DIGITAL TECHNOLOGY IN BANKING SERVICES: A STUDY OF CUSTOMER

PERCEPTION IN WEST KAMENG.

Chello Lima1 and Chorten Norbu 2

1
Assistant Professor, Dept. of Commerce, Government College Bomdila, Arunachal Pradesh
2Assistant Professor, Dept. of Commerce, Government college Bomdila, Arunachal Pradesh
Email: 1Chellolima5@gmail.com
2chhor10@gmail.com

ABSTRACT

Now a day’s costumers have become more demanding and are more interested in doing
banking transaction through online without physically visiting the banking premises. Internet
has changed the way banking industry conduct their business and has enabled the banks to
enhance its operation effectively and efficiently via online banking channel. It has made it
possible for the bank to fulfil the changing demand of customers by creating a convenient
platform for the costumer to carry out their banking transactions. The present paper is an
effort made to study the awareness level of customer t banking services. The study is carried
out in Papum Pare district of Arunachal Pradesh comprising a sample of 40 customers having
an account with bank for a period of at least 6months.

Keywords: internet banking/online banking, customer awareness, customer perception.

INTRODUCTION

Internet banking is an electronic payment system which allows the customer of a bank to
carry out banking transaction without physically going to the bank. It is a new phase in retail
banking services. In order to get an internet account a customer need to have an account with
the particular bank and then request for the internet banking. A customer will be provided
with a login id and password with the help of which a customer can carry out banking
transactions. Some of the internet banking service includes debit card/credit card, payment of
bill, transfer of fund, mobile banking, telephonic banking and view of account statement etc.
Internet banking has brought a change in the way banking industry carry out their transaction.
It has also brought changes in the way customer percept towards the banking services.
Through internet banking one can do most of the banking transaction even from a remote

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location provided it is conducted through a computer system or similar device that can
connect to the banking site via the internet.
Internet banking is a blessing to customers who has computer /mobile phone having Wi-Fi or
3G connections as they can simply transact anytime or anywhere. Customers are mostly using
online banking services to book tickets, utility request and to transfer funds to other accounts
(D. Singhal &V.padhmanabhan, 2008).Customers need not personally visit the banks but
they can carry out their transaction via internet or ATM machine. As information technology
advances different kinds of electronic banking are also being introduced facilitating the user
to interact with the bank in the easiest way. Stanford Federal Credit Union (SFCU) provided
the first online banking services based on internet in October 1994(Business Wire, 1995) the
first popular system introduced in online banking business was the Automated Teller machine
(ATM) which facilitated the users to access and carry out their banking transaction in
minimum time. The virtual market competition is going to take place in future (Rayport and
Sviokla, 1994).

The current study examines the perception of bank customers of Arunachal Pradesh. Most of
the banks in study area operate via internet. The study explores the awareness, preference and
perception of bank customers towards e banking service. An attempt is made to know about
perception of customers regarding the merits and demerits in usage of online banking in the
study area.

OBJECTIVES OF THE RESEARCH

1. To study the awareness level of customers towards internet banking.
2. To study the most frequently used internet banking service.
3. To analyse the perception of customers towards merits and limitations of internet
banking.

LIMITATIONS OF THE STUDY

The study faces following limitations:
 The study was conducted exclusive in Papum Pare district so the inference applies
only to the study area and cannot be generalised.
 The duration of the research period is 2 months, so the data was collected within
limited short time span from respondents.

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  Some respondents hesitant to give information, it is difficult to know if all the
respondents gave accurate information; some respondents might have given
misleading information.
 Time constraint as the respondents are busy with their own works and hardly get time
to fill up the information.

RESEARCH METHODOLOGY
The current study is mainly based on primary data. The primary data has been collected
through questionnaire, discussion with the customers whereas secondary data has been
derived from internet, related articles and journals etc.The study is conducted in Papum Pare
district of Arunachal Pradesh with a sample of 40 customers having an account with bank at
least for a period of 6months.The sample were selected using convenient sampling method.
For the purpose of analysis SPSS and simple statistic like frequencies were used.

ANALYSIS AND DISCUSSIONS

The current section discusses about the analysis of primary data and the major findings.
There are six tables showing the statistical results followed with the discussion of the same.

Table 1
Demographic profile of Respondents

Gender Frequency Age Frequency Education Frequency Occupation Frequency

(%) (Yrs) (%) (%) (%)
Male 21(52.5) 18-30 23(57.5) Secondary 2(5) service 16(40)
Female 19(47.5) 31-45 10(25) Sr.secondary 6(15) business 5(12.5)
46-60 6(15) Graduate 14(35) Self 4(10)
employed
<60 1(2.5) Post graduate 14(35) students 6(15)
Others 4(10) others 9(22.5)
Total 40(100) 40(100) 40(100) 40(100)
Sources: field survey

Table 1 shows the various demographical characteristic of the respondents. The table reveals
that out of 40 samples respondent 21 were male and 19 were female. The respondents
belonging to age group 18-30 form 57.5% of the total respondent. Majority of the
respondents were graduate and post graduate sharing 35% of the sample each. Maximum
respondents i.e. 40 % were serving in government job and self employed people were the
least among the respondent. The figure in bracket shows the percentage.

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 Table 2
Comfort level with internet banking

Comfort level with internet banking Total

Very high medium low Very low
Gender high
female 5 4 3 4 3 19
male 2 5 9 3 2 21
Total 7 9 12 7 5 40
Percent 17.5 22.5 30 17.5 12.5 100
Source: field survey
Table 2 represents the comfort level of respondents with the internet banking. It can be
observed that majority (30%) of the respondents have medium level of knowledge in carrying
out online transaction. Only 17.5% of the respondents felt that they their comfort level with
online banking is very high whereas 12.5% of respondent had very low level of comfort in
carrying out banking transactions through internet. The comfort levels of female and male
respondents with internet banking were similar.

Table 3
Comparison of Comfort Level between Male and Female
Chi-Square Tests
Asymp. Sig. (2-
Value df sided)
Pearson Chi-
6.263 4 .180
Square
Source: field survey

Table 3 shows if there is any significant difference in the comfort level of using internet
banking service between male and female respondents. The table also reveals chi-square
value of 6.263, df =4, P>0.05 (.180) which indicates that there is no significant difference in
the comfort level in operating internet banking between male and female respondents.

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 Table 4
Frequency of using online banking services
Frequency Percent
Daily 10 25
Weekly 18 45.0
Monthly 8 20.0
Quarterly 9 22.5
Yearly 1 2.5
Total 40 100.0
Source: field survey
The users of internet banking service in this study considers to those who posses at least an
ATM card and use it for withdrawal of cash or POS purpose. Above table shows that 45% of
the respondents used online banking services weekly. Most of them were the users of debit
card or ATM to withdraw cash for meeting their daily basic needs. The table also shows that
20% of customer used online banking monthly either for online shopping or to check their
account balance. Some respondents said that they use online banking quarterly to transfer
funds to others. And 2.5% of respondents responded that they used online banking once in a
year.
Table 5
Most frequently used e banking service
Frequency Percent
ATM cash withdrawal 10 25.0
Debit card at POS 19 47.5
Check Account balance 1 2.5
Inter Accounts transfer 1 2.5
Online bill payment 3 7.5
Generate/change password 3 7.5
Online Shopping 3 7.5
Source: field survey
Above table reveals that maximum respondents (47.5%) preferred to use debit card at point
of sale (POS) and 25% of respondents preferred using ATM for withdrawing cash. We can
also observe that 2.5% of respondents used online banking for checking their balance as well
as to transfer amount to others accounts. The table also shows that 7.5% of respondents
carried out online shopping, online bill payments and to generate and change their passwords.

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 Table 6
Perception of Customers towards benefits of Internet Banking
Statements Strongly agree Agree neutral disagree Strongly Total
disagree
Easy and saves time 16 (40%) 18(45%) 3(7.5%) 3(7.5%) 0 40
speedy transfer of 9 (22.5%) 23(57.5%) 6(15%) 2(5%) 0 40
funds
User friendly 13(32.5%) 11(27.5%) 5(12.5%) 8(20%) 3(7.5%) 40
Round the clock 13(32.5%) 22(55%) 2(5%) 0 3(7.5%) 4
service
No queuing 22 (55%) 11(27.5%) 6(15%) 1(2.5%) 0 40
Quick response 3 (7.5%) 21(52.5%) 10(2.5%) 5(12.5%) 1(2.5%) 40
Low service charge 3 (7.5%) 16(40%) 9(22.5%) 9(22.5%) 3(7.5%) 40
Convenient 6 (15% 24(60%) 6(15%) 3(7.5%) 1(2.5%) 40
Source: field Survey
Above table shows that 40% of the respondent strongly agree that internet banking is easy
and saves time. It can also be observed that 45% of respondents also agreed with the same
statement. Only few disagreed with the statement as they were finding difficulty in using
online banking service. The table also reveals that maximum respondents agree with
statement that online banking facilitates speedy transfer of fund. Only very few (5%) of the
respondent were not agree with the statement. It is also found that 32.5% respondent were
strongly supporting the statement that internet banking is user friendly but 7.5% of
respondent strongly disagreed with the statement as they knew only how to use ATM and not
other internet service. Maximum (55%) respondents agreed that internet banking service
provide round the clock service and only 5% of respondents disagreed because they felt that
when there is problem of internet connection there is no question of providing services. 55%
of the sample respondent have stated that freedom from queuing is an important reason for
using internet banking by strongly supporting the statement. 52.5 % of the respondents
strongly agreed that internet banking provides quick response whereas only 2.5% were
strongly disagreeing as they felt quick response is exceptional in case of poor internet
connection. Majority (40%) supported that online charges are reasonable but few (7.5%)
argued that banking charges should be negligible as an incentives to customers. 60%
customers agreed and 15% strongly agreed that internet banking is convenient as it allows

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banking anytime and anywhere. However, 15% of customers neither supported the statement
nor gave any negative commence. 7.5% of sample respondents disagreed with the statement
and 2.5% were strongly against the statement. They stated that it is convenient only for those
who are expert with computer system and have a good internet connection.
Table 7
Customers Perception towards Limitations of Internet Banking
Statement Strongly Agree Neutral Disagree Strongly Total
Agree disagree
Problem of Internet 15(37.5%) 20 (50 %) 3(7.5%) 1(2.5%) 1(2.5%) 40
Connection
Illiteracy 18(45%) 16(40%) 2(5%) 3(7.5%) 1(2.5%) 40
Lack of security 9(22%) 18(45%) 5(12.5%) 5(12.5%) 3(7.5%) 40
Hacking Problem 14(35%) 17(42.5%) 5(12.5%) 3(7.5%) 1(2.5%) 40
Lack of Incentives 8(20%) 16(40%) 7(17.5%) 8(20%) 1(2.5%) 40
Source: field Survey
The above table indicates that majority (50%) of respondents agree and 37.5% strongly agree
with the statements internet connection is a major problem faced in online banking service.
Very few like 2.5% of respondent did not feel that internet connection is a problem. Sample
respondents strongly felt that illiteracy is major problem in availing online banking as reveal
from the table that 45% respondents strongly supported the statement and 40% of them
agreed with the statement. However few felt that through constant practice one can carry out
online banking without being literate. 22% of respondents felt that lack of security is the
biggest enemy of online banking. 45% agreed that there is no security in online banking
which demotivates one to stay away from online banking. Only very few (7.5%) felt secure in
online banking as they feel if one is careful there is no risk in carrying out online transaction.
35% of respondents feared hacking problem in online banking. Majority of respondents feel
that customers are reluctant to register with banks for mobile banking as they fear that their
account might be hacked. Only very few (2.5%) of respondents stated that there is no fear of
hacking unless one shares one’s id or passwords with others. The table also reveals 20% of
respondents strongly agreed with the statement that lack of incentives discourages the
customer to use online banking. 40% of respondents agreed that incentives should be
provided to encourage online banking. Few (2.5%) of respondents stated that lack of
incentive is not a problem with online banking. They stated that online banking services

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make the work easier and convenient which itself is an incentive and there is no need of
providing extra incentives for the same.

FINDING & CONCLUSIONS

It is found that majority of the internet banking users were younger generation following in
the age group of 18-30 years. Maximum users were graduate and post graduates and were
engaged in government jobs. Male used more internet banking than female. Majority of the
users were very comfortable with online banking transactions. Online banking is used daily to
withdraw cash and the most frequent form of using online banking is use of Debit card at
POS. It indicates that bank customers in the study area are aware about internet banking
services and are availing it. Most of the respondent strongly supported that speedy transfer of
fund; time saving and freedom from queuing were the major reason customers opt for online
banking service. Factors like internet connection problem, illiteracy and hacking problem
were percept to be major factor discouraging the use of internet banking service.
Hence awareness level of the bank customers can be enhanced by providing special
awareness program among people. proper education and promotion by the banks. As the
awareness level increases the negative mindset of bank customer can be changed along with
proper promotion, education and provision of incentives. Internet banking is highly useful for
all sectors including government, corporate, and customers; hence it’s used should be
encourage by creating awareness about its benefits and planning strategies to minimise its
limitations.

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