Customer Perception and Adoption of Digital Banking

 

Dr. Shamsher Singh1, Ravish Rana2

1Associate Professor, Banarsidas Chandiwala Institute of Professional Studies, Sector-11, Dwarka.

New Delhi-110075. India

2MBA (IB) Final Year, Delhi School of Economics, University of Delhi, Delhi, -11007, India

*Corresponding Author Email: shamsher_1965@rediffmail.com

 

ABSTRACT:

The present study has focused on customer who uses digital banking. The objective of the study is to find the customer perception and adoption of the digital banking. The study also explored the consumer awareness, perceptions and willingness to engage in using a smart phone to replace the content of their physical wallets. Population for the research are the customers who use mobile apps as a major medium for doing banking transaction. Major findings of the research aredigital banking is getting popularity among the young lots such as students and employees. Further the study also explored which Digital banking gateway services are preferred by the consumers. The main influencing factors have been identified as time, convenience, security, loyalty/reward points and discount deals etc. Making payment through digital banking can be a great benefit to the users in terms of convenience, saving time and money. One of the prime obstacles is security issues, due to which the users gets anxious about his or her confidential information which may get disclosed. Therefore, the digital payment providers need to understand and meet or even exceed towards the users trust expectations. This includes not only addressing security and privacy concerns but also safeguarding the backup mechanism if the phone is lost or stolen. The study mainly focused on Security, Necessity, Time and satisfaction of the services used that affect the consumer’s perception toward digital payments.

 

KEYWORDS: Mobile apps, digital banking, customer perception, customer adoption.

 

 


INTRODUCTION:

Digital banking is the digitization (or moving online) of all the traditional banking activities and programs that historically were only available to customers when physically inside of a bank branch. This includes activities like:

·       Money Deposits, Withdrawals, and Transfers

·       Checking/Saving Account Management

·       Applying for Financial Products

·       Loan Management

·       Bill Pay

·       Account Services

 

A digital bank represents a virtual process that includes online banking and beyond. As an end-to-end platform, digital banking must encompass the front end that consumers see, the back end that bankers see through their servers and admin control panels and the middleware that connects these nodes. Ultimately, a digital bank should facilitate all functional levels of banking on all service delivery platforms. In other words, it should have all the same functions as a head office, branch office, online service, bank cards, ATM and point of sale machines. Digital banking is getting more and trendier among the consumers. Digital payments   are growing in India as the consumers are relying upon the digital life style to make things convenient and faster and the consumers are embracing digital payment with open arms.

 

 

The reason digital banking is more than just a mobile or online platform is that it includes middleware solutions. Middleware is software that bridges operating systems or databases with other applications. Financial industry departments such as risk management, product development and marketing must also be included in the middle and back end to truly be considered a complete digital bank. Financial institutions must be at the forefront of the latest technology to ensure security and compliance with government regulations.

 

Ministry of Electronics and Information Technology, Government of India envisages Paperless, Cashless and Faceless services across the country, especially in rural and remote parts of India. It further envisages common e-Governance infrastructure that will offer end-to-end transactional experience for a citizen, businesses as well as internal government functions, which includes accessing various services and making payments and receipts through electronic modes. The Apex Committee on Digital India has recommended a targeted and time bound approach to implement digital payments for citizens across all the e-Services of Government Ministries and Departments.

 

One of the main reasons electronic products were introduced was that the banks were losing their market share. Digital banking has assisted the banks in retaining their customer and their market share by reducing the cost in many areas, especially those associated with providing services to the customer and also to enhance their image. By the same the customers are fully influenced with these services provided by the banks and also these services helps the customer to save their money. Due to digital banking services it is seen that the loyalty of the customer has become very volatile and todays discern customer is now more services driven than loyalty driven.

 

Digital revolution has provided an easy way to go for digital payments. India has more than 100 crore active mobile connections and more than 22 crore Smartphone users as of March 2016. This number is going to increase further with a faster internet speed. The reach of mobile network, Internet and electricity is also expanding digital payments to remote areas. This will surely increase the number of digital payments.

 

The government is supporting digital payments a lot. It has reduced some taxes and announced incentives for digital payments. It has launched Lucky Grahak Yojna for customers and Digi Dhan Vyapar Yojna for shopkeepers. You can get cash prizes up to 1 crore if you pay digitally. Due to these incentives and waivers, more people are showing interest in digital payments.

 

 

Digital payments are more convenient than cash payments. You do not need to carry a lot of cash with you all the time. You can make digital payments in seconds. The change is not a concern with digital payments when you can pay the exact amount. You will also have all your payments recorded automatically. We all love simplicity and ease. Hence, we can say that a Digital payment is the future of fund transfer and money transactions.

 

The payment system in any country needs to pass the litmus test of safety, security, soundness, efficiency, and accessibility. In order to address all these, payment systems have evolved from barter to currency, to digital systems. We are witnessing enormous change in the payment systems, disrupting the monopoly of physical/paper-based system by electronic ones.

 

LITERATURE REVIEW:

In online business trust, security and safety are the most challenging issues for the banks. Beside them, to build and retain the customers’ trust will also become a future challenge for banks especially in internet banking (Aladwani, 2001). Majority of the customers hesitate to use internet banking services because of security and privacy issues (Lee and Turban, 2001). The security problems have a large contribution to reduce customer satisfaction. The success of any new product and service is highly depending on customer acceptance and customer satisfaction (Huang et.al. 2004). In contrasts the customer dissatisfaction and resistance is one of the major causes of market failure of innovation (Ram And Seth, 1989). In online banking business the automated teller machine (ATM) is the first popular system that was introduced to facilitate the users to access and carry out their banking transactions in minimum time. However, the evidences of various researches show that there is a high association between consumers’ usage patterns of ATM and their demographic profiles (Hood, 1979, Murphy, 1983). But in now a day’s the relationship between atm’s usage patterns and consumer psychographic profiles is also found significant.

 

Malhotra (2014) examined the factors that influence internet banking adoption. It was found that internet banking is influenced by its perceived reliability, perceived ease of use and perceived usefulness. Nippatlapalli, (2013) examined customer satisfaction as a measure of how products and services supplied by a company meet or surpass customer expectation. Saini, (2013) made an effort to examine the relationship between service quality and customer satisfaction of two private sectors bank of India. Service quality has been described as a form of attitude that results from the comparison of prospect with recital (Cronin and Taylor, 1992, Parasuraman et al, 1985). Gronoos (1982) argued that customers, while evaluating the quality of service, compare the service they expect with perceptions of the services they actually receive. Kumbhar, (2011) evaluates major factors (i.e. service quality, brand perception and perceived value) affecting on customers’ satisfaction in e-banking service settings. This study also evaluates influence of service quality on brand perception, perceived value and satisfaction in e-banking.

 

Bolar, (2014) presents Creators and investors of technology need information about the customers’ assessment of their technology interface based on the features and various quality dimensions to make strategic decisions in improving technology interfaces and compete on various quality dimensions. The research study identifies the technology interface dimensions as perceived by the end-users in a transaction-based environment (viz. Internet banking) in India.

 

Gherib (2014) observed the embracing of Internet banking in the Tunisian banking industry. The aim is to make out factors that accelerate or slow down the implementation process. The study identifieda set of variables: organizational, individual and structural. Neeli Prameela (2011) attempted to accumulate invented story in order to understand the overall structure of the formation of e-loyalty. It also provides underlying patterns of relationships between e-banking loyalty and its influencing factors. Malhotra (2012) found the demographic factors affecting adoption of electronic banking in general and Internet banking in particular in India. The results of this study indicate that age, education, income, and profession are the most influential demographic variables affecting Internet banking usage. It also found that 40 per cent of the Indian consumers who responded to this survey were already using Internet banking services. The results of this study provide interesting additions to knowledge of electronic banking and contribute to our understanding of Internet banking users as well as nonusers.

 

OBJECTIVES AND HYPOTHESIS:

The main objective of the study is to find the effect of the demographic factors on customers perception for digital banking. In pursuant of the objectives following hypothesis were formulated:   

H01. There is no significant relationship between different characteristics of digital banking and the gender of the respondents.

H02. There is no significant relationship between different characteristics of   digital banking and the age of the respondents.

H03. There is no significant relationship between different characteristics of   digital banking and the education qualification of the respondents.

H04. There is no significant relationship between different characteristics of   digital banking and the annual income of the respondents.

H05. There is no significant relationship between different characteristics of   digital banking and the occupation of the respondents.

 

RESEARCH METHODOLOGY:

Present study is based on descriptive research design. Survey method was adopted to collect primary data from 100 respondents from the various parts of Delhi. Close ended questionnaire was designed to collect the information from the respondents. Likert five point scales was used for obtaining responses. The responses have been collected by means of face-to-face interviews by authors.

 

Sampling Plan:

Sampling unit:

the sampling unit was the customers who have been using the digital banking for at least past six months.

 

Sample size:

In this survey the sample size was 100.

 

Sampling procedure:

Intercept interview method was adopted for collection of primary data. Respondents were told the purpose of this research and questions were explained to them in case there was any need for understanding any particular question. There had been no personal bias or distortions while recording the responses.

 

Research and Statistical Tools Employed:  

SPSS 20 was used to perform statistical analysis Cronbach’s Alpha test was used to find the reliability of the data, Bivariate correlation was carried out to test the hypothesis.

 

RESULTS AND DISCUSSION:

The analysis of this data was divided into following section:

(i)     Respondents Profile                                   : Table 1

(ii)    Reliability and Validity                            : Table 2

(iii)   Service providers of Digital Banking     : Table 3

(iii)  Correlation Matrix                                     : Table 4

 

Profile of Respondents:

The respondent profile as displayed in Table 1 replicate the population generally engaged in use of digital banking. There are 49% male and 51 % are female. 43% respondents are in the age group of 18-25 years followed by 37% percent in 26-40 years age, 74% are graduate and 24% are post graduate, there are 38% respondents having annual income less than Rs 200000, where as there are 35% respondents are in the range of 200000 to 500000. 47% respondentsare self-employed and 25% are in private service. This is the ideal profile for user of digital banking customers who are educated, employed and having decent income.

 

Table1 Respondent’s Profile

Variable

Characteristics

Frequency

Percentage

Gender

Male

49

49

Female

51

51

Age

18 - 25 years

43

43

26-40 years

37

37

41-50 years

3

3

51 years and above

2

2

Education

Under graduate

2

2

Graduate

74

74

Post graduate

24

24

Others

0

0

Annual Income

less than Rs.200000

38

38

Rs.200001 - 500000

35

35

Rs.500001 - 800000

21

21

Rs.800001 or above

6

6

Occupation

Govt. Service

15

15

Pvt. Service

25

25

Self Employed

47

47

others

13

13

 

Reliability and Validity:

Table 2 shows the result of reliability analysis- Cronbach’s Alpha Value. This test measured the consistency between the survey scales. The Cronbach’s Alpha score of 1.0 indicate 100 percent reliability. Generally any Cronbach’s Alpha scores greater than the 0.07 is accepted as good score of internal consistency Nunally’s (1978). In this case, the score was 0.734 for the digital banking used by the respondents.

 

 

 

 

Table 2: Reliability Analysis-Scale (ALPHA).

Practices/Services

Number of Cases

Number of Items

Alpha Value

Online shopping

100

11

0.734

 

44% respondents use digital banking of SBI, followed by Axis bank (16%) Paytm (13%) It indicate that SBI being the oldest and public sector bank is considered as trust worthy and reliable by the respondent for using digital banking. It is also to be noted that Paytm is emerging as new player in digital banking which is generally preferred by young customers.

 

Table 3: Service Providers of Digital Banking

Service provider of Digital banking

Frequency

Percent

Axis Bank

16

16.0

Std Charted Bank

5

5.0

 HDFC bank

8

8.0

SBI

44

44.0

 Paytm

13

13.0

Airtel money

1

1.0

PNB

6

6.0

Syndicate Bank

3

3.0

ICICI Bank

4

4.0

Total

100

100.0

 

Hypothesis testing:

In order to test the hypothesis and find relationship between different characteristics of customers of digital banking, the bivariate correlation test was employed on the basis of gender, age, education and annual income of the respondents. The results are displayed in the table 4

 


Table 4: Correlation Matrix

Characteristics of Digital Banking

Gender

Age

Edu

Occupation

Income

Main transaction I would prefer to do by net

Pearson Correlation

.146

.141

-.253*

.157

-.181

Sig. (2-tailed)

.146

.163

.011

.120

.071

N

100

100

100

100

100

Benefit I see in credit card/debit card uses

Pearson Correlation

-.084

.129

-.120

.251*

-.064

Sig. (2-tailed)

.408

.201

.234

.012

.524

N

100

100

100

100

100

I feel safein disclosing my details on net while making payments

Pearson Correlation

.106

.128

.070

.137

-.028

Sig. (2-tailed)

.294

.205

.491

.174

.780

N

100

100

100

100

100

I am aware of typeof digital payment methods

Pearson Correlation

-.102

.082

-.074

-.083

.461**

Sig. (2-tailed)

.313

.418

.467

.412

.000

N

100

100

100

100

100

I am aware of benfits of digital payment

Pearson Correlation

-.124

.166

-.057

.031

.427**

Sig. (2-tailed)

.219

.098

.574

.761

.000

N

100

100

100

100

100

 I am aware of the benefits of digital payment which are available

Pearson Correlation

-.308**

.052

-.047

-.008

.371**

Sig. (2-tailed)

.002

.604

.641

.937

.000

N

100

100

100

100

100

I am aware of all the methods which can be taken up to secure my transactions

Pearson Correlation

-.229*

.084

-.111

.151

.459**

Sig. (2-tailed)

.022

.404

.270

.133

.000

N

100

100

100

100

100

 My bank/institution educate me about the digital payment services being offered

Pearson Correlation

.140

.075

-.029

-.106

.403**

Sig. (2-tailed)

.165

.459

.778

.293

.000

N

100

100

100

100

100

I would prefer net banking instead of visiting my bank every now and then

Pearson Correlation

-.266**

.184

-.221*

.113

.469**

Sig. (2-tailed)

.007

.067

.027

.261

.000

N

100

100

100

100

100

 I am satisfied with my bank/institution services post digital payment delivery

Pearson Correlation

-.038

.095

.067

.227*

.272**

Sig. (2-tailed)

.710

.349

.506

.023

.006

N

100

100

100

100

100

**. Correlation is significant at the 0.01 level (2-tailed).

*. Correlation is significant at the 0.05 level (2-tailed).


Data Analysis for hypothesis H01:

The correlation matrix as given in table 4 shows that, there is significant relationship between some characteristics of digital banking and the gender of the respondents. It indicates that gender does have influence on digital banking, hence, null hypothesis (H01) is rejected.

 

Data Analysis for hypothesis for H02:

The correlation matrix as given in table 4 shows that, there is no significant relationship between majority of characteristics of digital banking and age of respondents hence, null hypothesis H02 is accepted.

 

Data Analysis for hypothesis H03:

The correlation matrix as given in table 4 shows that, there is no significant relationship between different characteristics of digital banking and education qualification of respondents except for “main transaction I would prefer to do by net”, hence, null hypothesis (H03) is accepted. However when we look at educational qualificationof majority respondents are either graduate or post graduate and are well aware of different aspects of digital banking.

 

Data Analysis for hypothesis H04:

The correlation matrix as given in table 4 shows that, there is no significant relationship between different characteristics of digital banking and occupation of respondents except for “benefit I see in credit card/debit card uses”, hence, null hypothesis (H04) is accepted.

 

Data Analysis for hypothesis H05:

The correlation matrix as given in table 4 shows that, there is significant relationship between different characteristics of online shopping and the annual income of respondents, hence, null hypothesis (H05) is rejected.

 

CONCLUSION:

The present study focused to find whether demographic factors such as gender, age, income educational qualification and occupation has any significant relationship with the different characteristics of digital banking. It was found that age, educational qualification and occupation do not have significant relationship with digital banking. It indicates that different age group and occupation of respondents, have similarity in their responses to wards digital banking. It was found that educational qualification, also has no significant relationship in adoption of digital banking because educational qualification of majority respondents are either graduate or post graduate and are well aware of different aspects of digital banking. It was found that gender and income have significant relationship with digital banking. The trend of digital banking had been widely accepted by the customers and they find themselves comfortable in using digital banking .SBI is the most preferred online shopping digital banking platform followed by Axis bank and Paytm .Most of the consumers prefer digital banking of SBI because of trust and reliability associated with the public sector bank , it is important for the private bankers to match similar level of trust and reliability .Consumers perceived that digital banking saved time and enhanced customers banking experience. Most of the respondents as per the survey agreed to the fact that digital banking provided safe and secure online transactions and encouraged customers to do banking digitally.

 

REFERNCES:

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18.   Saini, M. N. (2013) "the payments system through terminals (pos) at the offices of the notary," Monthly Association, 21(1), 139-154.

 

 

 

 

 

 

Received on 07.01.2019         Modified on 20.01.2019

Accepted on 19.02.2019      ©AandV Publications All right reserved

Res.  J. Humanities and Social Sciences. 2019; 10(2):397-401.  

DOI: 10.5958/2321-5828.2019.00067.6