The Impact of Internet Banking Systems on Indian Banks' Performance

This report delves into the impact of internet banking systems and technology on Indian banks, investigating customer perceptions, service quality, and the evolution of banking services. The study explores the background of internet banking, its aims, research questions, and hypothesis. It reviews existing literature on internet banking, trust, service quality, perceived ease of use and usefulness, and customer satisfaction. The research methodology includes quantitative and qualitative approaches, data collection methods, and analysis techniques. The report also provides an analysis of the findings, limitations, and recommendations for banks and customers, drawing conclusions based on the research conducted. The study includes a comparison between public and private banks such as SBI and HDFC. The report aims to provide insights into the functioning and future prospects of internet banking and technology in the Indian banking sector.

Running head: INTERNET BANKING
Impact of Internet Banking System and Technology on Indian Banks
Name of the Student
Name of the University
Author Note

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Abstract
The banking sector will be successful and will survive if they can maintain their customers and
broaden their base of customers as well. The satisfaction of the customers also plays an
important part, as it will help the bank in retaining its customers, which will help in increasing
their profits and result in better performance for the banks. The use of technology has changed
the perception of the people, as it has helped them in carrying out their work in an easy manner.
The banking sector has also adopted the latest technologies that are available to them so that it
can make the work easy for the customers as well as for its employees. The customers in the
current scenario are shifting from the approaches that are present in traditional banking methods
to the modern day practices of banking systems. This has helped in reducing their costs and
being more effective towards the customers.
This study has been conducted in five chapters. The first chapter contains the background of the
study along with the aims and questions and hypothesis that will help in carrying out the research
in an efficient manner. The second chapter deals with the review of literature that has been
presented by different authors and scholars so that it can help the researcher in completing the
study in an appropriate manner. The third chapter contains the methods that have been used by
the researcher so that the process of research can be conducted in a better manner. The fourth
chapter contains the analysis, which has been conducted by the researcher so that it can provide a
better recommendation for the banks and its customers. The fifth chapter consists of the
recommendation and conclusion, which has been gathered after the researcher has got the
responses and conducting the test with the help of software.

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Acknowledgment
I would also like to take this opportunity to thank my professor without whose, constant support
and guidance, the research would not have been possible.
Firstly, I would like to thank God the Almighty in giving me the strength and courage without
which I could not have completed the entire study. Secondly, I would like to thank my family
and relatives who gave me constant support mentally and physically so that I can complete the
study on time. Lastly, I would like to give thanks to my peers and the friends who have helped
me in providing the appropriate information throughout the project and helped me in doing the
in-depth analysis of the research. Without their proper guidance, it is impossible for me to
complete the project.
Thanks and Regards,
Yours Sincerely,

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Table of Contents
Chapter 1: Introduction....................................................................................................................5
Background of the study..............................................................................................................5
Aim of the project........................................................................................................................7
Details of the research.................................................................................................................7
Justification of the topic...............................................................................................................8
Assistance to the organization.....................................................................................................8
Research questions.......................................................................................................................8
Research Hypothesis....................................................................................................................8
Chapter 2: Literature Review.........................................................................................................10
Internet Banking........................................................................................................................10
Trust...........................................................................................................................................11
Quality of service.......................................................................................................................12
Perceived ease of use.................................................................................................................13
Perceived usefulness..................................................................................................................14
Customer satisfaction.................................................................................................................15
Impact of e-banking on the customers.......................................................................................16
Chapter 3: Research Methodology................................................................................................19
Approaches for the study...........................................................................................................19
Research method used...............................................................................................................20

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Quantitative method...................................................................................................................20
Qualitative method.....................................................................................................................21
Project content...........................................................................................................................21
Data collection...........................................................................................................................21
Analysis of the data...................................................................................................................22
Types of investigation................................................................................................................22
Research Philosophy......................................................................................................................23
Justification of the investigation type used................................................................................24
Chapter 4: Analysis and Findings..................................................................................................25
Chapter 5: Conclusion and Recommendation...............................................................................49
Findings.....................................................................................................................................49
Limitations.................................................................................................................................50
Recommendations......................................................................................................................50
Reference List................................................................................................................................52
Appendix........................................................................................................................................56

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Chapter 1: Introduction
Background of the study
The introduction of the technological advances has helped in the field of information
technology with respect to the banking industries on a global basis, as it has reduced the degree
pressure up on the consumers. The development in the field of telecommunications along with
the electronic processes of data has also helped in adopting these changes by using the latest
technologies in the banking business. The level of competition has also increased, as the method
has proved to be cheaper and effective towards the services that are provided by the banks to its
customers, as they are in need to avail the services of the banks at a faster rate (Krishna 2015).
The health and prosperity of any nation depends on the system of banking that the
country has so that it can help the customers in investing their money and trusting the services of
the bank. The rise of the commercial banks started in India after the country became
independent, which led to the formation of the Reserve Bank of India (RBI) so that the services
of the banks can be monitored in an efficient manner (Charfeddine and Nasri 2015). The rise in
the private and foreign banks along with the public sector banks has helped the customers in
availing the systems such as e-banking, t-banking and m-banking suggests that the banks have
come a long way forward. The banking sector that is present in India has come up a long way
and is undergoing continuous changes in its systems so that it can provide better services to its
customers. This will help the banks in satisfying the customers, which may lead to the retention
of the customers by the bank (George and Kumar 2014).
During the past years, it can be seen that the banks used to have large queues for paying
the utility bills or for depositing and withdrawing the cash from the banks. This has been reduced

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considerably with the onset of the technological advances within the banking systems. The
consumers of the bank have reduced their waiting times by a considerable amount, as the
transactions of the bank have been made easy with the use of technology. The banks in the
current scenario have utilized the facilities that are present online, which has helped them in
reducing the paper work that resulted in giving better responses to the customers. The banking
industry was one of the first sectors that had a major impact due to the adoption of the latest
technologies, which changes there interactive interface with the customers (Varaprasad,
Sridharan and Unnithan 2015).
The main advantage that the banks get due to this technique is that they can be available
to serve the customers on a regular basis. The perception of the customers and the change in their
life style of the people has helped in the growth of the banking system. The analysis of the
attitudes of the customers towards the banking system has changed considerably because of the
use of advanced technologies (Kumar Sharma and Madhumohan Govindaluri 2014).
The banking sector has been undergoing the changes since the early 1990s with respect to
the use of information technology and the development that is being seen in the electronic
commerce as well. These developments have proved to be a threat regarding the operations that
have been managed by the bank in a traditional manner. It can be seen that the use of the
payment system that is electronic in nature may over emphasize the system of payments within
the country because of the vast changes due to the advancements in technology. It can also be
seen that with the onset of the new technologies can lead to the changes in digital monetary
system by replacing it with fiduciary currencies (Paul, Mittal and Srivastav 2016).

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The rise in the multiple functions by the modern banks has helped them in providing
better and more products and services to its customers with the primary objective of satisfying
the customers and increasing its profit ratio. The process of innovation has helped the banks in
adopting new technologies along with better methods in serving the products and services, which
had started during the 1950s before most of the industries adopted it. The use of automatic
machines was started by the banks of United States of America, which led to the development of
most of the countries in the years to come (Mittal and Agarwal 2016).
Aim of the project
The aim of the project is to study the factors that are as follows:
 The impact of internet banking offered by Indian banks to its customers
 How much internet banking has penetrated in the minds of the customers
 To gain insights about functioning of internet banking and technology
 To explore the future prospects of internet banking and technology
Details of the research
The project will deal with the perceptions that the customers have regarding the adopting
of the technology in the banking system. The rise in the use of technological advances in the
banks have helped the customers in interacting with the services of the banks in an efficient
manner, which has helped the banks in establishing customer satisfaction by providing better
services. The research paper will be conducted to study the objective of the perceptions of the
customers regarding the services of the bank such as the e-banking system.

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Justification of the topic
This topic was chosen, as it will help the researcher in getting better insights about the
technologies that are being used in the Indian banks in providing better services to its customers,
which may help them in satisfying the customers with their services. The topic will also provide
valuable insights to the researcher regarding the impact of technological advancements on the
bank, which has resulted in serving the customers in a better manner.
Assistance to the organization
The research will be conducted taking in to consideration one of the public and private
banks and the customers of the banks, which will help in understanding the effectiveness of the
banks towards its customers. The private bank will be Housing Development Finance
Corporation (HDFC) and the public bank will be State Bank of India (SBI) along with some of
the customers of these banks who will help in conducting the research in an efficient manner.
Research questions
The research will be conducted based on the following questions:
 What impact does the bank create on its customers by adopting new technologies?
 What is the perception of the customers regarding the adoption of new technology in the
banks?
Research Hypothesis
The research will be conducted based on the following hypothesis:
H1: There is a relation between the banking services that are provided to the customer
based on gender, age, income and education

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H2: The awareness levels among the customers of the public and the private banks have
no difference with respect to the banking services that are offered to them
H3: There is a significant difference in the usage of the banking services by the
customers based on gender, age, income and education

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Chapter 2: Literature Review
Internet Banking
The lives of the individuals have been affected with the adoption of the latest
technologies in the current period in qualitative and quantitative ways respectively. The
expansion in the information technology has affected the lives of million people along with the
changes in the business and economic atmosphere all over the world. The adoption of these
technologies in the banking sector has helped them in communicating in a proper manner and the
process of transactions has sped up for the clients. The use of internet banking by the consumers
in the modern world is being adopted by the customers at a faster rate, as it has helped them in
minimizing their transaction process with the banks (Kaushik and Rahman 2015). The use of the
services provided by the banks has helped in creating a better channel so that the customers do
not need to visit the bank for any of their transactions, s it can be done while they are at work or
at home. This has helped in reducing the time of waiting, which has helped the consumers
significantly and has increased their trust towards their respective banks. The banks have been
able to eliminate their boundaries with respect to geographic and physical with the help of the
banking services. The traditional method of transactions in the bank was time consuming and
labor intensive, which is now replaced by the machines that is available at a cheaper price
(Chavan 2013).
The e-banking services that were adopted by the banks in India came in to effect from the
1990s with the rise in the usage of credit cards, telephone services and the Automatic Teller
Machine (ATM). The previous decade has shown that the banks have adopted the information
system, use of database and other latest technologies that have helped them in increasing the

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services at various levels of the banks. The availability of the online facilities has helped the
services of the banks to be conducted through a secured website, which are operated by the
banks through the help of online enquiries, e-transfers and e-payments (Laudon and Laudon
2016).
Trust
The act of performance or the service that is provided to the bank and is intangible in
nature without acting as the owners of the service needs to be done in a careful manner. The
services that are intangible in nature may often result in problems among the customers, as they
might not be aware of the problems that they might face when availing the service. Therefore, it
is necessary for trust to be involved in managing the risks along with the vulnerability that the
customers may face with the respective services. The use of internet has led to increased
competition in the markets that are developed technologically, which makes it challenging for
the banks to maintain their relationships with the clients in a better manner. The factor of trust
and security that is provided by the banks to its customers helps in influencing the relationships
between the banks and its customers (Shaikh and Karjaluoto 2015). The banks try to maintain a
long-term relationship with the customers so that it helps them in developing their trust with the
customers. The perception of the customers is that they find it challenging in trusting the internet
banking options that are provided by the banks along with the other electronic commerce factors
that try to extract the information from the customers. Thus, it can be said that trust is a
multidimensional and complex phenomenon that may arise in the minds of the customers. It is
related to the factor of avoiding the risk and the security that the customers perceive about the
services that are being offered by the banks (Yadav, Chauhan and Pathak 2015).