IJEMR March 2012-Vol 2 Issue 3 - Online - ISSN 2249 2585 - Print - ISSN 2249 - 8672

Factors influencing the Customer Preference towards E-Banking Services in Cuddalore District

*Ravichandran.S **Dr.A.Murugarathinam

* Assistant professor of commerce, DDE, Annamalai university, Chidambaram

** Assistant professor of commerce, DDE, Annamalai university, Chidambaram

Abstract The present study investigates the level of awareness among the customers on the use of e-banking and their expectations from e-banking. From the findings of the study, it is inferred that the customers are satisfied with the quality of e-banking services. But they face technical as well as administrative and procedural problems. Further to promote e-banking services, it is of importance that the banks must ensure quality in customer service. Quality in work and satisfaction of the customers are the two key words, which must be given sternest attention to promote a product. In India also, it has strongly impacted the strategic business considerations for banks. It must be noted, however, that while e-banking provides many benefits to customers and banks, it also aggravates traditional banking risks. Despite the low diffusion of technology in India, the momentum of e-banking has picked up recently, led by the foreign banks and the Indian private banks. It is evident from the present study that a majority of the customers are highly satisfied with the e-banking services. The customers prefer echannels with time and cost utility which provide efficient services. Moreover, banks are uncertain about the regulatory framework for conducting e-business and taxation issues for governing cyberspace present formidable problems. Any successful attempt at governing cyberspace will involve significant international cooperation. Although there are some drawbacks in e-banking like complaints regarding use of ATMs, high service charges and more working hours leading to frustration among the employees but still the e-banking is preferred as the efficiency of the employees working through e-channels is better.

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Introduction Nowadays banks are working hard to attract customers and retain their market share by providing them with various innovative services through e-banking. The banks are combining new electronic delivery channels almost every day to their existing services. Banks services are now just at the distance of one click from the mouse. Though e-banking is getting popular and spreading very fast, in India most people do not know it and people who know about it are reluctant to use it due to misconceptions like password hacking, privacy, security, etc. The present study investigates the level of awareness among the customers on the use of e-banking and their expectations from ebanking. From the findings of the study, it is inferred that the customers are satisfied with the quality of e-banking services. But they face technical as well as administrative and procedural problems. Further to promote e-banking services, it is of importance that the banks must ensure quality in customer service. Quality in work and satisfaction of the customers are the two key words, which must be given sternest attention to promote a product. Statement of the Problem With globalization and changes in technology, financial market, world over has become closely integrated. Customers can access their accounts anywhere and banks customers base is also spread across the world. Deregulation and liberalization have opened up new opportunities for banks but at the same time the pressure of competition has led to narrowing spreads, shrinking margins, consolidation and restructuring. Competition is going to be tough with financial liberalization and banks in India will have to benchmark themselves against the best in the world. If the quality of customer service is poor, the banks would surely not subsist in long run. The banks which are capable of providing quality service to their customers will acquire competitive advantage. Sustaining this advantage requires unrelenting efforts by the banks to upgrade the services continuously in the light of modern information technology from traditional banking into electronic banking. While electronic banking does offer exciting possibilities for payment mechanisms, there are many open questions that have still not been satisfactorily addressed and it has raised many issues before the banking regulators and government agencies. Further, the current banking services provided through internet are limited due to security concerns, complexity and technological problems. Interestingly, reliable and systematic information on the scope of electronic banking in Indian context is still not sufficient, particularly what electronic banking means to the customers and bankers. In e-banking there is a risk in the context of security concerns and risk in the context of trust in ones bank. Frequent slow response time and delay of service delivery causes customers to be unsure that the transaction has been completed. The disruption of information access is a common factor related to unwillingness to use internet channels for commerce. Another problem facing e-banking industry is the

quality of delivery service, including both delivery speed and delivery reliability, which caused many e-business failures in the earlier dot.com era. Limited online payment options have resulted in many customers to drop out in the last stage of the purchasing process due to dissatisfaction and inconvenience. The banks leading the current wave of e-banking application are those large national banks with most of their headquarters located in larger cities and urban areas. There are special challenges facing those local smaller and community banks. The lack of financial resource and weak technical expertise have been cited currently as two major obstacles in developing and maintaining e-banking services for many local smaller community banks located in remote and rural cities or counties. Customers fear that someone will have unlimited access to their personal financial information. Therefore, confidentiality of consumer data is another important concern in the adoption of online banking. In this context, the researcher has made an attempt to study the perception level of the customers towards electronic banking services of the commercial banks in Cuddalore District. Objectives of the Study The main objective of this study is to examine the perception of the customers towards e-banking services of the select commercial banks in Cuddalore district. Besides, the study has the following secondary objectives:
1. 2. 3. 4.

To study the growth and progress of electronic banking.

To find out the factors influencing the customers to prefer electronic banking services in Cuddalore district. To study the perception of the customers towards payment services of electronic banking in the select commercial banks in Cuddalore district. To offer suitable suggestions to improve the standard of electronic banking services of the commercial banks in Cuddalore district based on findings of the study. Testing of Hypotheses
In order to examine the perception of the customers towards electronic banking services of the commercial banks, the following null hypotheses were formulated and tested. There is no significant relationship among the satisfaction levels of the customers belonging to different demographic profile towards payment services of electronic banking in the select commercial banks in Cuddalore district.

Sampling Design There are 25 public sector commercial banks and 5 private sector commercial banks in operation in Cuddalore District as on December 31, 2009. In order to collect primary data for the purpose of the study, multi-stage sampling technique is adopted. At the first stage 5 commercial banks i.e. 3 public sector commercial banks and 2 private sector commercial banks which are outnumbered in number of branches were selected out of the 25 commercial banks. In the second stage, 10 per cent of the branches i.e. 9

branches were selected out of the 5 selected commercial banks (list is appended). In the final stage, from each of the branch 30 savings bank accountholders and 20 current accountholders were selected on the purposive basis for the study. Therefore, the sample size consists of 450 customers. The following table shows the sampling distribution of the present study. Period of the Study As an essential part of the study, the primary data were collected by the researcher for a period of 6 months from January 2011 to June 2011. Framework of Analysis
The ultimate object of the study was to examine the perception of the customers towards e-banking services of the commercial banks in Cuddalore district. The data collected for the purpose of the study were quantified, categorized and tabulated. In order to study the perception of the customers, Kendalls coefficient of concordance, analysis of one-way variance, student t-test, analysis of co-efficient of variation, factor analysis, discriminant function analysis, multiple regression analysis and percentage analysis have been employed. Kendalls coefficient of concordance (w) was applied to find whether there is similarity among the respondents in assigning the ranks on various e-banking facilities and channels used in e-banking. The student t-test and analysis of one-way variance are employed to measure the relationship among the demographic profile of the respondents and their perception towards payment and request services of e-banking. The coefficient of variation is employed to find out consistency in the satisfaction of the respondents towards payment and request services of the e-banking. The Factor analysis technique is applied to find out the underlying dimensions in the set of statements relating to the perception of the customers towards e-banking services of the commercial banks. Discriminant function analysis is used to study how the customers of public sector banks differ from those who are customers of private sector banks in terms of their level of perception towards various attributes of e-banking, satisfaction score on payment services, satisfaction score on requests services and impact score on e-banking. Multiple regression analysis is used to measure the effect of selected independent variables on the impact of e-banking of select commercial banks. Comprehensive descriptive and percentage analyses were also employed to examine the perception of the customers.

Limitations of the Study

In any study having a bearing on attitude, incomplete and non-responses to some questions could not be avoided. However, the researcher took maximum efforts to minimize such errors. Due to constraints of resource and time, only 450 customers from 9 branches of the 5 commercial banks have been selected and studied. Hence, the conclusion drawn is specific and cannot be universalized.

Findings
1.

Out of the 435 respondents, 79.78 per cent were male and 20.22 per cent were female. The predominant age group of the respondents (48.66 per cent) is 31-40 years. A good majority of the remaining respondents are distributed in the age group up to 30 years and 41-50 years. The highest literacy rate (40%) of the respondents is degree level. 15.33 per cent of the respondents have got H.Sc education, 25.78 per cent have got Diploma/ITI education. 18.89 per cent of the respondents have PG and above qualification. 55.78 per cent of the respondents are employed, 18 per cent are businessmen, 15.33 per cent of the respondents are professionals and 9.33 per cent are agriculturalists. A very low percentage (1.56) of the respondents is pensioners. 31.78 per cent of the respondents have monthly income up to Rs. 15000 and 41.33 per cent have Rs.15001 to Rs.25000 as monthly income. 22.44 per cent of the respondents have monthly income Rs.25001-35000. 4.44 per cent of the respondents have above Rs.35000 as monthly income. About 3.33%, 22.22%, 22.22%, 11.11% and 11.11% of the respondents belong to Indian Bank, State Bank of India, Indian Overseas Bank, ICICI, and Lakshmi Vilas Bank respectively. 60 per cent of the respondents have savings bank account and 40 per cent of the respondents have current account. 77.78 per cent of the respondents are the customers of public sector banks and 22.22 per cent belong to private sector banks. 66.67 per cent of the respondents belong to urban area and 33.33 per cent of the respondents are belonging to rural area. About 54%, 31.80%, 8.90%, 4.70% and 0.70% of the respondents are highly satisfied, satisfied, neither satisfied nor dissatisfied, dissatisfied and highly dissatisfied respectively towards the services of their prime bank. Home, office, browsing centre and mobile phone are the places of access to internet by the respondents at 43.10%, 42.20%, 12%, and 2.70% respectively. Out of the 450 respondents, 63.78%, 36.22%, and 0% of the respondents are aware, partially aware and not aware of electronic banking services of the commercial banks in Cuddalore district About 18.70% and 23.30% of the respondents are accessing e-banking services from 6.00 am to 12.00 noon and 12.00 noon to 6.00 pm respectively. 41.60% and 16.40% of the respondents are accessing electronic banking services during 6.00 pm to 12.00 noon and 12.00 noon to 6.00 am respectively. Gender, age, education, monthly income, location and nature of account of the customers have no significant effect on the impact of e-banking services of the public sector banks.

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Gender, age and nature of account of the customers have no significant effect on the impact of e-banking services of the private sector banks in Cuddalore district. Educational status and monthly income of the customers have significant effect on the impact of e-banking services at 5 per cent level of significance. About 44.22%, 37.55% and 18.22% of the respondents agree, partially agree and disagree respectively about the impact of e-banking services. The average acceptance score reveals that the respondents have higher acceptance level (2.63) with the easier access of e-banking followed by increase in social status of the customers (2.33), cost effectiveness (2.32) and time saving (2.27) of the ebanking services. 44%, 38.44% and 17.55% of the respondents agree, partially agree and disagree respectively about various issues of the e-banking services. The average acceptance score reveals that the respondents have higher acceptance level (2.37) towards security problems of e-banking followed by cost implications (2.35), lack of personal service, cost effectiveness (2.32) and inadequate knowledge to operate (2.30) the e-banking services. About 74.20 of the respondents are not ready to change their prime bank in future, whereas 25.80% of the respondents were of the opinion to change their prime bank in future.

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Suggestions On the basis of detailed study of the perception of the customers towards ebanking services of the commercial banks, it is clear that e-banking services play a vital role in the banking activities. The various suggestions for improving the effectiveness of the e-banking services of the commercial banks are follows:
1.

An adequate level of infrastructure and human capacity building are required for developing countries to adopt the global technology for their local requirements. For example, the review of the migration plan of Society for Worldwide Interbank Financial Telecommunications to the internet shows that to date full migration has not occurred in many developing countries due to the lack of adequate infrastructure, working capital, and required technical expertise. Many corporate and consumers in some developing countries either do not trust or do not have access to the necessary infrastructure to be able to process e-payments. The choice of technological infrastructure generally determines the success of e-banking in the long run. Therefore, a correct system architecture and design will help in managing operational and security risks to a greater extent. A long delay in making available the services to the customers in case of disruption of the e-banking system may erode the banks credibility and goodwill as well as the customers confidence in the e-banking services. Therefore, the business continuity planning should be an integral part of e-banking policy. Therefore, the bank can prevent interruption, and recover and resume processing in the event of a partial of complete interruption e-banking services availability.

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Most e-finance initiatives in developing countries have been the result of cooperative efforts between the private and public sectors. For example, Singapores successful Trade Net system was a government-sponsored project. If the public sector does not have the necessary means to implement the projects, it is essential that cooperative efforts between public and private sectors, along with the multilateral agencies like the World Bank, be developed to facilitate public sector for e-finance related initiatives. To achieve competitive advantage, technology based services may help, but to retain competitive advantage, the banking institutions have to improve services at the branches. The availability and access to banking information is required for customers to move towards e-banking. Similarly, on-line information will enhance customers ability to utilize e-banking services. For the purpose of creating awareness about information security in the area of ebanking, training and education is necessary. Therefore, training courses for understanding the need of information security, protection of passwords and awareness about various spy wares may be conducted. Advanced training for the system administrators may also be conducted to optimally configure the e-banking system and update them about the latest threats be present in the e-banking domain. The employees of e-banks should be given training to match their skill with the requirements of changing environment.

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Conclusion E- Banking is spreading all over the world with speed, sometimes at the cost of throwing caution to the winds. This has not only transformed the banking and financial institutions in their modern form, but has also brought a paradigm shift in their attitude to banking operations. In India also, it has strongly impacted the strategic business considerations for banks. It must be noted, however, that while e-banking provides many benefits to customers and banks, it also aggravates traditional banking risks. Despite the low diffusion of technology in India, the momentum of e-banking has picked up recently, led by the foreign banks and the Indian private banks. It is evident from the present study that a majority of the customers are highly satisfied with the e-banking services. The customers prefer e-channels with time and cost utility which provide efficient services. Moreover, banks are uncertain about the regulatory framework for conducting e-business and taxation issues for governing cyberspace present formidable problems. Any successful attempt at governing cyberspace will involve significant international cooperation. Although there are some drawbacks in e-banking like complaints regarding use of ATMs, high service charges and more working hours leading to frustration among the employees but still the e-banking is preferred as the efficiency of the employees working through e-channels is better. If the study provokes the authority concerned to take some positive measures for improving the effectiveness of e-banking, the researcher will feel amply rewarded. References

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