Customer Satisfaction on E-Baking Services

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1 40 Customer Satisfaction on E-Baking Services Dr.G.Tulasi Rao Prof.& Head DCMS. Dean CDC Principal, University College Dr.B.R.Ambedkar University, Etcherla Srikakulam T.Lokeswara Rao Scholar JNTUK Kakinada Assoc.Prof. of MBA GIET Engineering College Rajahmundry Mobile: Abstract E-banking is a fully automatic service for traditionally available for banking customer s and the products based on information technology platforms. Offering high quality different type services like Online banking, Telephone banking, Internet banking, Mobile banking for satisfy consumers' needs, at lower cost.. E-banking services provide potential competitive advantages of customer access o accounts, the ability to move their money between different accounts or making payments via e- channels. Keywords: Electronic banking, Internet banking, Home banking, Mobile banking Introduction: E-banking is the wave of the future. It provides enormous benefits to consumers in terms of ease and cost of transactions, either through Internet, telephone or other electronic delivery channels (Nsouli and Schaechter, 2002). The evolution of the E-banking industry can be traced early 1970s. Banks began to look at E-banking as a means to replace some of their traditional branch functions for two reasons. Firstly, branches were very expensive to set up and maintain due to the large overheads associated with them. Secondly, E-banking products/services like ATM and electronic funds transfer were a source of differentiation for banks that utilized them. Being in a fiercely competitive industry, the ability of banks to differentiate themselves on the basis of price is limited (Singh, Chhatwal, Yahyabhoy and Yeo, 2002). To protect banks against business, legal and reputation risk, e -banking services must be delivered on a consistent and timely basis in accordance with high customer expectations for constant and rapid availability and potentially high transaction demand. The bank must have the ability to deliver e-banking services to all end-users and be able to maintain such availability in all circumstances. To meet

2 41 customers expectations, banks should therefore have effective capacity, business continuity and contingency planning. E-banking development would lead to two classes of surviving banks, which are very large banks and small niche ones (Dewan and Seidmann, 2002). Through the E-banking, smaller banks could compete by offering portals to the services offered by larger banks (Holland and Westwood, 2001). With this development, banks could use E-banking to focus on customer needs in order to gain the strongest competitive advantage (Wind, 2001). Figure 1: E- Banking What is E-Banking? Internet banking or E-banking means any user with a personal computer and a browser can get connected to his banks website to perform any of the Virtual banking functions. The term e-banking covers both computer and telephonic banking. In other words it is said that it is updated On-line, real time. The system is updated immediately after every transaction automatically. Definition of e-banking E-banking is the newest delivery channel for banking services. Banks have used electronic channels for years to communicate and transact business with both domestic and international corporate customers. With the development of the Internet and the World Wide Web (WWW) in the latter half of the 1990s, banks are increasingly using electronic channels for receiving instructions and delivering their products and services to their customers. E-banking is defined as the automated delivery of new and traditional banking products and services directly to customers through electronic, interactive communication channels. Tools of E-banking ATM, Credit Cards/Debit cards/smartcards. E-Banking in India Opening up of economy in 1991 marked the entry of foreign banks. They brought new technology with them. Banking products became and more competitive. Need for differentiation and services were felt. The ICICI bank kicked off online banking in Currently 78 per cent of its customer base is registered for online banking. Technological advances TELE SERVICES allow customers to access the bank database and to do various operations through virtual bank branches. These services can be:- Simple, allowing customers only to get information about their account status, or- Complex,

3 42 allowing customers to get information about their account status, to make payments or transfers between accounts, and to ask bank forms. PHONE BANKING services use a rented telephone line (dedicated line), a connection convention signed by the customer, a password only known by the client and a personal code allowing access to the date. HOME BANKING services allow access to the bank accounts through a software module which is installed on the customer s PC and accesses the server connected to the bank s database. INTERNET BANKING services allow customers to access their accounts online. Customers connect to a bank portal and thus can check their accounts and do bank transfers from any computer connected to the Internet. For authentication, a customer code and a password are provided E-banking benefits E-banking serves several benefits to any societies which are summarized as below: Benefits to Banks The first benefits for the banks offering e-banking services is better branding and better responsiveness to the market. The main goal of every company is to maximize profits for its owners and banks are not any exception. Automated e-banking services offer a perfect opportunity for maximizing profits. As compared to 54 cents for telephone banking, 27 cents for ATM (Automatic Teller Machine) banking and 1.5 cents for Internet banking (Nathan 1999; Pyun et al., 2002). Very low setup cost Capability to cater to a very large customer base Saves of lot of operational costs, adds to the baseline Banks an offer a lot of personalized services to their customers. Reduction of burden of branch banking Benefits to customers Time saving and reduced expenses (no more transportation to and from the bank building) The main benefit of the bank customers is saving of time by the automation of banking services processing and introduction of an easy maintenance tools for managing customer s money. Comfort access to the bank 24 hours a days, 7 days a week, without depending on the bank s schedule. Low costs in order to reduce the number of clients who go to the bank desks, there are fee reductions (10-50% of the ordinary fees) for the electronic payments Safety transactions take place in the best security conditions as customers use a username, a password, and an encrypted channel Accessibility online connection with the bank for any Internet connected computer; simple and ergonomic menu leading the client directly to the operation he/she wants to perform; One disadvantage concerns the additional costs of subscription and Internet connection. Funds management- Customers can download their history of different accounts and do a what-if analysis on their own PC before affecting any transaction on the web. This will lead to better funds management.

4 43 Speed- The response of the medium is very fast; therefore customers can actually wait till the last minute before concluding a fund transfer. Economic benefits to Society E-banking serves so many benefits not only to the bank itself, but also to the society at whole. Accordingly from bank s side, e-banking makes finance economically possible (1) Lower operational costs of banks Automated process Accelerated credit decisions Lowered minimum loan size to be profitable (2) Potentially lower margins Lower cost of entry Expanded financing reach Increased transparency (3) Expand reach through self-service Lower transaction cost Make some corporate services economically feasible for society Make anytime access to accounts and loan information possible from society perspective E-banking business makes access to finance from banks attractive. Society have benefited from the development of E finance and gradually stepped out of the informal sector. E- Finance offers the following attractive benefits for society: Ease of use Lower costs of financing Convenience Time savings Operational efficiency E-banking services-customers satisfaction e -banking services must be delivered on a consistent and timely basis in accordance with high customer expectations for constant and rapid availability and potentially high transaction demand. To protect banks against business, legal and reputation risk. The bank must have the ability to deliver e-banking services to all endusers and be able to maintain such availability in all circumstances. To meet customers expectations, banks should therefore have effective capacity, business continuity and contingency planning. Banks should also develop appropriate incident response plans, including communication strategies that ensure business continuity, control reputation risk and limit liability associated with disruptions in their e-banking services. Services are increasingly used irrespective of time and place. The expansion of opening hours of virtual services is impacting also more traditional services, as consumers expect service round-the-clock, or even 24/7/365. E banking Charges-impact on customer satisfaction Service quality attributes in e-banking industry are important since humaninternet interaction is the main service delivery and communication channel. Offering high quality services to satisfy consumers' needs, at lower costs, are potential competitive advantage of e-banking. Some studies show that e-banking has successfully reduced operating and administrative costs (Devlin, 1995; Siriluck and Speece, 2003). Cost savings have helped e-based banks offer lower or no service

5 44 fees, and offer higher interest rates on interest-bearing accounts than traditional banks (Gerlach, 2000; Jun and Cai, 2001). Therefore, it is hypothesized that fees and charges have positive impact on customer satisfaction. Modern e-banks - development of new economy E-banking within the information-based environment of financial services made infinite scalability appear even more promising compared to other types of e - commerce. Banking organisations have been delivering electronic services to consumers and businesses remotely for years. Electronic funds transfer, including small payments and corporate cash management systems, as well as publicly accessible automated machines for currency withdrawal and retail account management, are global fixtures. Electronic banking (e-banking) is the newest delivery channel of banking services. E-Banking Services 1. The Electronic Fund Transfer (EFT): This facility offers you to make payments to account holders of other banks in an efficient and fast manner. As against the physical clearing, where the cheques are cleared on presentment of the physical instrument at the clearing house, in EFT the transactions are settled electronically. EFT also provides you with an opportunity to move your collections to an electronic platform, whereby you can instruct your Dealers to pay through EFT, thus reducing the time for realization of funds. At present the electronic fund transfer facility is available in two modes and you can avail either of the following modes to transfer your funds: 2. National Electronic Fund Transfer (NEFT): This is the faster mode of fund transfer in which the funds are credited to the beneficiary s account on the same day. It is offered by computerized branches of certain banks. 3. Electronic Fund Transfe: This is the normal electronic fund transfer facility offered by the banks. It is similar to NEFT in all respects with the exception of the transaction cycle time an EFT transaction takes a minimum of 3 working days to be credited to the beneficiary s account whereas in NEFT, the amount is credited on the same day of the transaction. The end to end transaction can be done through our Corporate Electronic banking wherein the request can be submitted online, either as a single transaction or through a file uploads. The key features that are common to both EFT and NEFT are: EFT/NEFT clearing is conducted by Reserve Bank of India (RBI) and it takes place thrice a day during Monday to Friday and twice on Saturdays. The payment instruction can be given through the Corporate Electronic banking. Alternatively the instructions can also be sent to the designated branches. Presently offered at more than 125 locations, which covers all the major cities of the country 4. Automated Teller Machines: The Automated Teller Machines are installed, now-a-days, at every nook and corner in most of the towns & cities. These are meant for balance enquiries, cash withdrawals and many other facilities depending upon the policies of the bank. This requires a valid Customer Id and password to log in and is therefore safe to be used. Despite of using ATM cards, Debit cards can also be used in the ATMs.

6 45 5. Debit Cards: Debit Cards is another advanced technology of the electronic banking, now-a-days. These cards are the multi-purpose cards and can be used in ATMs for balance enquiry and cash withdrawal or can be used for easy shopping at various counters. Debit Cards ensure the automatic deduction of amount from the account just by scratching it on the machine. It makes it easier for the consumers to go for shopping with and even carrying cash with them. 6. Credit Cards: Credit Cards, unlike debit cards, provide credit to the consumers. A credit card system is a type of retail transaction settlement and credit system, named after the small plastic card issued to users of the system. A credit card is different from a debit card in that it does not remove money from the user's account after every transaction. In the case of credit cards, the issuer lends money to the consumer (or the user). It is also different from a charge card (though this name is sometimes used by the public to describe credit cards), which requires the balance to be paid in full each month. In contrast, a credit card allows the consumer to 'revolve' their balance, at the cost of having interest charged. Most credit cards are the same shape and size, as specified by the ISO 7810 standard. 7. Charge Cards: A charge card is a means of obtaining a very short term (usually around 1 month) loan for a purchase. It is similar to a credit card, except that the contract with the card issuer requires that the cardholder must each month pay charges made to it in full -- there is no "minimum payment" other than the full balance. Since there is no loan, there is no official interest. A partial payment (or no payment) results in a severe late fee (as much as 5% of the balance) and the possible restriction of future transactions or even cancellation of the card. 8. Smart Cards: A card that is used for storing and retrieving personal information, normally the size of a credit card and contains electronic memory and possibly an embedded integrated circuit. The card can be used to do many tasks: Will verify the carrier of that card in order to access systems. Storing a patient's medical records Storing digital cash To use a smart card, either to pull information from it or add data to it, you need a smart card reader, a small device into which you insert the smart card. CONCLUSIONS E-banking can improve a bank s efficiency and competitiveness, so that existing and potential customers can benefit from a greater degree of convenience in effecting transactions. This increased level of convenience offered by the bank, when combined with new services, can expand the bank s target customers beyond those in traditional markets. A bank may be faced with different levels of risks and expectations arising from electronic banking as opposed to traditional banking. Furthermore, customers who rely on e -banking services may have greater intolerance for a system that is unreliable or one that does not provide accurate and current information. Clearly, the longevity of e-banking depends on its accuracy, reliability and accountability. The challenge for many banks is to ensure that savings from the electronic banking technology more than offset the costs and risks involved in such changes to their systems. While financial institutions have faced difficulties over the years for a multitude of reasons, the major cause of serious banking problems continues to be directly related to lax credit standards for borrowers and counterparties, poor portfolio risk management or a lack of attention to changes in

7 46 economic or other circumstances that can lead to a deterioration in the credit standing of a bank s counterparties. An increase in social expectations in relation to subjects rendering financial services, dissemination of new technologies, more developing technical culture of society, an increase in importance on information technology in economy, business globalization, consolidation of banks and an increase in competitiveness are only a few reasons which had an influence on a type and quality of services rendered by banks. References: Gupta, P. K. (2008): Internet Banking in India: Consumer Concern and Bank Strategies Global Journal of Business Research, Vol. 2(1) Gonzalez, M. E. (2008): An Alternative Approach in Service Quality: An E-Banking Case Study, Quality Manage,1(5);41-48 W. and Strassmann, P. A. (2005), Measurement of customer satisfaction on information technology adoption in banking services. Prestige Journal of Management and Research, 81(1-2): Mohammed, S. K. Siba S. M.(2009): Service Quality Evaluation in Internet Banking: An Empirical Study in India, International Journal of Indian Culture and Business Management,2(1):12-19 A. Timothy, (2012) Electronic Banking Services and Customer Satisfaction in the Nigerian Banking Industry, International Journal of Business and Management Tomorrow, Vol.2, No. 3, 1-8. A. Zeithaml Valarie, A. Parasuraman and A. Malhotra, (2002) Service Quality Delivery Through Web Sites :A Critical Review of Extant Knowledge, Journal of the Academy of Marketing Science, Vol. 30, No4,