International Journal of Innovations & Research Analysis (IJIRA) 35

ISSN :2583-0295, Impact Factor: 5.449, Volume 02, No. 02 (II), April- June, 2022, pp 35-40

ISSUES AND CHALLENGES FACED BY DIGITAL BANKING USERS

Jaspreet Kaur
Dr. Kashmir Singh**

ABSTRACT

With the introduction of digitalization and the digital India program, the banking sector has
become more competitive, assuring improved customer service and achieving the objective of a cashless
economy. Banking has begun to change from cash and paper-based banking to cashless and paperless
banking as a result of digitization. The objective of the paper is to study the challenges faced by the
customers of digital banking. A sample of 300 respondents was selected from the state of Punjab to
collect the data. The Analysis has been done by using Percentages, Chi-square test and Weighted
Average Method. Long processing time, Insufficient technical knowledge, server issues, poor network,
and high transaction cost are some hurdles in the path of digital banking that are needed to be resolved
for the betterment of digital banking.
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Keywords: Digital Banking, Awareness Level, Challenges, Customer Service, Digitalization.

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Introduction
Digital Banking
Digital banking is a system that uses the internet to enable banking transactions such as fund
transfers, loan and EMI payments, and cash deposits and withdrawals. It's one of the extra services that
banks offer in addition to traditional banking. Following the implementation of demonetization, it has
become the most popular feature among Indian citizens. Digital banking services are divided into various
sorts or areas. Internet banking, mobile banking, ATMs, NEFT, PPIs, SMS Banking, e-cheques, debit
and credit cards, and other services are among the most popular. ICICI Bank was the first bank in India
to offer digital banking in 1996. Since then, several more banks have followed suit, and most banks now
offer digital banking services.
Recent Digital Banking Trends
When it comes to digital banking, consumers today have a plethora of options. If they want to
stay ahead, even the most established financial institutions will have to work hard to be relevant. The
following are some of the most recent banking innovation trends and services:
• Automated Teller Machines (ATMs): An ATM is an electronic telecommunication equipment
that allows bank/financial institution customers to do financial transactions, primarily cash
withdrawals, without the assistance of a cashier or staff. Balance inquiries, PIN generation,
passbook printing, and cheque deposits are among the additional services provided by an ATM.
• Mobile Banking: Mobile banking is a financial service that allows a client to conduct banking
transactions and gather relevant information using a mobile phone or tablet at any time and from
any location without contacting the bank's CRM. All a customer has to do is go to the app store
on their smartphone or tablet and download and install the bank's mobile applications.
Customers can use mobile banking to carry a virtual bank on their phones. They can use it to
download mini statements, receive account activity alerts, monitor term deposits, view loan
statements, manage insurance policies, transfer cash between customer's connected accounts
and third parties, and so on.


Research Scholar, Department of Commerce, Punjabi University Patiala, Punjab, India.
**
Principal, Mata Gujri College, Fatehgarh Sahib, Punjab, India.
36 International Journal of Innovations & Research Analysis (IJIRA)- April - June, 2022

• Credit/Debit Cards: This feature encourages cashless transactions. It allows customers to

make purchases without having to carry cash. A credit card allows a customer to borrow money
up to a specific limit, and the credit card company charges a particular amount of interest on the
money the user uses to make purchases. The debit card, on the other hand, is linked directly to
the client's bank account, and when the customer makes purchases with it, the money is
automatically debited from the customer's account.
• National Electronic Funds Transfer (NEFT) is a one-to-one payment mechanism that
operates across the country. A person can electronically transfer monies from any bank branch
in the country participating in the system to any individual who has an account with any other
bank branch in the country participating in the scheme. Individuals, businesses, and
corporations with a bank branch account can use NEFT to transfer payments. Individuals who
do not have a bank account can deposit cash with instructions at NEFT equipped branches.
Credit and debit cards are accepted. This location encourages cashless transactions. It allows
customers to make purchases without having to carry cash. A credit card allows a customer to
borrow money up to a specific limit, with the credit card company charging a specified amount of
interest. The debit card, on the other hand, is linked directly to the client's bank account, and
when the customer makes purchases with it, the money is automatically debited from the
customer's account.
• PPIs - Mobile Wallets and PPI Cards: PPIs are payment instruments that enable the purchase
of goods and services, such as financial services and remittance services, against the value
held on them. There are three types of PPI systems: closed, semi-closed, and open. Closed
systems are PPI issued by a company just for the purpose of purchasing products and services
from that company. Semi-closed PPIs can be used to buy goods and services, including
financial services, at a group of clearly identified merchant locations/establishments that have a
specific contract with the issuer to accept the payment instruments, while open system PPIs can
be used to buy goods and services, including financial services like funds transfer, at any card
accepting merchant location (point of sale terminals) and also permit cash withdrawal. Banks
and non-banks are both permitted to issue closed and semi-closed PPIs, but only banks are
permitted to issue open system PPIs. Paytm, mobikwik, and itzcash are among the largest non-
bank issuers of PPIs / wallets. In recent years, PPIs have seen a tremendous rise.
• Unified Payment Interface (UPI): The most convenient type of financial transaction interface is
the Unified Payment Interface (UPI). It was released on August 23, 2016. It allows for instant
money transfers from any location using a mobile device. It allows users to access several bank
accounts with a single mobile app that combines many banking functions and two-factor
authentication with a single click. Each bank has its own UPI for various operating systems such
as Android, iOS, and Windows.
Review of Literature
Aladwani (2001) conducted research into the drivers and challenges of online banking; the
findings show that bank managers support a lack of internet specialists and changes in internal
technology as the primary issues affecting online banking development, while IT managers cite time and
budget constraints, as well as immature Internet technology. According to the report, the most significant
difficulty for the development of E-banking is technological impediments, which are cited by both general
and IT managers. Customers, on the other hand, cited internet security, online banking laws, and client
privacy as the most pressing E-banking concerns in Kuwait.
Kumbhar (2011) analysed that public and private sector bank customer have similar
perceptions of all service quality parameters of ATM services except for the cost-effectiveness. It is
suggested that cost-effectiveness of ATM service is a core service quality component that has a
considerable impact on overall consumer satisfaction with commercial bank ATM services.
Karimzadeh and Alam (2012) analysed that legal and security, sociocultural, management,
and banking issues are expected to be challenges for the development of E-banking. It is also found that
there is less awareness about new technologies and unsuitable software, which are ranked as the
highest and lowest obstacles in India, respectively.
Verma (2015) stated that developed countries can use internet commerce to their advantage
because of strong internet penetration among their populace, whereas underdeveloped countries are still
far behind. Other concerns suggested as roadblocks to widespread Ecommerce adoption in poor nations
include a lack of technical infrastructure, lack of knowledge, a lack of competent human resources, and
social constraints.
Jaspreet Kaur & Dr. Kashmir Singh: Issues and Challenges Faced by Digital Banking Users 37
Objectives of the Study
• To examine the awareness level of ATM services in Punjab State.
• To identify the problems faced by customers while using Digital banking services in Punjab
State.
• To offer suggestions to overcome the problems in Digital Banking Sercvices in near future.
Research Methodology
The following design is followed for the study
Primary Sources
A well-structured questionnaire is prepared to collect the data from the users of digital banking
in Punjab state.
Secondary Sources
The various secondary information used for the research is collected from the various published
and non-published works including books, periodicals, magazines, government reports, journals and
websites, etc.
Sampling Method
A simple random sampling method is followed.
Area of the Study
Sample Size
The four districts of the Punjab state have been selected namely, Mohali, Amritsar, Ludhiana,
and Jalandhar. 75 each respondent has been selected from the four districts of Punjab state comprising
300 total bank customers as a sample size.
Tools Used for the Analysis
The data collected was analyzed through Percentages, Chi-square test and Weighted Average
Method is applied for the analysis of data.
Analysis and Interpretation
Table 1: Demographic Profile of Respondents
Demographic Variable N %
Male 153 (51)
Gender Female 147 (49)
total 300 (100)
Doctorate 71 (24)
Postgraduate 158 (53)
Education Graduate 43 (14)
Senior Secondary 28 (9)
Total 300 (100)
Govt. Employee 17 (6)
Private Employee 152 (51)
Business 42 (14)
Occupation
Student 82 (27)
Unemployed 7 (2)
Total 300 (100)
less than 10,000 49 (16)
10,000 - 25,000 70 (23)
25000 - 40,000 95 (32)
Income 40,000 -60000 19 (6)
60,000 - 1,00,000 21 (7)
More than 1,00,000 46 (15)
Total 300 (100)
Table 1.1 indicates demographic wise distribution of respondents. Majority (51 per cent)
respondents are male and (53 per cent) of customers are post graduate. Percentage of Private
employees is maximum 51 per cent. Most of the digital banking customers belong to the income group of
25,000-40,0000 (32per cent).
38 International Journal of Innovations & Research Analysis (IJIRA)- April - June, 2022

Hypothesis-Testing
H01: There is no difference between the gender of respondents and their awareness level about
digital banking services.
H02: There is no difference between the occupation of respondents and their awareness level about
digital banking services.
H03: There is no difference between the income of respondents and their awareness level about
digital banking services.
H04: There is no difference between the education of respondents and their awareness level about
digital banking services.
Table 2: Awareness Level of Digital Banking Services
Awareness Level
Fully
Fully Partly Aware Chi- P-
Total DF Result
Aware Aware but Square Value
Unsecure
Gender Male 27 74 52 153
11.066 2 0.004 Rejected
H01 Female 45 46 56 147
Occupation Govt. Employee 5 6 6 17
Private Employee 25 56 71 152
Business 8 19 15 42 31.997 8 0 Rejected
Student 34 34 14 82
Unemployed 0 5 2 7
Income less than 10,000 10 15 24 49
10,000 - 25,000 19 24 27 70
25000 - 40,000 18 38 39 95
40,000 -60000 5 11 3 19 21.151 10 0.020 Rejected
60,000 - 1,00,000 10 7 4 21
More than
10 25 11 46
1,00,000
Education Doctorate 12 29 30 71
Postgraduate 50 62 46 158
17.717 6 0.007 Rejected
Graduate 8 20 15 43
Senior Secondary 2 9 17 28
Table 1.2 shows the results of chi-square, which indicates that there exists a difference between
the gender, occupation, income and education level of respondents and their awareness level about
digital banking services at 5 per cent level of significance.
Table 3: Challenges Faced by Customers
Disagree

Disagree
Strongly

Strongly
Neutral
Agree

Agree

Rank
WAS

Problem

N 10 76 106 99 9
Long processing time 2.93 10
% (3) (25) (35) (33) (3)
Insufficient technical N 45 100 123 24 8
3.50 6
Knowledge % (15) (33) (41) (8) (3)
N 74 131 80 14 1
Server Issue 3.88 3
% (25) (44) (27) (5) (0)
Poor network/Network N 68 170 51 11 0
3.98 2
Connectivity Problem % (23) (57) (17) (4) (0)
N 28 125 101 46 0
Password forgotten 3.45 7
% (9) (42) (34) (15) (0)
N 28 192 66 14 0
Risk of frauds 3.76 4
% (9) (64) (22) (5) (0)
N 23 199 39 29 10
High Transaction Cost 3.65 5
% (8) (66) (13) (10) (3)
Need of training provided by N 28 95 107 57 13
3.23 8
the bank % (9) (32) (36) (19) (4)
N 89 171 35 2 3
Unsuitable location of ATMs 4.14 1
% (30) (57) (12) (1) (1)
N 16 106 104 56 18
lack of confidence 3.15 9
% (5) (35) (35) (19) (6)
Jaspreet Kaur & Dr. Kashmir Singh: Issues and Challenges Faced by Digital Banking Users 39
Table 3 demonstrates the problems faced by bank customers while using digital banking
services. According to the opinion given by the bank customers regarding the problems the “Unsuitable
location of ATMs” is ranked first with a weighted average score of 4.14. The customers ranked “Poor
network/Network Connectivity Problem” at second position with a weighted score of 3.98. Another major
third problem faced by customers is the Server Issue (WAS = 3.88). The next problem faced by
customers is “risk of frauds” which is ranked at 4th place (WAS = 3.76). The problem of “high transaction
cost” among customers is ranked at 5th place (WAS = 3.65).
Moving further “insufficient technical knowledge” problem is ranked 6 th place (WAS = 3.50).
Forgetting the password is the 7th Problem faced by bank customers (WAS = 3.45). Need of training
provided by the bank and Lack of confidence are other problems faced by public sector bank customers
at 8th and 9th rank respectively (WAS=3.23, WAS=3.15 respectively). The problem of “long processing
time” is ranked at 10th place with the WAS of 2.93.
Findings
• Majority (51 per cent) of the respondents are males.
• Most of the respondents (53 per cent) are postgraduate.
• Nearly 32 per cent of the respondent‘s monthly income belongs to the income group of 25,000-
40,0000.
• Most of the respondents (51 per cent) are private employees.
• Three is no difference in the awareness level of customers regarding digital banking services
based on demographic variables (gender, occupation, income and education).
• Most of the respondents face the problem of the Unsuitable location of ATMs while using digital
banking.
Suggestions for the betterment of Digital Banking Services
• The issue of the long processing time taken by banks should be resolved by offering quick
services.
• The banks should organise special workshops or training to educate customers regarding
technical knowledge.
• One of the major issues regarding network connectivity should be resolved by banks on an
urgent basis to smoothen digital banking services.
• Transactions and withdrawals are made every now and then thus proper and additional ATMs
may be installed in order to resolve the issues faced by users.
• Many customers forget their passwords which sometimes becomes a tough job to recover the
password, hence a face identical or biometric facility should be made available to tackle such
issue.
• Banks should take required actions to reduce the risk of fraudulent activities.
• Customer’s satisfaction can be achieved by focusing on all the aspects considering the
transaction cost which should be kept minimum.
Conclusion
In today's technological environment, digital banking has taken on a new form. The banking
business is reshaping itself, shifting from a traditional to a technological strategy. Banking services are
taking on a new look because to technological advancements. The banking sector in India is undergoing
significant changes as a result of the adoption of digitisation. We can't ignore the expansion and services
of digital banking because we live in the digital age. It is found that digital banking services of Punjab
state are well received and utilized by the customers. It is revealed that the awareness level of customers
is high which is motivating the customers to use digital banking services. There is no difference found
between the awareness level and demographic variables indicating that irrespective of the gender
classification, income level, occupation and education level, every customer prefers to use the digital
banking services. Although there is a positive association between the demographic variables and
awareness level, still there a many problem that the customers had to face. The issue of the unsuitable
location of ATMs, network connectivity, password is forgotten, long processing time, etc are some issues
that are creating some obstacles while using digital banking. Hence banks and RBI need to focus on
removing these issues for the betterment of the digital banking services.
40 International Journal of Innovations & Research Analysis (IJIRA)- April - June, 2022

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