A

SYNOPSIS

ON

Consumer Perception and Preference towards Internet

Banking over Traditional Banking

Under The Guidance of:Mr. Munish SardanaBDE, Frank Finn Instt. of Air Hostress Training Centre, Hisar

Submitted by:Nitin Dhawan

Enrollment No. 08061160012MBA (Fin.)

Remarks of Evaluator

Approved/ Disapproved Approved/Disapproved

(1 Evaluation) (II Evaluation)

Session:-2008-10

Specialization – FINANCE

DIRECTORATE OF DISTANCE EDUCATION

GURU JAMBESHWAR UNIVERSITY OF SCIENCE & TECHNOLOGY

HISAR - 125001

RESUME OF SUPERVISOR/ GUIDE

1. NAME : Mr. Munish Sardana

2. DESIGNATION : BDE

3. QUALIFICATION : MBA

4. AREA OF SPECIALIZATION : FINANCE & MARKETING

5. EXPERIENCE : 3 YRS.

6. OFFICIAL ADDRESS : Frank Finn Instt. of Air Hostess Training Centre, Hisar

7. MOBILE NO : 94160-44544

8. E-MAIL : munishsardana@yahoo.com

I m willing to supervise Nitin Dhawan Enrollment No. 08061160012

A CASE STUDY OF

Consumer Perception & Preference towards Internet Banking over Traditional Banking

Signature with seal

Countersigned by the employer with seal

Countersigned by Director of Study Centre with Seal

CERTIFICATE

This is to certify that Mr. NITIN DHAWAN, Enrollment no.08061160012has proceed under by supervision his Research Project Report on “Consumer Perception and Preference towards Internet Banking over Traditional Banking” in the specialization area finance. The work embodied in this report is original and is of the standard expected of an MBA student and has not been submitted in part or full to this or any other university for the award of any degree of diploma. He has compiled all requirements of guidelines for Research Project and work is fit for evaluation.

Signature of Supervisor/ Guide

NAME : MUNISH SARDANADESIGNATION : BDEORGANIZATION : Frank Finn Inst. of Air hostess Training Centre

Forwarded by Head / Director of Study Centre (With signature, Name & Seal)

CONTENTS

. INTRODUCTION

. REVIEW OF LITERATURE/PROBLEM STATEMENT

. OBJECTIVES OF THE PROPOSED STUDY

. RESEARCH METHODOLOGY

. SCOPE OF THE PROPOSED STUDY

. BIBLIOGRAPHY

INTRODUCTION

A bank is a financial institution that accepts deposits and channels those deposits into

lending activities. Banks primarily provide financial services to customers while

enriching investors. Government restrictions on financial activities by banks vary over

time and location. Banks are important players in financial markets and offer services

such as investment funds and loans. In some countries such as Germany, banks have

historically owned major stakes in industrial corporations while in other countries such as

the United States banks are prohibited from owning non-financial companies

The level of government regulation of the banking industry varies widely, with countries

such as Iceland, having relatively light regulation of the banking sector, and countries

such as China having a wide variety of regulations but no systematic process that can be

followed typical of a communist system.

Banks have traditionally been in the forefront of harnessing technology to improve their

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

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

services. The delivery channels include direct dial – up connections, private networks,

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

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

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

receiving instructions and delivering their products and services to their customers.

Broadly, the levels of banking services offered through INTERNET can be categorized in

to three types: (i) The Basic Level Service is the banks’ websites which disseminate

information on different products and services offered to customers and members of

public in general. It may receive and reply to customers’ queries through e-mail, (ii) In

the next level are Simple Transactional Websites which allow customers to submit their

instructions, applications for different services, queries on their account balances, etc, but

do not permit any fund-based transactions on their accounts, (iii) The third level of

Internet banking services are offered by Fully Transactional Websites which allow the

customers to operate on their accounts for transfer of funds, payment of different bills,

subscribing to other products of the bank and to transact purchase and sale of securities,

etc. The above forms of Internet banking services are offered by traditional banks, as an

additional method of serving the customer or by new banks, who deliver banking services

primarily through Internet or other electronic delivery channels as the value added

services. Some of these banks are known as ‘virtual’ banks or ‘Internet-only’ banks and

may not have any physical presence in a country despite offering different banking

services.

From the perspective of banking products and services being offered through Internet,

Internet banking is nothing more than traditional banking services delivered through an

electronic communication backbone, viz, Internet. But, in the process it has thrown open

issues which have ramifications beyond what a new delivery channel would normally

envisage and, hence, has compelled regulators world over to take note of this emerging

channel. Some of the distinctive features of i-banking are:

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

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

jurisdiction of law / supervisory system to which such transactions should be

subjected,

2. It has added a new dimension to different kinds of risks traditionally associated

with banking, heightening some of them and throwing new risk control

challenges,

3. Security of banking transactions, validity of electronic contract, customers’

privacy, etc., which have all along been concerns of both bankers and supervisors

have assumed different dimensions given that Internet is a public domain, not

subject to control by any single authority or group of users,

4. A new form of competition has emerged both from the existing players and new

players of the market who are not strictly banks.

REVIEW OF LITERATURE

The name bank derives from the Italian word banco "desk/bench", used during the

Renaissance by Jewish Florentine bankers, who used to make their transactions above a

desk covered by a green tablecloth. However, there are traces of banking activity even in

ancient times, which indicates that the word 'bank' might not necessarily come from the

word 'banco'.

The earliest evidence of money-changing activity is depicted on a silver drachm coin

from ancient Hellenic colony Trapezus on the Black Sea, modern Trabzon, c. 350–325

BC, presented in the British Museum in London. The coin shows a banker's table

(trapeza) laden with coins, a pun on the name of the city.

In fact, even today in Modern Greek the word Trapeza means both a table and a bank.

YOONHEE TINA CHANG (University of Bath - School of Management) Studies on

adoption of new technologies have focused mainly on the behavior of adoption and on

efficiency gains from advancement in the state of technology. Despite growing interest in

e-Commerce and financial activities, consumer choice decisions as to whether to adopt

banking on the internet has not been fully investigated in the literature. The study

furnishes helpful information for managers in the banking industry, regarding customer

characteristics of trust and risk factors that determine adoption of banking on the internet.

England (1998) conducted the first important study that estimated the number of U.S.

banks offering Internet banking and analyzed the structure and performance

characteristics of these banks. They have found no evidence of major differences in the

performance of the group of banks offering Internet banking activities compared to those

that do not offer such services.

Suganthi et. al. (2001) conducted the review of Malaysian banking sites and revealed that

all domestic banks were having a web presence. Only 4 of the ten major banks were with

transactional sites. The remaining sites were at informational level. There are various

psychological and behavioral issues as trust, security of Internet transactions, reluctance

to change and preference for human interface which appear to impede the growth of

Internet banking

Furst et. al. (2002) provided a comparative study of Internet and non-Internet banks in

U.S. and found that institutions with Internet banking outperformed non-Internet banks in

profitability. Also, banks in all categories of size offering Internet banking tended to rely

less on interest yielding activities and deposits than non-Internet banks do.

Corrocher (2002) investigated the determinants of the adoption of Internet technology for

the provision of banking services in the Italian context and also studied the relationship

between the Internet banking and the traditional banking activity, in order to understand

if these two systems of financial services delivery are perceived as substitutes or

complements by the banks.

In the Indian context many publications throw light over the importance of

Internet banking and also its prospects for the Indian banking industry. Unnithan et al.

(2001) studied the drivers for change in the evolution of the banking sector, and the move

towards electronic banking by focusing on two economies – Australia and India. The

paper found that Australia is a country with Internet ready infrastructure as far as

telecommunication, secure protocols, PC penetration and consumers’ literacy is

concerned. India, by comparison, is overwhelmed by weak infrastructure, low PC

penetration, developing security protocols and consumer reluctance in rural sector.

Mookerji (1998), Pegu (2002), Gupta (2004) and Dasgupta (2006) found that Internet

banking is fast becoming popular in India. However, it is still in its evolutionary stage.

By the year 2007, a large sophisticated and highly competitive Internet banking market

will develop. Almost all the banks operating in India are having their websites but only a

few banks provide transactional Internet banking.

OBJECTIVE OF STUDY

The main objective of this research project to find out the “Consumer perception towards

Internet Banking”. The objective of this study is to measure the customers' awareness,

perception, and the level of satisfaction. The main logic behind the research study to find

out the perception towards use of internet banking, how it is effective for users etc. The

main purposes of the project area as follows:

To study the consumer perception towards internet banking.

To find out the effectiveness of internet banking.

To study the consumer perception towards saving time and money through

internet banking.

To study consumer perception towards the accuracy and timely information

provided by internet banking.

RESEARCH METHDOLOGY Research Objective

The main objective of this research project to find out the “Consumer perception towards

Internet Banking”. The objective of this study is to measure the customers' awareness,

perception, and the level of satisfaction. The main logic behind the research study to find

out the perception towards use of internet banking, how it is effective for users etc. The

main purposes of the project area as follows:

To study the consumer perception towards internet banking.

To find out the effectiveness of internet banking.

To study the consumer perception towards saving time and money through

internet banking.

To study consumer perception towards the accuracy and timely information

provided by internet banking.

Data Collection Method:-

As we know data is of two types:

(1) Primary data

(2) Secondary data

In primary data, researches has together primary data a fresh for the specific study that

undertaken by him. Primary data are gathered for a specific research project. We here

adopt the questionnaire method which is most reliable.

For secondary data, research papers, journals and magazines were referred.

Secondary data can be collected by two methods:-

(a) Published sources

(b) Unpublished sources

SCOPE OF THE PROPOSED STUDY

Banks- This type of study in this banking sector and looking at the vast scope and opportunity to study this booming field of banking.

Customers- The internet banking could be used as a gateway for delivery of product information .These measures could help in rapid movement of customers to internet banking environment resulting in considerable savings in operating costs for banks

Students-It will be helpful to the students to analysis and increasing the knowledge on this topic.

Researcher- It will be helpful to the researcher for further research on this topic.

BIBILOGRAPHY

1.      Agarwal, N., Agarwal, R., Sharma, P. and Sherry, A. M. (2006), “Ebanking for

comprehensive EDemocracy: An Indian Discernment,” Journal of Internet Banking and

Commerce, Vol. 8, No. 1, June.\

2. All banking sites available in India at

http://www.eastindiavyapaar.com/trade/bank/bank_links_websites.htm  and,

www.banknetindia.com/banklinks.htm accessed during the period of December, 2006 to

March 2007.

5.      Corrocher, N. (2002), “Does Internet banking substitute traditional banking?

Empirical evidence from Italy,” Working Paper, CESPRI, No. 134, November.

6.      Dasgupta, P. (2002), “Future of E – banking in India,” available at

www.projectshub.com  December, accessed as on August 16, 2003.

8.      DeYoung, R (2001b), “The Financial Performance of Pure Play Internet Banks”,

Economic Perspectives 25(1): 60-75, Federal Reserve Bank of Chicago.

9.      Diniz, E (1998). “Web Banking In USA,” Journal of Internet Banking and

Commerce, Vol.3, No. 2, June.