Literature Review About E Banking In India Finance Essay

Literature Review About E relianceing In India Finance EssayAbstract collect to augment in social occasion and popularity of mesh, E- buzzwording has contributed in economic harvest- sentence to a huge extent. E- desireing is a modern-day service of process provided by bounds tout ensemble in all oer the world (Poon, 2008). E-banking came into existence from the put on of Automatic Teller Machines (ATMs), telephone banking, direct bill defrayment, electronic storeho example transfer (EFT) and the revolutionary on job banking (Poon,2008). E-banking refers to banking through profits. Indian clients ar slowly and steadily moving towards meshing Banking. E-banking service constitute ATMs, electronic information interchange, MICR, coin dispensers, Automated ledger posting system, Electronic clearing system, Tele banking, anyplace Anytime Banking, flexible money, E-cash, Smart cards and so onand conglomerate processing systems such as echt time processing, Batch pr ocessing system, Desktop publishing and so forth The interview paper is int residualed on understanding and identifying the products of e-banking its trends, advantages and disadvantages as well of harvest-feast of e-banking in India. investigateer excessively intends on providing suggestions after analyzing the various an another(prenominal)(prenominal) research papers, articles, journals etc. Firstly, emphasis is made to define the term e-banking followed by literature review and methodology planned.Literature reviewIntroductionE-banking in todays scenario is a very dynamic concept. It is a kind of self-importance service technology (Dixit Datta,2010). Competition is the pushing force for the introduction of e-banking. (Ziqi Liao and Michael Tow Cheung, 2003) .E-banking is speech talk of upstart and traditional banking products and service straight to nodes using electronic, interactive communication line of credits using computers. At a entrepotamental point, E- ba nking means context of habit up of a web page by a bank to provide culture about its products and go their features, advantages, disadvantages, prices , duration and other details. On the other hand, at an groundbreaking level, it refers to providing facilities such as accessing accounts, transferring funds, and buying monetary products or services online, Making payments et which is known as deedal E- banking (Sathye, 1999). E-banking includes the systems that enable fiscal institutions, clients, individuals or argument sectores whether small or big or medium racing shell to access accounts, carry out proceedings or obtain teaching on financial products and services through a public or private network using net income. (Vasanthakumari and Sheela rani, 2010)The conception of electronic banking has been defined in a effect of ways (Daniel, 1999). According to Karjaluoto (2002) electronic banking is a form that consists of several channels of distribution. Daniel (1999 ) has defined electronic banking as providing banking information, products and services by a bank to guests using a tot up of dissimilar auction pitch platforms that whoremonger be utilize with different terminal devices such as a personal computer, mobile phone, desktop softwargon, telephone or digital television. Electronic banking is in like manner frequently known as internet banking or e-banking or PC banking or Home banking or Phone Banking or tele banking.The first java based 24 hours electronic banking services were started by the first direct and Fujitsu cooperation. (Fujitsu, 2008).It is a modern and innovative banking channel for Indian Banks. (Vasanthakumari and Sheela Rani, 2010). E-banking is two transactional as well informative medium. (Vasanthakumari and Sheela Rani, 2010). E-banking involves customers using earnings to prevail their bank accounts and obtain information without visiting a bank separate. (Vasanthakumari and Sheela rani,2010). cyberspace banking involves providing information about bank products as well carrying online transactions such as transfer of funds, formatting up direct debit, buying and selling of products etc. It involves computer networks and telecommunication networks. The basic aim of e-banking is to provide services to end consumer so that they can carry out banking transactions through PC or mobile. e-banking has attracted attention of banks, securities trading firms, individual work linees, insurance companies, medium and ample scale businesses etc. e-banking is growing because e-commerce has grown at a fast rate. net banking can help in building sound strategies as its impact on appeal savings, revenue and satisfaction of customer is awe-inspiring (Gupta, 2008). e-banking influences business models of various banks, insurance companies, brokerage houses etc. internet banking has changed the banking patience as well as banking relationships in a positive way. E-banking provides banking prod ucts using internet including e-mails, modems and various networks other networks like rbiNET, NICNET, BRISKNET, RBINET, BANKNET. E-banking services includes ATMs, Electronic data interchange, MICR, Cash dispensers, Automated ledger posting system, Electronic clearing system, Tele banking, Anywhere Anytime Banking, Plastic money, E-cash, Smart cards etc and various processing systems such as Real time processing, Batch processing system, Desktop publishing etc.However it is very complicated for banks as well as customers to shape a best and appropriate approach to E-banking. (Dixit Datta,2010)History Of E-banking In India in advance E-banking In India came into existence the dealings between customers and banks was on one on one basis. The bank branch was involved in dealing with customers, payments, clearing, add applications, untieding accounts etc but the head office was involved in overall clearing, size of branch, training, sanctioning of loans, keeping track of accounts of customers and it does non deal instantly with customers.In the last 5 decades banking in India has evolved through various phases. Due to Globalization and Liberalization a new environment was seen in banks in the whole of the world. Banks offered new services with modish technologies such as anywhere and anytime banking, Tele banking, profit banking etcThe entry of foreign banks has pushed Indian banks to follow the path of latest technologies so as meet threat of competition and to retain their customer base. The growing competition and change magnitude expectations has led to increase in cognizance among banks on and role of internet banking. E-banking has revolutionized banking industry and is a product of innovation. in that respect is a prototype change in different parameters of transformation. Many factors both internal and external ar responsible for this shift. Competition from other bank group and other global factors argon forcing Indian banks to make these c hanges in their functioning. E-banking services stool replaced traditional services. (Uppal, 2008). The process of E-banking started in 1980s when RBI had set up two committees in a sequence in order to step up the pace of semiautomatic operations in the banking sector. A high-level committee was make under the chairmanship of Dr. C. Rangarajan, then governor of RBI, to plan out phased computerisation and mechanization in the banking industry over intent five-years from 1985 to1989.The main aim was to improve customer service and two models of branch automation were positive and were in practice. The second committee was Rangarajan committee which was formed during this five year time frame in 1988 to make a detailed perception plan for Computerization of banks and for extension of automation to other argonas such as funds transfer, e-mail, BANKNET, SWIFT, ATMs, E -banking, etc.The Government of India enacted the breeding applied science Act, 2000 (generally known as IT Act, 2000), with effect from 17 October 2000 to provide lawful status to electronic transactions and other electronic commerce. RBI had set up a Working Group on e-banking to examine different aspects of e-banking. This Group mainly focused on three major areas of E banking(1) Technology and earnest issues,(2) Legal issues and(3) Regulatory and supervisory issues.RBI veritable the recommendations of the Working Group, and issued guidelines on internet banking in India for implementation by banks in accordance with those recommendations. The Working Group also issued a report on e-banking covering different aspects of E-banking. (Vasanthakumari and Sheela Rani, 2010)In 1980s internet developed rapidly. In early 1980s customers had access to their accounts through computers of banks. Later internet developed as a network of communication and E-commerce came into existence. In May 1995, come up Fargo which was the first bank in world to provide access to accounts over internet cedee d its customers to see their accounts online.In India, ICICI was the first bank to begin internet banking in early 1997 with the name of Infinity. Later ICICI bank terminated online banking services but 1996-1998 for Internet it was the adoption phase but its usage increased in 1999 because of lower online charges, increase in PC penetration and Technology friendly atmosphere. E-banking started with use of ATMs and later included telephone banking, electronic fund transfer, direct bill payments and online banking.Present Status of E-banking In IndiaE-banking is a banking business approach. Banks nowadays know that internet opens up new horizons and is a major factor in success of a bank and helps a bank to grow internationally. Therefore, a number of banks in India have either take E-banking or are in the process of adopting and using it. (Malhotra Balwinder, 2009). E-banking provides right to use to worldwide connection from anywhere in world. Products presented by banks are offe red all over internet callable to which internet has become an important channel for delivery for banks. (Rahmath Safeena Hema Date Abdullah Kammani, 2011).India being a developing country has short infrastructure, low PC penetration, developing security protocols and consumer reluctance in homespun sector. But many banks are offering e-banking services. In a issue conducted by Rao and Prathima (2003) it was revealed that India still has extensive way to go in online banking services in comparison to other countries. e-banking is becoming popular in India(Gupta, 1999 Dasgupta, 2002).Internet is cheapest channel of delivery for bank and financial products as it reduces the branch networks and scales guttle the number of service staff. E-banking has also improved performance of banks. E-banking has also emerged as planned source for achieving higher efficiency, surmount of operations and reduction of cost by replacing paper based and labour exhaustive methods with automatic p rocesses which thus lead to higher productivity and profitability and efficiency. (Malhotra Balwinder, 2009)E-banking has led to increase in speed of communication and transactions for clients. E-banking is offering wide wave of services to its customers. Customers can communicate with banks and carry out transactions from anywhere in the world. Due to E-banking customers have changed their traditional way of banking to modernised banking i.e self service system by use of internet. (Curran and Meuter, 2007).Fast and furious growth of technology has affected lives of one million million millions of pot from all over the world. There are a large number of factors which influence the consumers attitude towards e-banking such as persons age, income, family size, inspiration and behaviour towards different banking technologies and attitude of every individual towards the new technology (Laforet and Li, 2005). But Many people do not use Internet banking in India delinquent to securit y reasons, lack of knowledge and also due of user friendliness. Protection and confidentiality are the most challenging problems approach by customers who aspire to operate in the e-commerce. Perceived risk was also one of the major factors affecting consumer adoption, as well as customer satisfaction, of E- banking services (Polatoglu and Ekin, 2001).The Banks in India started E-banking initially with uncomplicated and simple functions such as getting information about rate of interests, checking account balances, clearing and scheming loan eligibility. Later on the services were extended to online bill payments, electronic transfer of funds between accounts and way of Cash for businesses. no.adays the banks are using E- banking technology to meet the increased competition. Some new services are also being offered by e-banking such as payment of taxes, railway tag booking etc (Malhotra and Singh, 2010).But The banking sector in India was not instinctive to use e-commerce appl ications as according to them the transactions which are conducted electronically were open to hackers and viruses, which were not in their control. overly e-banking became unattractive because online services were a garland of insecurities, technology investment costs and a lack of market-readiness. (Abdulwahed and Yaqoub, 2006) . But it has been notice that Internet banking has changed the banking industry as well as banking relationships in a positive way.The plan of a bank to carry out business online depends on assets of the bank, years in operation, expenses ratio, deposits ratio, urban localisation, Non- fee income ratio. Internet banking whitethorn not have huge effect on the bottom line of most banks except for a a few(prenominal) newly born banks. Internet Banking is subject to various statues including Banking Regulations Act, 1949, the Reserve Bankof India Act, 1934, and the Foreign Exchange Management Act, 1999, instruction Technology Act, 2000, Indian Contract Ac t, 1872, the Negotiable Instruments Act, 1881, Indian proof Act, 1872, etc. The effect of E-banking on monetary and credit policies of Reserve Bank of India is a vital area of anxiety. E- banking in India is barely at its native and is in the growing stage stage which is solely dominated and controlled by both the Indian private and foreign banks. E-banking in India is used only by a few consumer segments. There are a number of risks associated with E- banking which have to be modelled by banks by using sophisticated systems and broad and proper use of technology. The legal framework should handle the issues associated with E- banking. E-banking phenomenon cannot be avoided by the Indian Banks, but to add a competitive advantage and to succeed, business models must be structured and ar localized properly in the long run to suit to Indian conditions. (Gupta,2008). But The factors which influence the adoption of Internet banking in India go away probably be a matter of come to t o both bankers and policy makers. ( Prakash and Malik, 2008)There are a handful of companies specializing in developing e-banking software, security software and website designing and maintenance, there are few online financial service providers. Nowadays ICICI is also offering wide range of services to customers.According to a number of authors E-banking is becoming popular in India (Gupta, 1999 Pegu, 2000 Dasgupta, 2002). However, it is still in its evolutionary stage. By the year 2006-2007, a large classy and reasonable E -banking market leave develop. Almost all the banks operating in India are having their websites. (Vasanthakumari and Sheela Rani, 2010).In India almost 12% of the 38.5 million Internet users use E- banking and it Is expect to increase to 16 million, according to follow by lAMAI. (Prakash and Malik ,2008). In a survey carried out by Malhotra and Singh (2006) it was shown that 48% of the commercial banks in India offer e -banking.Therefore for gaining complete control in present e-markets a purposeful and strategized approach is requisite.Classification of E-banking In IndiaThe Reserve Bank Of India (RBI) constituted a functioning group on E-Banking in India. This functioning group further divided the internet banking products in India into the following three types based on the levels of access granted-Information notwithstanding systemElectronic information transfer system amply electronic transactional systemMore advanced transactionsInformation Only systemIt provided general information such as rate of interests, placement of a bank branch, products offered, their features, advantages and disadvantages, application forms were available for purpose of downloading. e-mails are used for communication purposes. A Customers and a banks application system do not interact. Customer identification is not done and there is no fate of any unauthorized person getting into a banks production systemsvia Internet. (Geetika, Nandan Upadhyay , 20 08)Electronic information transfer systemIt provides information about a customer such as account balances, address, details of transactions etc. Customers are identified by their passwords and customers are provided information from banks application system. (Geetika, Nandan Upadhyay , 2008)Applying For New Banking runVery few banks provide the facility of making an application and alter newservices using internet because the RBI does not allow opening of banks accounts online.(Malhotra Balwinder ,2009) This prays high degree of safety and security. In this, the network boniface and the application systems are linked over inviolable communications. (Geetika , Nandan Upadhyay , 2008)More advanced transactionsIn this system various other services are provided such as insurance policies, Brokerage, investments, demat, Credit card payments, trading, shopping and various other services provided online. Private sector banks are more expected to offer insurance services and covers , brokerage, online trading online and shopping online. Many of the Internet banks have also started offering certain new services through E- banking such as tax payment, charity payment and railway tag end booking. Public sector banks have shown a tremendous performance in the providing the services such as tax payment and railway ticket booking online. (Malhotra Balwinder ,2009)Advantages and disadvantages of E-bankingThere are a number of drawbacks of e-banking such as it is time consuming, poor network availability, lack of knowledge among people, unsuitable location of ATMs, Lack of infrastructure, high setting up costs, chances of frauds and scams, customers feel e-banking is not sacrosanct etc.Apart from above mentioned disadvantages there are a number of other disadvantages of Internet banking. Some of them are survival, accessibility, security, acceptance, infrastructure, perception, etc.Many people do not use internet banking because they do not trust banking services t hrough internet. They doubt that their money is not safe and secure while being processed through internet banking. Many cases of frauds in India have been reported.Another disadvantage of E-banking is when a person has a query or question or faces a problem he/she cannot physically go to the bank and solve it but he/she has to call customer service department to solve it which might take a quid of time.Also some people avoid using E-banking because they do not understand how to use to and what is the procedure of getting started.Internet banking also poses a problem when the network is down and it might cause delay due to server problem when an important transaction is to be made.Starting up of E-banking requires large amount of investment which includes advertising cost, setting up cost, buy of technology etc.Many Internet banks dont have ATMs, due to which customers have to pay ATM fees. This costs them more.Lack of literacy and education regarding how to use internet is anothe r drawback of e-banking.Sometimes unknowingly computer system is damagedAlso there are a number of benefits of e-banking to both bank as well as customer. For example- Its cheaper to make transactions over internet, it provides satisfaction to customers, it improves the film of the bank, and customers get facility to manage every aspect of their bank account, It makes the transactions paperless, banking services are available round the clock helps customers to save time as they do not have to visit bank branch, customers can check costs of currency. Check stock market, check previous transaction history, transfer money, check which transactions have been cleared.Joseph et al. (1999) studied the influence of Internet on the delivery of banking service. This study identified six dimensions of E- banking service spirit i.e. convenience and accuracy, feedback and complaint management, efficiency, queue management, accessibility and customization. While on the other hand Jun and Cai (2 001) identified to seventeen service reference dimensions of E- banking service quality which are reliability, responsiveness, competence, courtesy, credibility, access, communication, understanding the customer, collaboration and continuous improvement, content, accuracy, ease of use, timeliness, aesthetics, security and diverse features. runServices are one of the primary benefits which a customer looks for while adopting a new channel.The consumers consider the benefits and weigh them against the costs associated. The Internet offers a lot of benefits to consumers, like any time anywhere banking, updated information, convenience, express transaction, etc.Future of E-banking In IndiaThe large banks in India allow for reveal out new and better ways in providing their services. Also they testament find out new ways to propose those services which will include use of new technologies. Wireless communication and mobile banking will increase at a very high rate due to which e-ban king will become omnipresent. While E-banking will grow at a high rate the current generation of customers will still require face to face interaction with banks due because of feeling of satisfaction and security and some functions like cash withdrawals, checking lockers etc require physical contact with the bank. (Southard Siau, 2004) guardianship In India the benefits of E-banking such as increased efficiency of employees, accuracy etc it is seen that futurity of E-banking is very bright. The Banks which are fully computerized have gained majority of industrialists, service class, business class, less enlightened as well as highly educated customers. Most of the customers will favour E-banking because preferences of customers are changing with time and they are becoming more demanding and they will prefer a bank which will provide them quick service. In this era of globalisation only banks which are technologically advanced will survive.(Uppal Chawla,2009)The afterlife of e-b anking depends heavily on the future development of technology. The one certainty is that it will continue to offer new delivery methods for banking services. (Southard Siau,2004)Poon W C (2008), Users Adoption of E-Banking Services The MalaysianP.K. Gupta, (2008), meshwork BANKING IN INDIA CONSUMERCONCERNS AND BANK STRATEGIES, GLOBAL JOURNAL OF BUSINESS RESEARCH al-Quran 2Number 1R.K. 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