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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