BHARATI VIDYAPEETH INSTITUTE OF MANAGEMENT AND

RESEARCH

MBA (Masters of Business Administration)

SUBJECT: CONSUMER BEHAVIOUR

TOPIC: FACTORS AFFECTING CONSUMER BEHAVIOUR ON
E-BANKING

SUBMITTED TO: SUBMITTED BY:

PROF. B.R.BHARDWAJ NISHA CHOPRA (0201MBA087)

ARYAN YADAV(0201MBA068)
ABSTRACT
This study examines the primary aspects that influence customers' perceptions of e-banking
services. In addition, the impact of service quality on brand perception, perceived value, and
satisfaction in e-banking is examined in this study. Customers' surveys were used to get the
necessary information. Following a review of the literature and talks with bank management as
well as specialists in customer service and marketing, a Likert scale based questionnaire was
developed for conducting customer surveys. This study looks into the idea that buying e-banking
services is considered riskier than buying traditional banking services. According to a survey of
100 people, e-banking services follow a methodical pattern throughout the customer purchasing
process. Despite the fact that e-banking is becoming increasingly popular and widespread in
India, the majority of Indians are unaware of it, and those who are aware of it are hesitant to use
it due to misunderstandings regarding password hacking, privacy, and security.

The purpose of this survey is to find out how knowledgeable clients are about e-banking and
what they expect from it. Customers are satisfied with the quality of e-banking services,
according to the conclusions of the survey. However, they encounter technical, administrative,
and procedural issues. In order to promote e-banking services, banks must ensure that client
support is of high quality. The two main words that must be given the utmost attention to
advertise a product are "quality in work" and "customer perception."

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INTRODUCTION
Introduction to concept
E-Banking
E-banking (Electronic Banking) or online banking means any user with a personal computer and
a browser can get connected to his bank by bank website to perform any of the virtual banking
functions. In internet banking system the bank has a centralized database that is web-enabled. All
the services that the bank has permitted on the internet are displayed in menu. Any service can be
selected and further interaction is dictated by the nature of service. The traditional branch model
of bank is now giving place to an alternative delivery channels with ATM network. Once the
branch offices of bank are interconnected through terrestrial or satellite links, there would be no
physical identity for any branch. It would a borderless entity permitting anytime, anywhere and
anyhow banking. The network which connects the various locations and gives connectivity to the
central office within the organization is called intranet. These networks are limited to
organizations for which they are set up. SWIFT is a live example of intranet application. Any
customer apply can use number of facilities by e-banking. It can be Operative Account Statement
D-MAT, VISA Transfer, Fund Transfer, RTGS, NEFT. Mobile Recharges, and Portfolio
Management. The main objective of study is to know whether customer is aware about these
facilities, how it more convent than branch banking ,what type of services are provided by banks
and what are major problems faced by customer E-banking.

The basic functions of banking are to accept deposits and lend money through loans and
advances. Now-a-days banking is known as innovative banking as the current banking scenario
is taking a lot of new initiatives in order to provide more better customer service and innovative
facilities with the help of information technology. E-banking is defined as the automated delivery
of new and traditional banking products and services directly to the customers through electronic
interactive communication channels. E-banking is one of the major parts of e-financing. Such a
change in traditional banking system became necessary. Banking is the lifeline of an economy
and the survival of an economy largely depends on the success and development of banking. In
India, ICICI was the first to initiate e-banking in early 1997 under brand name ‘Infinity’.

E-banking Scenario in India

In India, traditionally, the banks had to follow branch banking model and depend upon manual
system. But in the early 1990s, non-branch banking services were introduced in India. Such a
service was first launched by ICICI bank followed by Citibank and HDFC bank in
1999.Government of India and Reserve Bank of India has been taking several initiatives in
developing e-banking. Government of India enacted IT Act, 2000 w.e.f. October, 2000 to
provide legal recognition to e-transactions and other means of e-commerce. Therefore, the
introduction of this Act became the core activity to promote e-banking. RBI is continuously
monitoring and receiving the legal and other requirements of e-banking so that the development
of e-banking does not face any problem and moreover does not become a threat to financial

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stability. Several initiatives have been adopted by commercial banks including e-banking in
order to compete with private and foreign banks. About 1% of the total internet users were using
online banking in 1998. Such usage increased to 16.7% by March 2000 and thus, it resulted in
approximately 90 lakhs users of online banking 2003. A survey of 2010-11 reveals that there has
been an increase in the internet usage by the customers for banking services. This increased
usage of internet of e-banking has affected the traditional banking system in India i.e. branch
banking has reduced by 15% during last thirteen years.

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LITERATURE REVIEW
According to Gonzalez, Mueller, & Mack (2008), e-Banking has grown rapidly and
transformed traditional practices in banking. And a dominant part of the future of banking
business lies in e-Banking which allows customers to access banking services remotely
(Srivastava, 2007). Both banks and customers get huge benefits from e-Banking. It increases the
efficiency of the banking operation along with providing more convenience to customers
(Singhal & Padhmanabhanm, 2008). Through e-Banking, banks try to extend their services and
utilities in order to attract more customers and satisfy them. But e-Banking may fail if it cannot
meet the needs or expectations of customers. They just get satisfied with e-Banking when it
provides maximum convenience and comfort while transacting with the bank (Singhal &
Padhmanabhanm, 2008).
Goyal & Goyal , 2012 has done their research on “Customer perception towards Internet
banking with respect to private and foreign banks in India” and they stated on their research an
analysis of the differences in risk perceptions between bank customers using Internet Banking
and those not using Internet Banking was done and it showed that risk perceptions in terms of
financial, psychological and safety risks among customer not using the internet was more
meaningful than those using internet banking. Customers not preferring to use internet banking
thought that they would be swindled when using this service, and therefore, are particularly
careful about high risk expectation during money transfers from and between accounts. Private
and foreign banks are trying to turn more and more customer towards the usage of internet for
the banking transaction.
Reeti, Sanjay, and Malhotra in their paper titled “The Custom9ers’ perspective regarding e-
banking in an emerging economy.” stated about the Customers’ perspectives regarding e-banking
in an emerging economy. so that, the author determining various factors affecting customer
perception and attitude towards and satisfaction with e-banking is an essential part of a bank’s
strategy formulation process in an emerging economy like India. To gain this understanding in
respect of Indian customers, the study was conducted on respondents taken from the northern
part of India.
Feinberg Richard A. (December 1986). It was found that consumers prefer plastic money over
paper money and the major benefit that the card provides to the customers is the convenience and
accessibility. The major problem according to them is the increased transactional costs and
unnecessary formalities to procure the cards from the financial institutions. They felt that the
future of plastic money is bright and according to them, the next thing to come via technology
would be the use of digital signatures
George (1995), “The card majors lead the way” shows that VISA and Master Card play a major
role in any international payment system. Both VISA and Master Card act also as franchisers,
lending their names to member banks’ card and acting as guarantor of payment to merchants
willing to accept the cards. For this and for handling transactions, VISA and Master card charge
a fee which varies from country to country but is approximately 3 cents (90 paisa) per
transaction. They are card clearing agencies. VISA and Master card each have nearly 22000

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banks all over the world as their members and handle several million transactions each day. This
gives them a transaction handling capability unmatched by any individual bank. They are not
credit card companies but function on the line to provide a global network that allows
authorization, clearing and settlement of card transactions, both of credit and debit cards.
Mandeep Kaur and Kamalpreet Kaur(2008), in their article, “Development of Plastic Cards
Market: Past, Present and Future Scenario in Indian Banks” conclude that Indian banking sector
is accepting the challenge of information technology as all the groups of bankers have now
recognized it as essential requirement for their survival and growth in future Despite the strong
advances in e-payments, an estimated 90 percent of personal consumption expenditure in India is
still made with cash which indicates the tremendous growth potential of this business. So this can
be considered as mere beginning which indicates the bright future prospects of plastic card
market in India.
Alvares, Cliford (2009) the article reports on the problem regarding fake currency in India. It is
said that the country's battle against fake currency is not getting easier and many fakes go
undetected. It is also stated that counterfeiters hitherto had restricted printing facilities which
made it easier to discover fakes. According to chief economist Soumendra K. Dash, the solution
to the problem is to provide people incentive to use plastic cards and make cashless transactions.
Subhani in 2011 conducted a study on ‘Plastic Money/Credit Cards Charisma for Now and
Then’. The study was based to find out the charisma of plastic money, its usability and
affordability and its impact on its preference to use. The research found that the preference to use
of plastic money/ credit card has its pros and cons with its usability and affordability. According
to the consumer behaviour, plastic money is a form of conditioning and acts as a stimulus which
qualifies a consumer to spend. The study shows that the preference to go for plastic money has a
positive association with the easy use of plastic money because the precept of credit card
usability is linked with a psychological phenomenon that people are likely to spend less with
credit card and spend more with the same amount of cash on hand in the same budget and this
precept also linked with the consumer self-convenience, i.e. convenience and easy use which
delves into spending.
Khurana, Sunayna1, Singh, S. P. (2011) in today's busy world, nobody has the time to
withdraw money from the bank account for shopping. Everybody is interested in carrying the
plastic money (credit card and debit card) in their wallet for shopping as it gives convenience,
safety, easiness and even style. In this cutthroat competition, banks have to work hard to gain
market share and to meet the expectations of customers so that they can delight their customers.
This study is carried out to identify customer preferences and expectations from credit/debit card
services.
Laforet and Li (2005) have studied users’ attitudes with regard to mobile and internet banking
in China. Perception of risk, lack of skills, and the culture of cash-carry banking were identified
as barriers to online banking. Furthermore, lack of awareness of mobile banking benefits was
found to be a deterrent for its adoption. Previous positive banking experience, level of education,
and reference group’s sway did not affect the acceptance of mobile and online banking in China.

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Miyazaki and Fernandez (2001) find that perceived risk mediates the impact of the Internet
experience on the online purchase behavior. Consumers’ perceptions of privacy protection and
security protection are regarded as antecedents and having strong influences on trust and risk.
Thus, privacy and security technologies provided by the bank for Internet banking are the most
important concerns for internet banking.
Lociacono et al. introduced a 12-dimension scale namely WebQual with the following
dimensions: informational fit-to-task, tailored communication, and trust, and response time, ease
of understanding, intuitive operation, visual appeal, innovativeness, emotional appeal, consistent
image, on-line completeness, and relative advantage. Josef et al. studied the impact of these
innovative technologies as ATM, telephone and Internet on banking services. They found six
primary dimensions of e-banking service quality namely: convenience, accuracy, efficiency,
queue management, accessibility, and customization, feedback and complaint management.
Also, 87 percent of the Internet banking customers was found to be asking for online possibility
of diverse financial transactions, including electronic and automatic payment of their accounts
and bills, receiving online monthly account balance, and purchase of shares and insurance policy.
Saha et al. studied the relationship between online services and customer satisfaction in Internet
banking and found a significant association between the online service quality dimensions
fulfilment and efficiency and customer satisfaction with electronic service quality.
Saha and Zhao identified nine service quality dimensions in internet banking. They are
efficiency, reliability, responsiveness, fulfillment, privacy, communications, personalization,
technology update and logistic/technical equipment. First five dimensions were tested as a core
dimensions in internet banking. Communication and personalization were identified as another
two important service quality dimensions in internet banking.
Wafa et al (2009) mentioned that, the nature and amount of a consumer's experience with an
evoked set of brands. Perceived brand reputation has significant impacts on customer satisfaction
and a consumer's beliefs about brand are derived from personal use experience, word-of-mouth
endorsements/criticisms, and/or the marketing efforts of companies. (Woodruff et. al., 1983). A
brand perception is also one of the important aspects of in banking sector. Perceived brand
reputation in banking sector refers to the banks reputation and expiating place of bank in the
banking industry (Che-Ha and Hashim, 2007; Reynolds, 2007). It measures experience of the
customer how he/she fill with this brand and their services. A perceived overall brand
performance is determined by some combination of beliefs about the brand's various
performance dimensions (Woodruff et al., 1983; Che-Ha and Hashim, 2007). A brand perception
is important factor to service provides because, satisfied customer with brand will recommends
that service to others.
Kalakota and Whinston, online banking was first introduced in the early 1980s in which
consumers were provided with an application software program that operates on personal
computer (PC) which could be dialed into the bank via a modem, telephone line and operated the
programs remotely on the consumer PC. However, due to the lack of Internet users, and costs
associated with using online banking, the growth of internet banking experienced a setback. But,
in 1990s internet banking made a huge comeback as the most sought after channel of service
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deliver as the Internet explosion had made customers comfortable with making transactions over
the internet around the world. Thus, internet banking became an important channel of delivering
the services for the banks and made the transaction and other banking activities much easier for
the customers. Internet Banking has been regarded as the most important way to reduce cost and
maintain or enhance services for consumers, as recorded by Hua. The banking institutions aim to
use internet banking as a tool to lower operational costs, improve banking services to the
customers, retain them and expand the customer base. In India, the internet banking was
introduced in 1995 by ICICI bank followed shortly by HDFC Bank.
Amutha D Department of Economics, St. Mary’s College, Tuticorin, India, The paper deals the
consumers perception towards e-banking system related to consumer awareness towards e-
banking system with special reference to Tuticorin District of Tamilnadu. Data for this
investigation were collected from primary as well as secondary sources. The sampling is random.
The data was collected during the months between April to June, 2015. The data collected from
the primary source were analyzed with the help of various statistical measures such as simple
percentage analysis, averages, F-Statistic, chi square test and probability analysis were used.
Secondary data have been collected from books, journals, newspapers, internet and periodicals.
The main difficulty for using the E-banking facility is less knowledge about the operations of
banking facility (50%). Respondents also feel the services of E-banking too complex to use
(30%) and respondents also believe the E-banking to be risky (12.22%). The research report is
based on primary data. According to the study, the researcher concludes that the most of the bank
customers are aware about all the banking services in Tuticorin District of Tamilnadu. The banks
further have to take necessary steps to educate the customers regarding the new technology and
other services offered by the banks.
Pikkarainen et al (2004) define internet banking as an "internet portal, through which customers
can use different kinds of banking services ranging from bill payment to making investments".
With the exception of cash withdrawals, internet banking gives customers access to almost any
type of banking transaction at the click of a mouse (De Young, 2001). Indeed, the use of the
internet as a new alternative channel for the distribution of financial services has become a
competitive necessity instead of just a way to achieve competitive advantage with the advent of
globalization and fiercer competition (Flavián et al, 2004; Gan and Clemes, 2006). Banks use
online banking as it is one of the cheapest delivery channels for banking products (Pikkarainen et
al, 2004). Such service also saves the time and money of the bank with an added benefit of
minimizing the likelihood of committing errors by bank tellers (Jayawardhena and Foley, 2000).
Robinson (2000) believes that the supply of internet banking services enables banks to establish
and extend their relationship with the customers.

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Research Methodology
Research Type

We use descriptive research and exploratory research design in our studies. Descriptive research
is also called Statistical Research. The main goal of this type of research is to describe the data
and characteristics about what is being studied. The idea behind this type of research is to study
frequencies, averages, and other statistical calculations. Although this research is highly
accurate, it does not gather the causes behind a situation. Descriptive research is used to obtain
information concerning the current status of the phenomena to describe "what exists" with
respect to variables or conditions in a situation. The methods involved range from the survey
which describes the status quo, the correlation study which investigates the relationship between
variables, to developmental studies which seek to determine changes over time.

Data Collection

Primary Data: Structured Questionnaire

Secondary Data: Online Database, Journals, Surveys

Data interpretation and analysis

1. Which banking service do you use?

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 We intended to find out what is the most common E-banking service used by the customers.
We found that ATM/Debit card is the most used E-banking service among the customers. The
reason behind this could be that ATM/Debit cards are the most common and easy to use for
any and it is the most necessary thing in today’s world.

2. Do you trust the security of e-banking service?

The above pie chart depict that majority (45%) of people agree that they trust the security of e
banking system. And 31% of respondent believe that they are somewhat trust the security but
they are not much satisfied with that. And minority (9%) of believe disagree that they don’t trust
the security system in e banking.

3. Internet is more effective than branch banking about time saving,

After observing we find that majority (48%) of people strongly believe that e banking is more
effective them branch banking if it comes to saving time. Whereas, about 12% of people are not
fully agree with this statement.

4. According to you e-banking is beneficial than traditional banking?

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The pie chart depicts that 47% of people believed and agree and 37% of the people strongly
agree that e-banking is beneficial than traditional banking. And it is finding out that no one
disagree with statement.
To concluded majority of people are agree that e-banking is beneficial than traditional banking.

5. Did e-banking help a lot the time of demonetization?

The above pie chart indicates that 37% of the total customers agree with the statement, 40% of
the total customers strongly agree with the statement, 17% of the total customer neither agree nor
disagree, and 6% of the total customers disagree with the above statement.
To conclude, E-banking helped a lot at the time of Demonetization as 59% of the total customers
agree with the above statement.

6. Did e-banking is helping a lot at the time of covid-19?

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This pie chart depict that 59% of the people strongly agree, 34% pf the people agree that e-
banking is facilitating and helping a lot at the time of covid-19 and there is very less proportion
which is disagree with the statement.
To conclude, e-banking is helping a lot at the time of covid-19.

7. E Banking Services are more flexible and convenient than physical banking during Covid-
19 pandemic

This pie chart depicts that majority (57%) of the people are strongly agree, 35% of the people
agree and 8% of the people are neutral with the statement that E Banking Services are more
flexible and convenient than physical banking during Covid-19 pandemic.
To conclude, E Banking Services are more flexible and convenient than physical banking during
Covid-19 pandemic.

8. E-Banking Services provides contactless payment as it does not involve handling paper
money during covid-19 pandemic.

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 2%2% This pie chart depict that 19.40% of the
19% people strongly agree, 46.90% of the
people agree and 29.60% of the people
30% Strongly Agree
neutral with the contactless payment by e
Agree banking and helping a lot at the time of
Neutral covid-19 and there is very less proportion
Disagree
Strongly Disagree
which is disagree with the statement.
To conclude, e-banking provides
contactless payment as it does not involve
handling paper money during covid-19.
47%

9. Mobile Banking Payments provides opportunity to earn rewards, cash backs and coupons.

2%2%
19%

30% Strongly Agree

Agree
Neutral
Disagree
Strongly Disagree

47%

This pie chart depicts that 19% of the people are strongly agree, 47% of the people agree and
30% of the people are neutral with the statement that mobile banking payments provides
opportunity to earn rewards, cash backs and coupons.
To conclude, E Banking payments provide opportunity to earn more and more rewards,
cashbacks to encourage people to use this service during Covid-19 pandemic.

10. E Banking has fulfilled my expectations than Conventional Banking during Corona virus
pandemic

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This pie chart depicts that 34.7% of the people strongly agree, 41.8% people agree and 23.5% of
the people are neutral they are neither agree nor disagree with the statement.
To conclude, majority of people are agreed that E Banking has fulfilled my expectations than
Conventional Banking during Corona virus pandemic.

11. It would not be easy without the e banking during this pandemic.

This pie chart depicts that 37.8% of the people strongly agree, 42.9% of the people agree, 17.3%
of the people are neutral they are neither agree nor disagree with the statement and there are
minority of people also who are not disagree with the statement as well.
To conclude, majority of people are agreed that it would not be easy without the e banking
during this pandemic.

12. Are you satisfied with e-banking services?

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This pie chart depicts that 57.1% of the people are agree, 25.5% of the people strongly agree,
15.3% of the people are neutral as they are not fully satisfied with the e-banking services and
there’s minority of people as well who are strongly disagree with the statement that they are not
satisfied with the e-banking services.

CONCLUSION
Majority of the respondents have trust issues in security level of e banking . Security level of e
banking needs to be improved . E banking users’ needs to be aware regarding frauds and scams.
Banking server also needs to be get improved in a way that account hacking , frauds and scams
might not be possible.

Majority of the respondents strongly agree that internet banking is more effective than branch
banking about time saving as internet banking helps in immediate transaction by ignoring
transportation and many other aspects. International transactions can also be done immediately ,
so it saves both time and money.

Majority of the respondents strongly agree e banking helped during the time of demonetization
as the cash transactions were not possible. Changing the old currency notes to new was lengthy
procedure during demonetization, e banking was considered to be most effective for the
transaction.

E banking has fulfilled the needs of majority of the respondents during covid 19 , it helped in
having safe transactions as cash transactions were unsafe during covid . Research also says that
covid pandemic might be difficult without e banking . Embanking retained many businesses
from getting close during covid 19, especially scope of online business has increased due to
pandemic .

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Hence, huge satisfaction is seen among the respondents due to its usage during the covid
pandemic and time and cost saving function , but banking industry needs to improve its security
level which is main reason for dissatisfaction among the respondents .

REFERENCES
 Bhosale, M. (2015). Indian Banking Sector at a Glance. International Research Journal of
Engineering and Technology (IRJET). 2(1)
 Rahman, M. (2007). E-Banking: Evolution, Status and Prospects. Journal of the Institute of Cost
and Management Accountants of Bangladesh. 35(1)
 Kaur, K. (2014). Electronic Banking in India: Innovations, Challenges and Opportunities.
International Journal of Management and Commerce Innovations. 2(1)
 Solanki, V. (2012). Risks in E-Banking and their Management. International Journal of Marketing,
Financial Services & Management Research. 1(9)
 Chauhan, V. (2015). Internet Banking: Challenges and Opportunities in Indian Context. Apeejay -
Journal of Management Sciences and Technology. 2(3)
 Chavan, J. (2013). Internet Banking- Benefits and Challenges in an Emerging Economy.
International Journal of Research in Business Management (IJRBM). 1(1)
 Isac, C. (2014). E-Banking Services – Features, Challenges and Benefits. Annals of the University
of Petroşani, Economics. 14(1)
 Gupta, S. (2015). SWOT Analysis of Electronic Banking in India. International Journal in
Commerce, IT & Social Sciences. 2(10)
 Vyas, S. (2009). Impact of E-Banking on Traditional Banking Services. Eurasian Journal of
Business and Economics. 2(4)

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  Lal, R. (2012). E-Banking: The Indian Scenario. Asia Pacific Journal of Marketing & Management.
1(4)
 Geetha, K. (2011). Acceptance of E-Banking among Customers. Journal of Management and
Science. 2(1)

APPENDIX
Questionnaire

Name:- _____________

Age:-

o Below 20
o 20-30
o 30-40
o Above 40

Gender:-

o Male
o Female
o Others

Occupation:-

o Business

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 o Job
o Govt. services
o Professional
o other

Qualification

o Graduation
o Post-graduation
o Professional
o other

1) Do you use any E-banking services?

 Yes
 No

2) Which E- banking services do you use?

 ATM/ debit card
 Electronic fund transfer
 Telephone banking
 Credit card
 Others
Question Strongly Agree Neutral Disagree Strongly
agree disagree

Do you think that E- banking

services are necessary in present
scenario?
Do you trust the security of E-
banking services?
Internet Banking is more
effective than branch banking
about time saving.
According to you, is E-banking
beneficial than traditional
banking?
Did E- banking help a lot at the
time of demonetization?
Did E- banking help a lot at the

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time of covid?
E Banking Services are more
flexible and convenient than
physical banking during Covid-
19 pandemic.
E Banking Services provides
contactless payment as it does not
involve handling paper money
during covid-19 pandemic
Mobile Banking Payments
provides opportunity to earn
rewards, cash backs and coupons.
E Banking has fulfilled my
expectations than Conventional
Banking during Corona virus
pandemic.
It would not be easy without the
e-banking during this pandemic.
Are you satisfied with E- banking
services?

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