The use of internet banking in the finance sector in numerous parts of the world is still at its infancy stage. Although numerous researches targeted on the effectiveness of internet banking to consumers have been performed, the research on the factors that may trigger its non-usage in the internet banking having been overlooked. This proposed research will be focused on analyzing the conceptual framework of internet banking as a viable investment banking strategic plan in India. It will also be focused on determining the causative factors that would ensure that internet banking in used by numerous persons in the India. It will also illustrate the consumers perceptions pertaining internet banking as well as the drivers that drive consumers to make a decision to use internet banking in the nation.
Brief Rationale Behind the Research Objectives
The evolution of the Internet technology in many parts of the world have created a major paradigm shift to the financial sector. Today, most banks in the U.S. and other parts of the world have invested heavily on internet banking as an effective strategy of enhancing their businesses. The development of internet banking today started in the early 1990s. Through internet banking, banks customers and businesses can be in a position to access their accounts, collect information on financial products and services as well transact business via the Internet. In India, the IT Act was developed in 2000 and its sole purpose, in the banking sector, was to provide a legal recognition to all employed electronic transactions used in the nation as well as other means of electronic.
The ICICI Bank was the pioneer bank to invest in internet banking as a tool for enhancing its banking commerce. Together with other several banks in India, Internet banking provided the consumers with an effective method of transacting with the bank. Although the development of Internet banking in India posed a lot of advantages to the banks consumers, its usage has not been adopted vastly compared to other nations such as the U.S. Nevertheless, Indian Banks such as the BOI, SBI as well as BOB among others have invested in internet banking as an effective strategy of providing online banking services to customers. However, there is a need for the banking sector to learn how their consumers evaluate their online services and develop e-loyalty.
The quality of services is the primary factor that determines the success or failure of the usage of electronic commerce (Santos, 2003). The usage of internet banking in the banking sector has lagged behind in its success because most of its users have focused primarily on its issues of usability as well as measurement of use (Al-Hawar, 2005). For this reason, customers perception, as well as preferences in the quality of services, have a significant impact on the success of banks in successfully implementing the usage of internet banking devices in the banking sector. This research will be focused on investigating the acceptance of the Internet banking services among the Indian banks consumers as well as their perception of the internet banking mechanism.
The study of the Internet banking investment in India by the banks and other financial institutions will aid in shedding a light on the factors that have affected its rapid adoption by consumers. This is an effective system for executing financial transactions between banks and their customers. A research on the perception of the Internet banking service, loyalty and consumers satisfaction in India will aid the banks in ascertaining how their Internet banking services are evaluated by the consumers. The information that will be attained from this research will in turn aid the banks in investing on the factors that hinder the vast execution of the Internet banking technology in India.
The Internet banking just like the automated teller machine created an essentially new financial distribution system via which banking institutions could deliver their traditional banking products as well as services to customers. Most banking customers in different parts of the world have developed a comfort on the rapid proliferation of remote banking services such as ATMs and Internet banking services. At first, most banks adopted the use of Internet to promote their core services such as products, services, and advice to their consumers. They then ventured into the Internet commerce market for distribution of their own products as well as services. Nevertheless, the majority of the banks that avoided the Internet banking services at first did so because they did not find any benefit of using the online banking for the Internet Commerce.
Past research studies have substantiated that online bankers make the most profitable or the wealthiest segments in financial institutions (Sheshunoff, 2000). The development, as well as diffusion of internet usage in numerous parts of the world, can be accredited to the argument that it is cost saving to the banks. It also reduces the number of bank networks and also paved way for the immergence of efficient financial self-service channels for customers. In addition, Internet banking has become an efficient system through which customers can save time and effort that would otherwise have been used in the traditional banking method (Karjaluoto et al. 2003). Nevertheless, despite the perceived merits of the Internet banking method, its usage in some nations such as India has not yet been largely successful.
According to Polatoglu and Kin (2001), the average Internet banking transactions costs approximately one twentieth of the tradition teller servicing transaction. As such, most banks viewed its usage for banking commerce as transactions cost ineffective. In addition, according to the Consumer Bankers Association (2001) the usage of Internet Banking remained vastly stagnant between 1996 to 1998 and less than 10 percent of Banks in the financial sector utilized the services. Also, according to Reil et al. (2001) as well as Long and McMellon (2004) automated banking services such as the ATMs and Internet banking devices are still at the infancy stage. These literature revelations illustrate that there is no generally approved theoretical conceptualization of the quality of services offered by Internet banking facilities.
According to the European Commission On Public Perceptions (2003), lack of trust has been accredited to be the primary reason that discourages most banks customers from adopting e-commerce as a convenient transacting method. In addition, according to the Commissions reports, cultural differences also significantly affected the level of customers trust formation on the Internet banking. In addition, according to the Journal of Services Research (2007), other variables that affect the Internet banking adoption by customers include religious beliefs, subjective norms, perceived usefulness, intentions and perceived ease of use. In addition, according to the Journal of Internet Banking and Commerce (2006), demography is also a primary factor that may affect the usage of internet banking services.
Corrocher (2002) performed a research aimed at investigating the determinants of using the Internet technology in the Italian banking sector. The research focused on investigating the relationship between the Internet banking technology adoption and the traditional banking activity. According to the findings of the research, it was evidenced that most banks seemed to perceive the Internet banking to be a direct substitute of the traditional banking. This perception by the banks was also translatable to the perception adopted by the banks customers. The impact of such a perception can be argued to be one of the primary factors that have contributed to the poor adoption of the Internet banking technology in the Indias banking sector.
In addition, according to a theoretical analysis performed by Rao et al. (2003), the use of Internet banking system in India compared to its usage in other banks situated to other nations around the world have a long way to go. The publication argued that in order for the Internet banking technology to range a large scale in its usage within the nations banking system, it has to be adopted by a large number of users. It should also have a sufficient number of essential internet technology infrastructure in place. In addition, the publication illustrated that although the ICT sector, via internet banking, introduced new business paradigms in India. It also illustrated that the ICT sector significantly improved the efficiencies of providing financial services in banks in India. Nevertheless, the publication stated that the usage of Internet banking technology has not yet been widely adopted in the nation.
Studies performed by Devlin and Yeung (2003) and Polatoglu and Ekin (2001) illustrated that there are multiple factors that could contribute to the poor adoption of Internet banking by the banks and its customers. Such factors include responsiveness, flexibility, complexity, security concern as well as convenience. Such factors were associated with the Indian bank's customers higher propensity of using the Internet banking services. In addition, according to a qualitative study performed by Black et al. (2001), persons with a higher level of income than others as well as those who employ information technologies are most likely to use internet financial services to facilitate their operations. This finding also illustrated that education exposure is a primary factor that may influence Internet banking technology in Indias banking sector. The effect of education on the Internet banking usage in India can also be supported by reason that the education level in India is at 67 percent.
In the context of this literature review, the proposed research will seek to evaluate the perception of customers and banks in India in the usage of Internet banking in offering financial services. With the increased ease of performing business using the Internet financial services, there is a need for the most banks in India to ascertain the factors that affect the Internet banking usage in India.
Formulation of the Research Questions
This research will be performed based on 4 fundamental questions. The questions will investigate the perception of the Internet banking services by banks customers in India. The research questions will also seek to investigate the frequency of the Internet banking usage by consumers of the various banks situated in India. In addition, the research questions will determine the level of banking customers comprehension of various Internet banking products offered to the public by the banks. Also, the research questions will seek to know how many banks users in India have access to Internet connectivity, an essential prerequisite for the Internet banking services. Ultimately, the research questions will seek to know the various factors that affect the increased adoption of the Internet banking services by banks in India and their customers.
Research Question 1# What is the perception of the concept of Internet banking by users of banking services in India?
Research Question 2# How many times do banking customers use Internet banking service to execute financial transactions?
Research Question 3# What is the level of customers comprehension on the various internet banking packages offered by the banks in India? Also, do most customers who use banks have access to good internet connectivity for them to execute various Internet banking functions.
Research Question 4# What are the various factors that affect the increased adoption of the Internet banking services by banks in India and also by their customers?
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