Emergence of e-banking in Rural Area Santosh. B. Potadar Assistant Professor ASM s ICS Hidayatulla K. Pirjade Assistant Professor ASM s ICS Miss. Manisha S. Thorat. Assistant Professor Krishna Institute Computer Application & Mgmt, Wathar, Karad Shivaji University,Kolhapur Abstract Banking Industry is the backbone of the financial system of a country. The need to survive in the changing environment has leaded the banking industry to adopt internet as a medium of operating in the market. Internet banking provides alternatives for faster delivery of banking services to a wider range of customers. Internet banking refers to the use of internet as a remote delivery channel for banking services. It means any user with a personal computer and a browser can get connected to his bank website to perform any of the banking functions. India is predominantly an agricultural country and it s above 65 % of the population lives in the villages. Spread of E-delivery channels in those areas is very less because of difficulty in reaching technology and other infrastructure which supports and helps in carrying the technology to these area as well as lack of knowledge of the technology and internet operating training. The objective of this paper is to examine the illiteracy of rural areas bank customer and by designing the model how it will helpful to them while carrying the internet banking transactions and also it will helpful to banking sector to get a benefit from rural areas bank customers to explore a banking industry. Keywords- Banking Industry, Internet banking, E-deliver, Remote delivery channel, Website INTRODUCTION Today we are in the era of globalization. Multinational organizations worldwide have adopted globalization as their first strategic choice. Advancement in technology has facilitated globalization too. The world has literally shrunk become a global village. Internet banking arrived in India in the late 1990s [1].ICICI was the first bank to champion its usage and introduced internet banking to its customers in 1996. With lower internet costs and increased awareness about electronic media, online banking established itself only in 1999. 1
Other banks followed suit, including HDFC, Citibank, IndusInd and the now redundant Times Bank [2].Internet banking changed both the banking industry as well as banks services to its customers. Anywhere banking came to be recognized as an opportunity also for differentiated and competitive services. E-Banking in remote rural areas of India is encouraging. It will become one of the most convenient ways of delivering financial services in the future. Over the last few years online banks have started to become more and more popular. There are plenty of reasons for this but there are still quite a few people who are not sure if an online account is a good idea for them. Online banking (or Internet banking) allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society. Online banking solutions have many features and capabilities in common, but traditionally also have some that are application specific. The common features fall broadly into several categories A bank customer can perform some non-transactional tasks through online banking, including - o viewing account balances o viewing recent transactions o downloading bank statements, for example in PDF format o viewing images of paid cheques o ordering cheque books o Downloading applications for M-banking, E-banking etc. Bank customers can transact banking tasks through online banking, including - o Funds transfers between the customer's linked accounts o Paying third parties, including bill payments and telegraphic/wire transfers o Investment purchase or sale o Loan applications and transactions, such as repayments of enrolments Financial institution administration Management of multiple users having varying levels of authority Transaction approval process In short, the objective of this paper is to examine the illiteracy and concerns of rural areas bank customer to use net banking. The model is proposed here to create customers' awareness, perception, and the level of satisfaction with regard to e banking system. It leads to a solution for banking industry as well as rural areas bank customers in many perspectives. Generally internet banking is widely used in urbanized area. But in case of rural region internet banking is not used or it is used in very low scale. The rural area bank customers are not using net banking facility due to some reasons which are mentioned further ahead. 2
Objective of the Study To examine the illiteracy and concerns of rural areas bank customer To design conceptual model for creating e-banking awareness. To provide a solution to banking industry to get a benefit from rural areas bank customers to explore a banking industry. Review of Literature Heggade (2000), studied the bank-customer relationship in Indian. He analyzed responses of 11 different classes of bank customers like businessman, salaried persons, advocates etc. He analyzed customer s views on one hand and employees view on other hand. He concludes that there is low correlation among the different occupations and satisfaction from services in the PSBs. [3] Furst, et.al. (2002) developed statistical models to explain why banks choose to adopt internet banking and why some choose to offer a relatively wider array of Internet banking products and services. They also investigated whether offering Internet banking affects a bank s profitability. The result revealed several significant differences in the profile of banks that offer internet banking and those that do not. They observe that internet bank rely more heavily in non-internet income and less on core deposits for funding than noninternet banks do. In addition, the study revealed that Internet banks have more accounting efficiency ratio and higher return on equity than non-internet banks.[4] Booz Alien and Hamilton (1997), conducted a global survey covering 386 retail and corporate banking institution in 42 countries to assess the strategic impact of Internet banking on the financial service industry. According to the study, there is huge perception gap between North American/ European and Japanese banks regarding the future interne banking. North European banks except Internet banking to become the most important retail channel within 10 years, but Japanese bank except traditional branches to become the most important channel. The study also indicates the rapid growth potential of Internet banking. Many of the banks that responded have plans to upgrade the functionality of their Internet service offerings. [5] 3
Sullivan (2000) found that Internet banks in 10 th Federal Reserve District incurred higher expenses but also generated higher fee income and conclude that the measures of profitability for internet banks are similar to the non-internet banks. [6] 1. Reasons of unused internet banking at rural side Lack of education Missing E-banking awareness No prior knowledge of computer and its peripherals Fear to perform bank transaction on machine Mentality to unchanged from manual activities Unfaith on computer machine Economically unsound situation 2. Emergent Model to enable Internet banking at rural side Generate E- Banking Awareness Training Implementation Formation of Net Bank store Development of simple Net Banking versions Dia. Emergent Proposed model for enabling internet banking at rural side bank customers 4
2.1 Generating E-Banking Awareness Banks should ensure that online banking is safe and secure for financial transaction like traditional banking. Banks should organize seminar and conference to educate the customer regarding uses of online banking as well as security and privacy of their accounts. Some customers are hindered by lack of computer skills. They need to be educated on basic skills required to conduct online banking. Banks must emphasize the convenience that online banking can provide to people, such as avoiding long queue, in order to motivate them to use it. Banks must emphasize the cost saving that online can provide to the people, such as reduce transaction cost by use of online banking. The online banking is the convenience that it offers. Since you can do your banking any time that you want you don't have to worry about the banks hours. You don't have to worry about the banks location since there is no need to travel to it. In addition online banks will allow you to pay your bills online. The whole process of paying your bills much easier than it would be if you had to mail a check to pay each of your bills. Another benefit of online banking is that you get much better record keeping they will mail you a statement every month. Clearly there are benefits to have an online bank account 2.2 Training to Rural Area Bank Customer To conduct a seminar and conference regarding online banking. They will aware about the technology Due to lack of Computer skills. They should have to provide basic skills to conduct online banking. To conduct demo training through expert trainers and train them how the net banking is carried out it s functionality To make them aware of net banking benefits and how they can make use of it in their professional work like To make them available net infrastructure with minimum cost for net banking. 2.3 Development of simple net banking website versions This is one of the most important features. Visitors come to a site It is must for a website to provide all the relevant information to the users. You can add informative articles or Demos how to operate different functionality as well as the products and bank services you offer. This will help the visitors to know what all you offer. It will also help them to make a decision quickly. Make sure that you provide only the relevant information. You may have a Web site with strong visual appeal, but if visitors can t easily find the content on your site, your Web site will not perform well for you. The usability of your Web site is like. 5
Effective navigation and orientation Appropriate and efficient functionality Access to help and support User control and error management Keeping users informed of progress Working the user s way Using words the user understands Being consistent Accessibility Visual clarity The extent to which these various usability aspects need to be taken into account on a particular web site depend on the type, content and size of the website. They should however all be considered during the early design of any website. 2.4 Formation of Net bank store Centers Rural areas bank customers are not economically feasible to investing in Internet Setup which requires equipments like Computer, Net Connection, Network Devices. Is the main reason to make them keep away from internet banking. The solution for that, to make them available net infrastructure with minimum cost for net banking. Banks can get helps to setup Internet Service Center like Internet Cybercafé from Social Societies or from Reserve Bank of India. An Internet Cybercafé is a place where one can use a computer with Internet access, most for a fee, usually per hour or minute; sometimes one can have unmetered access with a pass for a day or month, etc. 1.5 Implementation Is the final and key stage of in proposed model before this stage models includes four stages Generate e-banking awareness, Training to rural area bank customers, Development of simple net banking website versions, Formation of Net bank store centers all these stages are need to be executed rather than only planning and designing by following proper execution of all these stage which are specified in the model are fully responsible for successful implementation of proposed model. 6
3. Benefits of implementation of proposed emergent model In recent time E-banking has spread rapidly all over the globe. All Banks are making greater use of E-banking facilities to provide better service and to excel in competition. The spread of E-banking has also greatly benefited the ordinary customer in general and corporate world in particular. The following points summarize benefits of E-Banking. 3.1 To Bank Organization Banking industry has also received numerous benefits due to growth of E-Banking infrastructure. There are highlighted below: The growth of E-banking has greatly helped the banks in controlling their overheads and operating cost Many repetitive and tedious tasks have now been fully automated resulting in greater efficiency, better time usage and enhanced control. The rise of E-banking has made banks more competitive. It has also led to expansion of the banking industry, opening of new avenues for banking operations. Electronic banking has greatly helped the banking industry to reduce paper work, thus helping them to move the paper less environment. Electronic banking has also helped bank in proper documentation of their records and transactions. The reach and delivery capabilities of computer networks, such as the Internet, are far better than any branch network. 3.2 To rural area Bank customers The rural bank customer can benefits in Through Internet Banking customer can operate his account while sitting in his office or home. There is no need to go to the bank in person for such matter. E banking has also greatly helped in payment of utility bill. Now there is no need to stand in long queues outside banks for his purpose. All services that are usually available from the local bank can be found on a single website. The Growth of credit card usage also owes greatly to E-banking. Now a customer can shop worldwide without any need of carrying paper money with him. Banks are available 24 hours a day, seven days a week and they are only a mouse click away. From home they can manage the different account activities like viewing account balances, viewing recent transactions, downloading bank statements, viewing and ordering cheque books 7
Bank customers can transact banking tasks through online banking, including - Funds transfers,paying third parties, including bill payments, Investment purchase or sale, Loan applications and transactions, such as repayments of enrollments 4. Problems in application of proposed emergent model - Cooperation of villagers and financial organizations - Staff requirement and Infra.management of NETBANK store centres -Cost (for building simple versions of net banking & infrastructure management of NETBANK STORES) 2. Conclusion Internet banking has evolved rapidly over the years with technological advances and increasing number of Internet users across various regions. It has developed as an effective distribution channel for banking products and services. It helps to attract customers, also do banking anywhere without opening branch. Various services provided and available anytime, anywhere which increased its popularity. The Efficiency of e-banking is fully dependent on how it is used by rural area bank customer the above emergent proposed model highly strive to rural area bank customer for using net banking for using net banking facility. It optimizes the time and money of rural area bank customer as well as banking organization. In short, the above paper mainly focuses on emergent model which enable efficiency and productivity of rural area society people. 8
References: [1] Srivastava, Dr. Saurabh Internet Banking - A Global Way to Bank!, www.indianmba.com/faculty_column/fc908/fc908.html [2] De, Rajneesh and Padmanabhan, Chitra for Indian Express Group, Internet opens new vistas for Indian banks, www.expresscomputeronline.com/20020916/indtrend1.shtml [3] Heggade, O. D. (2000): Banker Customer Relationship in India, (New Delhi: Mohit Publication). [4] Furst K., Lang W.W., Nolle D. E. (2002) Internet banking: developments and prospects, Program on Information Resources Policy, Centre for Information Policy Research, Harvard University, April. [5] Booz-Allen & Hamilton, Inc. (1997) "Booz-Allen's Worldwide Survey Revealed A Huge Perception Gap Between Japanese And American/European Banks Regarding Internet Banking.". [6] Sullivan, R.J. 2000. How Has the Adoption of Internet Banking Affected Performance and Risk at Banks? A Look at Internet Banking in the Tenth Federal Reserve District. Federal Reserve Bank of Kansas City, Financial Industry Perspectives, December: 1-16. 9