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PROJECT REPORT
ON
AWARD OF
Submitted By
SDCMS (Marketing)
2016 -- 2018
A
Project Report
ON
INDIA.
AWARD OF
Submitted By
SDCMS (Marketing)
2016 – 2018
• Joseph et al. (1999) examined the influence of internet on the delivery of banking
services. They found six primary dimensions of e-banking service quality such as
convenience and accuracy, feedback and complaint management,efficiency, queue
management, accessibility and customization.
• Mols (1999) acknowledged that the internet banking is an innovative distribution
channel that offers less waiting time and a higher spatial convenience than traditional
branch banking with significantly lower cost structure than traditional delivery
channels. Internet banking reduces not only operational cost to the bank but also leads
to higher levels of customer satisfaction and retention. As a result internet banking is
very attractive to banks and consumers, who now have higher acceptance to new
technology.
Background of the study
In today’s fast pace life where most of the people in famil y working
including women’s there is no feasible timing when they can visit the bank
.E- banking is solution to this problem but still e -banking has not got that
much acceptance in India except metros and t ier-1 cities. The study is
undertaken to know awareness and preference towards e -banking services of
State Bank of India in Muzaffarnagar
Problem statement
The e- banking services has not yet accepted to appreciable level in cities
other than metros. To penetrate further in market, banks need to make
strategy to deal with creating awareness and preference towards banking. The
study is undertaken to know awareness and preference towards e -banking
services of STATE Bank of INDIA in Muzaffarnagar.
E – BANKING:
Around the world, banks are facing new challenges in their battle to compete successfully.
As ease of entry increases, competition to provide banking services will constantly grow and
change. Business and residential clients will be more independent in their selection of
services, especially with the creation of online banking services, where they can easily select
the packages best suited to their needs. Customer attraction and loyalty will be increasingly
hard-earned, while operational costs and time to market will need to be reduced and closely
controlled.
On top of these developments, the exploding volume and complexity of transactional data
that banks must manage and use effectively is straining the capabilities of many IT
infrastructures to operate profitably.
Increasingly, the goal of leading banking institutions is to offer the global market a
diversified range of financial products and services via a single e-commerce portal. Broadly
defined, e-commerce is all the transactional commerce conducted electronically between
businesses and other businesses (B2B), between businesses and their end-customers (B2C)
and within an enterprise, over the Internet, extranets and intranets.
To achieve and maintain an edge on its competition, a bank needs an open e-commerce
platform that can:
• Integrate new e-commerce applications with existing applications to optimize IT
investments and save on reprogramming and management costs
• Provide the power and scalability to handle multiple workloads, shift resources to match
changing workloads, handle unpredictable peaks, and grow with your business
• Provide rock-solid security and advanced services availability for transactions all the time,
around the world – absolute essentials for competitive banking
• Exploit the value of your customer and market data by deploying business intelligence (BI)
and customer relationship management (CRM) software to help you better anticipate,
understand and respond to customer wants and needs
•Unify your enterprise management chain with an open server platform that integrates
purchase and sales processes with information on customers and product offerings for more
timely, targeted and personalized customer service
• Integrate future technologies and new ways of doing business with customers.
Here we more concerned about private sector banks and competition among them. Today,
there are 27 private sector banks in the banking Sector: 19 old private sector banks and 8 new
private sector banks. These new banks have brought in state-of-the-art technology and
aggressively marketed their products. The Public sector banks are facing a stiff competition
from the new private sector banks. The banks which have been setup in the 1990s under the
guidelines Of the Narasimham Committee are referred to as NEW PRIVATE SECTOR
BANKS.
Electronic banking (e-banking) is the newest delivery channel of banking services. The
definition of e- banking varies amongst researches partially because electronic banking refers
to several types of services through which a bank’s customers can request information and
carry out most retail banking services via computer, television or mobile phone (Daniel,
1999; Mols, 1998; Sathye, 1999). Burr, 1996, for example, describes it as an electronic
connection between the bank and customer in order to prepare, manage and control financial
transactions. Electronic banking can also be defined as a variety of the following platforms:
(a) Internet banking (or online banking), (b) telephone banking, (c) TV-based banking, (d)
mobile phone banking, and (e) PC banking (or offline banking). In this paper, the ATM
(Automated Teller Machine) channel is also added to the research. The channels comprise
two major groups: the traditional channels and e-channels. (1) The traditional channels are
defined on the basis of the type of human assistance: teller, retail or corporate manager. (2) E-
channels are divided into 4 sub-groups on the basis of how the channel is seen by clients,
with some exceptions based on the technological processes of transaction execution: Internet-
based (online bank for corporate clients Telehansa.net, online bank for private clients
Hanza.net, offline bank for large corporate clients Telehansa), card-related (ATM –
Automated Teller’s Machine and POS –payment terminal), Phone channels (call center, IVR,
mobile bank) and Automated channels (“virtual” bank core channels where direct debit and
incoming payments are effected). Services are one of the primary benefits which a customer
looks for while adopting a new channel. The consumers consider the benefits and weigh them
against the costs associated. The Internet offers a lot of benefits to consumers, like any time
anywhere banking, updated information, convenience, faster transaction, etc. E – Banking
services are replacing traditional services and creating a new scale in transformation. In the
initial stage, e- channels were introduced in metropolitan cities and urban areas, but recently
some banks have started focusing on rural and semi urban areas. New private sector banks are
taking the lead in capturing rural and semi urban sector. The different e- channels such as
ATMs, Credit and debit cards, Tele-banking, Mobile – banking, online – banking and Smart
Cards, are changing the face of the retail banking sector. New private sector banks and
foreign banks are attracting customers in a big way. The potential customers and big
companies are shifting their accounts from traditional banks (not fully computerized) to E -
banks (fully computerized and provide different e – channels). If traditional banks, mostly
public sector banks, do not transform their business by introducing IT, their survival will
become difficult, as now-a-days IT is not a matter of convenience but a survival factor.
Therefore, e – banking services are a potent factor for transformation in this e – age.
“The entry of Indian banks into Internet Banking” Tremendous growth of Internet
during the mid-nineties prompted banks to utilize Internet as a medium for offering banking
services. Using Internet Banking, banks allow their customers to perform banking
transactions through their web site in a secure way. However, not many studies have been
conduced to evaluate if the customers in India utilize “Internet Banking” channel properly.
Internet banking, both as a medium of delivery of banking services and as a strategic
tool for business development, has gained wide acceptance internationally and is fast
catching up in India with more and more banks entering the fray. India can be said to be on
the threshold of a major banking revolution with net banking having already been unveiled. A
recent questionnaire, to which 46 banks responded, has revealed that at present, 11 banks in
India are providing Internet banking services at different levels, 22 banks propose to offer
Internet banking in near future while the remaining 13 banks have no immediate plans to
offer such facility.
In India, approximately one percent of high and middle-income group banking
customers conducted banking on the Internet in 2000 compared to 5 to 6 percent in Singapore
and South Korea. In 2001, a Reserve Bank of India survey revealed that more than 20 major
banks either were offering internet-banking services at various levels or planned to do so in
the near future. Some of the private banks included ICICI Bank, HDFC Bank, IDBI Bank,
Citibank, Global Trust Bank, Bank of Punjab and UTI Bank. In the same year, out of an
estimated 0.9 million Internet user base, approximately 17 percent were reported to be
banking on the Internet.
At present, the total Internet users in the country are estimated at 9lakh. However, this
is expected to grow exponentially to 90lakh by 2003. Only about 1% of Internet users did
banking online in 1998. This increased to 16.7% in March 2000.* the growth potential is,
therefore, immense. Further incentives provided by banks would dissuade customers from
visiting physical branches, and thus get ‘hooked’ to the convenience of armchair banking.
The facility of accessing their accounts from anywhere in the world by using a home
computer with Internet connection, is particularly fascinating to Non-Resident Indians and
High Net worth Individuals having multiple bank accounts.
Costs of banking service through the Internet form a fraction of costs through
conventional methods. Rough estimates assume teller cost at Re.1 per transaction, ATM
transaction cost at 45paise, phone banking at 35paise, debit cards at 20paise and Internet
banking at 10paise per transaction. The cost-conscious banks in the country have
record, register, correspondence and information, except for certain purposes and violation of
this provision is a criminal offence. Notification for appointment of Authorities to certify
digital signatures, ensuring confidentiality of data, is likely to be issued in the coming
months. Comprehensive enactments like the Electronic Funds Transfer Act in U.K. and data
protection rules and regulations in the developed countries are in place abroad to prevent
unauthorized access to data, malafide or otherwise, and to protect the individual’s rights
of privacy. The legal
issues are, however, being debated in our country and it is expected that some headway will
be made in this respect in the near future
of day or night. This means that banks may enlarge their market without opening new
branches. The banks in the US are using the Web to reach opportunities in three
different categories: to market information, to deliver banking products and services, and to
improve customer relationship.
In 2001, over 50 percent of the banks in the US were offering internet -banking
services. However, large banks appeared to have a clear advantage over small banks in the
range of services they offered. Some banks in the US were targeting their Internet strategies
towards business customers. Apart from affecting the way customers received banking
services; internet -banking was expected to influence the banking industry structure. The
economics of internet -banking was expected to favor large banks because of economies of
scale and scope, and the ability to advertise heavily. Moreover, internet -banking offered
entry and expansion opportunities that small banks traditionally lacked.
• Competition
The competitive pressure is the chief driving force behind increasing use of
internet banking technology, ranking ahead of cost reduction and revenue enhancement.
Banks see internet banking as a way to keep existing
customers and attract new ones to the bank.
• Cost efficiencies
Banks can deliver banking services on the internet at transaction costs far lower
than traditional ways. The actual costs to execute a transaction will vary depending on
the delivery channel used. These costs are expected to continue to decline.
• Geographical Reach
Internet Banking allows expanded customer contact through increased
geographical reach and lower cost of delivery channels. In fact, some banks are doing
business exclusively via the internet – they do not have traditional banking offices and
only reach their customers online.
• Branding
Relationship building is a strategic priority for most banks. Internet banking
technology and products can provide a means for banks to develop and maintain an
ongoing relationship with their customers by offering easy access to a broad array of
products and services. By capitalizing on brand identification and by providing a broad
array of financial services, banks hope to build customer loyalty, and enhance repeat
businesses.
Customer Demographics
Internet banking allows banks to offer a wide array of options to their banking
customers. Some customers will rely on traditional branches to conduct their banking
business. Other customers are early adopters of new technologies that arrive in the
marketplace. The challenge to banks is to understand their customer base and find the
right mix of delivery channels to deliver products and services profitably to their various
market segments. As use of the internet continues to expand, more banks are using the
web to offer products and services or otherwise enhance communications with
consumers. The internet offers the potential for safe, fast, and convenient new ways to
shop for financial services and conduct banking business, any day, any time.
Operational Risk: -
Operational risk, also referred to as transactional risk is the most common form of risk
associated with internet banking.
It takes them from of inaccurate processing of transactions, non-enforceability of
contracts, compromises in data integrity, data privacy and Confidentiality,
unauthorized access / intrusion to bank’s systems and transaction, etc.
Such risks can arise out of weaknesses in design, implementation and monitoring of
banks information system.
Besides inadequacies in technology, human factors like negligence by customers and
employees, fraudulent activity of employees and crackers/hackers, etc. can become
potential source of operational risk.
Security Risk: -
Security risk arises because of unauthorized access to a bank’s critical information
stores like accounting system, risk management system, portfolio management
system, etc.
Other related risks are loss of reputation, infringing customers’ privacy and its legal
implications, etc.
Attackers could be hackers, unscrupulous vendors, disgruntled employee or even pure
thrill seekers.
In addition to external attacks banks are exposed to security risk from internal sources
e.g. employee fraud. Employee being familiar with different systems and their
weaknesses become potential security threats in a loosely controlled environment.
They can manage to acquire the authentication data in order to access the customer
accounts causing losses to the bank.
Unless specifically protected, all data/ information transfer over the internet can be
monitored or read by unauthorized persons.
Strategic Risk: -
For reducing such risk, banks need to conduct proper survey, consult experts from
various fields, establish achievable goals and monitor performance.
In addition, they need to analyze the availability and cost of additional resources,
provision of adequate supporting staff, proper training of staff and adequate insurance
coverage.
Other Risk: -
Traditional banking risks such as credit risk, liquidity risk, interest rate risk and market risk
are also present in internet banking.
These risks are intensified due to the very nature of internet banking on account of use of
electronic channels as well as absence of geographical limits.
Credit risk: Is the risk that a counterparty will not settle an obligation for full value, either
when due or at any time thereafter. Banks may not be able to properly evaluate the
creditworthiness of the customer while extending credit through remote banking procedures,
which could enhance the credit risk.
Another facility of internet banking is electronic money. It brings various types of risks
associated with it. If a bank purchases e-money from an issuer in order to resell it to a
customer, it exposes itself to credit risk in the event of the issuer defaulting on its obligation
to redeem electronic money.
Liquidity risk: It is important for a bank engaged in electronic money transfer activities that it
ensures that funds are adequate to cover redemption and settlement demands at any particular
time. Failure to do so, besides exposing the bank to liquidity risk, may even give rise to legal
action and reputation risk.
There are four key tools that regulators need to focus on to address the new
challenges posed by the arrival of internet -banking.
Adaptation: In light of how rapidly technology is changing and what the changes mean for
banking activities, keeping regulations up to date has been, and continues to be, a far-reaching,
time-consuming, and complex task. In May 2001, the Bank for International Settlements
issued its "Risk Management Principles for internet banking," which discusses how to extend,
adapt, and tailor the existing risk-management framework to the electronic banking setting.
Legalization: New methods for conducting transactions, new instruments, and new service
providers will require legal definition, recognition, and permission. For example, it will be
essential to define an electronic signature and give it the same legal status as the handwritten
signature.
Integration: This is the process of including information technology issues and their
accompanying operational risks in bank supervisors' safety and soundness evaluations. In
addition to the issues of privacy and security, for example, bank examiners will want to know
how well the bank's management has elaborated its business plan for electronic banking.
In the era of globalization each and every sector faced the stiff competition from their
rivals and world also converted into the flat from the globe. After the policy of liberalization
and RBI initiatives to take the step for the private sector banks, more and more changes are
taking the part into it. That are create competition between the private sector banks and public
sector bank. Private sector banks are today used the latest technology for the different
transaction of day to day banking life. As we know that Information Technology plays the
vital role in the each and every industry and gives the optimum return from the limited
resources.
Banks in India are at different stages of the web-enabled banking cycle. Initially, a
bank, which is not having a web site, allows its customer to communicate with it
through an e-mail address’ communication, is limited to a small number of branches
and offices which have access to this e-mail count.
With gradual adoption of Information Technology, the bank puts up a web site that
provides general information on deposits products, application forms for downloading
and e-mail option for enquiries and feedback.
Banks provide information on their websites about NRI and other services. Customers
are required to fill in applications on the Net and can later receive loans or other
products requested for at their local branches.
A few banks provide the customer to enquire into his demat account (security/shares)
holding details, transaction details and status of instructions given by him. These web
sites still do not allow online transactions for their customers.
Some of the banks permit customers to interact with them and transact electronically
with them. Such services include request for opening of accounts, requisition for
cheque books, stop payment of cheques, viewing and printing statements of accounts,
movement of funds between accounts within the same bank, querying on status or
requests, instructions for opening of Letter of Credit and Bank Guarantees, etc.
These services are being initiated by banks like ICICI Bank Ltd., Citibank, Global
Trust Bank Ltd., AXIS Bank Ltd., IndusInd Bank, Citibank, Bank of Madura Ltd.,
Federal Bank Ltd., etc.
Some of the more aggressive players in this area such as ICICI Bank Ltd., HDFC
Bank Ltd., AXIS Bank Ltd., IDBI Bank, HSBC Bank, IndusInd Bank, Global Trust
Bank Ltd., and Bank of Punjab Ltd., offer the facility of receipt, review and payment
of bills online.
HDFC Bank Ltd. has made e-shopping online and real time with the launch of its
payment gateway.
Banks providing internet banking services have been entering into agreements with
their customers setting out the terms and conditions of the services.
The terms and conditions include information on the access through user-ID and
secret password, minimum balance and charges, authority to the bank for carrying out
transactions performed through the service, liability of the user and the bank,
disclosure of personal information for statistical analysis and credit scoring also, etc.
There are basically, 3 E- Banking service Levels provided by banks. These are discussed as
below:-
i. The Basic Level Service is the Banks’ web sites which disseminate information on
different products and services offered to customers and members of public in
general. It may receive and reply to customer’s queries through e-mail,
ii. In the next level are Simple Transactional Web sites which allows customers to
submit their instructions, applications for different services, queries in their account
balances, etc. but do not permit any fund-based transactions on their accounts,
iii. The third level of Internet banking service are offered by Fully Transactional Web
sites 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 service the
customer or by new banks, who deliver banking service 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 physical
presence in a country despite offering different banking services.
NEED FOR THE STUDY
This study is needed to find out the working of internet banking of SBI and its importance to
customer as well as to bank
5. The report is helpful in knowing about the customers’ expectations about the Bank’s
services.
To know the customer satisfaction level and their perception regarding State Bank of
India.
SCOPE OF THE STUDY
Data can be collected in different ways from the subject of study. One method is to observe
subjects on certain parameters, which is called observation studies. In such studies, the
subjects (respondents) by asking them questions through a questionnaire. For instance, if
research has to be done on the traffic flow at a particular junction, then the observation
method is best. On the other hand, if consumer preferences about a new product are to be
estimated, then a questionnaire for obtaining consumer responses is the best method.
Sampling method
The consumers are selected by the convenience sampling method. The selection
of units from the population based on their easy availability and accessibility to the
researcher is known as convenience sampling. Convenience sampling is at its best in
surveys dealing with an exploratory purpose for generating ideas and hypothesis.
Research Plan
Descriptive Research Plan
Researcher has used descriptive research design, a scientific method which involves
observing and describing the behavior of a subject without influencing it in any way.
The primary limitation of the study is based on quality and originality of secondary
data taken via the official website of State Bank Of India and Reserve Bank of India.
Time constraint: on the time availability is 10 weeks only it was not able to do the
thorough study in the selected area.
Merely asking questions and recording answers may not always elicit the actual
information sought.
BIBLIOGRAPHY
Books :-
Websites:-
www.statebankofindia.com
www.onlinesbi.com
www.wikipedia.com
www.google.com