Table of ContentsLetter of Transmittal………………………………………………………………………………………………………………………….iiAcknowledgements…………………………………………………………………………………………………………………………..iiiTable of Contents..................................................1List of Figures & Tables...........................................2

1. INTRODUCTION...................................................31.1 MARKETING IN THE INTERNET AGE................................3

1.2 BENEFITS OF INTERNET IN BUSINESS.............................41.3 INTERNET BANKING.............................................5

1.4 INTERNET BANKING IN INDIA....................................62. REVIEW OF LITERATURE...........................................8

3. RESEARCH FRAMEWORK............................................123.1 CONCEPTUAL MODEL............................................12

3.2 RESEARCH DESIGN............................................133.3 OBJECTIVES OF THE STUDY....................................14

3.4 VARIABLES OF THE STUDY......................................143.5 DATA COLLECTION............................................16

3.5.1 INSTRUMENT..............................................163.5.2 SAMPLING................................................17

3.5.3 PILOT TESTING...........................................173.5.4 RESPONSE RATE...........................................17

4 DATA ANALYSIS & FINDINGS.....................................184.1 EDITING AND CODING.........................................18

4.2 RELIABILITY ANALYSIS.......................................194.3 ANALYSIS OF DEMOGRAPHICS....................................20

4.3.1 AGE PROFILE.............................................204.3.2 GENDER..................................................21

4.3.3 QUALIFICATION...........................................224.3.4 PROFESSION..............................................23

4.4 MEASURES OF CENTERAL TENDENCY..............................24

1

4.4.1 MEASURE OF QUANTITATIVE QUESTIONS.......................244.4.2 MEASURE OF QUALITATIVE QUESTIONS........................24

4.5 CORRELATION................................................255 RESULTS & CONCLUSION..........................................27

6 REFERENCES....................................................28

List of Figures & Tables

Figures & Tables Description Page

No.Fig 3.1 Factors Affecting Consumer Adoption

of Internet Banking 12

Fig 4.3.1 Age Demographics 20

Fig 4.3.2 Gender Demographics 21

Fig 4.3.3 Qualification Demographics 22

Fig 4.3.4 Profession Demographics 23

Table 4.1 Questionnaire 18

Table 4.2 Reliability Test 19

Table 4.4.1 Ranking of Quantitative factors 24

Table 4.4.2 Ranking of Qualitative factors 24

Table 4.4.3 Factor for non-adoption of Internet Banking 25

Table 4.5 Correlations 26

Table 5 Result 27

2

1. INTRODUCTION1.1 MARKETING IN THE INTERNET AGEAccording to Norris (2000), an Internet market can be viewed

as a direct parallel of the familiar shop, store or emporium.

It is, in essence, a virtual trading area where deals are made

through a computer screen, over a network. The “shop-front” is

usually a set of web pages, the shelves equate to the

catalogue where products are stored and displayed, and the

warehouse is the server. Internet marketing or Internet-based

marketing can be defined as the use of the Internet and

related digital technologies to achieve marketing objectives

and support the modern marketing concept. These technologies

include the Internet media and other digital media such as

cable and satellite together with the hardware and software,

which enable its operation and use (Chaffey, et al., 2000).

The term “electronic commerce” is often used in a similar

context to Internet marketing and has become a standard term

recognised for business transactions such as selling online,

online bill payments, home shopping/banking and improving

market efficiency in dealing with suppliers and clients (Novak

and Hoffman, 1996). In the industrial age, marketers initiated3

and controlled the exchange process, whereas in the Internet

age customers increasingly initiate and control the exchange,

customer define what information they need, what offering they

are interested in, and what price they are willing to pay. In

other worlds, Internet age marketing is the age of “reverse

marketing” (Sheth, et al., 2001). Karjaluoto (2002) argues that

the commercialisation of the Internet was only started in

1995. By the year 1999, the Internet had reached over 50

million people. At the beginning of the year 2000, there were

over 70 million computers connected to the Internet and this

development is accelerating at enormous speed. Within the next

three to four years, the number of people connected is likely

to reach the 350 million mark worldwide. The Internet provides

consumers with a new means of obtaining useful information

particularly with regard to commercial products and services.

Electronic commerce is currently attracting a great deal of

interest. Not only is it growing rapidly, but it also has a

significant impact on the computer market and the way people

work (Chaffey, et al., 2000). Wang (2002) highlights the

importance of the Internet in facilitating dyadic information

flows between supplier and customer, emphasising that the

inverse relationship between the richness and reach of

information no longer holds. As a result, the Internet has the

potential to encourage a simultaneous two-way flow of

information between large numbers of customers and suppliers.

Norris, et al., (2000) point out that one of the biggest

implications for marketing theory and practice is the shift

from a non-virtual market-place to a virtual market-space

4

where industry players unlike their traditional counterparts

do not have to have a physical presence. The market-space

comprises four different spaces of opportunity: virtual

information space, virtual communication space, virtual

transaction space and virtual distribution space. In order to

capture the opportunities provided by each of these spaces it

is necessary that firms have a website.

According to Weisman (2001), increasingly more consumers are

migrating to electronic commerce to make electronic bill

payments, to pay for information online, and to purchase

products, services and prepaid cell phone airtime.

1.2 BENEFITS OF INTERNET IN BUSINESSThe benefits of internet in business have become widely known.

When the Internet was still new during the mid-1990s, it was

corporations who first purchased pieces of cyberspace to

create their websites. Although they weren’t sure what the

impact a website could make was at that time, today, a website

has become an indispensable tool in doing business. With the

continuing growth of the amount of information available on

the Internet, as well as the increase in time that people

devote to being online, more and more businesses are investing

research and money to improve their online presence. Any

company that does not tap into the many advantages of the

Internet will surely fall behind its competitors. Here are

some of the benefits of internet in business:

Improved Communications and Networking

5

The global nature of the web makes the world a lot smaller,

making it more efficient for companies to do business on the

international realm. Through the Internet, companies can stay

in touch with their partners, investors, clients, and

customers, regardless of their locations. Email, web

conferences, and VoIP make the transmission of important data

more seamless. For instance, companies can quickly communicate

with suppliers via chat or email to make sure deliveries and

payments are covered. The Internet can save the company a lot

of time and money as it reduces the need for additional

paperwork.

Customer Contact

A company website keeps customers abreast of new products and

services, 24/7. Profit also increases as their virtual store

can cater to customers anytime, anywhere.

Wider business networks

Companies can also maintain ties with other organizations and

sister companies through the Internet. In real-time, they can

all stay updated with new information about the business and

other important matters.

Access to Data

The Internet is very rich in information. Anything you need,

you can find on the web. For companies doing research in

products, markets, industries, new ideas, and other topics,

the Internet is an effective tool to use. Individuals can even

6

join forums where they can interact with people from the same

industry and exchange ideas.

Market Research and Internet Advertising

Businesses can conduct market research through the Internet.

They can use online surveys to study their market. They can

directly ask consumers what they think about a particular

product or service. It is a very cheap and effective way of

doing market research.

The Internet offers a new medium for advertising. Mailings,

newspapers ads, and fliers are slowly becoming obsolete as the

Internet has become a more cost-effective way to reach

consumers. E-newsletters can now be sent directly to the in-

boxes of customers with just a few clicks of a mouse button.

Since the Internet spans the entire globe, a business’ market

increases as anyone from anywhere in the world becomes a

potential customer. This increases market reach, thereby

boosting product recognition.

1.3 INTERNET BANKINGInternet banking allows customers to perform a wide range of

banking transactions electronically via the bank’s Web site.

When first introduced, Internet banking was used mainly as an

information presentation medium in which banks marketed their

products and services on their Web sites. With the development

of asynchronous technologies and secured electronic

transaction technologies, however, more banks have come

forward to use Internet banking both as a transactional as

well as an informational medium. As a result, registered7

Internet banking users can now perform common banking

transactions such as writing checks, paying bills,

transferring funds, printing statements, and inquiring about

account balances. Internet banking has evolved into a “one

stop service and information unit” that promises great

benefits to both banks and consumers.

Internet banking services are crucial for long-term survival

of banks in the world of electronic commerce (Burnham 1996).

The market for Internet banking is forecast to grow sharply in

the next few years, affecting the competitive advantage

enjoyed by traditional branch banks (Duclaux 1996; Liao et al.

1999). Indeed, it also was estimated that financial

institutions that failed to respond to the need for Internet

banking services would likely lose more than 10% of their

customer base by the year 2000 (Orr 1998; Tower Group 1996).

Internet banking would help banks present a potentially low

cost alternative to brick and mortar branch banking. Burnham

found that the majority of banks with Web sites spent less

than US$25,000 to create a Web presence, and less than

US$25,000 a year maintaining it. He suggested that even if

these figures were to rise as banks began to offer Internet

banking services, they would still be less costly than the

traditional branch banking. For example, it requires US$1.5

million to US$2 million to set up a traditional brick and

mortar branch and US$350,000 to US$500,000 a year to operate

it. Note that Burnham’s figure of US$25,000 is just for

creating an electronic presence on the Web. A fully functional

Internet banking site is likely to cost US$1 million to US$28

million. However, while traditional banks ‘operating costs

account for between 50% and 60% of revenues, running costs of

Internet banking is estimated at between 15% and 20% of

revenues (Booz-Allen & Hamilton 1997).

From the consumers’ perspective, Internet banking provides a

very convenient and effective approach to manage one’s

finances as it is easily accessible 24 hours a day, and seven

days a week. Besides, the information is current. For

corporate customers, sophisticated cash management packages

offered through Internet banking provide them with up to the

minute information, allowing for timely funds management

decisions (Kalakota and Whinston 1996).

1.4 INTERNET BANKING IN INDIAPikkarainen, Karjaluoto, and Pahnila, (2004) define Internet

banking (IB) as an “Internet portal, through which customers

can use different kinds of banking services ranging from bill

payment to making investments”. It is the most innovative

service offered by banks over the last decade. This

transformation from traditional banking to e-banking has been

a 'quantum leap' change.

The banking system in India is significantly different from

that of other Asian nations because of the country’s unique

geographic, social, and economic characteristics. India has a

large population and land size, a diverse culture, and extreme

disparities of income.

In the 21st century, Internet banking has experienced

exponential growth in many countries around the globe and

9

drastically changed traditional banking practice. According to

Parisa (2006), “By offering Internet Banking services,

traditional banks seek to lower operating costs, improve

customer experience, retain/expand customer base, reduce their

branch networks, and downsize the number of their service

staff”. Customers also benefit from the convenience, speed and

round-the-clock availability of Internet banking services.

However, as noted by Kuisma et al., (2007); Littler and

Melanthiou, (2006), “Though IB provides many advantages, there

are still a significant number of customers who refuse or

reluctant to adopt IB services. Therefore, understanding

various reasons for this resistance (reluctance) would be

useful for bank management in formulating strategies aimed at

increasing the overall usage of Internet banking.”

According to Srivastava (2008), “Some of the major

psychological and behavioural factors which affect the

adoption of any innovation such as Internet banking include

consumer awareness, ease of use, security, accessibility, and

technology phobia, in addition to reluctance to change,

preference for personalized services and cost of adopting the

innovation.” This study aims to investigate the factors

influencing the adoption of Internet banking services in

Chandigarh – a rapidly growing city in Northern India.

In India, ICICI bank was the first bank which offered this

delivery channel, by kicking off its online services in 1996.

Other private sector banks like Citibank, IndusInd Bank and

HDFC and Timesbank (now part of HDFC bank) started offering

10

internet services in 1999. State Bank of India launched its

services in July 2001.

According to Geetha & Malarvizhi, the customers would conduct

a variety of transactions through internet banking facility

which includes: account summary, details of historical banking

transactions, funds transfer, loan applications, bill

payments, cheque book request, cheque status enquiry, stop

cheque request, credit card payments/ statements, facilities

to contact account managers, etc.

2. REVIEW OF LITERATURE

Unninthan (2001) described the impact of e-banking adaptation

on Australian and Indian banking sectors with the help of

qualitative and quantitative analysis. The researcher found

that Australia had a strong platform for e-banking growth with

37.7 per cent of population willing to engage in e-banking

mostly in urban areas due to literate young working population

with discretionary income. However, India by comparison was

played by weak infrastructure, low PC penetration and consumer

reluctance in rural sector. But the professionals are

compelling the government and bureaucracy in the country to

support and develop new initiatives at a faster speed of

internet banking. However, in both the countries, e-banking

was a successful strategic weapon for banks to remain

profitable in a volatile and competitive market place.

11

Sureshchander and Rajendran (2003), in their paper, focused on

investigating the important factors of customers’ perceived

quality in banks of developing economy like India. The authors

had taken 15 public sector banks, 14 private banks and 14

foreign banks for the period under study. The researchers

found that there seems to be a great variation in respect of

services offered by three groups of banks. They used core

services such as human element, systemization of services,

tangibility of services and social responsibility as critical

factors. They analyzed that three groups of banks in India

seem to vary significantly in terms of service quality factors

but from the customer perception of service quality, it could

be acceptable only if customers’ need could be satisfied at

the right time in a right manner.

Manoharan (2007) highlighted the e-payment system in India and

its performance impact on Indian banking sector. The author

described that competition in banking industry had forced the

banks to rethink the way they operate their business. So, e-

banking has made it possible to find alternate banking

practices. In the paper, the author divided the payment system

in India into three parts, i.e., large value payment system,

retail payment system, and retail electronic system. Each one

includes different categories of e-payment. The author studied

the performance of various Indian payment 50 systems in the

last three years in which RTGS emerged as the principal

payment system in India for wholesale payment. The study

focused that having a huge opportunity of epayment system in

India still 90 per cent of transactions were cash based. So,

12

an effort should be made to increase the use of e-payment, and

RBI should make efforts to strengthen the legal framework of

electronic banking system.

Ramani (2007) studied the impact of e-payment system on Indian

banking sector. E-payment was required for handling large

volume of business payment and remittances for hassle free,

quicker and faster payment remittances at low cost, and

paperless transactions. The researcher highlighted various

steps taken by RBI for the epayment. It includes RTGS,

deferred net settlement system such as electronic clearing

services debit and credit, electronic fund transfer and NEFT.

The researcher studied that these methods had increased the

use of core banking solutions, data warehousing and data

mining. E-payment had reduced the chances of fraud, improved

customer service by cutting the delay in payment obligation.

Singh and Malhotra (2007) made an attempt to discover factors

affecting a bank’s decision to adopt internet banking in

India. The study was based on 88 banks comprising of public,

private and foreign banks covering financial years from 1997

to 2005. The results of the study showed that large banks

having high fixed expenses, high income and expenditure tend

to use more technology. Banks had used internet banking as

complementary channel to existing branch network. However, the

private and foreign banks were quick adopter to internet

banking than public sector banks. The adoption of this

innovation by other banks increases the probability that a

decision to adapt will be made as it has increased the

profitability and productivity of banks. 13

Shah & Braganza (2007): This survey indicates the critical

success factors in Internet banking adoption. Shah and

Braganza opined that “different pieces of literature report

different factors as key to success and generally based on

subjective, perceptual data. A synthesis of existing

literature is a basis for survey questions. The data was

collected from UK-based financial sector organizations that

are offering their services on electronic channels, using

postal questionnaires. The top factors found to be most

critical for the success in e-banking are: quick responsive

products/services, organizational flexibility, services

expansion, systems integration and enhanced customer service.

An important lesson from this research is that organizations

need to view the e-banking initiative as a business critical

area rather than just a technical issue. They need to give

attention to internal integration, which may include channels,

technology and business process integration, and improving the

overall services to their customers”.

Suresh (2008) highlighted that recently developed e-banking

technology had created unpredicted opportunities for the banks

to organize their financial products, profits, service

delivery and marketing. The objectives of the study were to

evaluate the difference between traditional and e-banking, and

to identify the core capabilities for the best use of e-

banking. The author analyzed that e-banking will be an

innovation if it preserved both business model and technology

knowledge, and disruptive if it destroys both the model and

knowledge. He also differentiated e-banking from traditional

14

banking in five ways, namely, value proportion, market scope,

cost structure, profit potential and value network. However,

in order to exploit technical and business capabilities of e-

banking, banks should generate more customers inside and

outside India so that more revenues could be generated that

lead to better future of Indian economy.

Kautish (2008) described the paradigm shift of banking sector

from traditional banking to online banking. The objective of

the paper was to discuss the derivation of value added tool of

online banking system which was used to attract new customers

and retain the existing ones. It helped the banks to acquire

more business from existing customers. People preferred to use

online banking because of its availability, better

performance, ubiquity, speed and its effectiveness. Further,

the author discussed two bank models integrated banking model

where the banks provide internet banking services as an

extension to their basic services like ATM and phone banking.

So, it is a kind of hybrid approach and the other was

standalone internet banking model, where the banks totally

rely on the online channel. To improve the services through e-

banking, banks should think from the customers’ perspective

and there should be creativity and innovation in designing and

implementation of e-banking processes. The author concluded

that as e-banking was a relatively new concept in the global

banking scenario so the best of this concept was yet to come.

Uppal, R.K. & Chawla, R. (2009): According to Uppal & Chawla

(2009) ,“This study highlights customer perceptions regarding

Internet banking services. A survey of 1,200 respondents was15

conducted in October 2008 in Ludhiana district, Punjab. The

respondents were equally divided among three bank groups

namely, public sector, private sector and foreign banks. The

present study investigates the perceptions of the bank

customers regarding necessity of e-banking services, quality

of e-banking services, bank frauds, future of e- banking,

preference of bank customers regarding banks, comparative

study of banking services in various bank groups, preferences

regarding use of Internet channels and problems faced by e-

bank customers”.

Malhotra, Pooja & Singh, B. (2010): In “An analysis of

Internet banking offerings and its determinants in India”,

Malhotra, Pooja, & Singh noted: “This study was an effort to

represent the current status of IB in India and the extent of

Internet banking services offered by Internet banks. The data

for this study are based on a survey of bank websites explored

during July 2008. The sample consists of 82 banks operating in

India on March 31, 2007. Multiple regression technique is

employed to explore the determinants of the extent of Internet

banking services.”

16

3. RESEARCH FRAMEWORKThe Banking sector has ushered into a new era with advent of

Internet and its application in the banking industry. Internet

banking aims to assist the customers with easy and speedy

transactions but still many people refrain from availing this

facility.

17

This research aims to determine and study the factors

influencing the consumer adoption of internet banking and in

the process unearth the factors acting as a hindrance for

people to take up this service.

3.1 CONCEPTUAL MODEL

The framework postulates that a person’s intention to adopt

Internet banking is determined by certain factors. These can

be (but are not limited to) relative advantage, compatibility

with values, complexity, security, individual’s self-

confidence and feature availability. Internet banking

services, in return, is expected to affect the actual adoption

of Internet banking.

18

Fig 3.1 Factors Affecting Consumer Adoption of InternetBanking

3.2 RESEARCH DESIGN

A research can be classified into one of the three following

categories:

Exploratory Research

Causal Research

Descriptive Research

This quantitative study is aimed at identifying the factors

influencing the adoption of internet banking among customers

in Chandigarh. The idea behind this research is to study the

19

Internet Banking Adoption

Security

Individual's self

confidence

Feature Availabili

ty

Relative Advantage

Compatibility with values

Complexity

impact of one variable (independent) on the other (dependent),

hence falls under the Descriptive Research methodology.

“A quantitative study, consistent with the quantitative

paradigm, is an inquiry into a social or human problem, based

on testing a theory composed of variables, measured with

numbers, and analyzed with statistical procedures, in order to

determine whether the predictive generalizations of the theory

hold true” (Babbie and Mouton, 2002). The research was

descriptive, that is it was used to determine market

characteristics. Malhotra (1999) defines descriptive research

as “a type of conclusive research which has as its major

objective the description of something”. Thus, the research,

marked by a clear statement of the problem and detailed

information needs, as was shown in previous chapters,

corresponds to descriptive research. Finally, the five W’s of

research specific to a descriptive design, have been

identified (Malhotra, 1999): Who? (Consumers), When?

(Presently), Where? (In Chandigarh), Why? (To investigate

factors influencing the adoption of internet banking), Way?

(By identifying consumers’ demographic characteristics,

perceptions, and attitudes towards internet banking).

As the respondents were considered at a fixed point in time,

the research used a cross-sectional methodology (Bailey,

1987). “The cross-sectional study is the most frequently used

descriptive design in marketing research. Cross-sectional

designs involve the collection of information from any given

sample of population elements only once” (Malhotra, 1999).

20

Secondary data was collected through research papers,

journals, websites, books, project reports and so on.

3.3 OBJECTIVES OF THE STUDY

The main objective of the study is to study the factors influencing the

customer adoption of internet banking in Chandigarh. It is further

divided into following sub-objectives:

i. To study the impact of Relative Advantage on customer

adoption of internet banking

ii. To study the impact of Compatibility on customer adoption

of internet banking

iii. To study the impact of Complexity on customer adoption of

internet banking.

iv. To study the impact of Security on customer adoption of

internet banking.

v. To study the impact of Individual’s self-confidence on

customer adoption of internet banking.

vi. To identify the features most sought after by the

customer influencing him/her to adopt internet banking

vii. To identify the factors which act as a hindrance for

customers to adopt internet banking.

Hypothesis Formulation:

H1: Relative Advantage has a significant impact on the

customer adoption of internet banking.

21

H2: Compatibility has a significant impact on the customer

adoption of internet banking.

H3: Complexity has a significant impact on the customer

adoption of internet banking.

H4: Security has a significant impact on the customer adoption

of internet banking

H5: Individual’s self-confidence has a significant impact on

the customer adoption of internet banking

3.4 VARIABLES OF THE STUDYIndependent Variables

Relative Advantage

Tornatzky and Klein (1982) found relative advantage to be an

important factor in determining adoption of new innovations.

In general, perceived relative advantage of an innovation is

positively related to its rate of adoption (Rogers 1983).

Likewise, as Internet banking services allow customers to

access their banking accounts from any location, at any time

of the day, it provides tremendous advantage and convenience

to users. It also gives customers greater control over

managing their finances, as they are able to check their

accounts easily. In view of the advantages that Internet

banking services offer, it would thus be expected that

individuals who perceive Internet banking as advantageous

would also be likely to adopt the service.

Compatibility with values

22

Compatibility with values is measured by the fact that is the

use of internet banking in accordance with the lifestyle and

family culture of an individual. Also, the customer’s

preference of physical money over electronic money or the vice

versa may also play an important role in determining the

customer adoption of internet banking.

Complexity

Past research has indicated that an innovation with

substantial complexity requires more technical skills and

needs greater implementation and operational efforts to

increase its chances of adoption (Cooper and Zmud 1990;

Dickerson and Gentry 1983. As the Internet is very user

friendly with its “point and click” interface, it is likely

that potential customers may feel that Internet banking

services are less complex to use, and hence would be likely to

use such services.

Security

Bauer (1960), Webster (1969), and Ostlund (1974) introduced

risk as an additional dimension in diffusion and adoption. A

common and widely recognized obstacle to electronic commerce

adoption has been the lack of security and privacy over the

Internet (Bhimani 1996; Cockburn and Wilson 1996; Quelch and

Klein 1996; Rhee and Riggins 1997). This has led many to view

Internet commerce as a risky undertaking. Thus, it is expected

that only individuals who perceive using Internet banking as a

low risk undertaking would be inclined to adopt it.

23

Individual’s self confidence

Hill et al. (1986) found that self-efficacy predicts

intentions to use a wide range of technologically advanced

products. Thus, an individual confident in having the skills

in using the computer and the Internet is more inclined to

adopt Internet banking. This is because the individual is

comfortable in using the innovation.

Feature Availability

According to Sathye (1999), “Access to computers and Internet

is a prerequisite for adoption of Internet banking. The higher

the access to computer and Internet, wider is the probability

of Internet banking adoption”. Separate studies by Doll, et al

(1995) and Muylle (1998) indicated that “the easier it is to

navigate the website, the better will be the overall user

experience. Attributes such as information content about the

product, structure, language(s) offered, layout features etc.

would also affect consumers' perception of the user

friendliness of the Internet banking site and overall customer

satisfaction”.

Dependent Variable: Customer adoption of internet banking.

3.5 DATA COLLECTION

3.5.1 INSTRUMENTQuestionnaire:

A specific questionnaire designed for the purpose of the

research was used. The questionnaire had a filter question to

segregate the internet banking users with the ones who don’t.

24

Based on the response to the filter question, the respondent

is directed either to part 1- that involves questions

pertaining to the general information for adopting internet

banking services and subsequently to part 2 – that records the

demographic information or the respondent is directed to part

3 to list out the possible factors hindering him/her to adopt

internet banking.

The part 1 of the questionnaire is to be filled by the

respondents who use internet banking and contained 20

questions of which 19 questions used a Likert scale ranging

from 1 = Strongly Agree to 5 = Strongly Disagree and the 20th

question was a multiple choice qualitative question that lists

out the internet banking feature customers find most

important.

Part 2 is the demographic study and it consist questions

pertaining to the respondents’ demographic profiles, such as

age, gender, highest qualification and current profession.

Part 3 of the questionnaire is to be filled by the respondents

who do not use internet banking and contained a single

multiple choice qualitative question listing the major

inhibitors of Internet banking adoption.

Questionnaire Administration:

The questionnaire was administered both online and in print to

record the maximum responses possible. Online questionnaire

was designed using the free service available from Google and

the same was then circulated to the target sample.

25

3.5.2 SAMPLINGThe data collection method chosen for this study was

Convenience sampling a statistical method of drawing

representative data by selecting people because of the ease of

their volunteering or selecting units because of their

availability or easy access. The advantages of this type of

sampling are the availability and the quickness with which

data can be gathered. In terms of this study, Convenience

sampling was chosen because overall market analysis had to be

done to understand the factors effecting the internet banking.

Sample frame: Restricted to sample that received the

questionnaire by hand and mail.

Sample size: Approx. 50

Sampling method: Convenience sampling

Population of Study: Chandigarh city

3.5.3 PILOT TESTINGA pilot test was conducted on the preliminary questionnaire to

assess its comprehension and the average completion time. Two

rounds of pre-testing were conducted. The first round was

conducted on three Internet users (one male and two females).

Based on feedback from this first round, some questions were

rephrased for clarity. The second round of pre-testing was

conducted with three other young working Internet users (two

females and one male). They found the questions generally

clear; thus, the questionnaire was deemed ready for data

collection.

26

3.5.4 RESPONSE RATEThe questionnaire was administered to 136 people both by hand

and e-mail. Out of this a total of 43 completed questionnaires

were received which were deemed fir to carry out further

analysis. Thus yielding a response rate of 31.62%.

27

4 DATA ANALYSIS & FINDINGS4.1 EDITING AND CODING

Editing and coding of data was done using IBM SPSS v20. The

data file can be obtained from the URL given below for

analysis and verification purposes.

http://bit.ly/PIEles

Further, independent variables and their corresponding

questions are as tabulated below. These are coded together by

taking mean of values of Likert scale for each question.

Table 4.1 Questionnaire

Factors Questions

RelativeAdvantage

I find it easier to carry out my bankingtransactions using Internet bankingInternet Banking saves time as compared tooffline banking.Internet Banking is a convenient way to managemy finances.Internet Banking is costly as compared tooffline banking.

Compatibilitywith Values

I prefer doing banking transactions withphysical money as against electronic money.Internet banking is compatible with mylifestyle.My family culture does not prefer internetbanking.

Complexity

Using Internet banking requires a lot of mentaleffort.Navigating through the internet bankinginterface can be frustrating.I am very skilled at using the Internet.I prefer using search engine if I need helpusing internet banking transactions.I prefer to call up someone if I need help usinginternet banking transactions.

28

Security

I believe internet banking is prone to hacking.Confidentiality of information is maintained ininternet banking.Increased security causes unnecessary delays.Security provisions currently offered ininternet banking in India are adequate.

Individual’sSelf

Confidence

I feel confident carrying banking transactionsonline.I am confident of using Internet banking even ifI have never used such a system before.I am confident of using Internet banking if Ihave just the online “help” function forassistance.

FeatureAvailability

Net banking for Visually ChallengedSecure Card TransactionsNRI ServicesForeign Travel CardRemittanceBill PaymentOnline ShoppingMobile Banking ServicesCredit Card servicesIssue Demand Drafts onlineonline tax paymentDEMAT and IPO servicesGenerate account statementsFunds transferIf others, please specify_____________________________

4.2 RELIABILITY ANALYSIS

The questionnaire framed was tested for its reliability using

Cronbach’s Alpha coefficient. Cronbach‘s alpha is computed

in terms of the average inter-correlations among the

items measuring the concept. The closer Cronbach’s alpha

is to 1, the higher the internal consistency reliability.

Reliability analysis report generated using SPSS for all the

questions in questionnaire is shown below-

29

Table 4.2 Reliability Test

Reliability Statistics

Cronbach's

Alpha

N of Items

.874 20

Therefore, it can be seen Cronbach’s Alpha comes out to be

0.874, which is closer to 1 and greater than 0.6. Hence, this

questionnaire can be deemed as internally reliable for

consistency.

4.3 ANALYSIS OF DEMOGRAPHICS4.3.1 AGE PROFILEAge profile of users varied as shown above-

30

Frequency Percent Valid Percent Cumulative Percent

0

20

40

60

80

100

120

23

53.5 53.5 53.5

14

32.6 32.6

86

614 14

100

43

100 100

Age Demographics

Valid 20 - 29 years Valid 30 - 39 yearsValid Above 40 years Valid Total

Frequancy / Percentage

AgeTotal20 - 29

years30 - 39years

Above 40years

Do you use internetbanking?

No 4 6 4 14Yes 19 8 2 29

Total 23 14 6 43

Fig 4.3.1 Age Demographics

It can be seen from above age demographics that for age

category “20 – 29 years” 83% of the respondents agree to use

internet banking. Further, for age category “30 – 39 years”

57% agree to use internet banking and for category “Above 40

years” only 33% respondents agree to use internet banking.

Hence, we can deduce that internet banking is more popular inthe younger age group i.e. 20- 29 years.

31

4.3.2 GENDERAs is clear from the figure below, 58.1 % of the respondents

were male while the remaining 41.9% were females. Since the

male: female ratio is 1.39 which is close to one, the study

does not include any gender bias.

GenderTotal

Female MaleDo you useinternetbanking?

No 7 7 14

Yes 11 18 29

Total 18 25 43

Fig 4.3.2 Gender Demographics

Further from the Crosstabulation of gender and internet

banking usage we can interpret that 61.1% of the female

32

Frequency Percent Valid Percent Cumulative Percent

0

20

40

60

80

100

120

18

41.9 41.9 41.9

25

58.1 58.1

100

43

100 100

Gender Demographics

Valid Female Valid Male Valid Total

Frequancy / Percentage

respondents use internet banking whereas in case of male

respondents this figure is a bit more at 72%.

4.3.3 QUALIFICATIONThe figure below shows that the majority of the respondents

were either post graduates or graduates accounting for around

93.2% of the total respondents.

Further the cross tabulation table shows that among the post

graduate respondents 66.67% do use internet banking while

63.15% of the graduate respondents use this facility. The

Doctorate and High School respondents were a paltry 3 in

number and all three of them agreed to using the internet

banking facility.

33

Frequency Percent Valid Percent Cumulative Percent

0

20

40

60

80

100

120

1 2.3 2.3 2.3

21

48.8 48.8 51.2

19

44.2 44.2

95.3

2 4.7 4.7

100

43

100 100

Qualification Demographics

Valid Doctorite Valid Post Graduate Valid GraduateValid High School Valid Total

Frequancy / Percent

QualificationTotal

Doctorate PostGraduate Graduate High

SchoolDo you useinternetbanking?

No 0 7 7 0 14

Yes 1 14 12 2 29

Total 1 21 19 2 43

Fig 4.3.3 Qualification Demographics

4.3.4 PROFESSIONOut of the total respondents, majority were students around

34.9% followed by those in private jobs (32.6%) while the

self-employed respondents were the lease at around 11%.

Further the cross tabulation reveals that 44.4% of the

respondents in Government jobs, 71.42% in private job, 60% of

self-employed and 80% of students use Internet banking

facility. This again validates that there is a greater

tendency among the younger generation to adopt internet

banking.

34

Frequency Percent Valid Percent Cumulative Percent

0

20

40

60

80

100

120

920.9 20.9 20.9

14

32.6 32.6

53.5

511.6 11.6

65.1

15

34.9 34.9

100

43

100 100

Profession Demographics

Valid Govt. Job Valid Private Job Valid Self EmplyedValid Student Valid Total

Frequance / Percent

Profession TotalGovt.

JobPrivateJob

SelfEmplyed

Student

Do you use internetbanking?

No 5 4 2 3 14Yes 4 10 3 12 29

Total 9 14 5 15 43

Fig 4.3.4 Profession Demographics

35

4.4 MEASURES OF CENTERAL TENDENCY

4.4.1 MEASURE OF QUANTITATIVE QUESTIONSTable 4.4.1 Ranking of Quantitave factors

Variables Rang

e

Minimum Maximum Mean Std.

Deviatio

n

Variance

Compatibility 2.33 1.67 4 3.20

69

0.58699 0.345

Security 2 2 4 2.87

07

0.47066 0.222

Complexity 2.4 1.8 4.2 2.84

14

0.64449 0.415

Self

Confidence

3.33 1 4.33 2.41

38

0.77998 0.608

Relative

Advantage

2.75 1.25 4 2.27

59

0.55639 0.31

Above table is used to analyze and rank the various factors

affecting consumer adoption to internet banking. Mean, being a

measure of central tendency can be used to rank the factors,

with 1 depicting most favored factor to adopt internet banking

and 5 depicting the factor least favored to adopt to internet

banking.

4.4.2 MEASURE OF QUALITATIVE QUESTIONSSurvey consisted of two qualitative questions

36

First qualitative question was trying to know what all

features and internet banking user seek while opting for

internet banking

Another qualitative question was trying to know what are the

factors which limits the non-users of internet banking to

not to go for the same.

Each of these questions were coded as 1 for response and 0 for

non-response, following tables summarizes the response for

each of these questions.

Table 4.4.2 Ranking of Qualitative factors

Feature Availability Mean Std.

DeviationBill Payment 0.9310

34

0.257880715

Online Shopping 0.8275

86

0.384425872

Funds transfer 0.7241

38

0.454858826

Online tax payment 0.6551

72

0.483725281

Mobile Banking Services 0.5172

41

0.508547628

Secure Card Transactions 0.4827

59

0.508547628

Credit Card services 0.4137

93

0.501230014

Issue Demand Drafts online 0.3448 0.483725281

37

28Generate account

statements

0.3448

28

0.483725281

DEMAT and IPO services 0.3103

45

0.470823615

Remittance 0.2413

79

0.43549417

Net banking for Visually

Challenged

0.2068

97

0.41225082

Foreign Travel Card 0.1724

14

0.384425872

NRI Services 0.1034

48

0.309934047

It can be seen from above table that bill payments is the most

preferred feature having maximum mean and minimum standard

deviation, just followed by online shopping.

Factors, which are responsible for less adoption to internet

banking and in their order of effectiveness are written below-

Table 4.4.3 Factors for not adopting internet banking

Factors Mean StandardDeviation

Mentally Frustrating

0.461538 0.518874522

Fear of security breach

0.428571 0.513552591

No Computer Knowledge

0.357143 0.497245158

Session expires a lot

0.214286 0.425815314

38

Can't remember passwords

0.214286 0.425815314

It can be seen that most people don’t use internet banking,

because it is “Mentally Frustrating” to them.

4.5 CORRELATION

On applying correlation between the variables we find that the

Customer adoption of internet banking has a significant

relationship with Relative Advantage, Security and Self

Confidence (significant at 0.01 level).

39

The results are shown in the table below:

Descriptive StatisticsMean Std.

DeviationN

RelativeAdvantage

2.2759 .55639 29

Compatibility 3.2069 .58699 29Complexity 2.8414 .64449 29Security 2.8707 .47066 29SelfConfidence 2.4138 .77998 29Adopt 3.7285 .43435 29

Table 4.5 Correlations

On the basis of these results we can accept or reject our

hypothesis which shall be discussed in the results and

discussions section.

40

5 RESULTS & CONCLUSION

This research revealed that of the factors identified,

Relative Advantage of using internet banking over traditional

banking influences the customer the most to adopt internet

banking. This is followed by self-confidence of the customer,

complexity of the system and the security of the transaction.

Whereas, compatibility with values was identified as the least

significant of the factors that affects customer adoption of

internet banking.

When we talk of the features that are most sought after by

internet banking users, bill payment was the most preferred

choice followed by online shopping, funds transfer and online

tax payment. Whereas Foreign Travel Card and NRI Services were

the least preferred choices.

The research also established that among the non-internet

banking users, the factor that contributed the most was the

fact that majority of the respondents found the internet

banking service to be Mentally Frustrating followed by Fear of

Security Breach, No Computer Knowledge, Session expiring a lot

and inability to Remember Passwords.

Hypotheses Accepted/RejectedH1: Relative Advantage has a

significant impact on the

customer adoption of internet

Accepted

41

banking.H2: Compatibility has a

significant impact on the

customer adoption of internet

banking.

Rejected

H3: Complexity has a

significant impact on the

customer adoption of internet

banking.

Rejected

H4: Security has a significant

impact on the customer

adoption of internet banking

Accepted

H5: Individual’s self-

confidence has a significant

impact on the customer

adoption of internet banking

Accepted

Table 5: Results

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