TOPIC

“Internet Banking in Indian Commercial Banks- A Study of Oriental

Bank of Bank of Commerce (OBC)”

By
Dr.N.Moogana Goud
Professor and Director
Dept of Management Studies
SJC institute of technology
Chickballapur
CELL: 97390 –96281
Email: nmoogangoud@gmail.com
ABSTRACT

The advent of technology and innovation in the IT sector brought a revolution in the operations of

banking sector. The development and dissemination of technologies helped bankers to adopt E banking

to have an efficient business practices and a channel to sell their services. The concept and scope of E-

banking is though still developing but successful in facilitating for an effective payment and accounting

system. Internet banking is one of the major components of E-banking system. Internet banking refers to

the use of internet as a remote delivery channel for banking services. Internet banking has gained wide

acceptance internationally and is fast catching up in India with more and more banks embracing. The

Indian banks perceived Internet banking as a strategic tool for business development. The customers are

also making use of the facility. But the adoption is not at an expected pace as expected by the bank. But

there are many factors that are affecting the Indian commercial banks in adopting internet banking. This

study empirically present the status of internet banking practices in India banks.
INTRODUCTION

In the world of banking, the adoption and development of information and technology is a Phillip

in evolving efficient and user friendly banking operations. Electronic Banking (Ebanking)

services are the outcome of the development and diffusion of these technologies by banks

resulting in efficient banking operations. E-banking refers to the delivery of banking services and

products through electronic channels, such as the telephone, PC, the internet, the cell phone, etc.

The concept and scope of E-banking is though still evolving it is successful in facilitating for an

effective payment and accounting system thereby enhancing the speed of delivery of banking

services considerably.

Internet banking (ibanking) is one of the major components of E-banking system.

Ibanking refers to the use of internet as a remote delivery channel for banking services. It means

the services like online transfer of funds, making loan application, account balance enquiry,

payment of other services like utilities are provided through the internet. Ibanking is becoming

an increasingly important channel for most of the banks in the world at present to serve both the

individual and corporate customers. The customer can use the ibanking with the help of a

computer and internet connection. The minimum requirement to use this system of banking is the

customer should have an active bank account with the branch having core banking facility, debit

card, customer's user ID, the ibanking PIN number, and a computer with an access to banks

website. Internet banking is vastly used by customers in developed nations and it is slowly

improving in developing countries too. The customer finds ibanking as means to operate the

transactions sitting before the PC and beyond the limits of the branch where he has an account.

Internet has helped the people who are busy in their work and not finding time to go to bank to

carry on their transactions.

 The Indian banks perceived ibanking as a strategic tool for business development. India is

also in the verge of major banking revolution with net banking having already been unveiled. All

the nationalized banks and most of the private sector banks in India adopted E-banking system

and provided internet banking facility. The introduction of innovative core banking schemes in

Indian banks like Real-Time Gross transfer (RTGS) and National Electronic Funds Transfer

(NEFT), which enabled fund transfers among account holders of the same bank as well as inter-

bank transfers, attracted many customers towards the use of E-banking system.

Oriental Bank of Commerce (OBC)

Established on 19th Feb' 1943 in Lahore, Oriental Bank of Commerce (OBC) is one of

the public sector banks in India. Its modest beginning is creditable to its founder Late Rai

Bahadur Lala Sohan Lal, the first Chairman of the OBC. The Oriental Bank of Commerce was

nationalized on 15th April 1980, and paved its way to count amongst the strongest banks in

India.

OBC has a network of 530 branches and 505 ATM's spread throughout India with its

head office at New Delhi, out of which 490 branches offer centralized banking solutions. With

High Capital Adequacy Ratio, Oriental Bank of Commerce is known be a consistent profit-

making bank. It offers various services and products, like current/ savings account, general loans,

educational loans, agricultural loans, etc, for the benefit of customers. For its effective services,

the National Institute of Bank Management (NIBM) rated OBC Bank as "Customer Friendly"

Bank.

The Oriental Bank’s iBanking Services are available to all the customers of bank

branches under Centralized Banking Solution (CBS). The authorized customers can view their

various accounts anytime (24*7) and anywhere. iBanking Services are offered Free of Cost to
the Customers and can be availed by any saving/ Current/ CC/ OD account holders. OBC has

one of its flagship branches in yelahanka new town, Bangalore headed by its Senior Manager

Mr. Date. This branch is selected for our study. The OBC offers various services under ibanking

system.

RESEARCH PURPOSE

Due to the advent of the globalized world, liberalization and free economy, the Banks

underwent a re-structuring process in its operations to cope up with the onslaught of competition.

E-banking adoption is one of the re-structuring strategies adopted by Indian banks to have a

switch over from the traditional patterns of bank operations to introduce technology. However

the Indian banks are constantly upgrading their websites, software’s, safety measures, privacy

option, etc to enable the customers actively use the Internet banking. The banks have also issued

the user manuals at regular intervals to make the customer comfort in using the facility. Banks

are also not lagging behind in encouraging customers to use the facility. Despite all their efforts

aimed at better and easier ibanking facility, these systems remain unnoticed and under utilized by

many of the customers. Therefore there is need to understand customers acceptance/ perception

of ibanking and the reasons behind the under utilization of the facility. This study will help the

bankers to understand the reasons for under utilization of the facility and evolve suitable

marketing and motivational strategies to popularize the Internet banking.

OBJECTIVES

1. To study the adoption of ibanking facility by Indian commercial banks in general and

Oriental Bank of Commerce (OBC) in particular

2. To understand the status of utilization of internet Banking facility by OBC customers

3. To quantify and evaluate the current state of customer beliefs, behavior and attitudes

towards internet Banking facility

 4. To suggest the measures to Bank to evolve a strategic tool for business development and

popularize the scheme.

SAMPLE AND QUESTIONNAIRE DESIGN

A Sample of 75 internet users was selected on the basis of random sampling technique to

elicit information on the research topic. But the researcher received the response from only 50

respondents. In the present study, a survey was carried out in 2010. A well structured and pre

tested questionnaire was designed and sent out to Individuals. The data collected was tabulated

by using percentage methods to draw the inferences on the use of internet facility.

RESULTS OF THE SURVEY

Educational Information

The survey has revealed that most of the users of E banking i.e. 76% are graduates and post

graduates and non graduate users are lonely 10%. Thus most of the qualified customers have

opted for E Banking facility.

TABLE-1
No. of Respondents Percentage
Below Graduation 05 10
Graduation 30 60
Post Graduation 08 16
Others 07 14
Total 50 100
CHART-1
EducationalInformation

T
otal 50 100

Others 7 14

Post Graduation 16
8
Grad
uation 30 60

BelowGraduation 510

0 20 40 60 80 1
00 1
2 0

No.ofResp
ondents Percentage

Employment Information
The study has revealed that except two respondents (students), the rest of the customers (94%)

who have opted for E banking are either employed/ professional or businessmen. It is also

observed that the customer’s opted for these facilities are not finding time to visit the bank

premises to carry on the transactions.

TABLE-2
No. of Respondents Percentage
Student 02 04
Govt Employee 09 18
Private Sector 22 44
Employee
Professional 07 14
Business person 10 20
Others - -
Total 50 100

CHART-2

EmploymentInformation

Total 100
50
Others 0
0
Businessperson 20
10
Professional 14
7
PrivateSector Employee 44
22
Govt Employee 18
9
Student 4
2

0 20 40 60 80 100 120

No. of Respondents Percentage

Awareness of E-Banking services

It is s observed that 72% had awareness about ibanking. 24% of customers have an idea about

the facility and only 04% did not have awareness. Thus the majority of the customers are well

aware of the facility

TABLE-3
 No. of Respondents Percentage
Fully aware 36 72
Had an idea 12 24
No idea 02 04
Total 50 100%

CHART-3

Awarenessof E-Bankingservices

Total 100%
50
Noidea 4
2
Hadanidea 24
12
Fully aware 72
36

0 20 40 60 80

No. of Respondents Percentage

Use of Internet Banking Services

The researcher asked the respondents to provide multiple usages to know the exat state usage of

the facility

TABLE-4
Factors No. of Respondents Percentage
Money Transfer 12 24
Balance Check 23 46
To pay other 08 16
Rail/Road reservation 21 42
Mobile Banking 18 36
Repayment of loan 10 20

It was noticed that just about half of the respondents used internet banking for making balance

enquiries or viewing or asking for statements; another 42% of them used online service for

requesting for Rail/Road reservation and 20 % have used it for loan repayment. Only 24% made

a better use of internet banking such as funds transfer. Thus, nearly 70% of the people in our

survey were using only the basic services provided by online banks.

CHART-4
 USE OF INTERNET BANKING SERVICES

Repayment of loan 20
10

Mobile Banking 36
18

Rail/Road reservation 42
21 Percentage

To pay other 16 No. of Respondents

8

Balance Check 46
23

Money Transfer 24
12

0 10 20 30 40 50

Frequency to Access to Internet Banking

TABLE-5
No. of Respondents Percentage
Occasionally 15 30
Fortnightly 06 12
Weekly 10 20
Daily 09 18
Not using 10 20
Total 50 100

It is observed from the previous table/chart that 80% of the respondents are using Internet

Banking. But when enquired about the frequency to Access to Internet Banking it is observed

that only 18% are using the facility daily and the most i.e. 30% are using it occasionally and 12%

are using it fortnightly . Thus the frequency of usage is highly negligible.

CHART-5
 FrequencytoAccesstoInternetBanking

Total 100
50

Not using 20
10

Daily 18
9

Weekly 20
10

Fortnightly 12
6

Occasionally 30
15

0 20 40 60 80 100 120

No. of Respondents Percentage

Reasons for using Internet banking (For 40 Users)

TABLE-6
No. of Respondents Percentage (For 40 Users)

All time availability 08 20

Ease of use 02 05
convenient 10 25
Security 05 12
Status symbol 03 08
Inexpensive 04 10
Saves time 08 20
40 100
Total

This was an important question, which revealed that a majority of people in our survey used

internet banking for the reasons of convenience (25%) all time availability (20%), saves time

(20%) ease to use (5%), inexpensive (10%) and security (12%) .

CHART-6
 REASONS FOR USING INTERNET BANKING

Saves time 20
8

Inexpensive 10
4

Status symbol 8
3

Security 12
5 Percentage (For 40 Users)

convenient 25 No. of Respondents

10

Ease of use 5
2

All time availability 20

8

0 5 10 15 20 25 30

Reasons for not using internet Banking regularly (Excepting of Daily users i.e. 9
customers) Sample of only 41 customers considered
TABLE-7
No. of Respondents Percentage
Resistance to change 06 14
Possibility of problem occurrence 05 13
Possible internet threats 12 29
Possible to make mistake 02 05
Lack of evidence 03 07
Lack problem solving 04 10
Not known how to use 02 05
Lack of Guidance 02 05
Previous unsuccessful experience 05 12
As mentioned before, only 22% of the total respondents in our survey are using internet banking.

When asked for the reasons for not using this new form of banking, 29% of them referred to a

possible internet threats, 14% have Resistance to change, 13% referred to a Possibility of

problem occurrence on their part or previous unsuccessful experience.

Here, emphasis appears to be on a lack of required resources rather than any failings with the

banking system, the banking technology or services and the banker’s guidance.

CHART-7
 REASONS FOR NOT USING INTERNET BANKING
REGULARLY

Previous unsuccessful experience 12

5
Lack of Guidance 5
2
Not known how to use 5
2
Lack problem solving 10
4
Percentage
Lack of evidence 7
3 No. of Respondents
Possible to make mistake 5
2
Possible internet threats 29
12
Possibility of problem occurrence 13
5
Resistance to change 14
6

0 5 10 15 20 25 30 35

Guidance of Bank officials (out of 40 Users)

TABLE-8
No. of Respondents Percentage
Guiding 38 95
Not guiding 02 05
Total 40 100

The respondents to the extent of only 5% revealed that there is a lack of guidance, but remaining

are receiving good guidance from the Bank. This point to two interesting facts: either the general

publics are not knowledgeable enough about the internet banking services or they are not fully

confident in the use of computing technology – or perhaps both.

CHART-8
 G
UID
ANC
EOFB
ANKOF
FIC
IAL
S

N o
t 5
g
uid
ing 2
P
erc
e n
tag
e

N
o.of
R
espond
ents
9
5
G
uid
ing
3
8

0 5
0 1
00

Rating of Guidance of Bank officials (out of 40 Users)

TABLE-9
No. of Respondents Percentage
Excellent 32 80
Very Good 04 10
Good 02 05
Needs Improvement 02 05
Poor - -
Total 40 100

The ratings of the 80% 0f respondents on Guidance of Bank officials is excellent, only 5% of

respondents opined for improvement

CHART-9
RATINGOFTHEGUIDANCEOFBANKOFFICIALS

Poor 0
0

NeedsImprov
ement 5
2

5 Percentage
Good 2 No. of Respondents

VeryGood 10
4

Excellent 80
32

0 20 40 60 80 100

Choosing Internet Banking at OBC only (out of 40 Users)

TABLE-10
No. of Respondents Percentage
Existing Bank Account 10 25
Brand of the Bank 22 55
excellent service 40 100
Guidance 40 100
Others 0 0

The researcher tried to get the multiple responses from the respondents for Choosing Internet

Banking at OBC only. It is interesting to note that all the users of internet baking have opined

that it is because of the excellent service and the guidance from bank officials. Only 25% of

users expressed that they have the existing account and converted the existing account in to

internet bank usage

CHART-10

CHOOSINGINTERNETBANKINGATOBCONLY

Others 0
0

Guidance 100
40

100 Percentage
excellent service 40 No. of Respondents

Brandof theBank 55
22

ExistingBank Account 25
10

0 50 100 150

FINDINGS AND CONCLUSION

The objectives of the study were to analyze the issues preventing the adoption of internet

banking in Indian banks. During the survey it is observed that OBC in particular and the Indian

Banks in general are careful about the implementation of new technology and innovation. The

bank is treating any new advancement as an advantage rather than a risk or confusion. The bank

is making a benchmarking in implementation new innovation for the help of the customers.

Online banks provide services through the use of their websites. It is important that web pages

and scripts are well designed, easy to use and quick to respond. The questionnaire contained
questions referring to this aspect of the website design. Nearly 75% of the respondents said that

the content was useful and they rated it as excellent or at least good.

The researcher had a general discussion with the bank manager and other official’s relating the

major issues of internet banking.

The Responses from Bank officials are as under

1. Adequate measures are initiated to provide security to the customers in the form of

authenticity, confidentiality and integrity of online transactions. This effort is aiming at

motivation to customer against their fear of possible internet threats. The bank officials

are aware that Security is the main reason why people are not readily opening the internet

bank acounts.

2. The development and the use of internet banking though not at the early stage but in the

stage of development in the Indian commercial banks. The bankers are aware of the

perceived risk of this facility. Therefore the bank is evolving a better internal

communication system, security policies and upgrading of services to meet the

customer’s expectations.

3. The customer’s major issue is the privacy and it needs of more attention in internet

banking system. The ibanking is highly uncertain because the parties involved in the

transaction are not in the same place. The customer trusts the banks that their personal

information and other transaction codes are secure. This aspect has been considered

seriously by the bank to keep the trust of the customer.

4. The Communication should be also given higher concern from the bank officials, because

it includes the way banks respond to their customers’ requests and the easiness with

which the bank is accessed by telephone when needed. Both these aspects might play
 crucial role in the development of trusting relationships with customers and can lead to

increased customer satisfaction.

5. The bank is also specific about the customer relationship in implementing i banking. The

officials express that mere phone or mails do not sufficiently help to retain the customer,

but the personal rapport with the customer that can help effectively in this regard

This research work presents result of a survey that was conducted in 2010. The aim was

to gauge opinions of the general public about the provision and use of internet banking. Only 75

questionnaires were sent and 50 replies were received and used in the analysis.

Customer’s Response is as under

1. Almost 85% of the respondents using the facility are well educated. It is more appropriate

that educated can learn computers, using internet and operation of account as the

transactions generally done in English language.

2. The study has revealed that except two respondents (students), the rest of the customers

(94%) who have opted for E banking are either employed/ professional or businessmen.

3. Ebanking services of Indian banking institutional are very popular as 96% of the

respondents are aware of the facility in the banks. OBC made a splendid effort in

popularizing the ibanking system.

4. It is interesting to note that phone banking and mobile banking facility are used by only

16% of the respondents. But the ibanking is used by 80% of the respondents.

5. It is distressing to note that only 18% 0f the respondents are the facility daily, 20% are

using weekly, the most i.e. 30% are using it occasionally and 12% are using it

fortnightly. Thus the negligible percentage of customers is using the facility regularly.
 6. Another interesting factor observed during the survey that most of the customers using

the facility for balance check and rail/road reservation. Thus the facility mostly used for

the purpose of public utility.

7. Main reasons for using EB were: Convenience, availability and saving of time. In case of

those not using internet banking 29% of the respondents assigned the reason of possible

internet threat and about 14% because of their resistance to change. Another reason they

have revealed is that internet banking is just an electronic and paperless business

transaction. They fear of having no proper written proof of transactions, to provide as

evidence in case the things go wrong.

8. The respondents to the extent of only 5% revealed that there is a lack of guidance, but

remaining are receiving good guidance from the Bank. The ratings of the 80% 0f

respondents on Guidance of Bank officials is excellent, only 5% of respondents opined

for improvement

SUGGESTIONS AND CONCLUSION

SUGGESTIONS

Basing on the observations and the opinions given by the respondents the study would like to

make the following recommendations

1. updating of new innovation in ibanking, making user friendly website, continuous flow of

guidelines to use ibanking, educating in an organized fashion may help for successful

adoption of facility by the banks

2. If the banks can look beyond in terms of maintaining personal rapport and personal

relationship more than sending mail and making phone calls, can create confidence

among the ibanking users.

 3. The bank should work hard to make their services secure by outsourcing an expertise in

case bank do not have the experts. The banks should take utmost importance to protect

personal information of the customers. The customer’s trust on bank officials will matter

more than any other issues in ibanking.

4. Bank should constantly encourage and motivate people to use ibanking. It is possible

when the banker counsels the new customer at the time of opening of bank account and

counsel existing customer by using effective mode by merit of each case

5. Bankers to take the data from the customer relating to his computer and internet

knowledge at the time of opening account. Simply thrusting the ibanking account to a

customer neither helps the customer nor the bank.

6. As the ibanking an innovative banking operation just taking off, the customers may fear

for various internet threats after hearing from many sources including the media.

Therefore the bankers should constantly educate the customers by using possible means.

CONCLUSION

The OBC customers are very happy that the bank is in forefront in providing the

Ebanking Services and an effective internet banking also. The customers are also making use of

the facility. But the adoption is not at an expected pace as expected by the bank. The reasons like

internet threats, computer illiteracy, fear of hacking, recurring operational mistakes, Privacy, lack

of knowledge, paperless business transactions are the major issues came against the adoption of

internet banking by commercial banks in India. It is also observed that the computer illiteracy

amongst many customers is a major impediment for commercial banks to adopt ibanking

REFERENCES
BOOKS AND REPORTS
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JOURNALS AND MAGAZINES

1. ABA Banking Journal

2. Financial Services Research Paper
3. Journal of Internet Banking and Commerce
4. Journal of International Banking Regulation
5. Journal of Global Information Management
6. The Electronic Journal of Information Systems in Developing Countries
7. The International Journal of Bank Marketing
WEBSITES
 1. www.bankofindia.com
2. www.buzzle.com
3. www.rbi.org.in
4. www.infrasofttech.com/Globa
5. www.nabard.com
6. www.google.com
7. 5. www.bankmate.com

NEWS PAPERS

1. Economic Times
2. Business Standard
3. Financial Express
4. Business Line
5. Indus Business Journal