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Volume 3 Issue 1 January 2014

ISSN 2277-8098

A Study on Impact of Information Technological Innovation in Present


Banking Scenario
Prof. Roopadarshini.S
Asst.Professor
Department of management studies,
K.S.School of Engineering and Management,
Bangalore

Prof. Shilpa.S
Asst.Professor,
Department of management studies,
K.S.School of Engineering and Management,
Bangalore

Abstract
The current scenario of the banking services appears to be driven by the downturn in economic
activity rather financial distress. Financial system has undergone structural changes. The current
factors driving changes have been advancements in technology and computing, external financial
liberalization and organizational changes in banking system. Globalization of banking operations
and expansion of financial activities has result of technology advancements, in an increasingly
market- driven environment have redefined the business models and changed the way the bank used
to do the banking business. The banking industry has virtually seen a shift from brick and mortar
banking to banking virtually across time zones, geographical reach and alternative delivery
channels.

The satisfaction index is substantially influenced by the quality of services made

available to the users. Today we find a positive change in the business regulations and development
strategies and therefore it is natural that strategies designed earlier show a luke warm response.
High tech bank providing e-banking facilities plays a balanced role offer state of the art service to
ever demanding customers.
Keywords: banking virtual, e-banking, technology, financial system, banking customers

Introduction
The Financial innovation in Indian financial system plays an important role in making growth and
in connecting hundreds of millions of customers to the banking system. The deregulation of
financial service industry and with an increase of competition in investment banking, led to an
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increased emphasis on the ability to design new products, develop better process, and implement
more effective solution for the complex financial problems. The financial innovations are from the
result of number of Government regulations, tax policies, globalization, liberalization, privatization,
integration with the international financial market and increasing risk in the domestic financial
market. Financial innovation is the process through which finance managers or intermediary
institutions in the financial markets add value to the existing products that satisfies the needs of the
man who use it. According to John Finnerty, Financial Innovation involves the design, the
development, and the implementation of innovative financial instruments and processes, and the
formulation of creative solutions to problems in finance.
A financial institutions that provides services, such as accepting deposits, giving business loan and
auto loan, mortgage lending and basic investment products like saving account certificate of
deposits. The development of Indian banks and the rationale for banking sector reforms a various
measures undertaken to improve productivity efficiency and profitability of banks by freeing them
from a number regulations and review of literature, it s felt desirable to evaluate the performance of
banking sectors.
The various way of innovations in banking and financial sector are ECS, RTGS, EFT, NEFT, ATM,
Retail Banking, Debit & Credit cards, free advisory services, implementation of standing
instructions of customers, payments of utility bills, fund transfers, internet banking, telephone
banking, mobile banking, selling insurance products, issue of free cheque books, travel cheques and
many more value added services for the intense competition among the banks has redefined the
concept of the banking system.
The banks are looking for the new ways not only to attract the customers, but also to retain the them
and also to gain competitive advantage over their competitors. The banks like other business
organizations are deploying an innovative selling techniques and has advanced the marketing tools
to gain the

supremacy. The main driver of this change is changing customer needs and

expectations. Customers in urban India have gained more advantages has they no longer want to
wait in for long queues and spend hours of time in banking transactions. This change in customer
attitude has gone hand in hand with the development of ATMs, Mobile phone and net banking along
with this the availability of services right at the customer's doorstep. With the emergence of
universal banking, banks aim to provide all banking product and also the services offered under
one roof and their main aim is to provide customer centric. While many banks are striving to
strengthen the customer relationship and move towards relationship banking, many customers are
moving away from the of traditional branch banking and they are seeking the convenience of
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remote electronic banking. Information technology and the communications networking systems
have been revolutionaries the working of banks and financial entities all over the world.
International banking is an institution which includes financial services as account payment and
lending that is secured by a bank customer from an international bank. International banking is
associated with Swiss banking and is referred off shore banking.
Literature Review
Technological innovations would lower the cost of capital, reduce the banking problems, and
improve the financial intermediation, and hence welfare enhancing. The primary functions of
banking system are to facilitate the allocation and deployment of economic resources in an
uncertain environment (Merton, 1992). Technological innovation is helpful in ensuring smooth
functioning and improves the overall efficiency of the banking system by minimizing cost and
reducing risk. More generally, financial innovation has been a central force driving the banking
system toward greater economic efficiency (Merton and Bodie 2005).Avasthi & Sharma (2000-01)
have analyzed in their study that advances in technology are set to change the face of banking
business. Technology has transformed the delivery channels by banks in retail banking. It has also
impacted the markets of banks. The study also explored the challenges that banking industry and its
regulator face. B. Janki (2002) analyzed that how technology is affecting the employees
productivity. There is no doubt, in India particularly public sector banks will need to use technology
to improve operating efficiency and customer services. The focus on technology will increase like
never before to add value to customer services, to develop a new implementation of ideas.
Statement of the Problems
Fear of using the advance technology from manual operating
Ineffective usage of online banking transactions
Upgrading of technology is not always implemented
Objective of the Study
To find out the impact of IT innovation in banking.
To analyze the impact of banking technologies.
To understand the impact on banking infrastructure.
To check out customer satisfaction towards banking services.
Research Methodology
This paper examines banking customers and their current attitudes towards information technology
in the banking sectors.
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Sources of data
Primary Data
Data collected through questionnaire, administered to sample of 125 customers selected from cities
of bengaluru. Questionnaire is pre-designed and pre-tested.
Secondary Data
Information collected through various publications, newspapers, magazines, books and websites.
Sampling Method:
Probability and non- probability are the methods used for the sampling method under the
probability we selected the simple random and internet for collecting the data. Under the non
probability method convenience and judgment method.
Sampling Design
Total number of 125 banking customers was from the cities of bengaluru for the study to analyze
the customer behavior with reference to IT banking sectors. But the responses that we could collect
were limited only to 110 respondents.
Plan of Analysis
Using simple percentage method for statistical interpretation supported by tables and graphs.
Data Analysis
1. Table shows the frequency of usage of banking services
Particulars

No. of respondents

% of respondents

Visiting bank branch

68

62

Mobile banking

17

15

Online banking

25

23

Total

110

100

2. Table shows the online banking operations


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Particulars

No. of respondents

% of respondents

Pay bills

50

45

Open an account

05

Money transfer

35

32

Savings

13

12

Insurance

07

Total

110

100

3. Table shows level of customer satisfaction through innovation in banking services


Particulars

No. of respondents

% of respondents

Internet banking

36

33

Mobile banking

18

16

ATMs

43

39

E banking

09

Point Of Sales

04

Total

110

100

4. Table shows the human contact with bank


Particulars

No. of respondents

% of respondents

Yes

86

78

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No

20

18

Dont know

04

Total

110

100

5. Table shows the disadvantages of visiting bank


Particulars

No. of respondents

% of respondents

Waiting

46

42

Distance

12

11

Opening time

06

Quality of services

24

22

No disadvantage

22

20

Total

110

100

6. Table shows the security of online banking system


Particulars

No. of respondents

% of respondents

Completely

26

24

Somewhat

38

35

unsure

25

23

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Not at all

21

19

Total

110

100

7. Table shows the usage of drop box system in bank by customer


Particulars

No. of respondents

% of respondents

Highly satisfied

20

18

Satisfied

45

41

Neither satisfied nor dissatisfied

18

16

Not satisfied

16

15

Highly dissatisfied

11

10

Total

110

100

8. Table shows the technological changes in banking services


Particulars

No. of respondents

% of respondents

Highly satisfied

55

50

Satisfied

40

36

Neither satisfied nor dissatisfied

10

Not satisfied

05

Highly dissatisfied

00

00

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Total

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110

100

9. Table shows the usage of debit card by customers


Particulars

No. of respondents

% of respondents

Highly satisfied

38

35

Satisfied

40

36

Neither satisfied nor dissatisfied

22

20

Not satisfied

10

Highly dissatisfied

00

00

Total

110

100

Limitation of Study
The study is confined to the extent of interpreting data which is collected only from 110
respondents as sample was chosen randomly it may not be the actual representation of total
population.
Time and cost is a constraint.
Expected level of information regarding the study was not able to be acquired from the
respondents.
The study restricted only to bengaluru.
Findings
Frequency of usage of banking services by customers
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Facilities provided by banks for convince of customer


Technological up gradation in banking sector for reaching the customers demand
Majority of customers are satisfied by the high safety and security provided by the bank.
E Banking facilities have reduced the cost and the time of customers.
Suggestions
Banks should update the technological innovation in order to satisfy the need of the
customer.
Maintain of high quality assets.
Protecting the pin number is equal important as protecting hard cash
Replacement of old with new technology helps to attract more customers.
Bank should interact with the customers to render better service
Customers support is very much important for the development in innovating the services of
banks.
Conclusion
Technology is one which has undergone the change of all poised to spin-off radical changes within
the banking sector. Banking sector in India has undergone significant transformation in past few
years. The fast spreading technological revolution and huge potential has developed the Indian
banks, however, the numerous challenges faced by banks such as:- increased competition, interest
rate risks, credit rate risks, inflation. Banks need to think out of the box where box represents all the
tested, tried things that always worked in the past. The structure of Indian banking in the economic
space are particularly required to increase the availability of credit to the household. There is a
significant correlation between the banking sectors and economic growth. Technological institutions
have to come out with low cost services to reach majority of customers.
References
Avasthi, G P & Sharma. M (2000-01), Information technology in banking challenges for
regulators. Prajanan XXIX (4) 17.
Bank Law and Practice by P N Varshney, Sulthan Chand & Sons, New Delhi.
Banking and Finance: Theory and Practice Clifford Gomez, 1/e, PHI, 2011.
Bank Financial Management-Indian Institute of Banking and Finance, 1/e, Macmillan, 2010.
Elements of Mercantile Law by N D Kapoor Sulthan Chand & Sons, New Delhi 2011,
Page No.(346).
Indian banker, June 2007 Vol II No.6 Indian Banks Association Mumbai.
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Shastri, R V (2003), Recent Trends in Banking Industry. IT Emergence, Analyst, (March),


Page No.(45).
www.slideshare.net/venkypalu/impact-on-fdi with reference to banking sector.
www.abhivanjournal.com
www.facultyjournal.com/.../_technological _innovation_ in banking

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