INTERCONTINENTAL JOURNAL OF MARKETING RESEARCH REVIEW

ISSN:2321-0346 - ONLINE ISSN:2347-1670 - PRINT -IMPACT FACTOR :0.882

INTERNET BANKING OPPORTUNITIES AND CHALLENGES IN

ARSHVEER KAUR
Assistant Professor, Guru Gobind Singh College for Women, Sector, Chandigarh.

ABSTRACT
Technology is improving day by day and now a day it plays a vital role in the future development of
the financial services. It has more impact on the banking sector than any other financial service
provides. Banking sector is the blood of the economy. The success and development of the banking
sector has impact on the present as well as future of the economy. The development of this sector is
not possible by the traditional methods of banking as now it is the age of technology. In Indian
banking industry the competition has increased which has led to the increase in total banking
automation. The progress in the Information and Communication Technology has brought lot of
changes in the day to day life. In banking industry, the traditional banking practices are being replaced
by online banking. But this concept is still evolving. The customers are more satisfied by online
banking as it adds value to their satisfaction by offering better services and on the other hand banks
also have competitive advantage over the other banks. The present paper has focussed on the
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opportunities which the banks have over the traditional methods of banking through online banking. It
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also highlights the challenges which are faced in online banking.

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Keywords: E-banking, Information Technology, Customer Satisfaction. O
INTRODUCTION
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Today we have a new type of economy which is known as digital economy. This economy has
brought many new and fast changes in the technologies, awareness in all areas of business, creating

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new supply chains and new delivery channels such as e-banking. Now a days customers are more
demanding. They want goods customized to their exact needs, at low prices, of good quality and as

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quickly as possible. To fulfil these demands businesses need to develop innovative ways to create
value, different enterprise Information Technology infrastructures. This change in technology also
brought change in the banking sector. There has been rapid transformation in the Banking sector in
India. Without the help of technology internet, phone and mobile banking is not possible. After the
recommendations of the Narasimham Committee, 1991 the use of Information Technology started in
the banking sector. Free entry of private sector and foreign banks was also included in these
recommendations and these banks brought new technologies and on the basis of these technologies
rendered world class services to the customers through ATMs, credit cards and internet banking,
which the public sector was not aware of. So to be in competition the public sector has also to adopt
their path.

E-BANKING
E-banking means electronic banking. It is also known as Virtual Banking or Online Banking.
Electronic banking means delivering and availing the banking services through electronic delivery
channels. E-banking is the outcome of the increasing expectations of the customers from the banks.
Under this system there is no direct contact with customers and the customers do not have to visit the
bank premises. First we use to have telephones and ATMs (Automatic Teller Machines) in electronic
banking but now we have internet. Through internet the services are available around the clock

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 INTERCONTINENTAL JOURNAL OF MARKETING RESEARCH REVIEW
ISSN:2321-0346 - ONLINE ISSN:2347-1670 - PRINT -IMPACT FACTOR :0.882
VOLUME 3, ISSUE 4, APRIL 2015
despite of the location of the customer. Internet also offers fast access and is more convenient. The
main services covered under E-Banking are:

Automated Teller machine

REVIEW OF LITERATURE
The problems which were faced by customers while using e-banking were analysed by Trivedi and
Patel (2013) in India. It was analysed that customers are aware of the e-banking services. Different
problems are faced by different consumers while using e-banking services. It was also observed that
while using e-banking services some problems have more effect and the others have less effect. The
challenges and opportunities in the banking sector were observed by Haq and Khan (2013). This study
found that only 28% of the bank clients were using electronic banking facilities and it also analysed

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that there is no relation between the age and use of internet banking. It also found that there is no link

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between gender and use of e-banking facilities. It was depicted that the main role in the acceptance of
online banking was played by the education and income of the consumers. This study suggested that
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the banks should create awareness among the people through various programmes which will also
help to increase the financial literacy of the customers. The new trends of online banking were

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analysed by Gupta and Mishra (2012) and they found that there are many opportunities available with
the banks and also there are challenges which are faced by them in E-banking. It also concluded that

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the banks should make every possible effort to provide better services to the customers. According to
Chavan (2013) internet banking has many opportunities and challenges. In this study it was observed
that traditional banking is being replaced by internet banking. It found that online banking helps the
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bank to have competitive advantage over their competitors and provide better quality services to the
customers which add value to the customer satisfaction. Customers perception towards internet
banking was analysed by Srivastava. It focused on the factors that affect the customers and how have
they accepted online banking and how the usage rate can be increased. It was also found that major
role is played by education, gender, income in the usage of online banking.

OBJECTIVES OF THE STUDY

FUTURE OF E-BANKING
Although online banking has failed to meet the early hopes due to its slower adoption than expected
but still the benefits which it offers that shows that it is growing day by day and it will stay in the
future. Online banking has redefined the role of branch banking. Now these branches not only
perform the transactions but had become the customer service centres. With this new concept of
online banking the concept of traditional banking has almost came to an end. Due to the arrival of the
new technologies the adoption of online banking is increasing as it overcomes the existing limitations
of traditional banking, so the future of online banking seems to be sound. New creative and innovative

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ISSN:2321-0346 - ONLINE ISSN:2347-1670 - PRINT -IMPACT FACTOR :0.882
VOLUME 3, ISSUE 4, APRIL 2015
methods are expected in this area of online banking using mobile phone such as improving the
security provisions and customer services. There are many technologies which if make the expected
progress will help to resolve the existing problems. Although there are opportunities of online banking
in the future, there are certain problems also which are faced by banks and regulators. Much more is
still to be done to remove the barriers of online banking. The banks should:
Formulate a strategy at the top level, considering the effects of online banking and this
strategy should be communicated to the whole organisation.
Measure the performance of e-banking against the pre-determined criteria through effective
measures.

OPPORTUNITIES OF E-BANKING: In internet banking the services of the banks are available to
customers online which is very convenient and has added value to the customer satisfaction in India.
Following are some of the opportunities of online banking:

UNTAPPED RURAL MARKETS: In India there is large untapped market for the banking sector.
This sector contributes to only 70 percent of the total population. Banking services have entered the
urban areas. These still have to enter the rural areas. In few big villages the banks have entered but
still the people there are not aware of the online banking services. The banks should conduct
awareness programmes and also reach in the remaining villages because majority of the Indian
population is in the villages and tap the untapped areas.
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MULTIPLE CHANNELS: Only few electronic delivery channels are available through which the

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customers can avail the services. There are many opportunities for the banks. The banks can have

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multiple channels to deliver the banking services such as ATMs (Automatic Teller Machines),
telephone banking, mobile banking, video banking etc. to expand the banking services to the wider
areas.
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WORTHY CUSTOMER SERVICE: The banks through its electronic delivery channels should try
to increase the value of customer satisfaction. Every interaction with the customers provides an

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opportunity to build the faith of the customer in the bank. Customer services are main method for
measuring the performance of the banks.

INTERNET BANKING: As the online finance will pick up. The coverage of banking services, share
trading, loans, insurance, data mining technologies, data warehousing will increase. The banking will
become common and the banks could launch separate internet banking services a part from their
traditional services.

CHALLENGES IN E-BANKING
LEGAL CHALLENGE: There are many legal risks for the banks which are attached with online
banking. The geographical area of the banks can be easily expanded through online banking as
compared to traditional banking. Sometimes the banks are not aware of the local laws, rules and
regulations before beginning the services in these areas either with license or without it, if it is not
required. Sometimes the banks are not in direct contact with their host banks e.g. when license is not
required, due to which they are not aware of the regulatory changes. As a result these banks
unknowingly violate customer protection laws such as data collection, privacy, regulations on
soliciting.

OPERATIONAL CHALLENGE: In online banking new technology is used which makes security
and system availability the central operational issues. Threats of the security may be from inside or

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ISSN:2321-0346 - ONLINE ISSN:2347-1670 - PRINT -IMPACT FACTOR :0.882
VOLUME 3, ISSUE 4, APRIL 2015
outside the systems of the banks. The banks should guarantee that the data is confidential as well as
the integrity of the system and the data. The outside experts should test the banks security measures
regularly. Impact of new investments, ability to attract the new staff and dependence on external
service provider all these factors should be taken into account because the transactions increases. This
operational risk becomes the part of overall management risk. So the regulators and the supervisors
need to include these risks in their safe and sound practices.

SECURITY CHALLENGE: The banks when operate online need to collect and keep the important
information the clients. With the advancement in the technology the ability of the hackers to hack the
sites of banks and steal the personal information of the clients also increases. So the internet banks
need to attract the capable staff with technical expertise to be updated with the latest viruses and
hacker techniques to protect the personal information of the customers. So security of the clients
information is the major challenge of online banking.

REPUTATIONAL CHALLENGE: Lack of security and improper system of the banks damages the
reputation of the banks. Electronic channels are more prone to risks so more the bank relies on
electronic channels more is the reputation risk. The customers lose confidence in the banks even if
they face problem in one of the delivery channels. This is the challenge which organisations face.
Once the reputation of the organisation is lost it is very tuff to gain back the confidence of the
customers.

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RESTRICTED CLIENTELE AND TECHNICAL PROBLEMS: The users of online banking
needs a computer and time to log on to the site. It means that the target clientele is restricted to those
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who have PC or can access net through the office or cybercaf. Moreover phone connections are not
always perfect and on home PC, the modem connection often breaks off. Navigating around websites
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on home computers is often slow and frustrating. Moreover local calls are not free generally and so
the customer has to pay every time he checks his balance.

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RESTRICTED BUSINESS: Not all transactions can be carried out electronically. Many deposits
and some withdrawals require the use of postal services. Some banks have automated their front-end

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process for the customers, but still largely depend upon manual processes at the back end. For
example, the internet customers receive their statements online, but paper statements are also sent by
mail. Mail and distribution costs are still necessary as the statements, cheques etc. are still mailed.

CONCLUSION
The growth of technology has played a vital role in the development of the banks. Online banking has
brought many in the banking system and has provided many opportunities in India. The banks and the
customers are able to reach each other anywhere and at any time. In India also the online banking has
helped to decrease the cost and provide quality services to the customers. These banking services are
available to the customers 24 hours. They can operate their accounts anytime anywhere. The banks
should provide different and efficient delivery channels such as ATMs, Internet, physical branches to
the customers. However there are many challenges which are faced by internet banking in India. As
compared to the developed countries the internet banking has not developed in India. To extend the
coverage of online banking the number of the users has to be increased.

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ISSN:2321-0346 - ONLINE ISSN:2347-1670 - PRINT -IMPACT FACTOR :0.882
VOLUME 3, ISSUE 4, APRIL 2015
REFERANCES

[1] Gupta, P., Mishra, C. M. (2012). E-banking- New emerging trends in Indian banking industry.
Research Journal of Economics and Business Studies, 1(10), 1-3.

[2] Haq, S., Khan, M. (2013). E-banking challenges and opportunities in the Indian banking sector.
Innovative Journal of Business and Managemen, 2(4), 56-59.

[3] Trivedi, M. H., Patel, V. B. (2013). Problems face by customers while using e-banking facilities in
India. International Journal of Scientific Research, 2(3), 121-123.

[4] Srivastava, R. K. (2007). Customers perception on usage of internet banking. Innovative

[5] Chavan, J. (2013). Internet banking- Benefits and challenges in an emerging economy.
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[6] Kamel, S (2005). The use of Information Technology to Transform the Banking Sector in
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[7] Khan, M S; S. S. Mahapatra and Sreekrumah (2009). Service Quality Evaluation in Internet

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