Evaluation of Service Quality in Internet Banking 1. Introduction: 1. 1Background 1. 1. 1 Banks have conventionally been in the vanguard of harnessing technology to develop their products, services and competence. They have, over a long time, been using electronic and telecommunication networks for delivering a extensive variety of value added products and services.
The delivery channels include direct dial – up connections, private networks, public networks etc and the devices include telephone, Personal Computers including the Automated Teller Machines, etc. With the popularity of PCs, easy access to Internet and World Wide Web (WWW), Internet is progressively more used by banks as a channel for receiving instructions and delivering their products and services to their clientele.
This form of banking is generally referred to as Internet Banking, although the range of products and services offered by different banks vary broadly both in their content and superiority. 1. 1. 2 Broadly, the levels of banking services offered through Internet can be categorized into three types: (i) The Basic Level Service is the banks’ websites which disseminate information on different products and services offered to customers and members of public in general.
It may receive and reply to customers’ queries through e-mail, (ii) In the next level are Simple Transactional Websites which allow customers to submit their instructions, applications for different services, queries on their account balances, etc, but do not permit any fund-based transactions on their accounts, (iii) The third level of Internet banking services are offered by Fully Transactional Websites which allow the customers to operate on their accounts for transfer of funds, payment of different bills, subscribing to other products of the bank and to manage purchase and sale of securities, etc.
The above forms of Internet banking services are offered by traditional banks, as an additional method of serving the customer or by new banks, who deliver banking services primarily through Internet or other electronic delivery channels as the value added services. Some of these banks are known as ‘virtual’ banks or ‘Internet only’ banks and may not have any physical presence in a country despite offering different banking services. 1. 1. 3 The Central Bank may have its concern about the impact of Internet banking on its monetary and credit policies.
As long as Internet is used only as a medium for delivery of banking services and facilitator of normal payment transactions, perhaps, it may not impact monetary policy. However, when it assumes a stage where private sector initiative produces electronic substitution of money like e-cheque, account based cards and digital coins, its likely impact on monetary system cannot be overlooked. Even countries where i-banking has been quite developed, its impact on monetary policy has not been significant. In India, such concern, for the present is not addressed as the Internet banking is still in its formative stage. 1. Internet Banking In India The Reserve Bank of India constituted a working group on Internet Banking. The group divided the internet banking products in India into 3 types based on the levels of access granted. They are: 1. 2. 1 Information Only System: General purpose information like interest rates, branch location, bank products and their features, loan and deposit calculations are provided in the banks website. There exist facilities for downloading various types of application forms. The communication is normally done through e-mail. There is no interaction between the customer and bank’s application system.
No identification of the customer is done. In this system, there is no possibility of any unauthorized person getting into production systems of the bank through internet. 1. 2. 2 Electronic Information Transfer System: The system provides customer- specific information in the form of account balances, transaction details, and statement of accounts. The information is still largely of the ‘read only’ format. Identification and authentication of the customer is through password. The information is fetched from the bank’s application system either in batch mode or off-line.
The application systems cannot directly access through the internet. 1. 2. 3 Fully Electronic Transactional System: This system allows bi-directional capabilities. Transactions can be submitted by the customer for online update. This system requires high degree of security and control. In this environment, web server and application systems are linked over secure infrastructure. It comprises technology covering computerization, networking and security, inter-bank payment gateway and legal infrastructure. The services available online vary from bank to bank.
Most of the general services are on all banking websites but the larger banks contain more control over your money. Here are some of the things that are possible – •View your account balances •Pay your bills (With the help of programs like ‘B-Pay’) •View records of transactions •Transfer money to linked accounts with the same bank •Transfer money to specially selected unlinked accounts •Order printed payment reviews •Pay for shares •Check interest in your accounts •Send money overseas •Change your details •Open new accounts •Receive advice on handling funds 2.
Literature Review: The financial services industry is global in scale and quite diverse, encompassing the banking industry, building and loan societies, insurance and investment companies, and increasingly, firms from other fields that have set up their own financial services operations like, retail financial institutions. In addition to the diversity of institutions engaged in some aspect of commercial finance, the development of new distribution channels, particularly those that relate to e-commerce, have changed the very nature of the competitive environment among the various players within the financial services industry (Hughes, 2005).
UK financial services industry has been subject to a significant degree of structural change since the early 1980s. This structural change has been associated with a number of issues that include: increasing competition, deregulation, increased diversification and merger activity, and most recently, the demutualization of segments of life assurance and building society industries. Birch and Young (2007) indicate that the financial services industry will continue to be strongly impacted by e-commerce strategies, primarily because such implementation tends to change the basic cost dimensions and the distribution structure.
Nonetheless, recent empirical studies indicate that internet banking is not having an independent effect on banking profitability, although these findings may change as the use of the Internet becomes more widespread (Carlson et al. , 2007). Hence service satisfaction will not merely be based on isolated service encounters and experiences but rather on the overall feelings of satisfaction. If customers are thus using channels in a complementary manner how are the banks taking account of the service experience in each channel to ensure overall satisfaction.
One element of dissatisfaction could potentially harm current and potential usage of other delivery channels in the banking sector. Gilmore (2005) acknowledge an assortment of methods used to measure and assess e-service quality including scales for measuring customer satisfaction and loyalty, critical incident technique, focus group discussion and in-depth interviews. Moreover, for this study it is important to note that other variables, including customer behavior, customer satisfaction and psychological factors will influence the whole banking experience.
The standardization in technologies and the public’s familiarity with the use of personal computer and the Internet have made the Internet bank or Internet banking site easier, cheaper and more cost effective than ever before. This paper discusses the coming of age of Internet banking, the opportunity for Internet banking and some of the obstacles and procedures that must be followed in order to develop a sound Internet banking presence. Mohammed Hossain and Shirley Leo, 2004) It is true that structural changes have resulted in banks being allowed a greater range of activities, enabling them to become more competitive with non-bank financial institutions (Angur et al. , 1999). “To understand the relationship that can develop between the Internet and banks, one has to first understand the nature of both these items. The first to be understood is the banks. So far as banks are concerned, at the beginning of the twenty-first century, central banking which is the source of all banking activity would appear to be at a crossroads in their future.
Earlier it was the lender of last resort, active participant in stabilizing economic fluctuations, and now the present main function is being the guardian of price stability. As it is still the monetary authority, much is expected from them. At one stage, fiscal policy was considered to be the main instrument of economic policy, the situation changed to an ascendancy of monetary policy and that was noted by the late 1980s in most parts of the industrialized world. This had a lot of implications for the role of the central bank. the Working Group that “the applicability of various existing laws and banking practices to e-banking is not tested and is still evolving, both in India and abroad. With rapid changes in technology and innovation in the field of e-banking, there is a need for constant review of different laws relating to banking and commerce. ” The establishment of the multidisciplinary high level standing committee to review the legal and technological requirements of e-banking on a continual basis and recommendations of appropriate measures as and when necessary would really be a panacea for legal clarifications as and when they arise.
The key in such future and further deliberations would be to encourage banks towards innovation and where necessary or required evolve new practices and customs to complement the banking laws in force from time to time. 3. Objectives of the study: 3. 1 Primary Objective: The Primary objective of the study is ‘To Evaluate the Internet Banking Service Quality’. 3. 2 Secondary Objectives: The secondary objectives of the study are: •To understand the customers’ perceptions of an ideal electronic banking service system. To know the ranking of important attributes of an electronic banking. •To understand the consumers’ perceptions of electronic banking performance. •To know the customers experience in choice of using or not using electronic banking 4. Research Methodology 4. 1 Research Design: This study proposes to have Exploratory as well as Descriptive research approach. Since, the focus of descriptive research is to provide an accurate description of something that is occurring, it will be extensively used in this research to understand the service quality aspect of the e-banking.
Exploratory research attempts to discover genus information about the topic that is not well understood by the marketer and still needs to be explored. This research will be useful in understanding the quality of internet services provided by the banks. 4. 2 Data Collection: The data for this study will be collected in stages. Interviews will be conducted of the bank customers to generate items important to users of financial services.
Data regarding significant themes involved in customer evaluations of service in electronic banking as reliability, accuracy, approachability and personalization can be gathered. Other methods included evaluations of ATM, telephone, and internet banking services provided. Although e-banking is non-personal in nature, face-to-face administration will be used to maximize response rates and meant the researchers on hand to answer queries. 4. 3 Sample Design: The research will be conducted on the basis of random sampling.
The proposed sample size of the study is 200 customers of four banks in Delhi & NCR. Two private & two public sector banks are selected randomly. Namely: HDFC Bank, ICICI Bank, Punjab National Bank and State Bank of India. 5. References: 1. http://www. worldjute. com/ebank. html 2. http://www. academon. com/Research-Paper-Internet-Banking/25315 3. http://ivythesis. typepad. com/term_paper_topics/2010 4. International Journal of Indian Culture and Business Management, Vol. 2, No. 1, 2009 5. The Journal of Internet Banking & Commerce