Impact of New Technology in Banking Sector

IMPACT OF NEW TECHNOLOGY IN BANKING
SECTOR”

A PROJECT SUBMITTED
TO
UNIVERSITY OF MUMBAI FOR PARTIAL
COMPLETION OF THE DEGREE
OF
BECHELOR OF BANKING AND INSURANCE
UNDER THE FACULTY OF COMMERCE
SEMESTER VI
2019-2020

BY
KAJAL VINOD GOHIL

UNDER THE GUIDANCE OF
Dr.K.S.JAIN
SYDENHAM COLLEGE OF COMMERCE AND

ECONOMICS
‘B’ ROAD, CHURCHGATE MUMBAI – 400020

SYDENHAM COLLEGE OF COMMERCE AND ECONOMICS
‘B’ ROAD, CHURCHGATE, MUMBAI – 400020
BBI ( BACHELOR OF Banking And Insurance )
CERTIFICATE

This is verify that Ms. Kajal Vinod Gohil has worked and duly completed his
Project work for the degree of Bachelor of Banking and Insurance under the
faculty of Commerce in the subject of commerce and his project is entitled,
“IMPACT OF NEW TECHNOLOGY IN BANKING SECTOR”

I further certify that the entire work has been done by the learner under my
guidance and that no part of it has been submitted previously for any degree or
Diploma of any University.
It is his own work and facts reported by his personal findings and investigation.

DR.K.S JAIN
PRINCIPAL
(PROJECT GUIDE)
DATE OF SUBMISSION:

EXTERNAL EXAMINER:
COLLEGE SEAL

DICLARATION

I the undersigned Ms. Kajal Vinod Gohil here by declare that the
work embodied in the project work titled “Impact of new technology
in banking sector” forms my own contribution to the research work
carried out under the guidance of Dr.K.S JAIN is a result of my own
research work and has not been previously submitted to any other
university for any degree to this or any other university.

Wherever reference has been made to previous works of other, it has
been clearly indicated as such and included in the bibliography.

I, here by further declare that all information of this documents has
been obtained and presented in accordance with academic rules and
ethical conduct.

Kajal Vinod Gohil

(Learner)

Certified by
Dr.K.S JAIN

ACKNOWLEDGEMENT

First of all I would like to extend my gratitude towards
the UNIVERSITY OF MUMBAI for giving me an opportunity to
make project. I would like to thank SYDENHAM COLLEGE OF
COMMERCE AND ECONOMICS for providing an opportunity to
do so.

I would like to thank my Principal Dr. SANGITA PAKADE for
providing the necessary facilities required for completion
of my project.
I would like to thank our Head of department DR.K.S Jain and course
Co-ordinator Dr.S.M Hasan of Banking and Insurance for their
support and guidance throughout the project.
I Would like to extend my sincere thanks and gratitude to my project

guide Dr.K.S JAIN for acting as a mentor and providing me with
utmost help and also for providing continuous corporation and expert
guidance throughout my project, whenever I was needed.
I would like to thank Dr.BABASAHEB AMBEDKAR LIBRARY,

for provided various reference books and magazines related to my
project.
Lastly, I Would like to show my gratitude who directly or indirectly

helped me in completion of the project My Parents (VINOD GOHIL,
LAXMI GOHIL), My Peers, and My Friend who have assisted and
supported me in preparing this project.
INDEX
PAGE NO
SR.NO TOPIC
.
CHAPTER 1 : INTRODUCTION
1.1 INTRODUCTION 1
1.2 INFORMATION TECHNOLOGY IN INDIAN BANKING 5
SECTOR
1 1.3 E-BANKING AND TECHNOLOGY 8
1.5 POTENTIAL BENEFITS OF E-BANKING 9
1.6 REASONS FOR IMPLEMENTATION OF E-BANKING 11
1.7 BARRIERS TO E-BANKING 13
1.8 E-BANKING DELIVERY CHANNELS 15
2 CHAPTER 3 : REVIEW OF LITERATURE
3.1 REVIEW OF LITERATURE 30
CHAPTER 2 : RESEARCH METHODOLOGY
2.1 RESEARCH METHODOLOGY 34

2.2 RESEARCH DESIGN 35
2.3 TYPES OF DATA COLLECTION 35
3 35
2.4 OBJECTIVE OF STUDY
2.5 LIMITATION OF STUDY 36
2.6 SCOPE OF STUDY 36
2.7 TOOLS OF STUDY 36
CHAPTER 4 : ANALYSIS AND INTERPRETATION 37

4
5 CHAPTER 5: CONCLUSION
49
5.1 CONCLUSION
5.2 FINDING
APPENDICES
BIBLIOGRAPHY
QUESTIONNAIRE
IMPACT OF NEW TECHNOLOGY IN BANKING SECTOR
CHAPTER 1
INTRODUCTION
In recent time, Indian banking industry has been consistently working towards the
development of technological changes and its usage in the banking operations for the
improvement of their efficiency.
To get the benefit of enhanced technologies, Indian banks are continuously encouraging the
investment in information technology (IT), i.e. ATMs, e-banking or net banking, mobile and
tele-banking, CRM, computerization in the banks, increasing use of plastic money,
establishment of call centres RBI has also adopted IT in endorsing the payment system’s
functionality and modernization on an ongoing basis by the development of Electronic
Clearing Services (ECS), Electronic Funds Transfer (EFT), Indian Financial Network
(INFINET), a Real-Time Gross Settlement (RTGS) System, Centralized Funds Management
System (CFMS), Negotiated Dealing System (NDS),Electronic Payment Systems with the
‘Vision Document’, the Structured Financial Messaging System (SFMS) and India Card –a
domestic card initiative, implemented recently (2011)
.Indian banking environment has become more compatible as compare to the standards of
international financial system, by the positive impact of all these efforts.
This study makes an at -tempt to map the impact of IT on banking sector for scheduled
commercial banks operating in India including public, private and foreign sector banks in
India. The results convey he results convey that all SCBs have shown a significant and
improving trend in their performance due to the adoption of IT. This adoption is required
mandatory to take the country into the 21st century.
1
Structure of Organised Indian Banking System

The organised banking system in India can be classified as given below:
Reserve Bank of India (RBI):
The country had no central bank prior to the establishment of the RBI. The RBI is the
supreme monetary and banking authority in the country and controls the banking system in
India. It is called the Reserve Bank’ as it keeps the reserves of all commercial banks.
Commercial Banks:
Commercial banks mobilise savings of general public and make them available to large and
small industrial and trading units mainly for working capital requirements.
Commercial banks in India are largely Indian-public sector and private sector with a few
foreign banks. The public sector banks account for more than 92 percent of the entire banking
business in India—occupying a dominant position in the commercial banking. The State
Bank of India and its 7 associate banks along with another 19 banks are the public sector
banks.
2
Scheduled and Non-Scheduled Banks:

The scheduled banks are those which are enshrined in the second schedule of the RBI Act,
1934. These banks have a paid-up capital and reserves of an aggregate value of not less than
Rs. 5 lakhs, hey have to satisfy the RBI that their affairs are carried out in the interest of their
depositors.
All commercial banks (Indian and foreign), regional rural banks, and state cooperative banks
are scheduled banks. Non- scheduled banks are those which are not included in the second
schedule of the RBI Act, 1934. At present these are only three such banks in the country.
Regional Rural Banks:
The Regional Rural Banks (RRBs) the newest form of banks, came into existence in the
middle of 1970s (sponsored by individual nationalised commercial banks) with the objective
of developing rural economy by providing credit and deposit facilities for agriculture and
other productive activities of al kinds in rural areas.
The emphasis is on providing such facilities to small and marginal farmers, agricultural
labourers, rural artisans and other small entrepreneurs in rural areas
Cooperative Banks:
Cooperative banks are so-called because they are organised under the provisions of the
Cooperative Credit Societies Act of the states. The major beneficiary of the Cooperative
Banking is the agricultural sector in particular and the rural sector in general.
The cooperative credit institutions operating in the country are mainly of two kinds:
agricultural (dominant) and non-agricultural. There are two separate cooperative agencies for
the provision of agricultural credit: one for short and medium-term credit, and the other for
long-term credit. The former has three tier and federal structure.
At the apex is the State Co-operative Bank (SCB) (cooperation being a state subject in India),
at the intermediate (district) level are the Central Cooperative Banks (CCBs) and at the
village level are Primary Agricultural Credit Societies (PACs).
Long-term agriculture credit is provided by the Land Development Banks. The funds of the
RBI meant for the agriculture sector actually pass through SCBs and CCBs. Originally based
in rural sector, the cooperative credit movement has now spread to urban areas also and there
are many urban cooperative banks coming under SCB
3
Brief History of Indian Banking Sector
The Indian banking system underwent four distinct phases of evolution .

The phases are briefly discussed as under:
i. The Foundation Phase Pre Nationalization period prior to 1969
When India achieved independence in 1947, its banking system was already fairly well
developed. The Reserve Bank of India (RBI) had been established in 1935 following the
passing of the Reserve Bank of India Act in 1934. At the end of 1947, over 600 commercial
banks were operating in India. During this phase, the government focused on creating a
country-wide sound system for banking. This phase saw the establishment of the necessary
legislative framework for the consolidation and re-organization of the Indian banking system,
thus delivering what is required for the Indian economy. This phase also marked two of the
biggest changes in the banking industry- reorganization of the Imperial Bank as the State
Bank of India %, followed by the nationalization of major private banks in 1969.
ii. The Expansion Phase- Nationalization of banks 1969

This phase began in the mid 1960s but only gained impetus in 1969, after the nationalization
of 14 major banks and resulted in a shift from class banking to mass banking. This phase
continued till 1984. The most notable factor of this phase was the determination to make
banking facilities available to the Indian masses. The branch networks were widened rapidly,
which was achieved in spite of many hindrances like poor infrastructure, inaccessibility and
harsh living conditions. Doing so, inversely affected the banks in terms of asset quality,
yielded negative profits and decreased the competitive efficiency of the system. The next
wave of reforms saw the nationalization of 6 more commercial banks in 1980.
iii. The Consolidation Phase-Slow down of branch expansion 1985

The RBI undertook several policy initiatives which resulted in a slow-down of branch
expansion from 1985. The banks laid more emphasis on improving the customer service,
housekeeping, staff productivity, credit management and profitability of the banks.
iv. The Reform Phase- Liberalization of the banking system of India 1991
Before 1991 banking sector in India was facing several problems such as:
a. Eroding productivity and inefficiency of public sector banks which led to continuous
losses,
b. Poor customer service and obsolete work technology,
c. Increasing NPAs, deteriorated portfolio quality and inability to face competition
effectively.
4
In order to remove the above-mentioned deficiencies, Narasimha committee was appointed in

1991 which acted towards the liberalization of the banking system of India. The committee
submitted its report within three months in November 1991 with measures to improve the
productivity and efficiency of the banking sector (Uppal and Kaur, 2007).The aim was to
improve efficiency, productivity and profitability of the Indian financial sector. The
recommendations among other things laid emphasis on revitalizing overall monetary policy
framework, strengthening financial institutions and integrating the financial system with the
global economy to attract capital and modern technology (Rajneesh De and Padmanabhan,
2002).
This phase faced a major challenge in replacing the development initiatives through
administratively management of planned actions with elements of market incentives.
Corporate governance in banks was established (especially the PSBs), leading to changes in
the regulatory environment, monetary policies and structural transformation. During this
phase, the policies fuelled competition and enabled greater opportunities for practicing
genuine corporate element in banks. Competition increased with the introduction
of private sector banks in the system, new foreign sector banks and also liberalizing norms
for the existing ones. Thus, the financial sector reforms of 1991 brought about deregulation of
interest rates, technological advancements, increased competition, and autonomy packages,
prudent guidelines for income recognition and asset classification and enhancement of micro-
credit category.
5
1.2 Information Technology in Indian Banking Sector

The Information Technology (I.T.) saga in Indian Banking commenced from the mid
eighties of the twentieth century when the Reserve Bank took upon itself the task of
promoting
automation in banking to improve customer service, book keeping, MIS and productivity.
This
role played by the Reserve Bank has continued over the years (Department of Information
Technology-Financial Sector Technology Vision Document, 2005). Indian banking today is
witnessing drastic changes. Technology has made tremendous impact on banking.
―Anywhere
Banking and Anytime banking has become a reality.
There is a transformation in every sphere of activities of the banks in India, especially in
governance,
nature of business, style of functioning and delivery mechanisms .
The new generation banks brought the necessary competition into the industry and
spearhead changes towards higher utilization of technology, improved customer service and
innovative products. However the public sector and the old private sector banks, which were
following the traditional method of banking till a few years ago, also realized the benefits that
could be reaped through the introduction of technology in their day-to-day operations. So
they
are also of late increasingly pursuing a technology-centric strategy in banking operations and
services delivery as manifested by their adoption of core banking solutions and the
introduction
of technology-enabled banking solutions .
Technology has opened up new markets, new products, new services and efficient
delivery channels for the banking industry. Information technology has been the cornerstone
of
recent financial sector reforms aimed at increasing the speed and reliability of financial
operations and of initiatives to strengthen the banking sector (Nanda, 2010). Information
Technology and the Communication Networking Systems have revolutionized the
functioning of
banks and other financial institutions all over the world. The Reserve Bank of India (RBI)
took
6
several initiatives and assigned top priority to the up gradation of technological infrastructure
in
the Indian financial system. The RBI‘s role in the implementation of I.T. deployment in
banking has been commendable. In fact, RBI had appointed various committees to work on
the implementation of information technology in banking sector. The reports of various
committees are briefly summarized below:
1) Dr. C. Rangarajan Committee [1983]

Dr Rangarajan committee had drawn up in 1983-84 the first blue print for computerization
and mechanization in banking industry and looked into modalities of drawing up a phased
plan for mechanization for the banking industry covering period 1985-89.The committee in
its report in 1984 recommended introduction of computerization and mechanization at
branch, regional office / zonal office and head office levels of banks. In 1988 another
committee was constituted under the chairmanship of Dr Rangarajan for making plans for
computerization for the next five years from 1990-94 for the banking industry.
It identified the purpose of computerization as improvement in customer service, decision
making, housekeeping and profitability. The committee observed that banking is a service
industry and improved efficiency will lead to a faster rate of growth in output and help to
expand employment all around. The work force in the banking industry must, therefore, look
upon computerization as a means to improve customer service and must welcome it in that
spirit.
2) W.S. Saraf Committee [1994]
In 1994, the Governor, Reserve bank of India had appointed a committee on technology
issues under the chairmanship of W. S. Saraf. The committee looked into technological issues
related to the payment system and to make recommendations for widening the use of modern
technology in the banking industry. The Saraf committee recommended setting up institutions
for electronic funds transfer system in India. The committee also reviewed the
telecommunication system like use of BANKNET and optimum utilization of SWIFT by the
banks in India.
3) Shere Committee [1995]
In 1995, RBI formed a committee under the chairmanship of K. S. Sher to study all aspects
relating to electronic funds transfer and propose appropriate legislation. The Sher committee
had recommended framing of RBI (EFT system) regulations under section 58 of the Reserve
bank of India Act 1934 (RBI Act.), amendments to the RBI act and to the bankers book
evidence act, 1891 as short term measures and enacting of a few new acts such as EFT act,
the computer misuse and data protection act etc. as long term measures.
4) Narasimha Committee [1998]
In order to examine the various issues related to the technology up gradation in the banking
sector, the Reserve Bank of India appointed Narasimha committee in September 1998. The
committee consists of representatives from the Government, Reserve Bank of India, banks
7
and academic institutions associated with the information technology. The committee dealt
with the issues on technology up gradation and observed that the most of the technology that
could be for India in some form or the other has been introduced in some diluted form or as a
pilot project, but the desired success has not been achieved because of the reasons inter-alia
lack of clarity and certainty on legal issues. The committee also suggested implementation of
the necessary legislative changes, keeping in the view the recommendations of committee.
The need for addressing the following issues was also emphasized:-
• Encryption on Public Switching Telephone Network (PSTN) lines

• Admission of electronic files as evidence
• Treating Electronic Funds Transfers on par with crossed cheques / drafts for purposes of
Income Tax etc
• Electronic Record keeping
• Provide data protection
• Implementation of digital signatures
• Clarification on payment finality in case of EFT
Taking into consideration the recommendations by various committees appointed by RBI and
guide lines of RBI, banks have started using IT to automate banking transactions and
processes.
V .Leeladhar (2006), Deputy Governor, RBI described technology as a key driver in the
banking industry, the infusion of which has led to new business models and processes. This
has revolutionized the provisioning of banking services through introduction of new
distribution channels. Banks which have not made enough investments in technology are at
peril as they will soon find their customer base eroding. Those banks which have invested in
technology have gained great mileage through improved competitive advantage and are
potentially poised to attract increased market share. Technology adoption has also improved
the quality of risk management systems in banks. On February 28, 2011 RBI released its IT
Vision Document for 2011-17. Main recommendations in the IT Vision document 2011-17
are as under:
 The Vision Document sets priorities for commercial banks to move forward from their
core banking solutions to enhanced use of IT in areas like MIS, regulatory reporting,
overall risk management, financial inclusion and customer relationship management.
 It also dwells on possible operational risks arising out of adopting technology in the
banking sector which could affect financial stability and emphasizes the need for internal
controls, risk mitigation systems, fraud detection / prevention and business continuity.
 Although banks have deployed technology for transaction processing, analytical
8
processing by banks is still in a nascent stage.

 The Report urges banks to work towards reaping benefits of technology in terms of cost
reduction of small value transactions, improved customer services and effective flow of
information within the banks and to the regulator
1.3 E-Banking and Technology

Information and communication technologies are playing a very important role in the
advancements in banking. In fact information and communication technologies (ICT) are
enabling banks to make radical changes to the way they operate. E-banking relies heavily on
information and communication technologies (ICT) to achieve its promise of 24 hours
availability, low error rates, and quicker delivery of financial services . When considering e-
banking, bank websites usually come to mind first, but e-banking requires much more than
just a good website. It needs back end applications such as account systems, support
applications such as Customer Relationship Management (CRM systems), communication
technologies to link e-banking to the payment systems such as LINK, and middleware to
integrate all these often different type of systems.
Evolution of Delivery Channels

Financial sector reforms set in motion in 1991 have greatly changed the face of Indian
banking. The pace of transformation has been more significant in recent times with
technology acting as a catalyst. Traditionally, when a bank wanted to expand it had to open
new branches, thereby incurring high start up and maintenance costs. This was a high cost
strategy considering the high real estate and bank operating expenses. This forced the banks
to develop strategies that could help them reach out to end customers in cost-effective ways.
In the recent years, the Indian banking industry saw a host of new faces called new
generation banks entering with their innovative strategies. All these bankers are generally
slim in structure but heavily using the technology and multi-channel facilities to reach out a
large section of the customers. Technology products, ―delivery channels‖, such as
Automated Teller Machines (ATMs), Mobile banking, Internet banking, etc improved
customer convenience by providing anywhere any time banking services. They turned out to
be the growth drivers for private banks in India. Technology is no longer being used simply
as a means for automating processes. Instead it is being used as a revolutionary means of
delivering services to customers. The adoption of technology has led to the following
benefits: greater productivity, profitability, and efficiency; faster service and customer
satisfaction; convenience and flexibility; 24x7 operations; and space and cost savings.
1.4 Potential Benefits of E-Banking

Many banks and other organizations have already implemented or are planning to implement
e-banking because of the numerous potential benefits associated with it. Some of these major
benefits are briefly described below.
(a) Choice and convenience for customers
9
A customer first approach is critical for success in e-banking. Customers hold the key to
success and companies must find out what different customers want and provide it using the
best available technology, ensuring that they are acting on the latest, most up-to-date
information. In modern business environments, customers want greater choice. They want the
traditional range of banking services, augmented by the convenience of online capabilities
and a stronger focus by banks on developing personal relationships with customers. Offering
extra service delivery channels means wider choice and convenience for customers, which
itself is an improvement in customer service. E-banking can be made available 24 hours a day
throughout the year, and a widespread availability of the Internet, even on mobile phones,
means that customers can conduct many of their financial tasks virtually anywhere and
anytime. This is especially true of developed countries, but increasingly in developing
countries, the spread of wireless communications means that services such as e-banking are
becoming accessible.
(b) Attracting high value customers
E-banking often attracts high profit customers with higher than average income and education
levels, which helps to increase the size of revenue streams. For a retail bank, e-banking
customers are therefore of particular interest, and such customers are likely to have a higher
demand for banking products.
Most of them are using online channels regularly for a variety of purposes, and for some
there is no need for regular personal contacts with the bank‘s branch network, which is an
expensive channel for banks to run (Berger & Gensler, 2007).
(c) Enhanced image
E-banking helps to enhance the image of the organization as a customer focused innovative
organization. This was especially true in early days when only the most innovative
organizations were implementing this channel.
Despite its common availability today, an attractive banking website with a large portfolio of
innovative products still enhances a bank‘s image. This image also helps in becoming
effective at e-marketing and attracting young/professional customer base.
(d) Increased revenues/incomes

Increased revenues as a result of offering e-channels are often reported, because of possible
increases in the number of customers, retention of existing customers, and cross selling
opportunities. It has also allowed banks to diversify their value creation activities.
(e) Easier expansion
Traditionally, when a bank wanted to expand geographically it had to open new branches,
thereby incurring high start up and maintenance costs. E-channels, such as the Internet, have
made this unnecessary in many circumstances. Now banks with a traditional customer base in
one part of the country or world can attract
customers from other parts, as most of the financial transaction do not require a physical
presence near customers living/working place
(f)Load Reduction on branches
E-Channels are largely automatic, and most of the routine activity such as account checking
or bill payment may be carried out using these channels. This usually results in load reduction
on other delivery channels, such as branches or call centres.
(g) Cost Reduction
The main economic argument of e-banking so far has been reduction of overhead costs of
other channels such as branches, which require expensive buildings and a staff presence. It
10
also seems that the cost per transaction of e-banking often falls more rapidly than that of
traditional banks once a critical mass of customers is achieved.
(h) Organizational Efficiency
To implement e-banking, organizations often have to re-engineer their business processes,
integrate systems and promote agile working practices. These steps, which are often pushed
to the top of the agenda by the desire to achieve e-banking, often result in greater efficiency
and agility in organizations.
1.5 Reasons for Implementing E-Banking

This section summarizes some of the reasons often cited by banks to be their primary motive
for implementing e-banking.
(a) Customers Demands
With the emergence of the digital economy the balance of power seems to be shifting to
customers. Customers are increasingly demanding more value, 24 hours availability, with
goods customized to their exact needs, at less cost, and as quickly as possible.
To meet these demands, banks need to develop innovative ways of creating value, and e-
banking is seen as one of those innovative ways to meet customers‘ expectations.
(b) Changes in the Environment
There have been some significant shifts in the importance of different sectors of the
economy. In most western countries, primary (such as mining, agricultural) and secondary
(manufacturing) have been steadily declining, whilst the service (e.g. financial services)
sector is growing in importance. This has increased the prominence of service sector
organizations, resulting in more pressure on them to diversify their offerings and look beyond
their immediate markets to create value.
They see new technologies such as the Internet and mobile telecommunications as a key
enabler in accessing new markets and the creation of value. Social changes are also forcing
banks to change the way they interact with their customers. Customers are increasingly
mobile (they move or travel more often), and this, coupled with the rise of single person
households, means that demand for flexible services is rising at rapid pace.
(c) To meet out competition
Some banks are offering e-banking because their competitors have done it, and not doing so
will mean losing an important customer segment to traditional competitors as well as new
entrants to the financial sector.
If this is their sole reason for doing so, they often drag behind their competitors and lack of
enthusiasm prevents them from using e-banking to boost other sources of innovation, which
are often enabled by the new technologies.
(d) Achieving competitive advantage
Most organizations aspire to achieve competitive advantage, but few attain truly succeed, and
even if attained, few are able to sustain this.
11
As Internet banking has spread widely, it is no longer a source of competitive advantage on

its own, at least in developed world. E-banking with the help of other technologies such as
data mining can however help in other sources of competitive advantage such as faster
product development, superior customers service and cross selling. To gain competitive
advantage, banks must continually develop new and innovative services to differentiate
themselves from the competition, as having a large branch network or even e-banking is no
longer seen as a main source of competitive advantage.
(e) To achieve efficiencies
Some banks look at e-banking from a cost savings point of view, as it is widely reported in e-
commerce literature (Shah et al., 2007) that cost per transaction is much lower than for other
service delivery channels.
Banks may fail if they are thinking only of providing low cost transactions, as these costs
only become lower once a bank exceeds a critical mass of online customers, owing to the
large upfront costs of implementing e-banking. Conducting cost/benefit analysis on a regular
basis often gives a clearer picture in this regard, enabling the analysis of feasible alternatives
in terms of the major costs involved together with the major benefits that are expected to
accrue. E-banking can also help lower operational costs since, to offer e-banking, banks have
to fine tune their business processes, systems and the ways in which employees communicate
with one another.
This may be seen as an unnecessary and costly exercise initially, but in the long run can
prove immensely valuable, and may even enable a bank to survive the economic pressures
and down-turns.
1.6 Barriers to E-Banking

The following factors demonstrate why e-banking may be difficult to implement, or why a
bank may not realize the full benefits from it.
(a) Internet access
Although the growth of the Internet has been very fast, there is still a large population not
connected to the Internet. Lack of computer literacy, high cost of hardware and call charges
and various other social and economic factors are some of the reasons cited for this . This is
changing fast as more and more people connect to the Internet, and numbers are expected to
12
grow even faster with the maturity of mobile communications . However, this is still more of
a problem in some developing countries, where the telecommunications infrastructure is less
developed.
(b) Consumer behaviour
A large number of consumers of financial services are still reluctant to conduct their financial
management online. A study of consumer habits in 10 countries found that two-thirds of
consumers do not consider online services important and that almost 30 percent do not know
whether their bank offers Web-base services. Changing consumer behaviour takes many
years, as was the case with the 10-year adoption cycle of the ATM. This process can be
accelerated with aggressive marketing and high value-added features, two things that are
lacking in today‘s online banking market . This can also be true for some businesses, which
may be even slower than consumers in adopting new technologies. Factors such as security,
perceived difficulties of use, perceived usefulness, functionality and lack of promotion (such
as availability of cheaper products on new channels) are most commonly cited factors which
are hindering the widespread adoption of new technologies .
(c) Language and culture issues
These play a major role in global e-commerce. Although English is accepted as the primary
language of the Internet worldwide, in some cases a website has to be designed specifically to
suit the market that it is trying to reach. The main problems associated with this are speed and
cost. It takes a human translator up to a week to translate a small website into just one
language. Financial services related websites are usually very large and consume large
resources in the translation process. The problem does not end with the translation of a
website, it also need be adapted to the local culture to attract visitors. Banks around the world
would do well to learn from Swiss banks, which successfully offer their services in several
different languages.
(d)Adverse industry trends
The financial services industry worldwide is in the middle of dealing with a number of
significant developments, which usually means that e-banking is low on their priority list.
These developments include the recent ‗credit crunch‘, conversion to the Euro, and various
mergers. These require sizeable resources to deal with resulting costs and to upgrade and
integrate various systems, distracting the attention from e-banking development and
advancements.
(e) Increase in cost
Some banks have been hesitant to promote e-banking systems, fearing that their costs will
become too high and that it will be difficult for them to match the prices of competing
Internet only banks. These fears have proven to be significant in most developed markets.
also stresses this point but suggests that not offering e-Services is not an option, instead
companies should focus on other means such as product differentiation to protect themselves
from excessive competition. Traditional banks could also use their well established brand
names and product development expertise to manage competition from new entrants.
(f) Security issues
Internet security is still one of the major issues hindering the growth of Internet Since the
Internet is an open network, high security risks are involved with financial transactions.
Internet fraud is common, and related stories get immediate media attention, making people
hesitant to bank online. Different security methods (including hardware and software) are
being tested and employed currently but there is still some way to go to win the trust of a
large majority of customers .
(g) Availability of resources
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For some banks, lack of financial and human resources will be a problem because offering
the sophisticated Internet based services is an expensive project requiring major changes in
IT infrastructure. Similarly, reported that the primary deterrents for businesses establishing a
Web presence is start up costs and the costs associated with major organizational changes
required for such moves. suggests strategic partnerships between banks to share such costs.
These partnerships could combine to develop e banking related systems. However, finding
suitable partners in very competitive environments may prove difficult.
(h) Return on investment
E-banking should be considered more as a business project rather than a technological
initiative. In this context, cost benefit analysis may be very useful. Offering e-banking is
expensive because of initial technological, human and marketing costs. A detailed investment
appraisal may save a company from costly mistakes. Internet banking should be considered in
terms of how it can achieve business objectives.
1.7 E-BANKING DELIVERY CHANNELS:
ATM Introduction:
The automated teller machine (ATM) is an automatic banking machine (ABM) which allows
customer to complete basic transactions without any help of bank representatives. There are
two types of automated teller machine (ATMs). The basic one allows the customer to only
draw cash and receive a report of the account balance. Another one is a more complex
machine which accepts the deposit, provides credit card payment facilities and reports
account information.
It is an electronic device which is used by only bank customers to process account
transactions. The users access their account through special type of plastic card that is
encoded with user information on a magnetic strip. The strip contains an identification code
that is transmitted to the bank’s central computer by modem. The users insert the card into
ATMs to access the account and process their account transactions. There are different ATM
cards available in India viz. MasterCard, Maestro, Visa, Visa Electron and Ru Pay cards.
The ATM made its debut at Barclays’ Enfield Town branch in north London in June 1967. Its
invention is credited to British inventor John Shepherd-Barron. The story goes that Mr
Shepherd-Barron saw vending machines selling chocolate bars and asked why a similar
machine couldn’t be used to dispense Cash.Bank tellers issued paper vouchers with unique
codes that allowed customers to take out a maximum of £10 at a time
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Advantages of ATM
Provide Convenience to Customers :

Customers are able to do financial transactions conveniently with the use of ATMs. They can
avail various banking services and can do payments seating at their home comfort. Various
payments for online shopping, at restaurants and various other places payment can be made
using ATM. Nowadays ATM are installed at all important places like railway station,
airports, hospitals etc. which facilitate the people in withdrawing their money whenever they
want.
Offer 24×7 Service :

ATMs provides 24 hours a day, 7 days a week and 365 days a year to all its customers.
Unlike bank branches, it does not have any time schedule for its operations. Customers can
access their bank accounts and withdraw their money at any time of day or night as per their
convenience.
Reduce Banks Workload:

ATMs have an efficient role in reducing the workload of the banking industry. It has relieved
customers as they can avail various banking services by using ATM without visiting the bank
branches. Customers are not required to stand in long queues and fill up various forms for
availing basic withdrawal and deposit facilities. It helps in reducing the work pressure on
bank staff and provides flexibility to its operations.
Access to Bank Account from Anywhere :

Account can be accessed by customer using ATM from any part of the country or even
worldwide. ATM machines are installed in different parts of the country at all convenient
places. Customers don’t need to carry cash while travelling and they can easily withdraw
money any place they are travelling.
Minimizes Transactions Cost V:
ATM has reduced the manpower need as all transactions are processed and monitored using
automated computerized systems. There is less human intervention in work operations which
reduce overall cost.
Disadvantages of ATM
Charges Fees :
Usage of ATMs by customers invites charging various fees for using it. Bank charges
routines charges as per their standard rates for providing them ATM facility. Customers are
also required to pay various tax while doing transactions online using the ATM.
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Limitation on Cash Withdrawal:

Bank imposes restrictions on withdrawal limit of their customers using ATM. There are
limitations on both no. of free transactions and the amount of money that can be withdrawn
per transactions. Banks set withdrawal amount limit for their customers. Most of the banks do
not allow withdrawal of more than 25,000 at a time.
Possibility of Frauds :
Customers performing online transactions using ATM are likely to be affected by various
frauds. There is a chance of stealing various account information by online hackers while
doing online transactions. These online hackers through various suspicious activities can get
access to your account and loot your money.
Non-Reachable in Rural Areas :

Banks in rural areas of our country have limited computerized branches and depends mainly
on manpower for its various operations. There are limited ATM machines installed in rural
areas which also do not operate properly. Therefore ATM services are not properly available
in rural areas.
Credit Card
A credit card is a thin rectangular slab of plastic issued by a financial company, that lets
cardholders borrow funds with which to pay for goods and services. Credit cards impose the
condition that cardholders pay back the borrowed money, plus interest, as well as any
additional agreed-upon charges.
The credit company provider may also grant a line of credit (LOC) to cardholders, enabling
them to borrow money in the form of cash advances. Issuers customarily pre-set borrowing
limits, based on an individual's credit rating. A vast majority of businesses let the customer
make purchases with credit cards, which remain one of today's most popular payment
methodologies for buying consumer goods and services.
HISTORY AND GROWTH OF CREDIT CARDS IN INDIA
ORIGIN OF CREDIT CARD SYSTEM IN INDIA :
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In 1961, the 'DINERS CLUB' was introduced by Mr. Kali Mody who was responsible for
bringing the credit card system to India and he can be called the 'father of the credit card in
India'. It is generally observed that m India, new consumer concepts, particularly those
brought from abroad, are slow to gam acceptance and popularity. Credit card system was no
exception to this phenomenon as the same did not get the initial push, notwithstanding the
fact that card system was quite popular in the western countries. Consequent to this,
consumer response for cards was mainly from those who had 1ived/travelled abroad and were
thus familiar with the operation of the credit card system. Besides this, one of the reasons for
initial slow growth of credit card system m India is that Mr. Mody's organisation being a
private sector enterprise, it took several years to reach a break even point -63- and make the
operations profitable. After achieving a modest card membership of about 8000, Mr. Mody
sold his credit card company to Mr. Shyam Sundar Agarwal m 1976.
GROWTH OF CREDIT CARD SYSTEM IN INDIA: a. In early 1970, with the increased
urban income and higher standards of living, especially in the urban area, the era of
consumerism had begun creating up-market consumers. Moreover, around the same time, a
host of new consumer products and services also became available. The commercial activity
was on the rise and consequently the number of young corporate executives increased
considerably. These developments had created a good potential for credit cards m the
metropolitan cities of India and Mr. Agarwal could see this as a good business opportunity,
which was exploited by him with remarkable success. b. The credit card market m India
remained non competitive until 1980, when Central Bank of India launched 'CENTRAL
CARD', the first bank credit card m India. Further competition arose with the affiliation of
Central Card with both VISA and MasterCard. This was followed by the launch of
'ANDHRA CARD' by Andhra Bank m 1981 which was also affiliated to VISA. Some years
later, more well known banks entered the credit card market.
Benefits of using a credit card
1. A credit card is safer than carrying cash. While there’s only a small chance of having
lost or stolen cash returned, a credit card can quickly be cancelled if you lose your
wallet. Most financial institutions also have security processes in place to protect you
if your card has been lost or stolen or if you suspect your account has been used for a
fraudulent transaction. If you’re in any of these situations, make sure to contact your
bank to report the issue as soon as possible.
2. A credit card can build your credit rating. Your credit card account details and
payment history make up a key part of your credit profile. If you keep your account in
good standing, this information will help you build up a good credit score, which
could increase your chances of approval for other products such as car loans or a
mortgage.
3. You can get interest-free days. If you pay your balance in full before the statement
period ends, you can be rewarded with interest-free days on future purchases for a set
period.
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4. Earn reward points when you spend. Rewards and frequent flyer credit cards allow
you to earn reward points on every dollar you spend on eligible purchases, such as the
groceries and petrol costs. Rewards credit cards let you earn reward points to redeem
with the bank’s rewards programs for perks including flights with partner airlines,
products from the rewards store or cash back. Frequent flyer credit cards, on the other
hand, let you earn flights with specific airline loyalty programs.
5. To You can request a chargeback if you’re unhappy with a product or service. You
can request a chargeback through your credit card company if you have a dispute with
a merchant, either in-store or online.
6. Credit cards work in any currency. Although currency conversion fees usually apply,
you can use your credit card overseas to make purchases in a foreign currency. There
are even credit cards that waive fees for international purchases, which could be
useful if you often shop at overseas online stores or have an international holiday
coming up.
7. Credit cards give you an emergency line of credit. Credit cards can be a financial
safety net if you don’t have enough cash or savings to cover any unexpected costs that
arise. Remember that you have to repay everything you owe, though.
8. Credit cards often have complimentary extras. Credit card features such as travel
insurance, purchase protection and extended warranty insurance can save you money
and give you peace of mind. Other value-adding features include complimentary
flight offers, passes to some of the best airline lounges and even free wine when you
dine.
9. You can consolidate debts and save money on existing balances. Balance transfer
credit cards allow you to move existing high-interest debts to a new account with a
low or 0% promotional interest rate. This can save you money on interest charges and
help you pay down debt faster.
Disadvantages of using a credit card
 Paying high rates of interest.

If you carry a balance from month-to-month, you’ll pay interest charges. Purchase and
cash advance interest rates can be as high as 22% APR, so you can end up paying
hundreds or thousands more than you initially charged in interest if you’re unable to make
repayments each month.
 Credit damage.
Missed credit card repayments and ongoing debts are recorded on your credit file and can
impact your chances of getting a loan down the track. See our guide on how to improve
your credit score for some tips.
 Credit card fraud.
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There are a range of fraud schemes that target credit cards. While you can be
compensated for illegal transactions on your account, dealing with credit card fraud can
still be a time-consuming and stressful experience.
 Cash advance fees and rates
Financial institutions make it very expensive to use your credit card to get cash out or
make other “cash equivalent” transactions, such as buying foreign currency or gambling.
Using a credit card for a cash withdrawal will attract a cash advance fee worth around 3%
of the total transaction amount. It also typically attracts an interest rate of 19–22% right
away.
 Annual fees.
While you can often get debit cards without annual fees, most credit cards have them.
These can cost as little as $25 per year, or as much as $1,200 depending on the card that
you choose. Generally, the more perks you want, the higher the cost of the annual fee. If
you want to avoid this charge, you can consider a no annual fee credit card — but make
sure you look at all the other features to help find a card that works for you.
 Credit card surcharges.
Businesses often apply a surcharge when you pay with a credit card. For Mastercard and
Visa products, this fee is usually 0.5–2% of the total transaction cost, while for Amex
cards it could be closer to 3%. Whatever the case, this is an extra cost for the convenience
of paying with plastic.
 Other fees can quickly add up.
Depending on your card, you could be charged fees when you miss a payment, fees if you
spend past your credit limit, fees for overseas transactions, balance transfer fees and even
some rewards programs fees. If you carry a balance or don’t have access to interest-free
days, there’s also a good chance interest will be applied to these charges
Debit card
A debit card (also known as a bank card, plastic card or check card) is a plastic payment

card that can be used instead of cash when making purchases. It is similar to a credit card, but
unlike a credit card, the money is immediately transferred directly from the cardholder's bank
account when performing any transaction.
Some cards might carry a stored value with which a payment is made, while most relay a
message to the cardholder's bank to withdraw funds from a payer's designated bank account.
In some cases, the primary account number is assigned exclusively for use on the Internet and
there is no physical card.
In many countries, such as most of Western Europe, the use of debit cards has become so
widespread that their volume has overtaken or entirely replaced cheques and, in some
instances, cash transactions. The development of debit cards, unlike credit cards and charge
cards, has generally been country specific resulting in a number of different systems around
the world, which were often incompatible. Since the mid-2000s, a number of initiatives have
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allowed debit cards issued in one country to be used in other countries and allowed their use
for internet and phone purchases.
Debit cards usually also allow instant withdrawal of cash, acting as an ATM card for this
purpose. Merchants may also offer cashback facilities to customers, so that a customer can
withdraw cash along with their purchase.
After the demonetization by current government there has been a surge in cashless
transactions, so nowadays you could find card acceptance in most places. The debit card was
mostly used for ATM transactions. RBI has announced that fees are not justified so
transactions have no processing fees. Almost half of Indian debit and credit card users use
Repay card. Some Indian banks issue Visa debit cards, though some banks
(like SBI and Citibank India) also issue Maestro cards. The debit card transactions are routed
through Ru pay (mostly),Visa or MasterCard networks in India and overseas rather than
directly via the issuing bank.
The National Payments Corporation of India (NPCI) has launched a new card called Ru
Pay. It is similar to Singapore's NETS and Mainland China's Union Pay.
Debit cards can function in two ways:

1. Like an ATM card for immediate withdrawals of cash
2. Like a check when buying an item. The money used to pay for the transaction is
usually deducted from your account within a day or two depending on when the retailer
presents the transaction for payment.
Advantages of Using Debit Cards
1. No Debt – With a credit card it's easy to purchase anything you want, even if you
don't have the funds. With debit cards, the money comes directly from your bank
account, so you avoid spending more money than you have. Plus, you don't have to
remember to pay the credit card bill once a month.
2. No Application Necessary – If you have poor credit it can be difficult to be approved

for a credit card and the interest rate will likely be sky-high. Debit cards require no
application or minimum credit score, and most just require you have a checking
account.
3. Fees – Although some checking accounts have fees associated, they are significantly
less than most credit cards. Avoiding late fees, annual fees and interest charges can
save you a bundle.
4. Identity Theft Protection – Anyone can steal cash from your wallet, but it's much
harder to steal money from a debit card. The thief would have to know your pin, and
if you report your card missing in a timely manner the bank will cancel it so nobody
can use the card.
5. Eliminate Checks – Writing checks is time-consuming and is quickly becoming an

antiquated payment method. Many vendors no longer accept personal checks, and
even if they do it takes quite a bit of time for the purchase to be reflected in your bank
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account. You also have to keep careful records to ensure you're not going over your
available balance and accruing overdraft fees. It' only takes a moment to complete a
purchase with a debit card, and your available balance is reflected in your account
almost immediately – it's a win-win.
6. Eliminate Cash – You don't have to carry around cash if you regularly use a debit
card. If you do need cash you can always stop by an ATM and take out however much
you need or get cash back when you make a purchase at most stores.
Disadvantages of debit card
1. No credit allowed: A debit card is linked to your bank account. There is no possibility
of making any transaction on credit. All transactions and withdrawals are limited to
the balance available in your account.
2. Difficult to dispute fraudulent use: It is easier to fraudulently use your debit card. In
case someone steals the details of your card, especially the PIN and CVV, the chances
of a fraudulent transaction are very high. It is difficult to dispute such transactions
with the bank.
3. Additional fees on ATM withdrawals: Every bank offers you a limited number of free
ATM transactions and other non-financial transactions per month at the branches of
other banks. Once you exceed the limit of free withdrawals/ non-financial
transactions, fees are levied.
Cash Deposit Machine
It is a 24*7 self-service banking terminal, which accepts cash deposits using ATM.
Customer’s account will be instantly credited with the cash deposited. A receipt will be
issued to you fir each successful deposit. Deposit service is available 24 hours a day, 7 days a
week. For the convenience of the customers, the customers can deposit cash without the need
for a card or passbook. They can simply touch the screen and follow the step by step guide.
This machine accepts cash deposits only and does not dispense cash. Only Indian currency is
accepted. The accepted denominations are 5rs, 10rs,20rs,50rs,100rs,500rs and1000rs. The
fake currencies are also detected. Rs 49999 are the cash limit that can be withdrawn at a time.
It is set so to avoid income tax issues. The bundle of notes can comprise of mixed
denominations place in any order. The respective account is credited immediately after
detecting the fake currencies. One possible reason could be your notes are either crumpled,
soiled, defaced or folded. Please ensure that your notes are properly straightened without
folds, dogged-ears etc. before depositing.
CDM in India
State Bank of India (SBI), country’s largest public sector lender, has introduced first cash
deposit machine (CDM) in Mangalore city on January 28, 2013. The facility was formally
inaugurated by Krishna Mohan Trivedi, General Manager, SBI, Bangalore. With this facility
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customers can remit cash to their account with SBI at any of its branches in the country using
their ATM cards. However, the minimum amount that can be deposited is Rs. 100 and the
maximum amount is Rs. 49,900 per transaction (or below Rs. 50,000).The cash deposit
machine will accept all currency notes in multiples of Rs. 100 up to Rs. 2,000.
Salient Features Of Cash Deposit Machine
 Accepts stacks of up to 200 mixed denomination notes

 Quickly counts, validates, and denominates deposited currency
 Displays deposit details on screen for customer verification
 Cash is held in secure area and returned if customer rejects transaction
 Notes are deposited to specified cassettes
 Itemized deposit details may be printed on customer receipt
 Fake currencies are detected.
Advantages
 Instant credit in CASA account.

 Immediate receipt.
 No need to fill cash deposit slips.
 No need to stand in long queues.
 No need to sort and arrange cash denomination wise.
Internet Banking
Internet banking, also known as online banking or e-banking or Net Banking is a facility
offered by banks and financial institutions that allow customers to use banking services over
the internet. Customers need not visit their bank’s branch office to avail each and every small
service. Not all account holders get access to internet banking. If you would like to use
internet banking services, you must register for the facility while opening the account or later.
You have to use the registered customer ID and password to log into your internet banking
account.
Internet Banking Scenario in India
The race for market supremacy has compelled banks in India to adopt the latest technology
on the Internet in a bid to capture new markets and customers. ICICI bank was the first one to
offer online banking way back in 1996 with the launch of ‗infinity‘ and other banks
especially those belonging to new private sector and foreign banks followed suit Nandan and
Upadhyay, 2008). The period from 1996 to 1998 marked the adoption phase even for the
internet as a whole. The usage increased only by 1999 as a result of lower online charges and
increased PC penetration combined with a tech- friendly atmosphere. After ICICI Bank,
Citibank, IndusInd Bank, HDFC Bank and Times Bank (now part of HDFC Bank), were the
early ones to introduce online banking (Rajneesh De and Padmanabhan, 2002). At first the
online banking facility was used as a vehicle for meeting the information requirements of the
customers and gradually transaction facilities like fund transfer and third party transfers were
introduced. Banks like Axis Bank Ltd., HDFC Bank Ltd. etc. are thus looking to position
22
themselves as one stop financial shops. These banks have tied up with Internet Services
Providers and portals for expanding their Net banking services, and widening their customer
base.
Internet Banking Security and Privacy Issues (E-threats)
“Security issues are important because fraudsters can make life unsafe and
miserable .Acceptance of Internet banking is directly influenced by the confidence of
customers with regard to the security of the computer, network and most importantly the
infrastructure of the bank they wish to access. The main issues in internet banking relate to
security, authentication, access control, data confidentiality, data integrity, non-repudiation,
security audit trail, business continuity planning, and customer awareness. These issues are
not only important for the banks but also they are essential to build customer confidence and
satisfaction (Kumar et al., 2007). Security: The providers of Internet banking services must
be more responsive towards security requirements (Fatima,2011).Security in Internet banking
comprises both the computer and communication security.
The aim of computer security is to preserve computing resources against abuse and
unauthorized use, and to protect data from accidental and deliberate damage, disclosure and
modification. The communication security aims to protect data during the transmission in
computer network and distributed system Authentication: There has to be a process of
verifying claimed identity of an individual user, machine, software component or any other
entity so that unauthorized persons cannot gain access.
Features of Online Banking

 Check the account statement online.
 Open a fixed deposit account.
 Pay utility bills such as water bill and electricity bill.
 Make merchant payments.
 Transfer funds.
 Order for a cheque book.
 Buy general insurance.
 Recharge prepaid mobile/DTH.
Advantages of Internet Banking

1. Availability: You can avail the banking services round the clock throughout the year.
Most of the services offered are not time-restricted; you can check your account
balance at any time and transfer funds without having to wait for the bank to open.
2. Easy to Operate: Using the services offered by online banking is simple and easy.
Many find transacting online a lot easier than visiting the branch for the same.
3. Convenience: You need not leave your chores behind and go stand in a queue at the
bank branch. You can complete your transactions from wherever you are. Pay utility
bills, recurring deposit account instalments, and others using online banking.
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4. Time Efficient: You can complete any transaction in a matter of a few minutes via
internet banking. Funds can be transferred to any account within the country or open a
fixed deposit account within no time on net banking.
5. Activity Tracking: When you make a transaction at the bank branch, you will receive
an acknowledgement receipt. There are possibilities of you losing it. In contrast, all
the transactions you perform on a bank’s internet banking portal will be recorded.
You can show this as proof of the transaction if need be. Details such as the payee’s
name, bank account number, the amount paid, the date and time of payment, and
remarks if any will be recorded as well.
Disadvantages of Internet/Online Banking

1. Internet Requirement: An uninterrupted internet connection is a foremost
requirement to use internet banking services. If you do not have access to the
internet, you cannot make use of any facilities offered online. Similarly, if the
bank servers are down due to any technical issues on their part, you cannot access
net banking services.
2. Transaction Security: No matter how much precautions banks take to provide a

secure network, online banking transactions are still susceptible to hackers.
Irrespective of the advanced encryption methods used to keep user data safe, there
have been cases where the transaction data is compromised. This may cause a
major threat such as using the data illegally for the hacker’s benefit.
3. Difficult for Beginners: There are people in India who have been living lives far
away from the web of the internet. It might seem a whole new deal for them to
understand how internet banking works. Worse still, if there is nobody who can
explain them on how internet banking works and the process flow of how to go
about it. It will be very difficult for inexperienced beginners to figure it out for
themselves.
4. Securing Password: Every internet banking account requires the password to be

entered in order to access the services. Therefore, the password plays a key role in
maintaining integrity. If the password is revealed to others, they may the
information to devise some fraud. Also, the chosen password must comply with
the rules stated by the banks. Individuals must change the password frequently to
avoid password theft which can be a hassle to remember by the account holder
himself.
REAL-TIME GROSS SETTLEMENT (RTGS)
Real-time gross settlement (RTGS) systems are specialist funds transfer systems

where the transfer of money or securities[1] takes place from one bank to any other bank on a
"real-time" and on a "gross" basis. Settlement in "real time" means a payment transaction is
not subjected to any waiting period, with transactions being settled as soon as they are
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processed. "Gross settlement" means the transaction is settled on a one-to-one basis without
bundling or netting with any other transaction. "Settlement" means that once processed,
payments are final and irrevocable.
RTGS systems are typically used for high-value transactions that require and receive
immediate clearing. In some countries, the RTGS systems may be the only way to get same-
day cleared funds and so may be used when payments need to be settled urgently. However,
most regular payments would not use an RTGS system, but instead would use a
national payment system or automated clearing house that allows participants to batch and
net payments. RTGS payments typically incur higher transaction costs and are usually
operated by a country's central bank.
Reserve Bank of India introduced the RTGS System in March 2004 with four bank
branches on a pilot basis, only for inter-bank transactions. Subsequently, customer-based
transactions were also taken up. The RTGS System's membership now includes 96 banks, 14
Primary Dealers and the Reserve Bank of India.
The RTGS System facilitates fund transfer between identified branches of banks on a real
time basis, i.e., instantaneously. Banks are required to include in RTGS System only those
branches which are connected through the network and capable of receiving messages on a
real time basis. One of the requirements of the system is that the receiving banks should
return the transactions within two hours of receipt of the transactions if the funds cannot be
applied for any reason. Thus, a customer sending funds through RTGS system at 11.00 am
can expect the beneficiary's account to be credited positively by 1.00 pm, if not earlier. Most
banks are understood to be immediately applying credit to the account holders.
Benefits of using RTGS
 It is a safe and secure system for funds transfer.

 RTGS transactions / transfers have no amount cap.
 The system is available on all days when most bank branches are functioning,
including Saturdays.
 There is real time transfer of funds to the beneficiary account.
 The remitter need not use a physical cheque or a demand draft.
 The beneficiary need not visit a bank branch for depositing the paper instruments.
 The beneficiary need not be apprehensive about loss / theft of physical instruments or
the likelihood of fraudulent encashment thereof.
 Remitter can initiate the remittances from his / her home / place of work using
internet banking, if his / her bank offers such service.
 The transaction charges have been capped by RBI.
 The transaction has legal backing
NATIONAL ELECTRONIC FUNDS TRANSFER (NEFT)

National Electronic Funds Transfer (NEFT) is an electronic funds transfer system maintained
by the Reserve Bank of India (RBI). Started in November 2005, the setup was established
and maintained by Institute for Development and Research in Banking Technology (IDRBT).
NEFT enables bank customers in India to transfer funds between any two NEFT-enabled
bank accounts on a one-to-one basis. It is done via electronic Messages .Unlike real-time
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gross settlement (RTGS), fund transfers through the NEFT system do not occur in real-time
basis. NEFT settles fund transfers in hourly batches with 23 settlements occurring between
00:30 hrs. to 00:00 From December 16, 2019, there would be 48 half-hourly batches
occurring between 00.30 am to 00:00 am everyday regardless of a Holiday or otherwise, As
of November 30, 2019, NEFT facilities were available at 1,48,477branches/offices of 216
Banks across the country and online through the website of NEFT-enabled banks. NEFT has
gained popularity due to the ease and efficiency with which the transactions can be concluded
.There is no limit – either minimum or maximum – on the amount of funds that could be
transferred using NEFT.
Benefits of NEFT
1. Safe and Effective – For a seamless movement of funds on the Internet, you could
opt for NEFT as it helps you transfer any amount of money quickly.
2. Low Processing Charges – Internet banking and NEFT are flexible payment options
which are very economical. For getting this facility, you don’t have to reimburse a
huge sum of money to your bank. The processing charges are quite low and you can
transfer any amount of money without any difficulty.
3. Highly Dependable – NEFT, an integral aspect of Internet banking, is a highly

dependable method of making payments and receiving funds online. Most of the
banks in India are regulated under the norms set by RBI and, hence, the Internet
banking facility too is quite safe in nature.
4. Rapid Settlement – Unlike the regular banking methods of fund transfer, NEFT
transfer is really quick and you can enjoy rapid settlement of accounts, thereby
improving the overall functionality of your business.
5.
Disadvantages of NEFT
1. Highly Technical – One of the major drawbacks of Internet banking and NEFT
transfer in India is this is a highly technical method of funds transfer which is not
easy to operate for everyone. An individual with little knowledge of computer or the
Internet might not be able to operate an Internet banking account easily.
2. The Risk involved with Online Payments – Even though most of the banks in India
take proper steps to secure an NEFT transaction, it is quite possible that your
information might get passed on to a hacker if you’re using an unsecured browser.
This is one of the reasons why a lot of people across the country don’t believe in this
facility.
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Immediate Payment Service (IMPS)

Immediate Payment Service was introduced in the year 2010 by the Indian government and is
facilitated by the National Payment Corporation of India (NPCI).
It is a service which enables you to make payments using your mobile number and completes
the transactions immediately. IMPS uses the Aadhaar number or mobile number to connect to
bank accounts and complete payments. Therefore, it is a secure method for transferring funds.
In this article, we view the various aspects of IMPS in detail.
Benefits of IMPS
 The fund transfer can be done using MMID, Aadhaar number and mobile number.
 IMPS serves you with the Debit and Credit Confirmation by SMS immediately.
 Using IMPS the money will be credited in the beneficiary’s account within a few
seconds.
 IMPS is safe, secure and cost-effective.
 IMPS has no minimum amount limit on transactions of funds.
 IMPS is available for 24 hours in a day and even on holidays.
 The customer can make intrabank as well as interbank payments.
 IMPS can be used on a mobile phone, internet banking and even ATMs.
Disadvantages of IMPS
1. Wrong Details: Funds through IMPS is transferred only based on MMID and Mobile
No or Account No and IFSC code. If either of the 2 details required is wrong, the
transaction will be declined. It is highly unlikely that amount is credited to the wrong
beneficiary. It is always advisable to cross verify MMID and Mobile No before IMPS
transfer. In case of wrong transfer, the sender’s bank do not take any responsibility for
the wrong transfer. The sender has to initiate the refund from receiver’s bank.
2. Delete Mobile Banking Application: To avoid any misuse of IMPS facility, it is

always advisable to remove mobile banking applicable before you change your
mobile handset. Also delete all the SMS stored on the mobile including MPIN
3. MPIN / OTP: Never share your MPIN with anyone. Also, you should update your
mobile no linked to mobile banking as soon as you change your mobile no.
Mobile banking
Mobile Banking Defined
27
Mobile banking (m-banking) involves the use of a mobile phone or another mobile device to
undertake financial transactions linked to a client‘s account. M-banking is one of the newest
approaches to the provision of financial services through information communication
technology (ICT), made possible by the widespread adoption of mobile phones even in low
income countries.
In the year 2002 Mobile Banking was started in India by way of SMS Banking. Now it is
becoming a new generation platform in India. Mobile Banking is useful for the customers for
making inquiries about their balances on mobile phones. With the arrival of smart phones and
ever growing usage of internet on mobile handsets, application based banking has emerged as
a new concept within this space. Mobile Banking is now being considered as the latest,
fastest and easiest way to conduct banking transactions. Indian banks are taking efforts to
expand the usage and scope of mobile banking. Telecom Regulatory Authority of India
issued the new regulations for mobile banking to ensure faster and reliable communication
for enabling banking through mobile phone. As the number of mobile users in India is
increasing day by day, there is a great scope for mobile banking. Therefore the customer
should be made aware of Mobile Banking. To gain the popularity for mobile banking, banks
should make tie-ups with the mobile service providers and try to provide services at cheaper
rates.
Advantages
1. It utilizes the mobile connectivity of telecom operators and therefore does not require
an internet connection.
2. With mobile banking, users of mobile phones can perform several financial functions
conveniently and securely from their mobile.
3. You can check your account balance, review recent transaction, transfer funds, pay
bills, locate ATMs, deposit cheques, manage investments, etc.
4. Mobile banking is available round the clock 24/7/365, it is easy and convenient and an
ideal choice for accessing financial services for most mobile phone owners in the rural
areas.
5. Mobile banking is said to be even more secure than online/internet banking.
Disadvantages
1. Mobile banking users are at risk of receiving fake SMS messages and scams.
2. The loss of a person’s mobile device often means that criminals can gain access to
your mobile banking PIN and other sensitive information.
3. Modern mobile devices like Smartphone and tablets are better suited for mobile
banking than old models of mobile phones and devices.
4. Regular users of mobile banking over time can accumulate significant charges from
their banks.
Tele-Banking or Telephone Banking

Banks offers one more value added service, i.e. Tele Banking also known as telephone
banking services (another form of technology-enabled banking providing various banking
services in the self-service mode through the telephones) to its customers for handling
banking related services from the comfort of their home, office or on the move, that too all in
their preferred language
28
. By dialing the number allotted by the bank, customers can transact most of the banking
transactions. Presently Tele-banking facility is available throughout the day( i.e. 24*7). This
facility is available only for the account holders in Core Banking branches. Telebanking is
offered by the banks (Kunju, 2008) through a technology known as
Interactive Voice Response System (IVRS).The customers can dial toll free number within
India to get the services from the Bank.
New Terms in Tele-Banking
Customer Identification Number (CIN) – Unique digit numbers allotted by banks.
Telephone Identification Number (TPIN) – Password for query purpose.
Financial Telephone Personal Identification Number (FTPIN) – Password for transaction
purpose.
Tele-Banking Security and Privacy Issues

The Telephone Personal Identification Number (TPIN) of the tele-banking service is for the
purpose of the user‘s personal use, strictly confidential and non transferable. TPIN shall not
be disclosed to any third party under any circumstances or by any means whether voluntarily
or otherwise as the TPIN restricts the usage of the tele-banking facility only to the authorized
user. The user shall not keep any written record of TPIN in any place or manner, which may
enable a third party to use the tele Banking. TPIN shall not be used for any purpose other
than for transaction designated by the bank. The user shall self generate the TPIN on
accessing the tele Banking Service for the first time and change the same as frequently
thereafter as possible as a safety measure. The user shall take all necessary precautions to
prevent illegal use of the service by any third party. For the purpose of using the tele-banking
service, the User shall provide the TPIN in the manner directed by the Bank. By use of the
TPIN, the user shall be deemed to represent that he is the legal and beneficial owner of or,
authorized to deal with the funds and property in the accounts each time the User uses the
tele-Banking service and seeks information in respect thereof. All transactions conducted
with use of this TPIN will be the responsibility of the account holder(s) and the account
holder(s) will abide by the record of the transaction as generated/maintained by the Bank
Core Banking Solutions (CBS) Computerization of bank branches had started with
installation of simple computers to automate the functioning of branches, especially at high
traffic branches. Core Banking Solutions is the networking of the branches of a bank, so as to
enable the customers to operate their accounts from any bank branch, regardless of which
branch he opened the account with it.
29
CHAPTER 2
LETRATURE REVIEW
Shah Ankit, Jawahar Society, R. V. Desai Road (2011)1

83In recent years, the banking industry around the world has been undergoing a rapid
transformation. The deepening of information technology has facilitated better tracking and
fulfillment of commitments, multiple delivery channels for online customers and
faster resolution of issues. In India too, the wave of deregulation in the early 1990s has
created heightened competition and greater risks for banks and financial intermediaries.
Today, customers expect higher quality services from banks which, if fulfilled, could result in
significantly improved customer satisfaction levels. This empirical research study mainly
focuses on investigating the major factors that influence online customers‟ satisfaction with
the overall service quality of their banks. This study also helps in assessing the power of
these factors in the context of Online (Internet) banking and would, therefore, help the bank
management not only in improving the level of satisfaction but also strengthening the bond
between the banks and their customers, thereby helping them to retain and/or expand their
overall customer base.
S. Balasubramanya (2002) 2
Described that a banking sector is entering into the new world and existing developments in
banking sector are changing the face of banking. Technology has revolutionised the banking
industry in a big way and banks all around the world are investing heavily in technology.
Technology has also helped banks to improve their product’s delivery and profitability. When
banks depend on technology for their day-to-day business, the complexity and risks of
technology has to be understood and sufficient backup plan put in place to ensure continued
customer service. In addition, as more technology based services are provided, the demand
from customers will keep increasing and banks would thereby end up in a technology war. In
order to win this war, investments in technology are going to increase and proper utilisation
of these investments is essential for banks to ensure that the systems deployed are fully
integrated with their operations. With more and more centralized core banking solutions
being deployed by major banks, there is a strongly felt (faith) need to provide comprehensive
telebanking services either from a single location or from regional locations based on
customer language preference. Further, a significant amount of back office processing can be
1
Shah Ankit, Jawahar Society, R. V. Desai Road (2011),Factors Influencing Online Banking
(Paper) ISSN 2224-896X (Online)Vol 1, No.1, 2011.
2
Bala Subramanya S., “IT wave breaks over banking”, THE CITY, Aug – Sept 2002
30
centralised, relieving the branch staff for more customer interactions. This is expected to
bring in large-scale economies of operations and better customer services.
Rajshekhara K. S. (2004)3
Described the adoption of IT in banking has undergone several changes with the passage of
time. Today IT has become an inseparable segment of banking organization. The application
of information technology in the banking sector resulted in the development of different
concepts of banking such as – E-banking, Internet Banking, Online Banking,
Telephone Banking, Automated teller machine, universal banking and investment banking
etc. Information technology has a lot of influence on banking transactions. It ensures quick
service with low transaction cost to the customers. The real success of IT in the banking
sector depends upon the customer’s satisfaction. Therefore banks should organize and
conduct customer awareness program in their service area. Security is an important issue in
the context of E-banking.
The development of technology for the identification of customers with different means of
communication devices is a must for successful business and also to reduce frauds in
banking. In this paper the author has studied customer related aspects only. This paper do not
present any study related to the bank employees and their problems regarding bank
computerisation.
Pathrose (2001)4
Has observed that as banking the world over is undergoing a rapid and radical transformation
due to the all-pervasive influence of IT and breath taking developments in the field of
communication technologies and electronic data processing. The winds of change are
blowing in India too.
The IT which implies the integration of information system with communication technology
has radically transformed the traditional ways of doing banking business and allowed banks
to wipe out the difference in time and distance.
In this context this paper attempts to trace the current status of hi-tech banking in India,
visualize its prospects and look at the challenges and problems in the tracks to be traversed.
The author has concluded that in the scenario of severe competition and escalating
expectation of customers for newer products and alternative delivery channels, the contours
of banking are being redefined. The key to survival of banks therefore is retention of
customers loyalty by providing them with value added services tailored to their needs, using
state-of- the-art IT.
3
Rajashekhara K. S., “Application of IT in Banking”, Yojana, July 04
4
P.P. (2001), “Hi-Tech. Banking- Prospects and Problems”, IBA Bulletin, Vol. XXIII,
No.7, July 2001, Indian Banks’ Association, Mumbai. Rao (2002)
31
Rao, N.V. (2000)5
He analysed the impact of new technology on banking sector. The advent of technology both
in terms of computers and communications has been changing totally the ways and doing
banking business. Technology has opened new vistas and in turn brought new possibilities
every day for doing the same work differently and in most cost-effective manner. Tele
banking and Internet banking are making forays such that branch banking may give to home
banking. In order to protect their profitability, the banks need to address urgently the
following emerging areas: (i) Product development and marketing skills, (ii) Modem credit
management skills, (iii) New risk management practices, (iv) Skills for operating in
electronic environment, (v) New internal audit skills in a changing business environment, (vi)
New focus on customer and his needs.
Husain (1988)6
has highlighted the importance of IT in various banking operations. In the introduction of any
new technology or system, various organizational, financial and functional problems are
faced by banks. People are generally reluctant to accept new system, howsoever beneficial it
may be. Such serious issues which are involved in computerization of banks have been
critically and vividly discussed by the author.
B. Janki, (2002)7
Has analysed in her article that how technology is affecting employee's productivity. It has
been observed that Indian banks particularly PSBs would need to adopt technology for
improving operating efficiency and customer service. Accordingly, it has been pointed out
that harnessing ‘employee-technology synergy’ is crucial for unleashing productivity and
reaching out to the huge base of retail customers, who are mostly dispersed in rural and semi-
urban areas.
Bank can use technology to address customers’ needs and improve their interaction with
customers keeping m touch through telephone and internet. The focus on technology will
increase like never before to add value to customers, develop new products, strengthen risk
management and asset liability management, and improves profitability. However technology
is only an enabling tool and achievement of banks would be determined by the drive and
motivation of their work force and their pro-active response.
5
Rao, N.V. (2000), 'Changing Indian Banking Scenario: A Paradigm Shift,' IBA
Bulletin, Vol. XXIV No. I, Indian Banks’ Association (IBA), Mumbai, pp. 12-20.
6
Husain, F. (1988), Computerization and Mechanization in Indian Banks, Deep and
Deep Publications Pvt. Ltd, Rajouri Garden, New Delhi – 100 027.
7
B. Janki (2002), “Unleashing Employee Productivity: Need for a Paradigm Shif”, IBA
Bulletin, Vol. XXIV No.3, Indian Banks Association (IBA), March 2002, pp.7-9.
32
Bajaj, (2000)8
Has highlighted the e-commerce related issues in the context of the adoption of advances in
IT. All over the world the traditional business of banks, viz. accepting deposit and extending
advances is growingly getting transformed into IT-driven businesses. The rapid proliferation
of IT and dramatic advances m financial theory have made it cheaper for big companies to
rise money in the capital markets than from banks.
IT is also helping in cutting costs by providing cheaper ways of delving products to

customers. ATMs, telephone banking, internet banking and such other innovative delivery
channels are on the rise. The author has concluded that electronic payment systems are fast
emerging and are getting accepted in the market.
They need to gain both consumer and business acceptance. Because of all these new
developments, banking stands to radically change. It remains to be seen whether banks use
ecommerce and other IT-based systems to reinvent themselves, gain access to new markets or
become extinct as dinosaurs whether advances in technology create new opportunities for
banks or they become extinct.
Mittal R. K. and Dhingra Sanjay 9

Discussed the issue that the transaction through technology channels cost much less to the
banks than the customers reaching the bank and doing the transactions. In the last decade
banks have invested heavily in the technology. In the use of information technology, the new
private and foreign sector banks have taken lead over the public and old private sector banks.
Today public sector banks are also investing heavily in technology to compete with the new
private and foreign sector banks.
In the study authors have identified the different technology issues and challenges such as
choice of right channel, justification of IT investment in terms of ROI (Rate of Interest), e-
governance, customer relationship management, security concerns, penetration of IT in rural
areas etc. Banks are required to address these issues and challenges effectively to stay in
business and grow.
8
Bajaj 7. Bajaj, K.K. (2000), “E-Commerce Issues in the Emerging Hi Tech. Banking
Environment”, The Journal of The Indian Institution of Bankers, Indian Institute of
Bankers, Mumbai, March 2000.
9
Mittal R. K. and Dhingra Sanjay, “Technology in Banking Sector: Issues and
Challenges”, No.4, 2006-07.
33
CHAPTER 3
3.1 RESEARCH METHODOLOGY
The word research is derived from the French word ‘Researcher' meaning to search back.
Broadly research refers to a search for knowledge. Research is an attempt to find answers to
problem both theoretical and practical, through the application of specific methods.
The study uses both primary and secondary data. The primary data has been collected for 50
respondents on the basis of convenient sampling. The samples were collected from customers
of various banking sectors. The secondary data was collected from published sources such as
journals and websites
3.2 RESEARCH DESIGN:

After deciding the basic aspects of research project . formulating research problem, objective
of research, data requirement, sample design And before the commencement of work of
research project, the researcher has to prepare research design.
3.3 TYPES OF DATA COLLECTION:

Primary Data:
Primary data is a type of data that is collected by researchers directly from main sources
through interviews, surveys, experiments, etc.
Primary data are usually collected from the source—where the data originally originates from
and are regarded as the best kind of data in research.
The sources of primary data are usually chosen and tailored specifically to meet the demands
or requirements of a particular research. Also, before choosing a data collection source,
things like the aim of the research and target population need to be identified.
SECONDARY DATA :
Along with Primary data, secondary data are also useful in marketing research. Such data
are collected by some other agency for other purpose. Secondary data are easily and readily
available in the published form and are used for the conduct of research activity.
3.4 OBJECTIVE OF THE STUDY
34
 To find out the major problem face by the customers while using online banking
services.
 To study the role of technology in bank.
 To determine the technology in Bank used by customers
 To analyse the banking innovations after computerization of banks in India
 To examine the extent of use of services especially the IT enabled services in Indian
banking.
 To assess various aspects of IT services provided by Indian banks.
 To review the implementation of IT in Indian Banking industry.
3.5 LIMITATION OF THE STUDY

 Due to shortage of time I have not been able to make a deep study.
 I could not collect data form outside of Maharashtra.
 The study is based on prevailing respondents satisfaction but there satisfaction may
change according to time, fashion, need .
 I have not used modern statistical tools for examine the data .
 The sample size is small because of time constraint and some of the customers are not
voluntary participate.
3.6 SCOP OF THE STUDY

The study covers the services offered by customers by the use of technology. More latest
technological delivery channels ,ATM/Debit card, Credit card, Internet Mobile Banking etc.
have been taken purpose of study.
This project is an analytical based on random sampling to ascertain satisfaction level and
customer attitude channels. The study also gives an idea secure, 24X7X365 E-banking
services at without compromising with the quality resulting in the widening of customer
balance.
3.7 TOOLS FOR THE STUDY

The analysis of data collected through research has been done systematically. Simple
percentage, tables where used to represent into verity of data that falls into various categories.
The analysis done systematically and accurately so as to get correct and authentic.
35
CHAPTER 4
Data analysis and interpretation
Table 1.1 Gender Basis Analysis

Gender Number of respondents Percentages
Male 15 50%
Female 13 43.33%
Other 2 6.67%
TOTAL 30 100
36
6.67%
50.00%
43.33%
MALE FEMALE OTHER
According to the analysis done 50% of males,43.33% of female,6.67% of people use

advance technology for financial service.
Table 1.2 Age Basis Analysis

Age group Number of respondents Percentages
Below 20 9 30%
20 – 35 13 43.33%
35 – 50 6 20%
Above 50 2 6.67%
Total 30 100%
37
BELOW 20
20-35
ABOVE 50
35-50
BELOW 20 20-35 35-50 ABOVE 50
According to the analysis 30% of people below 20 years,43.33% of people between 20-30
years ,20% of people between 35-50 years and 6.67% of people above 50 years use
technology for services.
Table 1.3 Educational Profit

Education Qualification Number of respondents Percentages
Higher secondary 10 33.33%
Graduate 7 23.33%
Post-graduate 8 26.67%
Other 5 16.67%
Total 30 100%
38
16.67%
26.67%
Column1
23.33%
33.33%
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%
OTHER POST GRADUATE GRADUATE HIGHER SECONDARY
According to the analysis people who use current technology among them 33.33% people
have Higher Secondary Education,23.33% people are Graduate,26.67% people are post
graduate and 16.67% of people have some other Education.
Table 1.4 Occupation basis analysis

Occupation Number of respondents Percentages
Employee 9 30%
Self- employed 4 13.33%
Student 15 50%
Other 2 6.67%
Total 30 100%
39
60%
50.00%
50%
40%
30.00%
30%
20%
13.33%
10%
6.67%
0%
EMPLOYEE SELF-EMPLOYED STUDENTS OTHER
On basis of data collected 30% people are Employee,13.33% people are Self Employed,50%
People are students and 6.67% people belong to other category.
Table 1.5 Income basis analysis

Monthly income Number of respondents Percentages
Nil 10 33.33%
Below 10,000 6 20%
10,000 - 15000 4 13.33%
15000 - 25000 7 23.33%
Above 25000 3 10%
Total 30 100%
40
10%
33%
NIL
23%
BELOW 10000
10000-15000
15000-25000
ABOVE 25000
13%
20%
According to the analysis 33.33% people have no income,20% of people earn below
10,000,13.33% of people earn 10,000-15,000,23.33% of people earn 15,000-25,000 and 10%
of people earn above 25,000.
Table 1.6 showing the level of usage of technology

Usage of technology Number of respondents Percentages
Financial transactions 5 16.6%
Online banking 15 50%
E-payment 8 26.66%
Banking Service 2 6.66%
Total 30 100%
41
Bnking Service
Financial Transaction
e-Payment
Financial Transaction
Online Banking
e-Payment
Bnking Service
Online Banking
According to the analysis done 50% of respondents use the technology for online banking,
26.66% respondents use for e-payments, 16.66% financial transactions and 6.66% of
respondents use the technology in banking service for
Table 1.7 Showing how frequently branch banking use per month
Branch banking use per Number of respondents Percentages
month
Nil 3 10%
1 to 3 times 16 53.33%
3 to 8 times 8 26.67%
8 to 12 times 1 3.33%
Over 12 times 2 6.67%
Total 30 100%
42
8 To 12 Time NIL
3 To 8
Time
NIL
1 To 3 Time
3 To 8 Time
8 To 12 Time
over 12Time
1 To 3
Time
Analysis shows that 10% of respondents never visit their bank branch on a monthly. 53.33%
of respondents visit their banks between 1 to 3 times in month. 26.66% of respondents visit
their bank branch between 3 to 8 times in a month and 3.33% respondents visit their bank
branch 8 to 12 times in month. None of the respondents visit their bank branch more than 12
times in a month.
Table 1.8 showing how frequently ATM use per month

ATM use per month Number of respondents Percentages
Nil 0 0%
1 to 3 times 6 20%
3 to 8 times 15 50%
8 to 12 times 5 16.66%
Total 30 100%
43
Column1
1 To 3Time 3 To 8 Time Over 12 Time 8 To 12 Time
10%
25%
59%
7%
Analysis shows that none of respondents never visit their ATMs an a monthly basis. 20% of
respondents visit their ATM 1 to 3 times in a month, 50% of respondents visit their ATM 3
to 8 in a month, 16.66% of respondents visit their ATM 8 to 12 times in a month and 13.33%
of respondents visit ATM over 12 times in a month.
Table 1.9 Showing how frequently internet banking is used per month
Internet banking use per Number of respondents Percentages
month
Nil 3 10%
1 to 3 times 12 40%
3 to 8 times 6 20%
8 to 12 times 5 16.66%
44
Total 30 100%
According to the analysis done it shows 10% of respondents never use internet banking on
monthly basis, 40% of respondents use their internet banking 1 to 3 times in a month, 20% of
respondents use their internet banking 3 to 8 times in a month, 16.66% of respondents use
their internet banking 8 to 12 times in a month, 13.33% of respondents use their internet
banking over 12 times in a month.
Table 1.10 showing reasons why E-Banking services not used by most of
the customer
E-Banking services not Number of respondents Percentages
adopted
Security risk 12 40%
Prefer traditional banking 7 23.3%
Not aware of E-Banking 5 16.6%
Some Bank charge high fees 6 20%
Total 30 100%
45
Security Risk Prefer Traditional Bnking Not Aware of E-Banking Some Bank Charge High Fees
Security Risk
20%
Prefer Traditional Bnking

12%
Some Bank Charge High Fees

60%
Not Aware of E-Banking

8%
According to the analysis 40% of respondents have not adopted E-Banking due to security
risk. 23.3% of respondents prefer traditional banking and 16.60% of respondents are not
aware of E-Banking, 20% of respondents consider that charges high fees for E-Banking.
Table 1.11 showing online banking is better substitute of traditional

banking System
Online banking is better Number of respondents Percentages
substitute
Yes 19 63.33%
No 7 23.33%
Can’t say 4 100%
46
13%
YES
23% NO
Can't Say
63%
According to the analysis 63.33% of respondents think online banking is better substitute of
traditional banking where 23.33% respondents think traditional banking is more better .
CONC1LUSION
Information Technology offers enormous potential and various opportunities to the Indian
banking sector. It provides cost-effective, rapid and systematic provision of services to the
customer. The efficient use of technology has facilitated accurate and timely management of
the increased transaction volumes of banks which comes with larger customer base.
Indian banking industry is greatly benefiting from I.T. revolution all over the world. Another
concept i.e. Virtual banking or Direct Banking is now gaining importance all over the world.
According to this concept Banks offer Products, services and financial transaction through
only through electronic delivery channels generally without any physical branch. This
concept already has been tested in advanced countries such as U.S and Europe.
47
Owing to lower branch Maintenance and manpower cost such banks are able to offer
competitive pricing for their product and services as compared to traditional banks. In India
also the technology –savvy bank will adopt this concept. To be competitive with this
globalized era Indian banks should also adopt this concept .As the Indian banking is in
transition phase from direct banking to the virtual banking two things stand
out –
 Using Less Paper
 Doing Transaction Wirelessly
By designing and offering simple, safe and secure technology, banks reach at the doorsteps of
the customers with an objective of “delight customer satisfaction”. In fact Information
technology has succeeded in creating a win- win situation for all concerned segments in
India.
The India n banks lag far behind the international banks in providing online banking. In fact,
this is not possible without creating sufficient infrastructure or presence of sufficient number
of users. Technology is going to hold the key to future of banking. So banks should try to find
out the trigger of change. Indian Banks need to focus on swift and continued infusion of
technology.
The Banking industry in India is rapidly progressing with increased customer base and due to
newly improved and innovative facilities offered by technology. As the coin has two faces
likewise technology also has its two sides on Indian banking Sector-the positive and the
negative side. The risks are high, though it can be minimized and Technology will be the
backbone of Indian Banking Industry in upcoming time.
IT has no doubt changes the overall pattern of banking system. The banking today is
redefined and re-engineered with the use of IT and it is sure that the future of banking will
offer more sophisticated services to customers with the continuous product and process
innovations. Thus there is a paradigm shift from seller’s market to buyer‟ market. So banks
also change their approach from “Conventional Banking to Convenience Banking” and
“Mass banking to Class Banking”. So banks are now more concentrate on providing value
added services to customers. But IT can be fully useful only if they enable to met the
challenges in the present environment. In India it can be successful only if it is properly
implemented in rural areas also. There is also need to maintain privacy and confidentiality of
data’s. Many nations deem privacy to be a subject of human right and consider it to be the
responsibility of those who concerned with computer data processing for ensuring that the
computer use does not revolve to the stage where different data about people can be
collected, integrated and retrieved quickly. Another important responsibility is to ensure the
data is used only for the purpose intended. For this, there is a need to implement IT and other
Cyber laws properly. This will ensure the developmental role of IT in the banking industry.
Although service and ICT sector are being considered as power engines for the Indian
economy, the Indian banking sector has embraced IT only at moderate level. There is still
scope for further technological developments in the Indian banking sector in terms of
customer relationship building services and more advance services which would be fully IT
driven. However, for IT upsurge at the present, the drivers have outdone the impediments
48
once faced by the adopters. The strongest driver is bank customer whose acceptance and
usage of such services define the bank business and justification for huge investments made
for IT infusion in the bank’s system. The dark side is customers’ prefer e-banking services
but their usage is moderate (significantly low for public sector banks). Various factors have
been identified as reasons for their preference and explanatory factors for their usage of e-
banking services. Electronic media and traditional media (branch banking) are found to be
complementary to each other. So, Bank staff still has vital role to play in influencing
customers and successful as well as profitable implementation of technological service
innovations in banks. Technology infusion has also affected service quality of banking
offerings positively. Six technologically influenced determinants of service quality have been
identified ,significantly defining overall service quality of e-banking services. Service quality
itself is found to be a significant explanatory factor for customers’ e-banking usage that
further drives IT propagation in banks.
FINDINGS:
According to the study it was found that technology has paved a huge way for banking Sector
. At large number of respondents prefer E-Banking in study region.
A large number of respondents are satisfied with ATM facilities provided by bank. Majority
of the respondents do not use Tele banking in the study region.
A large number of respondents are benefited by paying utility bills by using mobile banking.
Based on the study it was it was found that 90% of the respondents prefer using Internet
banking.
A large number of respondents are satisfied with a level of Security provided by the bank,
only 10% of the respondents are not satisfied according to the study conducted.
Security threat is the possible reason for E-Banking services have not been adopted by the
bank respondents.
The study shows that majority of respondents consider Private sector bank to be
technologically advanced than public Sector bank.
A large number of the respondents, rate the technology oriented services of the bank as good
In the study region.
Majority of the customers opined that bank’s operation is efficient after introduction of
computers in the banks.
49
BIBLIOGRAPHY
 www.rbi.com
 www.Banknetindia.com
 http://shodhganga.inflibnet.ac.in/bitstream/10603/26125/11/11f
 www.theinternationaljournal.org
 www.idrbt.ac.in/publications/Frameworks/Technology Banking.pdf
 almashriq.hiof.no/projects/business/it-banking.html
 www.banknetindia.com/special/itbanking.htm
50
Appendix-1
Customer Satisfaction Survey Questionnaire
(This survey has been carried out purely for academic purpose, we request you to be
as frank as possible .The information provided by you will be kept confidential.)
Please Mark (√ ) your response to the following:
a. Name of respondent: Mrs./Ms./Mr.______________________________________
b. Name of Bank:____________________________________________________
c. Type of Account:_________________________________________________
1. Gender ?
(a) Male [ ]
(b) Female [ ]
2. Age (Years) ?
(a) below 20 [ ]
(b) 20-35 [ ]
(c) 35-50 [ ]
(d) Above 50 [ ]
3. Educational Qualification ?
(a) higher secondary [ ]
(b) Graduate [ ]
(c) Postgraduate [ ]
(d) Others [ ]
4. Employment status ?
(a) Self-Employment [ ]
(b) Professional [ ]
(c) Student [ ]
(d) Others [ ]
51
5. Monthly Income ?
(a) Below 10,000 [ ]
(b) 10,000-15,000 [ ]
(c) 15001-25,000 [ ]
(d) Above 25,000 [ ]
6. How many times you visit your bank branch per month ?
(a) never [ ]
(b) 1 to 3 times [ ]
(c) 3 to 8 times [ ]
(d) 8 to 12 times [ ]
(e) over 12 times [ ]
7. How many times you use ATM per month ?
(a) never [ ]
(b) 1 to 3 times [ ]
(d) 8 to 12 times [ ]
8. How many times you use internet banking per month ?
(a) never [ ]
(b) 1 to 3 times[ ]
(d) 8 to 12 times [ ]
9. why E-Banking services not used by most of the customer ?
(a)Security risk. [ ]
(b)Prefer traditional banking. [ ]
(c)Not aware of E-Banking. [ ]
52
(d)Some bank charge high fees. [ ]
(e) other [ ]
10. Does online banking is better substitute of traditional banking System ?
(a) yes [ ]
(b) No [ ]
(c) can’t say [ ]
53

Impact of New Technology in Banking Sector

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IMPACT OF NEW TECHNOLOGY IN BANKING

SYDENHAM COLLEGE OF COMMERCE AND

‘B’ ROAD, CHURCHGATE, MUMBAI – 400020

BBI ( BACHELOR OF Banking And Insurance )

Kajal Vinod Gohil

I Would like to extend my sincere thanks and gratitude to my project

I would like to thank Dr.BABASAHEB AMBEDKAR LIBRARY,

Lastly, I Would like to show my gratitude who directly or indirectly

2 CHAPTER 3 : REVIEW OF LITERATURE

3.1 REVIEW OF LITERATURE 30

CHAPTER 2 : RESEARCH METHODOLOGY

2.1 RESEARCH METHODOLOGY 34

CHAPTER 4 : ANALYSIS AND INTERPRETATION 37

Structure of Organised Indian Banking System

Reserve Bank of India (RBI):

Scheduled and Non-Scheduled Banks:

Brief History of Indian Banking Sector

The Indian banking system underwent four distinct phases of evolution .

ii. The Expansion Phase- Nationalization of banks 1969

iii. The Consolidation Phase-Slow down of branch expansion 1985

In order to remove the above-mentioned deficiencies, Narasimha committee was appointed in

1.2 Information Technology in Indian Banking Sector

1) Dr. C. Rangarajan Committee [1983]

• Encryption on Public Switching Telephone Network (PSTN) lines

processing by banks is still in a nascent stage.

1.3 E-Banking and Technology

Evolution of Delivery Channels

1.4 Potential Benefits of E-Banking

(d) Increased revenues/incomes

1.5 Reasons for Implementing E-Banking

As Internet banking has spread widely, it is no longer a source of competitive advantage on

1.6 Barriers to E-Banking

1.7 E-BANKING DELIVERY CHANNELS:

Provide Convenience to Customers :

Offer 24×7 Service :

Reduce Banks Workload:

Access to Bank Account from Anywhere :

Limitation on Cash Withdrawal:

Non-Reachable in Rural Areas :

HISTORY AND GROWTH OF CREDIT CARDS IN INDIA

ORIGIN OF CREDIT CARD SYSTEM IN INDIA :

Benefits of using a credit card

Disadvantages of using a credit card

 Paying high rates of interest.

A debit card (also known as a bank card, plastic card or check card) is a plastic payment

Debit cards can function in two ways:

2. No Application Necessary – If you have poor credit it can be difficult to be approved

5. Eliminate Checks – Writing checks is time-consuming and is quickly becoming an

Cash Deposit Machine

Salient Features Of Cash Deposit Machine

 Accepts stacks of up to 200 mixed denomination notes

 Instant credit in CASA account.

Features of Online Banking

Advantages of Internet Banking

Disadvantages of Internet/Online Banking

2. Transaction Security: No matter how much precautions banks take to provide a

4. Securing Password: Every internet banking account requires the password to be

REAL-TIME GROSS SETTLEMENT (RTGS)

Real-time gross settlement (RTGS) systems are specialist funds transfer systems

Benefits of using RTGS

 It is a safe and secure system for funds transfer.

NATIONAL ELECTRONIC FUNDS TRANSFER (NEFT)