Page 1 of 7
Journal for Studies in Management and Planning
Available at https://pen2print.org/index.php/jsmap/
ISSN: 2395-0463
Volume 05 Issue 01
January-2019
Available online: https://pen2print.org/index.php/jsmap/ P a g e | 84
Online Banking in India
MR. RAJESH KUMAR
ASS PROF- Institute of Engineering &Technology Alwar (Raj.) And
Mr Sunil Yadav
Assistant Professor :LIET ,Alwar
DR. O P PATHAK
HOD Department of Management studies- Institute of Engineering &Technology Alwar (Raj.)
Abstract. This paper documents online banking trends, behaviors and expectations of Indian
consumers and banks. It is based on excerpts of a large industry case study of users from 4
leading banks. While banks view online banking essentially as a technology solution, it is a
relatively new area for Indian consumers and not yet self-supporting. Being a savings based
culture still, Indian consumers are cautious about their financial assets. They are also relatively
recent entrants to internet based services. Design of these systems must therefore be based on an
understanding of these users’ outlook and priorities through task centric, security assured and
service oriented solutions minus the technological challenges. Design lessons suggest viewing
online banking not just as a convenience alone anymore but beyond it, to provide service,
simplicity and security. This will create satisfied online banking customers and therefore
profitability for the bank.
Keywords: Online Banking, user of online banking, perception of banking, banking in India
Introduction
The Internet has revolutionized the way we live, shop, entertain and interact and also the way we
save and invest. Internet banking arrived in India in the late 1990s .ICICI was the first bank to
champion its usage and introduced internet banking to its customers in 1996. With lower internet
costs and increased awareness about electronic media, online banking established itself only in
1999. Other banks followed suit, including HDFC, Citibank, IndusInd and the now redundant
Times Bank.
Page 2 of 7
Journal for Studies in Management and Planning
Available at https://pen2print.org/index.php/jsmap/
ISSN: 2395-0463
Volume 05 Issue 01
January-2019
Available online: https://pen2print.org/index.php/jsmap/ P a g e | 85
Internet banking changed both the banking industry as well as banks’ services to its customers.
‘Anywhere banking’ came to be recognized as an opportunity also for differentiated and
competitive services. Ancillary online services like checking account status, fund transfer,
ordering demand drafts, loan applications, credit card verifications, shopping portals etc. as well
as not requiring a visit to the branch during office hours were viewed as high-value offerings and
increasingly started to become a necessity rather than a service.
Once banking institutions recognized the low processing cost per transaction via the internet,
they began viewing online banking as an extension of the bank rather than as an add-on service.
The motivation to introduce online banking now also included new business potential, additional
funds from new and existing customers, expansion in geographical reach, image as a tech-savvy
bank especially if targeting the youth and the threat of customers shifting loyalty if they did not
introduce it.
Nationalized banks initially viewed online banking as insecure and counterintuitive and were
therefore hesitant. But eventually, SBI, Canara Bank, Allahabad Bank, Punjab National Bank,
Bank of Baroda, Syndicate Bank and others introduced it. SBI launched internet banking in 2001
and experienced good response. In general, internet banking saw an exponential rise in users .
Today, banks encourage their customers to use online banking. Besides cost and revenue
impacts, this paradigm shift is because they also recognize that self-control transactions have
greater potential for customer satisfaction and retention. Online banking has thus come to be
among essential banking services.
The approach to adopting online banking however is often to merely stay abreast of industry and
technology and online banking is becoming a separate business unit driven by technological
possibilities. The user often has minimal place in such an approach as evidenced by non-human
centric experiences that flourish. However, the cultural and organizational shift needed by Indian
banks to draw old customers into this new banking channel as well as to draw new customers
requires a user centric focus.
But how much have banks paid attention to the user? How is the overall experience and how do
customers perceive their bank as they struggle unaided in the comfort of their homes? How
cognizant are banks that customers silently leave after getting frustrated? Do they measure how
much revenue they are losing because of a technology focused approach to online banking? How
do Indian consumers behave in this dichotomy between technology barrier and convenience?
Indian Banking Industry and Online Awareness
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Journal for Studies in Management and Planning
Available at https://pen2print.org/index.php/jsmap/
ISSN: 2395-0463
Volume 05 Issue 01
January-2019
Available online: https://pen2print.org/index.php/jsmap/ P a g e | 86
A large chunk of the Indian banking industry still belongs to the public sector banks having the
most extensive network of physical branches. These are followed by large private banks and
lastly by multinational banks (MNC) who have the smallest physical network and therefore their
online banking needs to be the most developed and able to address user needs without requiring
human intervention.. The fact that most government organisations have their payroll accounts
with public sector banks contributes significantly to the large customer bases of these banks.
Traditional public sector banks have existed for many years and have serviced diverse income
groups. This has resulted in their customer base being huge as well as belonging to a wider
demographic representation, given India’s heterogenous population as well. However, most of
the traditional customers prefer to bank with a ‘bank with a human touch’ and prefer public
sector banks as they form an emotional relationship with their bank personnel, which is not really
encouraged by private sector or multi-national banks.
Review of Literature
Review of Literature done through following
a) Malhotra R.N., “Banking in 1990’s, PIGMY”, Economic Review, Monthly Economic Journal of
Syndicate Bank, Vol. 35, No.7, February 1990, pp.1-3 and 8
b) De, Rajneesh and Padmanabhan, Chitra for Indian Express Group, Internet opens new
vistas for Indian banks, www.expresscomputeronline.com/20020916/indtrend1.shtml
c) Merholz, P., Wilkens, T., Schauer, B., Verba, D. Subject To Change: Creating Great
Products & Services for an Uncertain World
d) Norman, D., Emotional Design: Why We Love (or Hate) Everyday Things
Research Methodology
1 Objectives of the Research Study
1) To find the banking sector largely preferred by the customers.
2) To study the measures taken by Private & Private Sector Bank against the frauds in Net
Banking and compare
3) To study the Comparison between Net Banking Services provided by the Private & Public
sector Bank
