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A Study on “E-Banking and it’s problems with reference to selected Banks in India”

 

Dr. V. Murali Krishna

Head and Associate Professor, Dept. of MBA, Vemu Institute of Technology,

P Kothakota, Chittoor Dt., Andhra Pradesh, India.

 

ABSTRACT

 

The use of technology has placed Indian banks at par with their global peers. It has also changed the way banking is done in India. ‘Anywhere banking’ and ‘Anytime banking’ have become a reality.

 

With the expansion of Internet usage, E -banking has become one of the most revolutionized components of today's economic growth. E-banking is a powerful value-added tool to attract new customers and retain the existing ones. With the proliferation of internet and computer usage, the electronic delivery of e-banking service has become ideal for banks to meet customer's expectations

 

An attempt has been made in this article to enquire into the how many customers are utilising electronic banking of the SBI, ICICI, and Citibank in Hyderabad, Chennai and Bangalore and to examine the problems faced by the sample banks respondents while using electronic banking and to suggest possible ways and means to tone up their financial services in the global business scenario.

 

FULL PAPER

 

Banking in India is considered as fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. Even in terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets-as compared to other banks in comparable economies in its region.

 

E - Banking is a new delivery channel for banks in India. The E -banking channel is both an informative and a transactional medium. However, E -banking has not been popularly adopted in India as expected. E-Banking involves consumers using the Internet to access their bank account and to undertake banking transactions. At the basic level, Internet banking can mean the setting up of a web page by a bank to give information about its products and services

 

The use of technology has placed Indian banks at par with their global peers. It has also changed the way banking is done in India. ‘Anywhere banking’ and ‘Anytime banking’ have become a reality. The financial sector now operates in a more competitive environment than before and intermediates relatively large volume of international financial flows.

 

E-banking is a generic term for delivery of banking services and products through electronic channels, such as the internet, the cell phone, etc. The concept and scope of E-banking is still evolving. It facilitates an effective payment and accounting system thereby enhancing the speed of delivery of banking services considerably. While E-banking has improved efficiency and convenience, it has also posed several challenges to the regulators and supervisors. Several initiatives taken by the government of India, as well as the Reserve Bank of India (RBI), have facilitated the development of E-banking in India. The government of India enacted the IT Act, 2000, which provides legal recognition to electronic transactions and other means of electronic commerce. The RBI has been preparing to upgrade itself as a regulator and supervisor of the technologically dominated financial system. It issued guidelines on risks and control in computer and telecommunication system to all banks, advising them to evaluate the risks inherent in the systems and put in place adequate control mechanisms to address these risks. The existing regulatory framework over banks has also been extended to E-banking. It covers various issues that fall within the framework of technology, security standards, and legal and regulatory issues. An attempt has been made in this article to enquire that, how many customers are utilising electronic banking of the SBI, ICICI, and Citibank in Hyderabad, Chennai and Bangalore and to examine the problems faced by the sample banks respondents while using electronic banking and to suggest possible ways and means to tone up their financial services in the global business scenario.

 

OBJECTIVES OF THE STUDY

           

The objectives of the study are:

 

  1. To know how many customers are utilising electronic banking of the SBI, ICICI, and Citibank in the study area ;
  2. To assess the operation of electronic banking by the respondents of sample banks in the study area; and
  3. To identify the problems of sample banks’ customers while operating e-banking in the present study and on the basis of the findings made, offer some workable suggestion to better the services offered by the India banking system.

 

RESEARCH METHODOLOGY

           

The present study is based on primary data for analysis and to draw concrete inferences. It uses a one-way approach focusing on the selected banks in the public, private, and the foreign sector. It focuses attention on a sample size of 450 customers of the sample banks in India. The study was carried out during January 2011 to December 2011.

 

Sample Design

 

To collect data a multi-stage sample design has been used. There are 170 banks in India. They have a combined network of over 80,547 branches and 44,857 ATMs for the year ended 20010-11. Keeping in view the time and operational constraints, these banks one from each sector viz., Public, Private and Foreign banks operating in India, have been chosen as sample banks for an in-depth study. The sample banks are the SBI in the Public sector, the ICICI Bank in the Private sector, and the Citibank in the sector of foreign banks operating in India and 150 customers of each sample bank have been selected to get perception about the financial services of the sample banks.

 

Data Collection

 

The primary data is collected from the 450 sample respondents of the SBI, ICICI and Citibank through a pretested questionnaire to get perception about how the respondents are utilising the electronic banking and problems faced by them. The study area is Chennai, Bangalore and Hyderabad.

 

LIMITATIONS OF THE STUDY

           

As the study of banking financial services is very vast, it is a herculean task to cover all aspects of all categories of banks and their operations. Therefore the study is restricted to cover banks instruments offer by the sample banks in the study area. Constraints of time and facilities available, which are linked, have necessitated the focusing of its scope to only one bank selected from each public, private and foreign sector banks in India.

 

ELECTRONIC BANKING UTILIZED BY THE RESPONDENTS

 

The following Table presents the utilisation of electronic banking by the sample respondents.

 

Table No. 1

Bank-wise Analysis of Electronic Banking utilized by the Respondents

 

Name of the Bank

Yes

%

No

%

Total

%

SBI

30

22.06

120

38.22

150

33.33

ICICI

36

26.47

114

36.31

150

33.33

Citibank

70

51.47

80

25.48

150

33.33

Total

136 (30.22)

100.00

314 (68.78)

100.00

450 (100.00)

100.00

Source: Field Survey

 

The above table shows the Electronic banking utilized by the respondents in the sample study area. Out of the 450 respondents, only 136 (30.22 per cent) used electronic banking. Of them, 30 (22.06 per cent) respondents of the SBI, 36 (26.47 per cent) respondents of the ICICI and 70 (51.47per cent) respondents of the Citibank were using the service in the sample study. It is observed that, from the above analysis the Citibank (51.47per cent) respondents are more in number when compare to the SBI and ICICI respondents.

 

Electronic Banking Operation by the Respondents

 

            Banking customers are operating electronic banking at different times, places and for different purposes. An attempt is made in the following table to assess the operation of electronic banking by the respondents:

 

Table No. 2

Bank-wise Electronic Banking Operation by the Respondents

 

Services

SBI

%

ICICI

%

Citibank

%

Total

%

Banking from Home

13

33.33

10

25.64

16

41.03

39

100.00

Transfers after Bank Hours

10

31.25

15

46.88

7

21.88

32

100.00

To Reconcile Accounts

3

25.00

5

41.67

4

33.33

12

100.00

To View Recent Transactions

1

14.29

1

14.29

5

71.43

7

100.00

All the above

3

6.52

5

10.87

38

82.61

46

100.00

Total

30

22.06

36

26.47

70

51.47

136

100.00

     Source: Field Survey.

 

The above Table No.2 gives bank-wise analysis of the operation of electronic banking by 136 respondents who used the facility. Among them 70 (51.47 per cent) in the Citibank, 36 (26.47 per cent) in the ICICI and 30 (22.06 per cent) in the SBI used electronic banking. Among those who used electronic banking from home, 16 (41.03 per cent) respondents were of the Citibank, 13 (33.33 per cent) respondents of the SBI, and 10 (25.64 per cent) respondents belonged to the ICICI. Transfers after banking hours were done by 15 (46.88 per cent) respondents of the ICICI, 10 (31.25 per cent) respondents of the SBI, and only 7 (21.88 per cent) respondents of the Citibank. This service to reconcile accounts was used by 5 (41.67 per cent) respondents of the ICICI, 4 (33.33 per cent) respondents of the Citibank, and 3 (25.00 per cent) respondents of the SBI. To view recent transactions this service was used by 5 (71.43 per cent) respondents of the Citibank, and 1 (33.33 per cent) responding each of the SBI and the ICICI. All the above transactions were done by this service of electronic by 38 (82.61 per cent) of the Citibank, 5 (10.87 per cent) respondents of the ICICI and 3 (6.52 per cent) respondents from the SBI. Interestingly the higher number of respondents utilizing the facility belonged to the Citibank. In the above table it is evident that the majority (51.47 per cent) of the sample customers who used the services of electronic banking belonged to the Citibank. Further 38 (82.61 per cent) respondents of the same bank used the entire above all services. And, 117 (86.03 per cent) respondents of three sample banks used the services of banking from home and banking after bank hours.

 

Bank-wise Problems of Respondents while operating Electronic Banking

 

            The following Table presents bank-wise the problems of the sample respondents while operating electronic banking. Out of 136 respondent’s  server down, access charges high, network, technical problems are facing by 112 (82.35 per cent) customers are facing problems and 24 (17.65 per cent) respondents are not facing any problem when using e banking.

 

Table No. 3

Bank-wise Problems of Respondents while Operating Electronic Banking

 

Problems

SBI

%

ICICI

%

Citibank

%

Total

%

Server Down

7

25.93

6

22.22

14

51.85

27

100

Access Charges High

2

15.38

7

53.85

4

30.77

13

100

Local Network Problem

8

21.05

10

26.32

20

52.63

38

100

Technical  & Other Problems

7

20.59

8

23.53

19

55.88

34

100

No Problems

6

25.00

5

20.83

13

54.17

24

100

Total

30

36

70

136

100

(22.06)

(26.47)

(51.47)

100

Source: Field Survey.

 

The above Table No. 3 shows that Server down is one of the problems faced by 14 (51.85 per cent) respondents of the Citibank, 7 (25.93 per cent) of the SBI, and 6 (22.22 per cent) respondents of the ICICI. Electronic user charges are felt to be high by 7 (53.85 per cent) respondents of the ICICI, 4 (30.77 per cent) of the SBI, and 2 (15.88 per cent) respondents of the SBI. Sometimes due to the local network problems like, failure of power, speed of internet etc., are the problems to do banking. This problem is faced by 20 (52.63 per cent) respondents of the Citibank, 10 (26.32 per cent) respondents of the ICICI, and 8 (21.05 per cent) respondents of the SBI. Technical problems, like respondent’s computer fails to work, or if working is not supported by the operating system (to install few tools), fast of the computer etc., the problem is faced by 19 (55.88 per cent) respondents of the Citibank, 8 (23.53 per cent) respondents of the ICICI, and 7 (20.59 per cent) respondents of the SBI. It is observed from the above analysis that local network and other technical problems are faced by the majority [74 (52.94 per cent)] of the respondents who utilizing electronic banking.

 

FINDINGS

 

1.      Out of the 450 respondents 136 (30.22 per cent) used electronic banking. Of them the SBI and ICICI respondents were in number than there of the Citibank.

2.      Majority (51.47 per cent) of the sample customers who used the services of electronic banking belonged to the Citibank. Further 38 (82.61 per cent) respondents of the same bank used the entire above all services. And, 117 (86.03 per cent) respondents of three sample banks used the services of banking from home and banking after bank hours.

3.      Local network and technical problems are faced by the majority [74 (52.94 per cent)] of the respondents who are utilizing electronic banking.

 

SUGGESTIONS

 

It would be appropriate to offer the following suggestions for consideration in the light of the observations made in the present study. It is hoped that the suggestion would be helpful in overcoming the problems facing by respondents and also helpful to strengthening and provide uninterrupted services to its customers.

 

The Government of India has to take some measures/steps to increase the use of virtual network. And there is a need to conduct awareness campaign programmes by banks to increase the awareness of its customers about retail/electronic banking products in India.