IMPACT OF INFORMATION TECHNOLOGY AND SECURITY SYSTEMS ON BANKING INDUSTRY

Chapter – 1

1.1: Introduction

With the innovation that been taking place in the telecommunication, related technologies

in the information processing known as "information technology" these would often help

to fuel the strong growth for many economies. Even banking industry was not spared by

this change. Today we cannot imagine the business world without information

technology. The retail banking industry particularly has benefited a lot from information

technology ( Berger, A. N. (2003). During 1952 to recent times a revolution took place in

the banking sector, where people deposited their money into the banks that was kept safe

and could be accessed only through a check or draft. But today the tractions can be done

online within seconds the transactions are done. The banking industry was adapting to

this change. Almost all the banks started to see the impacts on the operations in the new

banks in the country. The banks had a large arrangement of information technology in

their business functioning and it proved one of the biggest advantages of information

technology. Initially, banking was done personally where the customer had to travel to

the bank to either get the information or do the transaction. In the bank everything was

done on paper that is the ledger books for maintenance of accounts, taking customer

information, checks, receipts, in and out book maintenance, transfer of money. Retail

banking is a very broad and always relates with the commercial banks also with

individual customers as in the balance sheet it shows both the assets and the liabilities.

For the liabilities it deals with savings or current or fixed accounts also the loans and

mortgages like the educational or housing or the personal loan for the assets side as these

are very important products that are offered by the banks. This also has services that

include the credit or debit cards or the services, which are related to deposits. Retail

banking is nothing but providing services to both the customers and the small-scale

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businesses, which are having a number of transactions of low value. This is very different

when compared with the normal banking where the customers are large in number like

the governments or big enterprises or the multinational companies that deal in smaller

numbers with a high value in the transactions.

Lending and retail banking both are considered many a time as synonyms, but it is

assumed to be a part of retail banking. The customers are given priority in a smooth way

in this retail banking, and it is mainly divided into three important forms and they are as

follows: the multiple groups of customers either be it for small business, consumer or

corporate. The multiple distribution channels like the branch, call center and Internet and

the last one is the multiple product like the securities, credit cards, insurance and deposits

and investments.

A power has risen up in the government greater than the people themselves, consisting of

many and various powerful interests, combined in one mass, and held together by the

cohesive power of the vast surplus in banks. The change started very slowly with

preliminary software’s or the database for the maintenance of their data in the

background. And gradually it started to grow and importance of information technology

was increasing (Hotelling, H. (2009). It was used in every sector of the bank. They

introduced new technologies and made the process more customers centric and with each

new technology the bank received great appreciation from their customers. For very small

information the customer had to travel to the bank but after the information technology

came into existence the transaction become very easy. To withdraw or to deposit money

the customer had to wait for his turn. But information technology has come up with a

solution for this problem they introduced the teller machine which is an "Automated

Telling Machine (ATM)". In which the money is stored and at the same time customer

can get his account information. They introduced the plastic cards called as the Debit

Card. This card can give access to the customer to either withdraw or deposit money, get

information about is balance all this by following few easy steps. And the banks have

also concentrated more on the security issues also where the customer would not have to

worry about misusing of his/her account information. The customers got habituated with

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these technology and they started to withdraw money on a frequent basis. And the many

other applications were introduced in the banking sector by the information technology

like the online, mobile service, SMS service, electronic authentication and electronic

signature services (Rohlfs, J. (2004). And the banking industry has also taken care of the

security as it plays a vital role when the transactions are through the Internet. A secured

site is provided to the customer to perform his transactions through the Internet. No other

industry has gained profit from this as the banking sector. As in the middle of an

economic fall and the reforming of the financial legislation to the banking industry in the

past few years the impact of these information technologies innovations on the customer

behavior was very huge. The information technology has introduced new ways of

delivering retail banking to the customers and hence retail banks have found themselves

at the adaptation of technology for past decades.

The main question rises is that the retail bank customers are able to like this technology

services are more interested about the older tradition that had a banking staff's personal

touch to it. As the services that the customers receive are given by the banks are after

working hours, the help is available to the customer 24/7, with given accuracy and

reliability and at low cost. These have become important to the retail bank customers

when compared to the traditional system. The new improved technological help that the

banks are getting have become very famous among their customers (Milne, A. (2006).

With the retail banks reputation in the banking industry it has to think of new strategies

to satisfy their customers and also keep their loyalty. Understanding what are the

important pointers about the customers that would keep them satisfied. Meeting the

customer’s expectation should be the first thing to keep in mind of the bank to keep the

loyalty of the customer.

Everyone knows that customers are more knowledgeable and more skeptical than ever

before and that in today's environment they do a lot more homework before committing

to a bank's service. Many consumers will check products and prices online before making

a decision about what to purchase. HSBC probably has a business objective to drive more

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transactions to its website which is understandable, but if you want to maintain trust, you

want to maintain trust, you should aim for maximum transparency (Shu, W. and

Strassmann,P. A. (2005).

In the retail banking industry they have seen a speedy growth due to the Web that is

creating great opportunities for the new businesses in the retail banks. And it also shows

an important method to see available bankers in the market. Experts estimates that

consumer use of on-line banking services will increase over 20 fold by the end of the

century. Geography and the number of branches become irrelevant and community banks

are able to offer the same level of service and convenience to customers as the largest

banks. In the past over 60% of existing bank customers have cited bank selection to be

based on convenience of location. For the customers of today, convenience of location

includes the availability of 24-hour access via the Internet.

Current progresses under electronic have made the growth under “electronic-based self-

assistance” (et al. 2003 Dabholkar). These growths are modifying the method with which

assistance business and users communications are increasing the host of the study and

procedure problems with respect to the release of e-assistance. E-assistance is evolved

into highly significant to evaluate the failure or success of technological business (et al.,

2001, Yang), yet even to give the users with great knowledge regarding the

communicative surge of data.

The economical method throughout the globe has been experiencing many modifications.

Achievements and alliances, liberalism, enhanced rival, modified data methods and

electronics, and man means with distinct talents are simply some ‘impacts’ which are

effecting the banking commerce (Pereira, 1995).

Electronic is the progressing ‘moving impact’ today, in distinct organization. As a result,

It is essential to review the interests under electronic and their scope in the bank

commerce (1994, Walter and Saunders; 1994, Sethi and King). This is specifically

significant to determine the electronic which is the ‘labour exhaustive actions, decreasing

assistance and functioning rate, enhanced assistance stages, and enhancing the affectivity

and rivalry of the UK economical division.

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Electronic is created based on findings in technology, item enhancement and

development in apparatus, method, and automation and data electronic. Even, this

contains the mix of data, experience, and concepts (2003, Murungi). The reviews need

the extensive responsibility of the interactions among assistance character, user

fulfilment, and economical accomplishment where face-to-face communication between

user and worker and is the mere target. Currently, as a result, the electronics possess

unusual effect on the development of assistance release selections (2002, Bagozzi and

Dabholkar).

(1994) Dabholkar declares that if the user is in immediate interaction with the electronic

then there is larger operation like with web banking. Nevertheless, when there is no direct

interaction like by phone banking (because the electronic is not apparent to users who can

merely press the phone numbers over their keypad of telephone) this is thought that there

is low power obtained over the user in the process of this transaction. (1985) Bateson has

made many numbers of reviews on the requirement for costumers to get the power in the

process of the assistance encounters. If the user selects independently to utilize the

electronic like the method of assistance release, then the scope is large in the form of

feature attributes. A few of the feature determinations, which are largely essential to

users, are productivity and accuracy (2000, Bateson).

Assistance feature are identifies like to get the ability to release the procedural advantages

like enhanced user custody costs and therefore to increase the functional productivity and

income (2001, Rust et al.; 2003, Cronin; 2003, Zeithaml.et al). Oliveira (2002) proposed

that e-assistance feature is between the rival abilities of the industry which result in firm

accomplishment and Menor and Roth (2003) look at the problems to execute the

assistance electronic and e-assistances like the important under assistance functions and

Ward and Al- Hawari (2006) shows assistance feature scopes on user fulfilment that

result to influence the economical accomplishment of banks.

Electronic and Assistance Quality

The conception of, and quick progresses in, electronic-based forms, mainly the one with

respect to the Internet results in important modifications under the way of the industries

that contact with users (Zinkhan and Parasuraman, 2002; 2005, Bauer et al.). This fashion

is well organized in the assistance company and the assistance givers are disputing to

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exchange in electronic to protect their future in 2012, on the April 12 technological

period (2005, Prybutok and Zhang; 2005, Bauer et al.).

The dispute firm atmosphere under the economical assistance retail has even lead under

more stress on banks to enhance and use other released platforms with a look to impress

many users and enhance the understanding of users and energize the sincerity (2005,

Bauer et al.; 2005, Lee and Lin; 2005, Parasuraman et al.). Between many current-

releasing platforms oriented is technological banking. Under its easy method, the

technological banking implies the supplies of data of the bank and its items over the

website of the Internet.

The implementation of user friendly electronic (like the menu moving the automated

teller devices, phone, and Internet banking assistances) like the sources of releasing the

banking assistance and evolve into the general place under current decades like the

method of sustaining the user sincerity and enhancing the retail investment.

The common brick and mortar banks make use of electronic to obtain the rival dispute

arranged over online banks and also the concept to decrease the rate of giving assistances

which were released inclusively over personnel bank (2003, Joseph et al.).

Virtually, organizers and companies comprehend to give the feature user assistance and it

is the important procedure element under business income. The significance of assistance

release and its scope to enhance the fulfillment and custody of users, enhancing the

interests and retail invests, and enhancing the allied picture are not exaggerated (1994,

Lewis et al.). Like many alternative assistance givers, the banks do go on rapidly to

advance in electronic like the method of functioning the rates and impress modern users

and obtain the facility and electronic novelty possibilities of their abiding users.

Assistances, over description, are indefinite and simply copied. They are split under

assistances of high-tech or high-touch. High-touch assistances are mainly relying on the

public under the assistance method to form assistance. High-tech assistances are

important depending on the utilization of automated forms, data electronic and alternate

kinds of physical means. Nevertheless, one must always know that even high-touch

contains the physical means and electronic-based forms which should be functioned and

merged into the assistance method under the user-oriented trend (Gronroos, 2001).

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Hence, under this review, the electronic banking assistance contains both high-touch and

high-tech assistances. For instance, high-tech assistance contains Short Messaging

Service/ Internet/Telephone (SMS) and ATM devices. High-touch assistance includes

guidance and personnel services to utilize the assistances. Feature is distinct and is root

from the possibilities of users. Thus, it is important to recognize and plan out the

possibilities for assistance and combining these possibilities under the form to enhance

the assistance feature. Executing and determining assistance feature is very important

method.

The feature has been described from distinct outlooks and introductions, based on the

human creating the description, the calculation used and the framework under which it is

accomplished. This has been mentioned like the “best” “agreement needs” (1995,

waterman and Peters) “benefits of health” (Juran and Gryana, 1988), “value”

(Feigenbaum, 1995) and getting and/or increased user possibilities” (Parasuraman et al.,

1988). Sometime, the users request features face and their outcome attitude is copied in

the form of behaviour against consumption attitude that resulted the researchers and

identifier to the feature like very essential determination for unending form of survival

and accomplishment.

Feature under the assistance function is basically made at the “time of fact” (1989,

Carlzon) and (2001) Gronroos implies it like the “time of chance” where value is

included to obtain the assistance feature. Nevertheless, as soon the user leaves, the new

time of fact should be made like the assistance “recovery” (1990, Hart et al.) to make the

correction prior the issue formed. (1993) Vandermerwe moves ahead to say “under

assistances, providing and the workers are not separated”.

Banks include great implementation assistance release electronic like the method of

improving the assistances, which is commonly given by bank personnel. Execution

outcomes both based on the requirement to decrease the rate to release the assistance

mainly by personnel and the complement should obtain the dispute arranged by electronic

change rivalries (Boyers and Lederer, 2002). Modification under the banking company

like the output from liberalism, quick world web, and the increase in own property have

hence created the execution of delicate release methods (for instance banking online and

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telephone, automatic website and remote teller devices and so on) the procedure needs

under several situations (1994, Lewis et al.).

The issue with electronic under assistances is that it is the ability to create the ‘time of

fact’ the automatic knowledge, deficiency in feeling. For the user to be fulfilled, each

should have the charge to assist the user in the management. (1995) Berry discusses to

rival for skill under workers to arrange the increased standards and to remain on

standards and therefore Parasuraman (2002) underlined the significance to get the aim

and synonyms to workers and works and to strengthen them without any risk of revenge.

Moreover, modifying the management method to energize the workers to accept the

“correct first moment” intellectual is important (2000, Oakland). Therefore, the training

is significant and even it is expensive and keen accomplishment and should provide like

it is able to assist to enhance the method organization and also to get the requirements

and possibilities (2000, Oakland).

Electronic is able to assist the public to satisfy their needs very productively and yet the

industry is yet “the merely as best as its workers” (2001, Gronroos).” The issue exists to

recognize the single person and inspire the determinations and controlling them in the

correct path. It does not bother which assistance release is utilized and the assistance

giver/assistance costumer interactions should be disciplined at each rate. Many users

move online to satisfy their assistance requirements and the more rate-production and

scalable the firm design (2003, Schultze). This organization among assistance feature and

firm accomplishment does move the interest in e-assistance, online assistance, and web

marketing. This investment has been later energized over the proof of less-assistance

character in a few frameworks (Zeithaml, 2002; Boyer et al., 2002). Zeithaml (2002)

recognizes the requirement for firms to target on the e-assistance under their e-firm, and

to comprehend the significance of e-assistance feature like the distinct procedure.

Even firms should identify that the Internet knowledge shows the tag to be place on

online user and it might be significant component under the organization of faith and

interactions with users (Zeithaml et al., 2002, Yang, 2001).

Technology in the Banking Industry

With the growth in the technology Electronic growths have deleted the duplication and

time taken actions and decrease the man mistakes and increased the entry to banking

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convenience. Also, electronic gives data to the user, which will be very costly to give on

the basis of person-to-person. Telephone banking convenience permits the non-fund

transactions to be taken place and then will need to go to the branch prior.

In the same way, the Internet banking permits the users to do the actions at a moment and

under the portion, which is suitable for them. (2002) Dabholkar proposes which directly

interact with such electronic also provides the users like the sense of large operation.

(2007) Smith is of the view, which electronic was oriented under banks basically to

decrease the rate and yet over classifying functions of front and back office and the

electronic focused to increase the distinct operations. Nevertheless, the thinking yet

remains like to sustain the fulfilled number of face-to-face contacts with the users.

(2004) Rogers recognized five features or qualities of novelty, which influence the cost

at which novelties are accepted (and finally their useful methods): their appropriate

benefit, affinity, interaction (observability), complexity, distinction (trialability).

Moreover, the qualities were further included and obtained the threat and economical and

social rate (2005, Zeithaml).

Under the classification of assistances under electronic-based assistance release selections

Dabholkar (1994) proposes many particular divisions, which would use for the

companies for employing the electronic based assistance release. The division

recognitions “who” release the assistance, that is, the person-to-person, under which the

worker makes use of the electronic or user to electronic like utilization of an ATM. The

second classification views on the assistance released.

If at all the websites of assistance business then at the home or office of the user or

“neutral” website like the location of an ATM available at an airport. The ultimate

classification views at the interaction of the user with the assistance function for direct or

indirect like under the situation of telephone banking.

(1994) Dabholkar contracts that there must be adaptability under the model of the

electronic to permit the users to create modification in the process of the transaction and

make present for the user assistance adviser when needed, with “decreased stay”. It even

increases the model problem of enough selections for web bankers and ATM/Telephone.

Under many situations, the transaction happens in a stable place and the presence of the

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worker do not always be possible because these conveniences sometime function per day

for 24 hours and seven days weekly.

Constant developments under the data electronic allowed the banks to give their

assistances under a direct method to be suitable for their items in a good way for the

requirements of clienteles. Even though, banking is the experienced firm and the data

technology was basically utilized to monitor the administrative methods. The movement

from controlling to information by making use of data and its surge to intimate the

organizers to give the chance to know the attitude of the user and reply at the correct

moment.

The chasing form refers to the method or alternate form of technological banking:

The banking personal computer (PC), virtual banking, online banking, home banking, and

phone banking, Internet banking, remote electronic banking. The Internet or online

banking and PC banking are very sometime utilized for label. Nevertheless, this must be

cited, that the words utilized to mention the distinct kinds of technological banking are

utilized correspondently (2003, Dirk de Villiers).

Internet banking is assumed to revolutionize and change the common banking company

(Mols, 2000). Banking assistances are simply mechanical and digitalized and hence based

on functional outlook, they lend themselves to the web. The ability of rival benefit of the

web for banks occurs in the fields of decreased rate and fulfillment of user requirements.

As per Siau et al. (2001), m-business (mobile business) contains WAP and includes a few

of the qualities of mobile commerce that contain Ubiquity. Mobile commerce allows the

customer to get the permission for the date and they are expecting the customer under

personalization, the cellular broadcast field. Because of few of the memory ability of the

mobile hardware, the software allows the good degree of solving and dividing to get the

requirements of mobile costumers, adaptability. The movement of the hardware for

instance the cellular handsets allows the customers to have the transactions and/ or get the

data when the customer is busy in alternate task like functioning or travelling or

dissemination.

Automated Teller Machines (ATMs) are even called as technology cash device and the

electronic device allows the user to get the paper amount or going with alternate banking

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transactions after inserting (msn) the encoded plastic card. Automated teller machines

(ATMs) use of convinces which ATMs give.

The present bankers are concentrating on how the customers will transact and it also

shows their traditional banks against their online challengers. According to Fletcher's

Research "around 200,000 people in the UK are already banking online and predicted

seven million would be by 2002." According to Vernon (1999) with the Internet the

banking brands should face the competitors to attract their customers, which will be hard

to focus due to pressure. "By the year 2005 two billion people will be on the Internet

representing 90% of the buying power on the planet."

1.2 Research Objectives:

The research objective will show the purpose of this dissertation. The five objectives are

is as follows:

To evaluate the banking industry with IT and Security systems.

To analyze customer level satisfaction before and after IT impact on banking industry

To understand how the IT changed the banking industry present and future.

To review the major changes in banking industry with effect of IT and security systems

To describe major changes in HR with effect of the IT impact particularly in banking

industry

1.3 Methodology Adopted :

The main aim of this dissertation is to study the IT impact and Security activities which

are adopted by both private and public bank sectors. The country considered in the study

was India. The main reason behind in selecting this country is as it has more number of

banks and very large population who has all grades of assured income levels.

1.4 Collection of data:

A small sample survey was conducted in this study and required primary data was

gathered from questionnaire (annexure) which contains the data/information about the IT

and Security activities followed by private and public sector banks. It also had the

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information about the customers received facilities. Now the secondary data was gathered

from newspapers, magazines, Internet, journals etc.

1.5 Sample plan:

Sample unit: In this dissertation six banks where three were nationalized banks that are

Punjab and Sind (PSB), Punjab national Bank (PNB) and State Bank of India (SBI) while

ICICI bank, Axis bank and HDFC bank as private sector banks were randomly selected.

This study was restricted to the staff of private and public sector banks of India.

1.6 Sample size:

Sample sizes of 10 employees were selected randomly from each bank. As the CRM

activities are adopted mainly by bank’s employees to satisfy, retain and attract the

customers to make them as their long term customers. But for the subject relative

interviews only specified in the dissertation.

1.7 Sampling Technique:

A suitable and appropriate sampling technique was followed to conduct the study. In this

sampling technique participants are selected based on the requirement.

The technique is like the way of conducting the interview and scrutinizing the answers

based on faith and fair answers related to our study.

Assume that we have interviewed near about 15 people and mostly out of 15 near about 8

people will give irrelevant answers and some answers are not related to our study. But we

can take only some answers which we feel the answers are related to our subject and it

should be honest.

1.8 Data analysis and Interpretation:

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The obtained data is classified and summarized to improve their strategy from result.

After conducting questionnaire the data collected from the participants was organized by

finding the response rate. By using this percentage was founded and summary was made.

1.9 Limitations of the study:

Even though special care was taken while conducting the study there are some limitations

to notice which are explained on following:

1. In research process time is the main constraint to consider hence only few banks were selected to do study.

2. The result of this study will depend on response of the participants. Therefore the selected sample may be or may not be considered as to represent complete population.

3. As this is an open category survey there may be chances that the participants may give their opinions personally to justify their interests.

4. Few questions were not answered by the participants due to lack of knowledge and not knowing some concepts in IT and security activities.

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Chapter - 2

2.0 Literature Review:

Banking industry is one of the best customer centric industry and with the improvement

in technology it lead to a major change in all its operations as it has bought a sudden

increase in customer satisfaction and customer loyalty, that lead to the increase in profit .

Earlier the retail banking was functioning in a personalized style that is the customer had

to go to the bank to do any transactions and they also had to wait for their turn to do the

transactions.

Four key forms of technology dominated business culture in the banking industry:

Jones T., 199rrA new trend culture in the new Era.

(Ibid)

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"A bank collects money from those who have it to spare or who are saving it out of their

incomes and lends this money to those who require it"(Crowther, 2006)

Earlier everything in the banks was stored on paper that customer information, ledger

books, receipts, account information and in and out management of banks was stored in

the papers. Then the introduction of the first software the data ware was introduced by the

information technology and storing the information was easy and they didn't need a room

to store the data. This was the first impact of information technology on banking industry.

Then they introduced the plastic cards which had a customized personal identification

number called as the "PIN number" which would be allotted to individual customers

specifically designed for privacy of the customer. With this plastic card called the Debit

card customers can get information about their account a saving or a current account from

the Automated Telling Machine they can deposit or withdraw money within seconds

(Saloner, G. and Shepard, S. (2005),.

Then the Internet influenced business industry. With the entry of Internet the banking

industry was the one, which benefited the most. Customers who travel a lot it was

becoming difficult for them to transact. Then the solution that the information technology

came up with is the online service, which would make the bank 12 available 24hours a

day and 7 days a week. Customer is asked to online to a secured site in which he needs to

answer the security questions and then the customer gets his username and password for

his online banking account. Where the customer can transact his current or saving

account, can transfer the money to other's account with a different bank account number,

also they can do the trading they can sell and buy the shares online. The customer can

even take the print of his account statement all this can be done from any system or place.

This was appreciated by the customers a lot and the bank took all the necessary steps to

satisfy the customers. This is a convenient process where the customer can access his

saving account or current account and transfer the money to another account without even

travelling. Through this online and wireless banking the customer can pay his bills

without going to his bank. Electronic authentication and Electronic signatures banks is

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used for proper identification of the customer's identity (Tam, K. Y. (2008). These

processes would increase the efficiency of electronic transaction. Secured online

encryption is a safe of doing the transactions when the customers are online. Mobile

banking is the calescent area in the banking industry and very soon it would be replacing

the credit and debit card systems in the near future. Most of the banking industry are

sending the alerts through SMS to their customers it is safe and very useful now a days.

Magnetic Ink Character Recognition is a technology mainly used by the banking industry

to check the processing of a cheque. These characters are printed with magnetic ink to a

toner. Security is one of the most important factors for any information technology based

processing and which is very critical. Many security measures should be taken care of. To

validate the transactions the “Maker checker concept, transmission of electronic messages

over a network in encrypted form, due authentication by means of providing digital

signatures and storage of electronic records in conformity with the provisions of the IT

Act, 2000 and amendment 2008."

Electronic funds transfer the customer could be able to transfer up to five lakhs to any

bank in any city or state or country with this service. Electronic bill payment this service

would allow the customer to pay the bills faster and with more ease they can operate this

service as this is one thing a customer would appreciate is not to go to different places to

pay bills but at one place they can pay all their bills this service would provide this to the

customer. And the banking industry can contact the customers with any updates or any

new schemes or new plans by sending a message to the customer's phone and customer

can even get his monthly account statement to his email within seconds. Centralized

banking core is a terminology used to describe a process, which is provided, by a group

of bank with is in network with each other. Here the customer can access his funds from

any of the branch, which is a member of the network banking. They can deposit or

withdraw or any other information that they need they can get it. This kind of banking has

become in almost all the states and countries where the banks are under core with other

banks.

As the retail banks introduced new services for the customer they have also made sure

that whatever the customer asked for is done. The customers in the initial stages had a

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notion that security would not be there when they are transacting through internet but the

retail banking has made sure that the security of data would be at the top and every

transaction that the customer would do would be in a secure zone and all the passwords

and pin number were also encrypted. So it became easy for the customer to transact

without any fear online. The service which is provided to the customers is personalized

when compared to the traditional banking the new technological were customer centric

and can be accessed at any time and from any place (Oliner, S. and Sichel, D. (2000).

These things have changed the customer's psychology about banking and retail banking

become even easier to the customers.

Earlier the customer had to visit the branch for any queries. But now if we look at the

usage of ATM’s have increased to a high extent which is a remarkable because of the fact

that in olden days internet was nowhere in picture but now in the present context the

usage is ten times more than olden days.

This will describe the different types of new technologies or the electronic methods,

which are using by the present banks. The retail banks should find and use these

technological inventions for its distribution channels. Combining different technological

innovations together to form an Electronic banking, here the Electronic banking is

developed due to the electronic delivery channels hence the name is given as electronic

banking. All the services are elaborated in various forms and also in the past years many

firms and organizations are adopting these services and came to know about the

importance of working together. Now the banking industries have seen this service and

this had evolved a new picture in their businesses as the world itself has seen the growth

in the recent years in this new technology. The various forms of electronic delivery

channels are explained (Kozak, S. (2005).

ATMs (Automated Teller Machines) (Rose 1999) the definition of an ATM is "an ATM

combines a computer terminal, record-keeping system and cash vault in one unit,

permitting the customers to enter the bank's book keeping system with a plastic card

containing a Personal Identification Number (PIN) or by punching a special code number

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into the computer terminal linked to the bank's computerized records 24 hours a day".

Once they get the access it starts to offer the services of the retail bank to its customers.

These machines can be located outside the bank, in the malls, airports and in all the major

locations in the city apart from their home branch. The main reason why the retail banks

have introduced this service is for cash dispensing. But later on with the innovations in

the information technology the ATMs have started to provide many other services like

the funds transfer, bill payments, deposits, and mini statement. The retail banks have

opted for this service from the ATMs because it had a competitive advantage when

compared to other services. With the combination of both the services that is from the

ATMs and the human tellers during the peak banking hours it gave more productivity. As

it saves lot of time of the customer instead of standing in the queue in the bank they can

directly withdraw the money from the ATM as they can utilize this time in doing

something else. For the retail banks the ATMs have proven very cost efficient which gave

high productivity in a less period of time when compared with the human tellers. On an

average a human teller can give service to about four thousand three hundred while

compared with the transaction of the ATM it is six thousand four hundred and if the

human tellers take a break in between still the service is continued by the ATMs during

and after the banking hours.

2.1 IT impacts levels on the Banking industry:

2.1.1 Personal Computer-Banking:

PC-Banking is a service which allows the bank's customers to access information about

their accounts via a proprietary network, usually with the help of proprietary software

installed on their personal computer". If the consumer can easily access he can perform

many functions, which are provided by the retail bank. As this will also increase an

awareness and importance of computer literacy among the customers in turn it will

increase the usage of personal computers. This will definitely support the growth of the

PC banking service which will virtually connects the branch bank into the customer's

18

house or the office. 12 available 24 hours a day and 7 days a week. This in turn would

benefit the ATMs and the Telephone banking (Rose, 1999).

2.1.2 Telephone Banking:

"Telephone banking (telephone banking) can be considered as a form of remote or virtual

banking, which is essentially the delivery of branch financial services via

telecommunication devices where the bank customers can perform retail banking

transactions by dialing a touch-tone telephone or mobile communication unit, which is

connected to an automated system of the bank by utilizing Automated Voice Response

(AVR) technology" (Balachandher et al, 2001).

Telebanking has many benefits for both the customers and to the banks according to

Leow (1999). Mainly for 12 customers it can give improved easy methods to access

which is enhanced and the time can also be saved. And according to the banks'

perspective these services related to the telephone are substantially lower than any of

their branch services that are provided by the bank and it costs very less compared to all

these. It is similar to the impact that the ATMs produce only exception is that it cannot

dispense the cash like the ATMs. The telebanking delivers the conduit that gives service

even after the bank office hours. It increases the continual productivity for the retail bank.

The retail banks offer its services to the customers at their home or the offices so that it

could avoid to go bank for any kind of need, so this method may save time and can also

improve the productivity by providing greater convenience to the customers.

2.1.3 Internet Banking:

According to Essinger (1999) the idea about Internet banking is “to provide customers

access to their bank accounts via a web site and to enable them to enact certain

transactions on their account, given compliance with stringent security checks".

According to the Federal Reserve Board of Chicago's Office of the Comptroller of the

Currency (OCC) Internet Banking Handbook (2001), Internet Banking can be described

as "the provision of traditional (banking) services over the internet”.

19

“Internet banking offers more flexibility and convenience to its customers whom

combined with a virtually absolute control over their banking”. Service delivery gives the

information to the customer about the new bank products and many more services also

about the transactions that are being conducted by the retail banks.

An alternative delivery channel for the retail banks is that it can reach the customers by

PC-Banking and Telebanking, which will improve the productivity. Along with the

improvements in the huge productivity it can also have an advantage that the distance

hurdles and time are eliminated. The retail banking will continue its productivity with

unexpected chances of banking to the customers. Electronic Fund Transfer Process will

be very useful to the customers that they can transfer money from their account into

merchandise account for buying products at the purchasing place itself using online

transaction which is called Electronic Funds Transfer at Point of Sale (EETPoS). A Point

of Sale will use the smart card like debit or credit card the funds can be transferred by

activating the facility Electronic Fund Transfer Process.

Due to the increase in the productivity of the bank has resulted in the use of EETPoS

which helps the customer to pay for the purchasing during shopping by avoiding giving

cash to them and also can be useful instead of using cheque or withdrawals for the

shopping. This service can work even after the working hours of the banks, and hence the

productivity increases for the banks during non-banking hours. This mainly saves the

customer energy and precious time to go the banks or searching nearby branches to

withdraw money or at least search for ATMs so this may lead to loss in the productivity

of the banks.

2.1.4 Branch Networking:

"Networking of branches is the inter- connecting and computerization of geographically

scattered standalone bank branches into one unified system in the form of a Wide Area

Network (WAN) or Enterprise Network (EN) for creating and sharing of consolidated

customer information or records”.

20

Thus there will be speed rate in the transactions in the inter-branch without the distance

and time that are eliminated. So the productivity time period will also increase. Since

there are more number of branches for a bank to serve its customers and under one bank

there will huge labor working in the branches with a goal to improve the productivity in

each and every branch. The customer should travel to near by branch and spend more

time to do production activities. Are the customers of the bank today are they more

satisfied and better served from their banks with the innovations or they are happy with

old format that has a human approach to its services is the main question. The factors like

availability of instant help, availability of service after the office hours, convenience,

accuracy and reliability, low cost for the usage are important for the bank customers.

“Customer satisfaction is Result- Expectations" (Dunne, T., Foster, L., Haltiwanger, J.

and Troske, K. (2000). To measure the customer satisfaction the tools are categorized

into three levels of satisfaction, which based on the model of three levels of satisfaction

by (Kano)

1. Desired quality tools – surveys on customer satisfaction which is only way to know

about the customers whereas the perceptual surveys have the views of the competitor's

customers.

2. Expected quality tools – talks about the complaint system.

3. Excited quality tools – shows the focus group of the future invents.

Innovations in the technology which are adopted by the present bankers are divided into

three categories as stated by (Fisher, 1998)

1. Transparent Customer and customer technology shows the core of the operations in a

bank. This is the technology, which the customer only expects. If the customer is satisfied

and the technology reaches their expectation then they will remain calm, otherwise the

consumer would contact the bank quickly to give his feedback on this or gives complain.

The main example would be if there were no facilities to see the account transactions in

statement, the customers will expect from the banks even though the technology and the

21

bank process are transparent. For example let us see the problem of the statement was

delayed by a technical reason the customer would feel angry that the normal standard of

service as expected has not been met.

2. Customer Independent is a technology which would involve the customer's conduction

and the transactions which are completed within the bank is mainly independent of any

human contact with the bank like the internet banking, phone banking and the ATM's

which would not require any assistance.

3. The bank employee will assist a customer and he uses the customer technology to

finish the transactions like the customer service in the call center would use the customer

relationship management to under the file where the customer details are stored in the

customer profile and then the customers are contacted and enquire on their banking

transaction problems and also provide the billing up to date.

According to Spiggle and Sewell (1987) the model for motivation for the bank selection

is used to show as an example for the customer satisfaction.

The retail bank can be attributed according to Spiggle and Sewell's model into three types

1. Locations for the retail outlets are at variable distances and travel time and assortment.

2. Consumer psychological sates like the perceptions, attitudes, attribute weights and

image are directly viewed as the preferences and shaping choice of patronage.

3. The characteristics of the consumer like the lifestyles and demographic characteristics.

This model of motivation was applied for the qualitative analysis in the questionnaires for

the survey and to study the selection reasons to the mode of services given by the bank to

show the customer satisfaction.

"Customer Satisfaction and Customer Connection" by Cole and Wayland (1997)

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Do information technological innovations meet the customer expectations in the retail

banking industry, According to Cole and Wayland (1997). Considering the customer's

knowledge and customer's connection with technology and taking them as the basic needs

for the customer’s connection strategy. It shows the new technologies found and are used

to make the online connections for customers such as ATMs, self-service systems,

Internet and the call center for the customer care system. According to these systems the

technologies are increasing the capability of the strategic supporting changes through the

improvements in the strength of customer strength base and also explain the different

methods used by these value chains and correlations and promoting these collaborations

in the customers and suppliers. This report will help to know whether the customer

connection technology will be useful to satisfy maximum in the customer of retail

banking and also increasing promoting collaboration of the potential customer base and

the interdependency, which was mentioned by Cole and Wayland.

From the results it is showing that customer connection technology always doesn't satisfy

the customer maximum. Anyhow the customer connection technologies such as ATM

will satisfy the customers in some cases when compared with other services like Internet

banking and phone banking. According to Sloan management review: finding the outrage

and also the customer delight (Bowen and Schneider, 1999) why the customers are not

satisfied and why they are satisfied? It may be because of the bank technological services,

customer likings, or the attributes or the customer characteristics?

There were many studies done by the marketing perspective to understand the customer's

satisfaction but psychological explanations of these kinds of behaviors are little explored.

From this study we can seek the explanation in our research from the customer's

perspective of his internal state. And the retail banks have to give many attributes and

services and can see the whether the customers are satisfied. According to Sloan

management review 1999 there are only two methods of thoughts, which will describe

the various stages of customer satisfaction. From Met expectation method we will

conclude that by reaching the customer expectation can lead to customer satisfaction. If

we cross their expectations then can make customer delight. Always the expectation

23

levels will be an increasing one and dynamic. The personal expectations are more than

the personal status, which are always tough to estimate. The Needs Based Model will be

helpful to satisfy the customer in three aspects of the customer such as security, justice

and self-esteem. This model will explain that the needs are focused on the customer’s

physiological behavior and to reach their expectations will concentrate on attribute but

not on the customer.

2.1.5 The Downsizing of Banks:

There are many factors, which influence the banks in downsizing. As financial service

sectors prefer to globalize the business from the national level to international, there has

been huge competition in the international financial services of customer awareness,

availability and information.

There are many levels in the banking structure like other industries have. But it is very

difficult to face this never-ending competitive market. The higher levels of management

will interact with the primary line managers with the help of availability of the

technological information. This is also useful while horizontal information transfer

among the departments. (Jacques M., 12 June 2004,p.10/8) the horizontal information

transfer is used to decrease the middle management in the management structure.

2.1.6 The end of cross subsidy:

Many banks have been working on the small account holder’s prices, which are

subsidized to get more profits. These are high value transactions with less volume to

subsidies the low value transactions with large volumes. Since it is taken as a positive

aspect but it may lead to negative effects on the ability of the banks to compete the

market. Anyhow "Banks now increasingly accept that they must recover transaction costs

from those customers that incur them" (Channon D., 1993, p146). The main reason for

this step has been observed from the Customers service revenue matrix- if the losses are

24

increasing by many of the customers- it is important that the services should increase to

twenty percent, which may return large profits to the banks.

The less revenue making customers should bare the transaction charges. There should be

a strategic reason if those customers are not following it like the student accounts. This

may affect the customers to do transactions with the bank or it may also decrease the

revenues from the profit making customers and may have more burdens on them. This

step will make to keep the large incentives to attract many of the profitable customers in

the market. However Economist Vilfredo Pareto (1848-1923) argued in his model "in

order for maximum welfare position to be reached then the "ophelimity"2 of some should

not increase to the detriment of others". (Sloman J, 2004, p.400) the main advice, which

is given here, is that to get more profits the banking elements within it should not affect

the other factors for subsidy. This pricing method has been seen in the First Chicago

Bank. This policy was adopted by the City bank to some group of retail customers it

attracted some customers and removed some use less customers.

If there are savings in the price drivers that cannot be transferred to the pricing policy, by

this nearly eighty percent of no profit making customers can be attracted. The savings

made should be used in decreasing the prices and use these small accounts in returns of

revenue or to attract new profit making customers. From the study made in the year 1995-

96 reveals that there may be chances to decrease the interest rate for the medium and low

access accounts when compared to the long period accounts. Even though the interbank

rate is falling the interest given to the 90 day larger and medium balance maintaining

accounts are increasing gradually.

2.1.7 The move away from the Branch Network:

Basically the whole bank operations, trainings, personnel and lending are completely

depending on the bank branch manager (Smith S., Wield D., 1994, p.98) "in theory

promotion was open to anyone The relationship between Interbank rates, deposits and

mortgage rates, who could demonstrate the necessary 'aptitude' and 'dedication'"

25

From the past few years’ maximum banks are not following the need to facilitate special

services to the corporate and personnel customers by the normal bankers. It has observed

that the branch managers are feeling more difficult to provide such special services to

their high revenue making clients. The branch manager should follow as below:

a. Increasing non-banking services for salesman.

b. Branch administration head decisions.

c. The central point of reference for personal banking.

It is also planning to perform significant method of working a corporate banking

function. One more important point is there that it does not have the suitable decision

making in lending the larger and medium balance accounts. It has considered as just

'errand boy' to send a short message. Anyhow the main thing to be remembered is that the

branch manager does not have the advantages in both training and experience since it

may be the treated personal thinking. But anyhow it has been advised that the managers

are "lacking in some aspects of credit evaluation" (Channon D., 2003, p.210).

2.1.8 Hub and Satellite Banking:

Hub branch is the main center of the system where the complete account services are

provided. It will be the place where administration, special lenders and training managers

are needed. The processing of data can be possible in the same Hub building or in a

different data processing area (DP). The word processing and standing order clerks are

generally centralized. This DP and Hub will support a satellite network or offer many

limited services to the personal customer in the branches. "Many satellite branches have

no managers"(Smith S., Wield. D., 2004, p.102). This method is very much useful, as it is

not allowing in replacing the de-layering and old general managers. "The career structure

has become horizontally and vertically integrated” (ibid). This limited the opportunities

in career development for the labor. The main reason for this situation is that the

26

traditional hierarchy has been removed and replaced with the insular levels, which will

not move constantly.

The hub will also serve the corporate branch but it does not offer any special services to

the business customers like by answering solely. It has been observed in some cases that

the banks are having limited savings and in some cases it found that it has effecting the

productivity. By reducing the branch managers the savings obtained are used for

appointing the new clerical and other staff that are in need for bank processing (ibid.

p.103). As the flexibility has decreased and hence there has been decrease in the

productivity. In the higher stages of specializations may be reason in increase of the staff

costs. Let us see one example that in 2004-2005 Barclays bank has removed 3400 or -

3.7% of staff. In this mean time the staff prices are raised quickly from 2607 to 2728

million pounds or 4.6% of increase. The clerical staff costs are raised to 2.75% (Bifu).

Hub and satellite banking elements are communicated with each other by relief staff

cover, information system (electronic or paper) and managing teams to look over the

network. There is a need to increase the relief staff cover since there is a specialization in

the bank process. It can be seen that the banking system is intending to include Tyalorist

theory in their methodology. There is necessity to see the inputs like the Ford plants,

which are not proof of banking network. It also says that:

“While new technology, business process re-engineering and the total quality movement

may have created more efficient companies, Efficiency should not be confused with

competitiveness. Competitiveness, relies on innovation, and innovation relies on people”

(Donkin R., 2005b, London page 12)

When the banks are not able to become competitive and advanced by technically, it may

lead to non-productivity. It means, when there is any severe crisis occurs then there will

be no specialists and man power to clear the problems. So it is advised to always look

underlying cause for any kind of change and innovations in terms of technology.

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2.1.9 Does technology give banks a competitive advantage? :

To become competitive advantage it needs to develop a suitable, different, unique and

impossible to copy. So technology will not answer this question.

“Sustainability demands that a firms competitive advantage resists erosion by competitor

behavior or industry evolution”(Porter M., 1985, p20)

M. Porter advised that to decide whether technological change will become competitive

advantage can be done by adopting some criteria:

a. If technology is increasing then the bank products will become unique hence

many shares can be expected in the new market by keeping remaining things

constant and as it has pioneering effect.

b. The new technology should be made secure and protect from re-duplicating by

others so that it can become sustainably advantageous.

c. Even though if others can copy the technology the bank should use its competitive

advantage and increase its traffic rate.

“Pioneering may lead to a variety of potential first-mover advantages in cost or

differentiation that remains after its technological lead is gone” (ibid., p172)

From M. Porter says that the new technologies will not lead to the productivity of the

organization or firm. These technological changes can be able to change the structure of

the firm effectively or may become worst. By considering this point it is suggested that

“technological change that improves a firm’s competitive advantage may worsen

structure as it is imitated.” (ibid).

The five forces within banking:

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It became very evident in some cases like NatWest’s development case of Mondex and

also for other firms like NatWest strategic alliance and Tesco. Many banking services

like cash handling when emergency to clear the cheque, traveller cheques are being

strategically ready to replace with new elements by the Mondex, by introducing new

technologies they have worsen the structure of the process.

2.1.10 Security Impact on banking industry:

Security is always an important aspect especially in banking industry where the risk of

being hacked by some hackers is more likely to happen so banking industry have

employed some techniques which assures the customers to have a safe and secure

banking. Security has bring in a major impact on the banking industry and in the timeline

there’s been a major developments in the security level on banking different banks have

employed different security techniques so which demands the customers to have a strong

security with whom they bank with.

2.1.11Security and accessibility:

The bank amount can be returned back by the Internet users may be not sufficient. There

are many problems with the customers to use Internet banking since they feel difficult to

access to connect. It can notice that the problems raised in network policing cannot be

financial institution controlling or ownership of specific institution/individual. The main

29

aspect to be seen is security many of the banks are facing huge threat from computer

hackings.

“Recent events-notably one young Russian hacker’s penetration of Citibank’s own

computer system-show that banks find it hard enough to keep their proprietary networks

secure” (The Economist, 2005b, p.123)

The security for open Internet system is highly risky factors for the banking system. If

any worse thing happen like hacking then the Internet banking will make the customers to

lose confidence. To overcome this problem many of the bankers are using encryption of

the data. Anyhow encrypting the data many not provide security it cannot be called as

‘security system’. If the system is theft then it does not mean that the whole data has gone

within the systems since it accounts only for 8%. The new technology made modern

systems where the central computers are replaced with PCs’ and file servers. Anyhow

this type saving data is not advisable there are many chances of loosing data in this way

of saving. From a report analysis organized by National consumer council along with The

Department of trade and industry, UK ITSEC and ICL revealed that 9 from 10 are

operating security branches (Garrett B, 2007, p22). To improve the reliability the data is

decentralized into network.

Anyhow the survey report says that 54% has lost the data. The main goal of the

management security is not only to protect from the viruses and hackers but also it should

make it clear and approximate. The authorized people only should access the data in a

practical and useful way. It is necessary to satisfy both the managerial and customers’

requirements in security.

2.1.12 Consumers & EFT:

This explains that there is tremendous increase in use of electronic devices like plastic

cards and ATMs’. From the American Bankers Association many of the customers are

not interested to take the pre-authorized credit transfer methods like paying the wages and

showing reluctance if preauthorized debits are taken like paying bills. Both are

30

proportional to each other as income increases gradually whereas there is decrease in

payments for the goods and services. It is advised that the customers are not readily take

up convenience without any limitations and will react by taking economic worth

rationality (King R., 2005, p43). The new technological innovations and ATMs’ are

providing very easy way of banking to the customers.

It will not say that the old systems are not useful or insufficient and are in final stage.

This new innovations will make the both customers and banks to access easily and also to

hold up data effectively. But “The more complex the architecture of a computer system

and its associated software the more likely it is to fail.”(ibid., p.47)

If any of the system fails then it will lead to a big problem as the customers will lose

confidence on the bank flexibility and quality of network. If customers are satisfied and

comfort with the technological methods like ATM then they will arrange some way

banking available around them. In such cases if ATM network ‘goes down’ then it tend to

a big personal tragedy since they commit to payments.

The previous methods of banking like manual cheque clearing and accounting are having

more chances of errors than the today ATMs. Any of wrong deposit has occurred then

they can be observed before all debits are posted. The modern banking system is very

much flexible that clearing of cheques can be done automatically and it can be displayed

on the system more over all transactions can also be seen. “Such a stream of poor credits

may propagate through thousands of accounts before it is noticed.” (ibid.)

If this situation is considered as an extreme one then it may lead to ‘credit blackout’

anyhow it is not suggested but it can be done.

2.1.13 Mondex Function:

Even though the credit cards, cheques and debit cards has been introduced they cannot be

replace by paper money. The new changes have not dominated the Global requirement as

primary payment is by cash. If the payment systems are done with cash then it will give

31

satisfaction and confidence in banking system. Mondex functions will match with the

cash that is transferred widely; even though it performs special functions it should be

widely accepted. Basically cash itself is the main asset than any other thing where

Mondex is embossed in a chip of plastic card works using a reading electronic device.

The main will allow transferring money to any part of the world only by monetary

computer or telephone basis. Mondex is different from other bank system cards since

they can make only individual card transactions as they have data base method.

This reveals that the “Supporting the infrastructure required for such a process means

marginal cost per transaction for such initiatives is always likely to be uneconomic for the

lowest value transactions, leading to their exclusion or substantial cross-subsidization”

(Jones T., 2006). Anyhow Mondex has planned a new method is to transfer the money

without any third party to overcome the above problem.

But there are some connections with the banks in certain levels of processing in the

Mondex system of functioning. Anyhow the level of connection with the banks depends

on the type of transactions doing. Individual transactions are done directly using the

Customer Wallet transactions. Now if the transactions are between the retailer and

customer then the transferring will not be done directly using banking system, but the

process will continue periodically transferred to the bank through the telephone network

from the retailer terminal Point of Scale (POS).

James Essinger wrote about Mondex in his book as “Electronic Payment Systems -

Winning New Customers” (2002), have “a huge impact on the entire retail and financial

services business” (Bifu 2004, p 7). By using the Mondex secured system of money

transfer using telephones has reduced the difficulty and risk of counting and transporting

of cash. Hence this will decrease the employees of the cashier and security in the

financial and banking systems. Mondex provides a facility that the foreign currency can

be transferrable into five currencies simultaneously in the global level using the telephone

network systems. Thus the increased use of Mondex will reduce the traveller’s cheques

and also the Banker’s Union can transfer the cash to foreign countries without using the

32

banking process (ibid.). Thus by using the Mondex method will increase the home

banking process.

This electronic method of transferring and payments will make to decrease in jobs of

cashier and cheque clearance in the banks due to less use of paper in the banking process.

One thing should be notice that this Mondex is eroding the Banking system slowly.

Anyhow this statement was refused in a telephone call made by Nina Humphries to

Mondex international. She advised that the banking process still continue and the

communication can be seen in the banks and cards. But she cannot explain the main

reason behind the communication between them to occur. If the Mondex Wallet has

purchased in the larger extent then the present ATMs’ can be easily replaced with direct

transferring. The purchased Wallet can be used to check balance, deposit, transfer cash

from or to other individual cards and withdraw money (Mondex, 2004, pp.10-2). Hence

by using the terminal interconnection of the banking network the employers are able to

pay there employees with charging of the Mondex cards, there is nothing to stop this

process. Since this system is adopted as a payment system. It depends on the retailer and

its workers embossing on the cards.

The question here arises is that will the people are ready to pay for this technology since

we have free system of payment as direct cash exchange of cash. Apart from these

transferring charges there will be addition profit for the security for exchanging the cash.

It can attract the new customers by improving the new functionalities. Anyhow the profits

cannot be able to weigh the costs in small transactions such as newspaper salesmen and

small street sellers are not able to do high transactions.

Mondex uses in Swindon Units

Mondex card holder 10,000

Retailers and service providers 700

Payphones 200

Screen phones 2,000

33

ATM's adapted for Mondex 20

Car parks 6

Buses 80

[Based on information supplied by MONDEX]

NatWest and Midland are estimating that Mondex will replace these 20% cash

transaction in UK within 20-30 years (Bifu, 2004, p.8). This also advises that the effect of

Mondex on the employment levels and banking system may not estimate up to 20 years.

In the mean while the banking system will completely become worst in the market and

lead to disfunctionality. It will also show greater impact on the basic functions of the

banking. Hence Nat West and Midland are planning to introduce new technological offers

to the customers to become competitive advantage in the market by smart card offer.

Apart from the banks other financial systems are trying to innovative new payment

system like providing electronic smart cards to do payments. Due to these new methods

of payments, increasing competition the employment levels are decreasing it has

effecting completely in the banking industry.

“. . . . History and experience shows that when profits are under threat, WORKERS ARE

TOO.”(ibid. ,p.9)

Experts are advising that the market share will fall tremendously in the credit card market

position as explained in Competition between Store and Bank credit cards, page 31.

There are chances to become success in this new market. Anyhow if they are not

successful in electronic cash market system then have bare penalty from the banking and

retail banking system. It tells that the bank is dealing with huge investments and risks. It

not only deals with the banking process to be successful in the market with competitive

advantageous methods but also to remain in the market even if there are any kind of

changes occur in the bank market environment.

34

2.2. The impacts of IT and Security systems on banking industry:

2.2.1 Enhancing profitability:

It will not be satisfactory to provide the consumer with the desired product. If any

financial institution intends to stand before the competition it should concentrate on the

profitability. Financial institution should find the more profitable fields. They should

invent the different methods to sell the product across more efficiently. It is easy to have

the big share of the market as high product acuteness is there. Additionally the selling of

more goods makes the profits go high.

With the close relationship of the buyer-seller profitability rises. When profitability of

any organization increases share in the market will be more. To make some decisions in

sales, marketing and services banks needs business intelligence. Banks should include the

high technologies to make the work faster. This helps to fragment the data quickly and

overcome the technological hurdles.

Different data of customers are saved at many places. This data can be accessible with

some ways. With the variations in the industry build or with any merger and acquisition

the information can also be distributed to less administrative area.

A well-managed CRM solution that works with different applications can initiate the

compilation and analysis of data. This system is operated with lot of business partners

and suppliers which facilitate the data compilation that strengthen financial institution

sales force.

2.2.2 Operational excellence:

All the banks must bring together its sales and services. It should use the various channels

which facilitates the portals for the consumers and workers. From direct meeting to

indirect online meeting, they should available on each possible ways of interaction. A

35

highly efficient CRM solution should work with all the modes of communications. It

includes fax, email, online portals, wireless device and interaction with bank employees.

This gives a interaction between touch points to an work bay and linked the work bay to

the all the business partners. This service enables the bank personnel on any consumer's

important events. These should be ready to take appropriate actions.

Each personnel are having the proper knowledge and skills to achieve the desired goals of

the organization. They have all skill sets to deliver with high quality. What is relationship

of the customer with the industry? The effective Customer Relationship Management

(CRM) system should be able to analyze this. It should provide the data to see the

consumer stability in the relationship.

2.2.3 Benefits for the customers:

When the consumer provided with easy access to the various products and services they

feel blessed. The way to reach the consumer should be well planned and professional.

Industry can design better-personalized services if the data of the consumer is updated.

Quick action to any issues faced by them.

2.2.4 Benefits to the employees:

They will get enough time to focus on the customer demands and orders. All the

personnel are strengthening with the idea to provide the good quality services and to

fulfill the orders as they have asked for. Rate of satisfaction will be high. The top-level

personnel are strengthen with the data which is effective in building customer

relationship and make the making quick.

2.2.5. Benefits for banks:

There will be an ideal utilization of the resources. The individualized services provide the

consumer faith and level of satisfaction. There will be better consumer acquirement, hold

36

and sale across. The goodwill of the industry should get improved in the consumers'

minds.

2.2.6 CRM challenges:

Though CRM is the complete package which contains all the strategies of making profits

but still there are some loopholes. One of the main issues which CRM system is facing is

to not meeting the expectation of reducing the consumer retention. This is the reason for

the CRM downfall. What is CRM failure? What is the reason for it? The major reason is

that the entire organizations that are using CRM are not aware of its features. They are

facing a lot of confusions about its characteristics. There are many industries who give it

a definition of business strategies and others tells it is pertaining to technology. There is

very less percentage of the industries which are successful after the installation of the

CRM. It lost its interest as it was not able to meet expectations. There are nearly 755 of

the projects which are facing the number of the problems after installing CRM. Most of

the project fails to get the desired results due to the various issues exists in the CRM.

However the exact the rating if failure is just 5%. Mainly the big industries are failed.

Medium size organization has a high rate of success.

2.2.7. Exorbitant Costs:

CRM requires the large investment to manage its customer database. This huge

investment considers being a big problem. There are some other expenses also like

maintenance of the computer hardware, software and personnel etc. The additional costs

are so high and number of expenses is there. Mostly the costs involved are fails to cover

the return on investment from the CRM implementation. This leaves the CRM user with

bad experience. This is what we call a CRM success and ultimately CRM failure.

2.2.8 Inadequate Focus on Objectives:

The second thing which needs to be taken in the mind is that the aims and objectives

should be clear. Whole management and employees should be well aware of these

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objectives, so that they can work towards the goal without any confusion. All the

objectives should be clearly defined and well planned. However mainly when the CRM is

going to be implemented and suddenly hard time hits, Industry lost its focus on the goals,

which ultimately vanishes. Sometimes goals gets changed and lost their value. In that

time companies taken towards goals which are important and ignores the one which are

of less importance. This is the main issue which is faced by many companies while using

CRM.

2.3 Conclusion of Literature review:

As in the banking industry the competitions is getting intensified day by day and the

customer's expectation are also increasing, acquisitions and mergers and the main reason

the globalization and deregulation and technological innovations are increasing have

changed the scenario of retail banking industry. Which is the customer’s preferred

facility? Is the customer happy with the facilities providing by the bank such as ATMs,

phone banking, internet banking and smart cards or they are interested with the old

pattern of banking style which has the human touch in it?

This research would mainly focus about the retail banking industry, and tells the

customers intension in accepting their services from the retail banks do they still have

quality in their services and do they like this new information technology advancements

which are implemented by these retail banks. The changes in the technological field,

which paved way for greater customer expectations, the competition was intensified like

the acquisitions and mergers, globalization and deregulation have changed all the rules of

the retail banking industry. The survey is a combination of questionnaires and interviews

to check or identify the expectations of the customer to the services provided by the retail

banks. Comparing can check the customer’s satisfaction the traditional services provided

by the bank to the new and improvised services with technological innovations in the

services like the Internet banking, Phone banking and ATMs. By checking the levels in

which the customers compared to the traditional style of banking have used the services.

What are the main factors the customer focuses when he is choosing a service in their

38

bank? The surveys, which were done in India and in UK, try to assess the customers'

behavior. And the results show that most frequently used service is the ATM in both the

countries. But the older and with lower education age group chose the bank tellers as it

had the human touch in it.

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Chapter - 3

3.1 Research Methodology:

To gather the information the survey method should be used. To show the impact of

information technology and security system on the customers of banking industry,

checking all the information that they have collected does Data analysis used. Surveys or

questionnaires should be prepared to check if the customers are satisfied by the services

provided by them. Also take a survey of the banking officials for ideas or changing for

the betterment of the retail banking industry.

Also checking the current trends of the market and if they needed have to do a research

on this method and work on it. This is a simple but a more concise data to show how the

impact of information technology has helped the retail banking industry change for better

development while also keeping in mind the requirements and queries of the customers

and getting it resolved by opting for this implementation of technology.

A survey should be done among the bank employees to check if the customer was able to

adapt to the new technology or were they happy with the old system the personalized

banking. The main the reason was the customers trust factor when they do the transaction

online they always think about the site which they use is save or not. Questionnaires

should be given to customers to check if they are satisfied with services provided by the

retail bank and how easily could they adapt to the change in style and adaptation in the

technology.

3.2 Primary Research:

The research has two main research factors which has been utilized they are qualitative

and quantitative research styles. The traditional format of research is called the

quantitative research and the qualitative research style is called as the interpreter’s

research style. The dissertation has both the research styles.

40

3.2.1 Quantitative Research:

Questionnaires are given to the customers to check their views on the new

implementations in the retails bank. How the information technology has changed their

view about retail banking the services which were introduced to them did they like them.

This analysis helps to assess the satisfaction of the customers and shows the reasons

behind their levels of satisfaction. Here basically it shows the reasons behind their levels

of satisfaction in using the new technologies and securities introduced by the bank.

3.2.2 Qualitative Research:

This research is mainly based on the interviews which have been conducted to understand

the satisfaction of the customer in a better way. The method in which the interview was

conducted was they had a questionnaire that would ask few basic questions and rating

them when they were asked to the customers.

The usage of both these research factors shoed a more clear understanding of the aims

and objectives of the study.

The main reason for this survey is to analyze in the banking industry what affects the

information technology and security systems on the customer’s satisfaction. a survey was

conducted on the people based on the questionnaire taken from Hill’s (1996) customer

satisfaction measurements book. This required information is adopted from Woodruff,

Donnelly (1992), Oliver (1997), Cardinal (1999), Johnson (1998) and other available

literature in the libraries and from Internet.

By dividing various types of customers into groups based on educational level and age

and conducted questionnaire. This survey will mainly focus on the customer satisfaction

and their opinions in the retail banking services offered from the following methods:

Internet banking, phone banking, ATMs, Bank Tellers.

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3.2.3 Preparation of questionnaire:

The main use of this survey is to see the customer’s valuable feedback on the services

provided by the bankers and comparing them with satisfied level. The services are

offered to the customers by the retail bankers by utilizing the old culture of service rather

than the new information technology innovations services provided to the customers. In

the questionnaire there are 10 issues where the retail customers will find when they use

the services provided by the retail banks.

The customers are requested to rate the issues which of them were relevant to them or not

which were provided by the banks human tellers against the automatic teller machines,

call center to internet banking and phone banking. And the data which is detailed shows

the importance of the criteria which is used by the customers to measure their satisfied

degrees while they are using the facilities of the retail banks, and the association of the

questions is seen in the given example: if the consumers rates the “availability of a wide

range of innovative services and high tech services” which is an important issue from all

of them in order to select a bank and they also accept that the internet banking is the

“high tech and innovative services”, hence from the survey we can conclude that the

customers are satisfied by using the internet banking facility. This interviewing process is

held only on the randomly selected sample of people, the maximum interviews will held

in the railway stations, premises of banks and shopping centers. If the customers are

above the age of 18 can easily access the retail banking and can do transacting with the

banks are eligible for this. The questionnaires are mainly filled in from the information

which has been collected from the customers which will reduce the problems of

inappropriate reason from the banks and reply from complaints. Some of this was

answered through emails. Before plunge into the survey, there were interviews that were

conducted on 10 participants from different educational levels of different age groups to

gather the feedback on the questionnaires on a trial bases. The main report findings and

other factors and its effects are explained here. Do the bank customers using the bank

tellers and using how frequently these facilities rather than Internet banking, ATMs,

phone banking and other services? Which are the customers banking habits? From this

42

survey report we can find how often these ATMs are used in India and UK. Now the

second goes to the Human teller's service which is provided by the retail bank in both the

countries. When the analysis made on the varying people in age groups and educational

levels in both the countries are as follows: (Table 1).

3.2.4 Administration of Questionnaire:

The usage of the banking services will differ from many groups of people like

educational levels and age of the retail bank customers. In both the countries maximum

educated group people prefer to use human tellers. When it comes to the age factor there

are chances of using the information technological innovations which may be ATMs for

aged people rather than to use human teller services (Table 2).

But 45-55 group customers will prefer to use the human operator services provided by the

retail banks rather than using the technology innovations like ATMs?

1. Which facility provided by the banking is more satisfied the customers or which mode

of service is used frequently?

2. Do the customers of the retail banks are satisfied more with the human tellers which is

provided by the retail banks or the technology innovations including Internet banking,

phone banking or ATM machines satisfy the customer maximum?

Normally in the services provided from the retail banks are the " automatic teller

machine", "human tellers/ operators", " phone banking without operator assistance",

“phone banking with the operator assistance" and" internet banking" in India and UK,

and this will explain that the more satisfied services provided to the customers are by the

ATM machines.

The most important service dimension which is liked by the customers is from the ATM

which are suing the services of ATM is that it is available even after the office hours

when compared to the human tellers services where the service is given to them only in

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the office hours. Similarly the Internet banking and phone banking is serviced equal to

the ATMs after office hours it is available.

3.2.5 Survey:

The choice of the bank tellers is utilized more to make Bank transactions in India such as

to apply for any loan or to take the bank statements and paying the bills.

TABLE 1Results from Survey (Question 6)

Human ATM Phone Internet Banking Banking

India App of Loan 92/100 11/100 16/100 42/100Update a/c 96/100 82/100 62/100 65/100Bill Payment 99/100 83/100 45/100 79/100

UKApp of loan 86/100 15/100 18/100 66/100Update a/c 83/100 94/100 78/100 73/100Bill payment 43/100 93/100 36/100 71/100 However in UK the maximum bank customers will choose the ATM facility more over

the bank operator services.

Which mode of service is least satisfied?

In UK the bank customers are not satisfied with the services provided by the retail banks

like phone banking few times it goes for the Internet service also. However in comparison

to UK the Internet banking is low in India.

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Which dimension of service is perceived as important?

We have listed in ten criteria in the questionnaire that customers will think about it only

after using the bank services. They are

a. Convenience or the convenient locations

b. Courteous customer service officers or the human tellers

c. Service that is available after the office hours

d. The banking services minimum taking time.

e. Ease of use f. Minimal processing or transaction time by a machine or a teller.

g. High tech innovative services offered.

h. No extra cost.

i. Instant help or assistance

j. Reliable accurate services.

According to the results of the survey the two countries retail customers are ranked as

"convenience convenient location" will be the best bank service offered. Each and every

customer who took the survey in both the countries have chosen "reliable accurate

services" as the second best bank service as the second best bank service.

And may think about the facility of high tech services offered, the report shows that the

“high tech innovative services offered” is ranked least and given low importance. Do the

technological services provide by the retail bankers such as ATMs, Internet banking and

phone banking are given importance? The technology innovations are ranked bit lower

importance and still more than 80% of the survey customers of two countries are showing

interest to prefer these technological services rather than bank tellers or (operators). And

above 90% of customers prefer for new banking services with the technology

innovations.

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TABLE 2

Survey Question 8 - Overall, do you prefer interacting with theBanking technological services over human tellers?

Findings INDIA UK

YES 132 81 No 18 19 88% 81%

TABLE 3

Survey Question 10 - Do you look forward to more technologicalInnovative banking services?

Findings INDIA UK

Yes 134 85 No 16 15 85%

86%

Do customers perceive cost?

Bank customers in India and UK perceive extra cost that is associated with the services

provided differently in the bank. The survey customers ranked “extra cost” as important

as “reliable accurate services”

Why the bank customers preferring the Human teller or operator?

When the banking customers are using the bank services like human operator can have an

advantage of any kind of help on the spot itself and also have better service.

Why the Internet and phone banking do not prefer more?

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The bank customers don’t feel comfort with these phone and Internet banking facilities

and they also feel that by using internet or phone banking the time may not consumed

reduced. They does not even access these online banking facilities easily they feel that

they are not reliable and convenient as human tellers and ATMs provide.

3.3 Secondary Research Analysis:

This secondary research analysis report will explain about the facts of how to develop the

literature review structure and analysis framework. The sources for this research which

were obtained to mainly use in the literature review.

3.3.1 Press Articles and Industry Reports:

Some important factors in the literature review used from these press articles like the

interviews, opinions and from the surveys. This combination of information has basically

helped to develop the literature review in an effective manner.

3.3.2 Related Books:

The literature review was basically dependent on the books. These books show the

theoretical aspects for the research which has been takes from these books written by

different authors.

Academic Journals and References: To show loyalty and satisfaction of the customers in

adapting to the changes and implementations their banks were doing with information

technology was seen in the journals that showed the likes and dislikes of the customers of

the banks. As this helped to form the basic structure for the surveys and questions for the

interviews and the surveys, this information was taken from library and Internet.

3.4 Survey Questionnaire Analysis:

This is explained in the following concept using literature review framework that was

developed to know the customer satisfaction level and loyalty in the retail banks and the

impact of information technology on the retail banking services. The questionnaires are

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first tested as a pilot sample to determine if the questionnaires would provide the results

in regards to the questions addressed. First the feedback from the pilot research is taken

into consideration and then it is used in finalizing the questionnaire and then a final

version of questionnaire is prepared with the final version of questions.

There are three main sections for the survey questionnaires. In the first part consists of

the retail bank profile questions. Then the next part will explain satisfaction and loyalty

stages from the survey conducted on sampled people regards to the impact of information

technology on the customers of retail banks. And the final part would show the

characteristics that made the customer's satisfaction and loyalty towards the retail

banking.

The starting section in the questionnaire had the profile of the customers which had the

sample of their education, age and gender level categories which are important in this

survey. To improve the capacity is the important aspect to show the difference between

the choices in selecting the services that where provided by the banks.

The next section contains the details of the level of satisfaction and level of loyalty in this

questionnaire. These questions are useful to know the relation between the customer

satisfaction levels and the loyalty of them towards their bank with the impact of

information technology and the changes that it made in the services of the bank.

Can it be possible to rate the how frequently the bank services are used?

The question assesses the customer's preferences over the bank tellers to the ATMs or the

Internet banking or to the phone banking.

Do customers perceive cost?

Bank customers in India and UK perceive extra cost that is associated with the services

provided differently in the bank. The survey customers ranked “extra cost” as important

as “reliable accurate services”

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Why do customers prefer Human Teller/ Operator?

Banking customers chose the human teller/operator when they are using the bank services

an ability to provide instant help and assistance as well as their courteous service.

Why not phone banking and Internet banking?

In general the banking customers do not see Internet or Phone banking services as

convenient. They do not think that services can minimize the waiting time or the

transaction time. And the banking customers also do not perceive that Internet banking

and Phone banking services are as reliable and accurate as that provided by the ATMs or

the human tellers.

Are the technological innovations such as phone banking, ATMs and the Internet

banking preferred?

As the technology was ranked little low in importance in the findings but more than

eighty percent of the survey customers in both the countries said that they preferred

interacting with technical services over the human tellers and more than ninety percent

are looking forward for innovations in the technology in the banking services.

How about the Availability of a wide range of innovative and high tech services?

This survey “availability of a wide range of innovative and high tech services” was

ranked low in terms of importance.

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Which mode of service is least satisfied?

In UK the bank customers are less satisfied with the phone banking services and few

times it goes for the Internet service also. However in comparison to UK the Internet

banking is low in India.

What is the Most Satisfied or the Satisfactory Mode of service?

Are the retail bank customers of the bank are more satisfied with the personalized

services which are provided by the bank tellers or are they more satisfied with the

services that are provided by the machines like ATMs, Internet banking and Phone

banking?

Generally among the services that are provided by the retail banks are the “ automatic

teller machine”, “human tellers/ operators”, “ phone banking without operator

assistance” , phone banking with the operator assistance” and “ internet banking” in India

and UK show the same results that customers are more satisfied with the services that are

provided by the ATMs.

The in-depth interviews which followed the general structure of the questionnaire. This

method was done in order to have a similar coverage in terms of the questions that were

raised and they were able to address the research issue effectively with the given

conceptual frame work that was developed from the literature review. The difference

between the in-depth interview and the questionnaires is that the customers were able to

respond and provide more information in terms of their responses and that in turn helped

to understand what the customers were excepting from the retail bank and its services.

The in-depth interviews are also divided into three main parts.

The first part would merely introduce the main requirement and it will show the

age and education level of the customers and their requirements with services that

are provided by the retail banks.

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The second part of the interview is related with the questions regarding the

satisfaction and loyalty of the customers and also knowing their response on the

services like the ATM, Internet banking and Phone banking. The starting point is

similar to the questions in the questionnaire but in the later part of the in-depth

interview a more detailed information is obtained from the customers on a

personal level what kind of service would they prefer and why do they prefer it

and would they like any changes in the services that are provided by the retail

banks.

The final part of the in-depth interview that involves factors that we have

discussed in the framework.

Here in the discussion it was mainly discussing the each service which also defined the

expectations versus their perceptions that each individual customer had about the services

which were provided by the retails banks. But as in the questionnaires we did not get the

rating in the in-depth interview. The main concentration is mainly on the qualitative

discussions, and also to understand the gaps that existed and in what way could the bank

improve its services. The output of the in-depth interviews are compared with the

questionnaire responses and then analyzed.

In a survey which was conducted by Ernst and Young (2006) results show that a in India

maximum retail customers are satisfied with the banks which follow the country stream

and the confidence improved tremendously in year 2008 as their was a global financial

crisis in the world. Only India was less affected with this as they had preferred banking

policies which are followed by the Reserve Bank of India.

"Indians have the highest level of trust and satisfaction in their banking industry… the

credit crisis had minimal impact on the customer confidence in the Indian banking

industry”. As this survey had surveyed almost twenty thousand and five hundred global

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retail banking customers in which there are 1000 from India. The main reason for this

check loyalty levels of the customers towards their bank and its services.

"In order to drive customer value and reduce attrition, much-improved leverage of

customer data and insight will be critical, as tailored offers and service propositions are

likely to be positively received by the customers, "said E&Y National Director Viren H

Mehta.

HDFC bank is one of India's premier banks and in the year 2009 it has won the "best

retail bank in India" and this was third time it won the award. This shows the loyalty of

the customers towards this bank, and hence HDFC has managed to operate better than its

competitors in the retail banking.

Survey results

What will be the main reason in selecting the type of banking services?

The majority from the 200 responses of the survey conducted maximum people are

selecting or preferring the modes of services based on the services offered to the

customers from their respective banks. The 5 percent of the reasons are based on the

customer’s physical behavior to select the bank. Every model will have its own

limitations in their bank that are only 14 responses that were cited it and they have no

reasons to tell, and these two factors are considered as the most important factors to select

a retail bank and to open accounts in those banks. So to attract the customers the banks

should concentrate on their strategy and mainly on the satisfaction factor of the

customers.

To reach the customer satisfaction the banks should improve the technology and can

erase this barrier and can plan how to face this? From the present survey we can notice

that the technological innovation such as Internet banking has not given a good rank by

the customers and can be seen in the present table. To understand the broader picture in

52

selecting a retail bank, this process can be found from the data of the report, the survey

present report conducted on the selected customers to know the research uses.

Country Total Internet Total Internet Users Banking Users (%) (%)

Australia 48 40Singapore 38 21Hong Kong 50 7

The above observations were deduced from the recent surveys.

a. the literacy level and the knowledge level are very low so that the new technologies

are difficult to explain.

b. the state of technology that is present in many countries and has an affect on utilizing

the online services.

c. The cultural differences that can be seen in the two countries were taken as the major

reason to take up the Internet banking between the two countries.

Through information technology the retail bank customers can access the account status,

performances of their businesses, and the newly introduced the products and services. For

example the retail banking industry in which the automated information processing would

enable the customers to connect with the bank at any time or at any point in the retail

banks network coverage. Thus information technology would create and strengthen the

customer loyalty with the retail bank.

It is critical for the banks to attain the desired goals with the well-managed CRM

solutions. Cross industry competition has dilate the different products that banks are

offering. Banks major goal is to maintain a highly cordial terms with the consumers if

53

they wish to list themselves among big market leaders. There are lots of rivals in the

market who are also adopting different techniques to develop consumer relationships.

Among the all financial service provider banks should make themselves different by

adopting different methods like raising the value, various products line and best

accessibility which was not present before.

Nowadays consumers are looking for the banks which are not complicated in other words

their process should be easy. They must be providing the useful data and works through

the all aspects. CRM solution is quite effective in storing the consumer data. With this all

the customers are provided with required information. CRM solution picks the true data

from the customers then it saves the data in the central repository. Finally that particular

data is used to develop the clear understanding of the customers and their present and

upcoming demands.

With the relevant information, banks would be able to do the market campaigns

effectively. This gives the strategic advantages from the profitable consumers and ignores

the unprofitable ones. The all-successful banks should be recognizing the upcoming

business opportunities by updating the current product and servicing the future market

requirements. To cope up with these issues and to achieve the goals banks needs the web

technology that collects the data centrally to make sales across and upcoming

opportunities of selling and assist the leader to make the right strategy.

The consumer relationship is one of the new methods which include consumer loyalty

towards organization. Differences between the product and prices are of low importance.

With this reasons banks are now unable to draw the customer attention towards products

and services. There should be different variety of the products which can stand against

the other products in the market. That product should meet the consumer demand.

The main goal of the banks to increase and maintains the consumer base. Because when

there is big customer strength there will be high profits. Customer means business.

54

Consumer is the soul of the any business so banks need to maintain the quality so that

consumer strength goes up.

3.5 Limitations of research:

As we all know the word technology is an endless concept but now in the current context

we can see that due to the limited accessibility and the time factor we have to limit this

dissertation to some extent the key limitations are as follows :

The first limitation is the time factor as we know that a research process is continued for a

longer period of time as this banking is a never ending process as the dissertation needs to

be completed within the course period time. There are many advantages with this

research if it is continued for a longer period of time but this research was done in the

best situations in the best possible given the time constraint.

The respondents to the survey were in a small sample due to the given time and the

funding criteria the questionnaires samples were limited and were utilized in an approach

of non-probability with the help of useful sampling. So this may be taken as one of the

limitation and accordingly we have enough respondents for the surveys and the

questionnaires to generate a meaningful insight to show the satisfaction in the retail

banking customers and also on the impact of information technologies in their banking

services.

The dissertation was mainly dependent on relied contacts and networks in particular

situations to improve the sample people for the in-depth interviews and questionnaires to

understand in a better way about the impact of information technology on the customers

of retail bank. The above limitations that are mentioned raise an issue of reliability,

validity, ability to generalize the findings for this research and bias.

55

3.6 Reliability:

The results of this research are considered as robust as they are given particularly using

the triangulation methods. The survey results were triangulated with findings from the

existing secondary research also from the in depth interviews.

3.7 Validity:

To meet the requirements of the sample size we had enough respondents. Then main

issue is with the approach of non-probability of the convenience sampling. But however

with a good representation of the responses were very objective for this research.

3.8 Ability to generalize :

With the triangulation method in the research we may approach the respondents and

make them feel that there is a solid stable state to face and also to ensure with an exited

theme which will be related to the affects of information technology on the customers of

retail banks.

3.9 Inherent bias :

We could see a natural intension to respond from the sample of people taken. The

research design is developed in the best way as it has a complementary approach to make

this by utilizing both the research paradigms. The triangulation formed by the many

sources of research will limit the interests of the sampled people of customers. From the

above points discussed the survey results are triangulated by taking the results from

secondary research analysis and in-depth interviews which already exists.

According to the survey results we would be able to compare and come to a conclusion to

our analysis. But there is an issue always occurs mainly due to the uncertainty in the

coverage extensiveness as there are many reasons like the cultural differences, the

geographical barriers and also the response rates. The other survey limitations are stated

56

in the Berenson and Levine (2002, p.18) we have targeted 300 responses but we could

manage to get only 250 and where not able to focus on the customers high net worth

importance, about the information about the competitors were not included.

3.10 Research ethics:

This research has taken help from many sources like the Internet, people and from the

banking industry. Here in this research we are trying to show the customer's loyalty to the

retail banking as they are introducing new technologies to their customers and are they

still able to sustain their customer's loyalty. With the retail banks reputation in the

banking industry it has to think of new strategies to satisfy their customers and also keep

their loyalty. Understanding what are the important pointers about the customers that

would keep them satisfied. Meeting the customer's expectation should be the first thing to

keep in mind of to the keep the loyalty of the customer.

"Everyone knows that customers are more knowledgeable and more skeptical than ever

before and that in today's environment they do a lot more homework before committing

to a bank's service. Many consumers will check products and prices online before making

a decision about what to purchase. HSBC probably has a business objective to drive more

transactions to its website which is understandable, but if you want to maintain trust, you

want to maintain trust, you should aim for maximum transparency."

In the retail banking industry they have seen a speedy growth due to the Web that is

creating great opportunities for the new businesses in the retail banks. And it also shows

different methods of using the business market for the new bankers. "Experts estimates

that consumer use of on-line banking services will increase over 20 fold by the end of the

century. Geography and the number of branches become irrelevant and community banks

are able to offer the same level of service and convenience to customers as the largest

banks. In the past over 60% of existing bank customers have cited bank selection to be

based on convenience of location. For the customers of today, convenience of location

includes the availability of 24-hour access via the Internet. " (Wilson, 1996)

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Chapter - 4

4.1 Results and Analysis:

The secondary data finding involve both the surveys on the in-depth interviews and

questionnaires. This is elaborated separately further in a detailed way as shown below as

4.1.1: Case 1

The following are the details of case1

Name: swetha reddy

Age: 34

Gender: Female

Occupation: Manager

Traditional banking

Swetha has been banking with ICICI for 4 years. She said initially she had to travel to the

bank on frequent bases to withdraw money. In the queue for long hours for withdrawal

and that used to take away lot of time including the travel time. For smallest of

information also she had to travel to the bank and get the information personally. Though

the service was good in the bank as the bank tellers were friendly and very courteous but

still she was not satisfied with that.

After the introduction new services the retail banks introduced ATMs and that saved

swetha's time it became very easy to withdraw money check the account details and also

deposit money. Yes, there was wait time but compared to the normal traditional banking

it was much easier to do this. And the bank slowly introduced the Internet and phone

banking which actually made their life easier. In the initial stages she was skeptical about

giving out her information and she was not sure if it was secure or not. The bank assured

her of the security and whenever they login it would be into a secure site where

information cannot be hacked. As they produce individual truncation pin numbers and

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passwords. And the site is functional 24 hrs a day and seven days a week and she can

withdraw or transact even after the banking working. For a working woman like her these

technological innovations has proven to be successful as she can access the bank at any

time and from anywhere which is a greatest service the bank could give to her.

4.2.2: Case 2

Name: Mr. John Thomason

Gender: Male

Occupation: Businessman

In the initial days when john opened an account with Barclays bank, he liked the services

which were provided by the bank. Wherein he is always treated right when visits the bank

for his transactions. But when the banks introduced the new services like the ATMs or

phone or Internet banking it was not the same for him. He felt the personal touch was

missing as in the traditional banking scenario. There were benefits in the new the services

which were provided by the bank but still he preferred the services in which the human

touch was always there.

4.3.3: Case 3

Name: Rajashekar

Age: 42

Gender: Male

Occupation: Customer service executive

ICICI Retail banking

ICICI bank was the first bank in India in 1997 which has offered for the first time the

internet banking to its customers with the help of its "Finacle's e – banking solution and

established itself as a leader in the internet and e-commerce space". In the future it

expanded its services in the e-commerce like the funds transfer, bill payments and for the

corporate banking which is on the Internet. For ICICI bank the Internet has become a

critical element which helped the bank win the award for "multi-channel strategy" which

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turned out to be the main source for its growth. During the years 2000 to 2004 was able to

convert almost 70% of its routine banking transactions to different sources of banking

which they provided. In today's date only 25% of transactions take place in the banks and

the remaining percent of transactions are done through the net, as this has helped the bank

to use its work on the customer acquisitions more. The ICICI bank on an average has for

a month almost three hundred thousand customers which is the highest in the world.

Nowadays in the CRM environment we look the risk of different suppliers who are

building the rational database technology. And this promotes the consumer relationship

as a tool of the organization. The reason is mostly all latest banking applications are

developed with the database gives the average consumer information. The main problem

arises when various CRM data marts are implemented and runs with different

applications. Next you will find that cannot be pacifying the each information in the

database. This is always advisable to implement only one CRM system and next to make

the database with the different applications.

4.4.4 Case 4

Name: Ali Bhasha

Age: 29

Gender: Male

Occupation: Owner of supermarket

Customer ICICI bank

As per this customer, he is very much interested about fast services and it should be

secure. In his interview he mentioned that, he was very comfort with the internet transfers

and security of the ICICI banking industry. But he mentioned that, now days there are so

much of scams and scammers are trying to hike the banking software. The bank has to

improve the services to avoid this kind of situations and also need be with new software

updates in the market.

As per this interview, the banking customers are more worried about the security and safe

internet banking. This is one reason ware the banks are introduced the Mondex systems in

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the banking industry. As per this interview with the customers he is not worried about he

charges but he looks only safe banking.

3.4.5 Case 5

Name: Issac

Age: 44

Gender: Male

Occupation: Manager in BPO

Customer of share trading in ICICI bank (ICICI DIRECT)

This person is having full knowledge about the banking and able to do maximum internet

banking and telephone banking. As per his intention, the bank is following all safe

methods but the hackers are very cleaver to hack the banking systems. So, sometimes he

feel not to go with internet banking, but it is essential for him.

When we asked the about the downsize banking and reducing branch networks. He states

that it will be good indication but not always. Whenever he want to rectify the problems

about personal banking issues or usages then, he will prefer only direct contact not by

phone nor mails.

As per this interview, we can assume that branch downsizing is not much preferable.

Customers will feel happy and secure when the branch people contacted him directly to

rectify the problems.

The notion of consumer orientation seems genuine. There are various pitfalls which don't

allow some necessary changes. The banks can minimize the risk by ignoring them. These

are as:

Pragmatic business explanation

Information of low quality

Big time for planning

Commitment to the consumer

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Ignoring the human side of equation

Disagreement on power

No rules are clearly defined

Less motivation

Less Authority

Too many expectations from consumer.

Failure to reengineer business process

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Chapter – 5

5.1 Conclusions:

Information technology's innovation may increase or reduce still the customer satisfaction

would depend upon the need and expectations of the customers, as we can find all this

information in our research. The requirements and expectations will change in the entire

country due to the various categories like education, age group and many other levels.

We can see here due to the implementation of information technology new services were

invented and advancement of the existing ones. These new services like Internet banking,

electronic payments, and investment securities have increased the income of the bank and

a more convenient service for the customers.

How the banking industry is made available to its customers by giving a 24/7

service to their customers? They have introduced secured modes for transferring their

money. Technology indeed had a very positive impact on the retail banking industry. As

banking industry has become more efficient and the profits and customer satisfaction

increased. As information technology is a vital part for any business process and the

innovations in this process has helped the banking industry for a very long period of time

and the customer were satisfied with each new innovation for their own comfort the retail

banking industry was doing this. It all started by exchanging of coins and now the retail

banking industry is a sophisticated business where all the customers are treated with a

special treatment as they are being introduced to new and better services every time.

Retail banking industry is one industry, which is implements lots of service, related

technology, which traditionally was provided by the persons of the bank, but with the

changing technology they have come up with services, which would make the life of the

customer easier while they are banking. The customers would receive the same amount

comfort while they are banking personally online or through Internet the service will

never be different. They would have the privileges of the customer always and would be

treated the same no matter what technology they use.

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It is clearly explained that the complete banking business is moving with many changes.

The changes are nothing but developing new technologies to make bank process easy.

Many banks are choosing new methods of banking from cross subsidy accounts. It is

directly saying that they are readily neglecting the accounts making less profit. Offering

attractive interest rates and banking charges encourage these accounts. By doing these

ways the accounts are maintain higher balance accounts, which make profits to the banks.

The bankers are also approaching new methods like telephone banking; ATM’s and

Interactive voice response so that it has chances to gain money with these increases in

facilities. Anyhow to provide any kind of service to the customer all category people are

considered and not single person is taken into consideration. The banks will always try to

gain more profits from all accounts. If there are any low cost making customers then they

are considered as an economic channel for distribution and also treated as 'available

customers'. But the customers should be aware that they are maintaining adequate amount

or not else the banks will remove the accounts from the banking process completely.

The Midland bank says, "The fact is that banks are becoming more selective. People tend

to think they have a divine right to an account, but it is a two-way process." (Wright D.,

2003 p.3/12). There is also one more point to be observed that the banks prefer to only

high accessing customers. The banks are also selecting the customers who are profit

making and credit worthy before they are given an account. Since banks are providing

high accessible facilities to customers through many available mediums like Internet. But

the banks are giving an opportunity to hackers to do frauds things on the available data on

Internet. So this type of service needs maximum care to work on. If this kind of facility is

taken extra care with more secured way then it may lead to less use of the available

options during process for the customers who are in exact need. An adequate data is to be

kept on the Internet and suitable methods are taken if not the customers may lose

confidence hence the utilizing of these offers will reduce.

Many of the ATM’s are replaced with the branch network since there is an increase in

usage after the telephone banking services are offered. Anyhow technology will be

considered as an advantage inn the competitive banking market. But in most cases it is

64

observed that the technological advantages will exists only for short period only. The new

technologies like ATM’s and Mondex are adopted only for limited period as

technologically advanced one. If these are employed for long period then it may effect the

bank structure and its position. One example, which explains this situation, is that the

ATMs’ are not able to become a strategic tool to provide the required branch network

information since the customers will always expect in high range. So ATMs are

decreasing the barriers for the new entries into the market. To do the banking process

there is no need to consider these branch networks. Now-a-days many of the super

markets are providing credit cards to its customers to attract them with low interest rates.

This will affect the banking sector. Many banks like Bank of Scotland are attracting its

customers by offering very low rates and also to compete its competitors in the retail-

banking environment. In order to withhold in the market the new entries will offer low

rates to its customers, easy banking process, and penetration pricing all are for

temporarily, hence the competition is increasing. The industries may shakeout and it may

lead to losses due to price war in the market. This will also show the effect in the future

pricing in the financial and banking sectors.

If the bank is restructuring then the savings made through the banks may show errors

hence it is advised that it is a risky factor to invest high potential amount. This situation

cannot taken very easily as this is not a single accident to happen “Barings directors had

been aware for several weeks of the existence of a file in Lesson’s computer records

called Error Account 88888.” (Kane F., et al., 20055, pp.2/3). Anyhow this may not lead

the bank to fall down. If the directors are operating in a perfect way without any mistakes

and neglecting any kind of bad situations occurred the bank may see supernormal profits

within no time. But one point to be taken seriously that this kind of situations is repeating

continuously.

CRM is basically the solution system, which helps to increase the profits from medium to

long. With its great capability of storing consumer knowledge, proper treatment of

consumer and perceptions it maintain its standard to meet the customer requirements.

65

There are some important points which improve in maintain the good relationship with

consumer and that are:

• Positive staff attitude

• Honesty, integrity and reliability

• Proactive advice

• Consistent delivery of superior’s fast and efficient complaints

• Quality service

• Delivery of promise

• 11simplicity and ease of doing business

• Resolution policy

All the private sector banks are trying to allure the main parts of society by its way of

CRM solutions. Some nationalized banks are also following it. Many bank personnel

accepted that CRM systems assisted them in maintain consumer retention. With this the

banks are able to make high profits. As it is helpful in attaining the goals they like to

Continue with this processed and update them accordingly. Some employees think that it

is only wastage of time as they are not aware of it. The statics shows that more than 83%

of the users were happy after the implementation of these solutions. And around 17%

were the unhappy one due to some cost considerations.

Security is a major factor as in the current era where the security has become a major

issue in banking because of the ongoing things that are leading to the loss of the banks,

looking at the percentage of bank frauds though information technology has bring in

impact on the banking industry has also given a buzz on the security index as well. Banks

have come up with strong security systems which has impacted in a very huge manner

like the people have started building trust on the bank and security systems have bought

in revolution to the banking industry different banks have employed different security

systems when the people are doing internet banking and telephone banking like by

employing some security questions or authorization codes which have reduced the

fraudulent activities in a very large scale.

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5.2 Recommendations:

The recent economic downtown reduced the UK and Indian retail banks’ productivity.

The money has transferred from the present banks into the new banks because of other

banks technology innovations. An example would be the ICICI bank in India as it

continually develops the cutting edge in the information technology in mobile and

Internet banking. Compare to other banks like SBI and other Government subsidiary bank

not reached up to the level of ICICI bank, because without the governments help it would

not reached to this level due to these banks under government control.

5.2.1 Cultural Diversity:

According to Adler (2002, P.16) culture is " that complex whole which includes

knowledge, belief, art, law, morals, customs and any capabilities and habits acquired by a

person or as a member of the society" culture is expressed differently in different

countries through their values with which they lead their life and in their world. In the

survey we can see that in the initially stages in India the Internet banking was not taken

up properly because of the cultural innovations. The cultural diversities are processed

with the many levels when the technological innovations of the information technology to

improve the customer satisfaction of the retail banks (Adler, 2002)

Choice shows for example the aged group people would use ATMs, which will little easy

to access. There are options of different language changing and selection in the electronic

services, which will be seen in ATMs. Information search which deals with gathering

information like facts as the customer’s satisfaction and convenience is ranked higher and

given more importance.

5.2.2 Training or Public education:

The biggest problem for the banks is to give some training to the customers about the

information technology and its innovations, this knowledge will be much useful to the

customers. To achieve this, government should help because since it will provide funds to

67

employees to make the people learn and upgrade new uses in the banks. From the need-

based model the customers should improve their knowledge to use ne technologies in

banking and also to improve their skills. Courses about the computer should make to

learn by the people. The problems arises is with the older aged people since they are less

educated and this problem may seen less in youth.

Currently CRM focus is on how to save money and time and increase profitability. It is

possible by redefining of all the process and techniques. This will cost less as compared

to other methods and moreover assists in the growth of currently existing client. It is

saying that "it is seven times more expensive to acquire a new customer than to keep an

existing one", Hence the importance of consumer data and management should not be

ignored. It is of great importance for any organization to achieve the desired goals. CRM

is a bundle of methods, procedures, techniques, organizational culture and technological

solutions. It increased the company's capability to check the differences as per the

consumer behavior and demands. It sees the upcoming opportunities to serve the

customer and act accordingly.

All the banks must focus on the consumer relationship building techniques like reply to

the queries as soon as possible, searching the attrition of the consumer for specific service

and give the rates to the product to all the networks and branches. Suggestion box is

important to know the thoughts of the employees. It gives the picture what actually are

the advices and suggestion for any improvements. It is important for healthy

environment.

Another way of strengthens the relationship with the electronic feedback. Consumer will

provide the feedback electronically to know their behavior and thoughts about the current

products. This will helps in improving the products and services. Banks would be able to

get the benefits as low price makers. CRM solutions enable the bank to decide the low

price and high benefits strategies. It assists in maintain the consumer faith and their

capability to analyze the product which they are using from long. With the help of sales

68

executives and their performances and service staff retail banking are able to develop the

successful consumer relationships.

Correct CRM solution increases the customer satisfaction level and it leads to growth of

the company. It assists in building self-motivations in the consumers, which give boost to

generate revenues. There are various issues, which attract the attention of the banks like

its efficiency, its applicability and targets. Many banks got benefitted from CRM

solutions. Indian retails banks must concentrate on this and put more attention on the

customer relationship activities. The Indian banks are not yet developed in CRM

solutions. They needs to implement CRM as per the requirement and trained their

employee wherever it is necessary. Then only this institution would be able to meet the

demands of "universal banking" The main goal of the CRM is to make the use of

technology and human resources. To set the vision on the perspective of consumer

various banks should understand the significance of CRM. And CRM understands the

significance of consumer only

5.2.3 Steps that a banker can follow to build up long-term relationship with their

customers who related to the CRM:

• Welcome call

• Sheets of profile

• Bank customer interaction detail file

• Diary of appointments

• Dates tracker alarm

It contains the collecting the information from the various institutions and then makes

them in one whole. This from the technological point of view, all the information

pertaining to the consumer should be made in one externally and internally. This studies

the consequences of the detailed research. It analyze that whether the various

segmentations of the consumer has reached to the key points like sales force, web

surveys, mails etc. While interacting with the and while making all the transactions all the

69

points should touched. The online system of doing business has changed the complete

scenario. It enables the consumer and organization within the reach of each other. All the

details can be seen from customer care centers through online and then through mobile

devices.

5.2.4 To study the customer following suggestions emerged from the study:

1. Educating and providing the proper training related to CRM solutions is being

followed by the private sector banks and with this they are running. This is what all

nationalized bank should focus on.

2. Participation of every personnel in the process, which CRM solution should not

ignore. Whether the personnel belong to HR department of Finance all should participate.

It is not for single individual rather it comes when all works in a team.

3. Banks personnel should communicate with consumer so that they should get quick

and prompt reply.

4. It should be understandable by every personnel that CRM system is for assisting

them to make interaction with consumer. It realizes beforehand the consumer needs and

provide with services as per their needs.

5. Whether banks are meeting its goals or not CRM systems should be taken as a

practice of regular development.

6. Listening to the consumer problems is the half work done. So every employee duty is

to listen properly to all issues of the consumer and act quickly.

7. For the continuous growth of the technologies all the banks should opt for new

technology. These will assist them in maintain the one to one interaction with the

consumer on Internet.

70

8. With the day-to-day changes in the consumer needs and requirements new services

should be launched.

9. What will be the cost for implementing the CRM strategies? It should be measured

By the banks at the time of profit evaluation. This should be based for the long run not for

earning for the short term.

10. Focus should be on the training of all the employees. It is not just to trained worked

but to all level personnel.

5.3 SCOPE FOR FUTURE RESEARCH:

IMPACT OF INFORMATION TECHNOLOGY AND SECURITY SYSTEMS ON BANKING INDUSTRY

The process of banking is a never ending one as this industry is one which is

continuously evolving always so as in the current era there are so many frauds that are

ongoing like money laundering so we should continue the research process in way that

would improve the online banking security as of now there are so many developments

that are ongoing like developing a system that would reduce the hacking of accounts and

money laundering products and personal identity.

Therefore, the researcher is of the opinion that future research about the impact of

Information Technology and the Security Systems should focus on the following areas:

(a)The effectiveness of the current technology and the development of new technology

that would eradicate the weaknesses now prevalent.

(b)The development of new operating and application software to replace the current

ones.

(c ) The improvements required in the security systems to make them more effective.

The researcher believes that the banking system is ever evolving and its evolution should

match the developments in technology and security systems. Therefore, research in IT

and security systems engineering are areas of research.

71

However, the research conducted in the future should also be supported by the law. New

technology and even new security systems bring about risks to the environment and the

people. As a result, research regarding ethics and law should also be carried out by future

researchers.

Chapter - 6

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Questionnaire

Name:Gender:Age:Occupation How you related to the banking industry?

1. Can it be possible to rate the how frequently the bank services are used/2. Do customers perceive cost?

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3. Why do customers prefer Human Teller/ Operator?

4. Why not phone banking and Internet banking?

5. Are the technological innovations such as phone banking, ATMs and the Internet

banking preferred?

6. How about the Availability of a wide range of innovative and high tech services?

7. Which mode of service is least satisfied?

8. What is the Most Satisfied or the Satisfactory Mode of service?

9. Are the retail bank customers of the bank are more satisfied with the personalized

services which are provided by the bank tellers or are they more satisfied with the

services that are provided by the machines like ATMs, Internet banking and

Phone banking?

10. How you rate about the safety of internet banking ?11. What is opinion about downsizing banks and reducing the branch network?12. Is it essential to come to the bank for rectify the problems and banking issues?

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