencies etc were performed on the data for getting an overall structure of the sample. The reliabilityand construct validity of the research instrument were assessed before final analysisof the data. The Cronbach alpha coefficient for each research variable was computed totest for reliability. To analyze for convergent and discriminate validity of theconstructs, factor analysis was used.

DISCUSSIONS AND IMPLICATIONSInternet Banking

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Internet Banking facility, which is increasingly being used by the corporate clients and

also by the retail customers, has been extended to the customers of 199 additional

branches during the financial year thereby taking the number of branches covered to 913.

On-line trading with IL&FS has been made live during the financial year.

SMS Banking

SMS Banking has been launched for customers during the financial year.

Mobile Banking

Having introduced SMS Banking, the Bank is exploring with companies that offer

cutting edge technologies for using the Mobiles for carrying out financial transactions at

authorized outlets.This study also revealed that Subjective norms have positive effect on intention.

This indicates the relative importance of the social influence on non-users of internet

banking. This finding has implication for marketers; it indicates that advertisements in

media or press play important roles in forming intention toward internet banking

adoption.

For researchers, past research on technology acceptance implicitly assumed that

the success of a system adoption and use is mainly dependent on technological aspect

and does not consider the notion of uncertainty. However, the advent of the Internet hasintroduced uncertainty and risk in system acceptance and use because people often need

to use the Internet to communicate, collaborate, and transact with individuals and

organizations without physical face-to-face interaction. Thus, uncertainty is increasingly

becoming the underlying determinant of the Internet-base system usage.

The implication of these findings and conclusions are that, banks need to play a

leading role in influencing the perception, and there by the attitude and behavior of

current and potential internet banking users. The outcome of this study has two practical

implication and recommendation for banks.

CONCLUSION

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There is still a lot needed for the banking system to make reforms and train their

customers for using internet for their banking account. Going through the survey the

main problem lies that still customer have a fear of hacking of accounts and thus do not

go on for internet banking. Banks are trying their level best by providing the best

security options to the customers but then to there is lot of factors which betrays a

customer from opening an internet bank account.

Banks are providing free internet banking services also so that the customers can

be attracted. By asking the bank employs we came to know that maximum numbers of

internet bank account holders are youth, business man. If proper training should be given

to customer by the bank employs to open an account will be beneficial secondly the

website should be made friendlier from where the first time customers can directly make

and access their accounts.

We can see the time is changing and we the passage of time people are accepting

technology there is still a lot of perceptual blocking which hampers the growth its the

normal tendency of a human not to have changes work on the old track, thats also one of

the reason for the slow acceptance of internet banking accounts.

Give proper training to customers for using i-banking

Create a trust in mind of customers towards security of their accounts

Provide a platform from where the customers can access different accounts at single

time without extra charge.

Make their sites more users friendly.

Customers should be motivated to use I- banking facilities more.

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Factors that affect Internet and SMS BANKING adoption

Most and Least Perceived Factors in Internet and SMS Banking Adoption

Internet Banking SMS BANKING

Items Items

Faster Internet access speed is importantfor Internet banking.

I would use cell phone banking if I could use it ona trial basis first to see what it can offer

Internet banking makes it easier to dobanking

I would use cell phone banking if I could see atrial demo first

Internet banking is a convenient way to

manage my finances

I would use cell phone banking if I could test cell

phone banking first

Internet banking is compatible with mylifestyle

I would use or be more likely to use cell phone banking if cell phone banking was compatiblewith my lifestyle

Using Internet banking fits into myworking style

I would use or be more likely to use cell phone banking if using my cell phone to conductbanking transactions fits into my working style

Information concerning my Internet banking transactions can be tamperedwith.

Cell phone banking is a risky mode of banking touse

Information concerning my Internet banking transactions will be known toothers.

Cell phone banking would allow me to manage myfinances more efficiently

My decision to adopt Internet banking isinfluenced by my family

Cell phone banking would be complex to use

Using Internet banking requires a lot ofmental effort

I would use cell phone banking if cell phonebanking increased my status

Internet banking is a difficult way toconduct banking transactions

Cell phone banking would require a lot of mentaleffort

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Indian economy is witnessing stellar growth over the last few years. Therehave been rapid developments in infrastructural and business front during thegrowth period. Internet adoption among Indians has been increasing over the lastone decade. Indian banks have also risen to the occasion by offering new channels

of delivery to their customers. Internet banking is one such new channel which has become available to Indian customers. Customer acceptance for internet banking has been good so far. In this study the researcher tried to conduct a qualitative andquantitative investigation of internet banking customer acceptance among Indians.The researcher tried to identify important factors that affect customers behavioralintention for internet banking. The researcher also proposes a research model whichwas extended from Technology Acceptance Model for predicting internet bankingacceptance.

The findings of the study would be useful for Indian banks in planning andupgrading their internet banking service. Banks could increase internet bankingadoption by making their customer awareness about the usefulness of the service.

It is seen that from the study that the variable perceived usefulness has a positiveinfluence on internet banking use, therefore internet banking acceptance wouldincrease when customers find it more usefulness Banks should plan their marketingcampaigns taking into consideration this factor. Proper marketing communicationswhich would increase consumer awareness would result in better acceptance ofinternet banking.

The variable perceived ease of use had a positive influence on internet bankinguse. That means customers would increase internet banking usage when they find iteasier to use. Banks should therefore try to develop their internet banking site andinterface easier to use. Banks could also consider providing practical trainingsessions for customers at their branches on usage of internet banking interface Thefindings of the study would be useful for Indian banks in planning and upgrading

their internet banking service

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REFERENCES

Ajzen, I. (1985). From Intentions to Actions: A Theory of Planned Behaviour. in Action

Control (Kuhland, J., and Beckman, J. (Eds) , From Cognition to Behaviour, pp.11-39 ).Heidelberg: Springer

Davis, F., Bagozzi, R., & Warshaw, R. (1989). User Acceptance Of ComputerTechnology: A Comparison Of Two Theoretical Models. Management Science,35(8), pp. 982-1003

Davis, F. D.. (1989). Perceived Usefulness, Perceived Ease of Use, and User Acceptanceof Information Technology. MIS Quarterly, 13(3), pp.318-339.

IMRB, & IMAI. (2006).Internet in India-2006 (Summary Report of I-Cube 2006) . NewDelhi: IMRB International(eTechnology Group@IMRB)

Creativity in mobile banking-www.wit-software.com

Innovations in SMS banking-A K SOHANI, KATURI NAGESWARA RAO

Marketing research by BERRY G.C

Marketing Research by Malhotra N.K. , fifth edition

M.S., Mahapatra, S.S. and Sreekumar (2009) Service quality evaluation invinternetbanking: an empirical study in India, Int. J. Indian Culture and Business Management,Vol. 2, No. 1, pp.3046.

The Indian Internet Banking Journey - Nachiket Mor, Head of ICICI's Treasury, inMarch 2008.

The Impact Of Internet Banking Service Quality On Business Customer

Commitment

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APPENDICES

QUESTIONNAIRE

Name ..

Age 18-25__ , 26-35__, 36-45__, 46-60__, 60 +____

Gender MALE, FEMALE

Occupation .

2) Do you own a internet?

a) Yes b) No

3) The time you are using internet

A) Regularly

B) 5 times in a week

C) 6 to 12 times in half of a month

3) Frequency of visiting your bank branch per month?a) Less than 1

b) 1 to 3 times

c) 3 to 8 times

d) 8 to 12 times

e) Over 12 times

4) The main reason that you typically visit your bank branch (please choose the single

Most important reason)?to make a deposit

to get advice for investment options

to inquire about a balance

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to withdraw cash

other

5) The e-banking facilities provided by your bank?

ATM

Online banking

Telephone banking

Mobile banking

SMS banking

6) The e-banking services you use provided by the bank?

ATM

Online banking

Telephone banking

Mobile banking

SMS banking

For those who uses internet banking and sms banking service

1. What is the name of bank you have an Internet bank or sms banking account

with? ________

2. What are the most important reasons you opened an Internet bank account?

(Please prioritize the following list in the order of importance.

(A: the most important B: the least important)Convenience (24 hours service, anywhere connectivity) ______________

Curiosity______________

Better rates______________

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Safe and secure______________

Low service charge______________

Easy to maintain my banking transaction activity______________

Online shopping ___________________

3. What banking services do you use which your bank offers in internet banking and

sms banking? (Please check all you are currently using)

Seeking product and rate informationCalculate loan payment information

Download loan applications

Download personal bank transaction activity.

Check balances on-line

Apply for consumer loans or credit cards online

Inter-account transfers

On-line bill payments

Others

4. What was the single most important reason that you chose this particular bank as

your

Internet bank? (Please choose one)

I have a traditional bank account with the same bank

The brand name of the bank

The excellent service offered by this bank

Others

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In addition to your Internet banking and SMS banking, do you also have a traditional

bank account?

Yes

No

PARAMETERS/ BANKS

AXIS ICICI HDFC SBI KARNATAKA INGVYSYA

Bank service

Account securityAccessibility

Convenience

Training to usebanking services

Encouragecustomer to usee-banking

Location

CustomerRelationManagement

USERFRIENDLINESS

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For those who didnt use internet banking

The main reasons that you have not opened an Internet bank account yet? (Check all that

Apply)

Never heard of Internet banking Concerned about security

Haven't taken time to open an account

Don't see any real value in having this type of account

Too new. I would like to see how it works, and then I may open an account

Not available through my bank

Others

For your choice of an Internet banking and SMS banking, please indicate how

much each of the following

Factors (were) are important for you:

1. Better rate and lower service charge______________

2. Bank familiarity______________

3. Bank location (geographic) ______________4. The size of bank (in terms of asset) ______________

5. Security of Transaction______________

6. Convenience (24 hours service from anywhere) ______________

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7. Quick service (transaction completed in seconds instead of minutes)

______________

8. Variety of features and services that are offered (for example; bill payment,

Account reconciliation, electronic bill payment) ______________

9. Integrated value-added services using other on-line services and resources

(For example; other brokerage account summary) ______________

ABREVIATIONS

ACF Auto-Correlation FunctionAFS Annual Financial StatementAGM Annual General MeetingATM Automated Teller Machine

BIS Bank for International SettlementsBoP Balance of PaymentsCAD Capital Account DeficitCBS Consolidated Banking StatisticsCC Cash CreditDBOD Department of Banking Operations and Development Department of

Banking Supervision, RBIDESACS Department of Statistical Analysis & Computer Services, RBIECS Electronic Clearing SchemeGDR Global Depository ReceiptIBS International Banking StatisticsIOTT Input-Output Transaction Table

ITRS International Transaction reporting system NASSCOM National Association of Software and Services Companies

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GLOSSARY

account

Continuously updated record of transactions. Interest rates, charges, credit and with-

drawal limits and additional facilities will differ according to account type.

account statement

A summary in writing of all account transactions within a given period. Depending on

the type of account, interest is calculated on a monthly to yearly basis. Can be requested

online via telebanking or Multimat.

accrued interest

Interest payments accrued since the last interest due date up to a specified date prior to

the next due date.

admission to stock exchange dealing

Official listing of a security on a stock exchange.

agent

Legally independent businessman who is authorized by a third party (the principal) to act

on that party's behalf, to act as intermediary or to conclude business transactions.

allround fund

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Investment fund which is not restricted to any particular countries, regions or sectors and

which invests globally

.

asset-backed securities

Specially created securities used for refinancing and collateralized by a pool of similar

claims (e.g. mortgage loans) and where debt service payments are covered by the income

generated by the pool.

Call option

The right to buy and accept a share an option is a security, which represents the right of

its holder either to exercise or not exercise a transaction at a certain date. In the case of a

call option this means the right to buy or accept a share. The counterparty is obliged torealise the trade should the other party wish it.

Capital adequacy

Characterises the riskof a bank having inadequate capital reserves in view of the risks it

is undergoing. Current NB (Czech National Bank) and BIS regulations define capital

adequacy as the ratio between capital and risk-weighted assets.

Direct trading

As a part of this manner of trading in the exchange business system, operations among

members of the stock exchange are registered where the amount ofsecurities is at least

CZK 200,000. The price and amount of the handled security is determined in advance by

an agreement of both contractual participants in direct trading. Thus in these operations

the transaction price is not created on the basis of comparison of an anonymous offer and

demand, because both participants of the transaction know each other in advance. The

price for which a direct transaction is concluded is not the stock-market rate, and its

variance with the valid rate is in no way restricted.

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Eurodollar

Eurodollars are deposited in the accounts of banks (i.e. dollar claims and deposits),

which are non-residential banks from the viewpoint of the US. The result is that a

eurodollar is not subject to supervision and regulation in the countries where it is traded.

A eurodollar is also not directly dependent on US interest rates, even though, to a certain

extent, it is connected to the US banking system and is managed within banks in the

same manner as all other currencies. For a transaction to be designated as a eurodollar

transaction, the residency of the mediator is the decisive factor, rather than the residency

of the primary creditor or of the final debtor. For example, a US citizen lends funds to a

bank in London, which in turn lends these funds to the US: this transaction is a

eurodollar operation. On the other hand, if funds go via a US bank in New York, this

means that we are dealing with a domestic dollar operation. The affect of eurodollartransactions on the banking system is specified below.

Euromarket

A euromarket is a market on which securities and debts are traded, which are

denominated in euro currencies. Euro currency markets, of which the eurodollarmarket

is the biggest, were established at the end of the Second World War, when the currencies

became convertible and when securities began to be truly traded on an internationalscale. The preposition euro appeared almost accidentally and is rather confusing, as it

has no connection to Europe. A market with euro-securities exists in all major financial

centres, with London having the biggest share of this trading activity.

personal loan / Privatkredit / prt personnel / prestito personale

Credit granted to a private person for non-commercial purposes solely on the basis of

that person's creditworthiness, income and financial circumstances. consumer loan,

instalment loan.

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PIN code

Personal alphanumeric code for the electronic identification of a customer using an

account card. plastic money. PIN stands for personal identification number.

plastic money

Popular term for all plastic cards, such as credit cards, VISA card, Eurocard orec card

used as paying medium instead of cash.

price drawn by lot

Price at which more than one buyer wishes to purchase the same stocks or bonds from

the same seller, or several sellers wish to sell to only one buyer. If not enough units are

available to satisfy the entire demand, lots are drawn to decide who can effect the

purchase or sale.

Banking institution where the owner or partners are liable with their personal assets.

Under Swiss law, the expression "private bank" refers only to institutions with the legal

form of an individual proprietorship, partnership firm or limited partnership. They exist

primarily in Geneva, Basle and Zurich.

private banking

Investment counselling and portfolio asset management services offered to international

private and institutional clients.

Put option

The right to sell, to supply a share the option is a security, which expresses the right of

its holder to implement or not to implement a transaction at a certain date. Thus in the

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case of a put option it means to sell or to supply somebody with a share. The

counterparty is obliged to implement the transaction if so desired by the other party.

Retail banking

Retail banking is understood to mean the provision of services to the general public, i.e.the provision of credit repayable in instalments, mortgage loans, depositary services, etc.

In comparison to wholesale banking retail banking encompasses a large spectrum of

activities at many branches. Certain services offered by retail banking (e.g. credit cards)

are highly profitable.

Risk

Financial institutions and markets exist in a world of insecurity. A type of insecurity is

the risk. There are several types of risk. Obviously the most important risk of financial

markets is the credit risk, which means a risk of loss if the partner fails to honour his

commitments according to the conditions of the contract. In the category of credit risk,

the so-called settlement risk is sometimes specified, which is a risk of loss from a failure

to settle a transaction. Another important risk is market risk, which is divided into

interest, stock, commodity and rate risks. This is a risk of loss in the case of the small

liquidity of markets (risk of market liquidity), or risk of momentary insolvency (risk of

cashflow). Operational risk is a risk of risk in the case of human errors, fraud or

imperfection of information systems. Legal risk is a risk of loss if a contract is not legallyenforceable

Technical analysis

The changes of prices ofstockare determined by many factors and many of them cannot

be anticipated. The estimation of the changes of prices of stock on the basis of economic

factors is the basis of fundamental analysis. The estimation of the changes of stock on

the basis of other factors is the subject of technical analysis, which is based only on therecords of the results of previous operations in stock. All this is based on the hypothesis

that the prices of stock reflect all the factors including psychological factors, which in

short-term investments are more important than the factors included into fundament al

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analysis.

Wholesale banking

Wholesale banking is represented by services offered to enterprises, investmentcompanies, investment funds, pension funds, government agencies and the like. It

includes, for example, providingcredits,servicesofthedepository,leasing,etc.

Zero-coupon bond

The issue of a zero-couponbond commits the issuer to pay a nominal value at a certain

date in the future. On theprimary and secondary market it is sold for a price lower than

its nominal price. The difference between the nominal value and the sales price is the so-called discount. A zero-coupon bond does not have coupon repayments between its issue

and the repayment of the nominalvalue.

Documents

Bharat (8nbrj009) Final Report