Comparative Study on Online Banking, Mobile Banking and ...ijetmas.com/admin/resources/project/paper/f... · Over the globe, banks are investigating ways to convert into a more digital

International Journal of Engineering Technology, Management and Applied Sciences

www.ijetmas.com June 2017, Volume 5, Issue 6, ISSN 2349-4476

400 Dr. Kiran Mehta, Bhanuja Mehta

Comparative Study on Online Banking, Mobile Banking andPayment Banks

Dr. Kiran Mehta* Bhanuja Mehta***Associate Professor, Chitkara Business School, Chitkara University, Punjab

**MBA Student, Chitkara Business School, Chitkara University, Punjab

AbstractOver the globe, banks are investigating ways to convert into a more digital business model. Up until now, the change hasnot been excessively troublesome, regardless of forceful offerings from non banks. Other than step by step diminishingprinted material collaborations the essential concentration has been on improving the product suite with value addedservices and accomplishing a coordinated channel experience

Along these lines, the concentration has clearly been on the client confronting side. Not very many players have ingeneral sense changed their inside organization or administration policies. Most clients still have a place with thebranches, and in the back workplaces the arrangement for being the central client attraction coordinator has been shy.

Furthermore, the pace for change is expanding. New innovation keen firms are flooding the market with imaginativeoffers for money related services, clients are becoming more confidant in using the full scope of online offerings, andeven controllers are reshaping the long established procedures to adjust new ideas.

Digital banking is not recently more build up about the following enormous thing in the market. It is vital piece of eachbanks motivation as a way to overcome outdated approaches and mismanaged customer relationships. Banks far andwide are pushing advanced points both inside and remotely.

Key words: Digitalization, Mobile Banking, Payment Bank, Demonetisation

I. INTRODUCTIONDigitalization is a process of moving to a computerized business. It is nothing but the use of digitaltechnologies to change a business design and give new income and esteem delivering opening.

Digitalisation impacts everything. Especially with respect to finance it has a transformative process – costsaving potential from innovative IT. Digitalisation is about taking control of your client experience ecosystemby dealing with your whole business from your client imminent and re-examining your legacy business plan.

E-Banking: The Oxford Dictionary of Finance and Banking adds telephone banking to the definition and seesE-Banking as a “facility to operate a bank account by remote instructions utilising a PC and phone line”(Oxford – A Dictionary of Finance and Banking, 2008). In this way, e-managing an account is fundamentallyproviding banking products and services to its clients through electronic conveyance stations including onlinebanking and telephone banking.

Online Banking (or Internet Banking) gave an online facility including value based and other standardkeeping money administrations offered through a site by a bank to its clients (both private and business)

Digital banking is a broader, more holistic concept (rather than a facility or service).

The full reach of what digital banking can offer clients goes past the fundamental mobile and online bankingservice that is now widely generally given.

Digital banking is a new concept in the region of electronic keeping money, which plans to improvestandards online and mobile banking services by coordinating computerized advances, eg strategic analyticaltools, online networking associations, portable innovation and emphasis on customer encounter.




Mobile banking is a service which is provided by monetary related establishments that permit its clients toconduct financial transactions using cell phones. It uses software or an app provided by the financialinstitutions to accomplish this purpose. It is a 24hour service. Some budgetary establishments have restrictionson which records might be through mobile banking and in addition a limit on the amount that can betransacted.

Mobile banking helps us in making different moves like getting record adjust and rundown of most recentexchanges electronic bill instalments and fund transfers within own banks or with other banks. Banks may ormay not charge an expense for mailing printed versions of banks proclamations.

From the bank’s prospective, mobile banking has decreased by diminishing the requirement for customersvisit to a bank office particularly for non money withdrawals and store exchanges. Mobile banking does notinclude cash transactions. Numerous applications now have a remote choice which carefully transmitscheques to their monetary organizations.

Although the purpose of both the facilities is more or less the same but is fuctions differently. Mobile bankingcan be operated by any mobile. Fund transfer through mobile banking takes less time as you do not have toregister the beneficiary. It it can be operated only through registered mobile (mobile no. Registered withbank.) It is SMS based as well as app based.

Whereas internet banking needs a internet connection. Unlike mobile banking it can be operated throughcomputers as well. Fund transfer may take a bit longer as you have to register your beneficiary which maytake some time i.e 2-12 working hrs. However both can be used to transfer funds, know your balance, stopcheque payment, recharge mobile electronic bill payment, etc.

Payment BanksPayments bank is the new model of banks given by RBI. This type of a bank can acknowledge a confinedstore, which is as of now constrained to ₹1 lakh per client, which may be expanded further. These bankscannot issue advances and MasterCard however both current accounts and saving accounts can be operated bysuch banks. It issues services like: Debit cards, net-banking and mobile banking. Airtel has propelled India’sfirst live payment bank, Paytm being the second and India Post Payment Bank being the third. The RBIanticipates that payment banks will focus on India’s low income families and small businesses, orderingsaving accounts and settlement administrations with low exchange costs. It could be more uneconomical fortraditional banks to open branches in each town however the mobile phone coverage is a low cost platform forquickly taking basic banking services to every rural citizen. This advantage is relied upon to quicken India’strip into a cashless economy.

II. Impact of demonetization on digital services2016 Indian Banknote Demonetisation

Until November 2016 the Indian economy was more or less dependent on cash. In any cash , the suddenannouncement of the demonetization on INR 500 and 1000 money notes, has mixed another wave in thereception of the digital payments across the country.

I expect that more than 200 million bank accounts that were opened in the most recent 2 years and were idlewill begin seeing exchanges start. Additionally substitute instalment strategies like mobile wallets, cards haveas of now observed surge in transactions recently.

One thing that has been growing at a very good pace after demonetization, it is online payments. Now manypeople have switched their preference from cash transactions to online payments. There has been an immenserise in the number of debit and credit cards transactions. Even small vendors have introduced cashlesspayment methods.




The recent changes happening in the Indian economy has increased the market size of e-wallet companies.There has been a significant growth in mobile wallet sector as it has made transferring money and makingonline payments very easy for its clients.

Digital transactions have surged in the range of 400-1000% since November 8 when government declaredstopping of old Rs500/100 notes.

According to government information the volume of exchanged utilising Rupay card has extended from Rs3.85 lakh per day to 16 lakh per day and value from 39.17 crore – Rs 236 crore , UPI transactions volume wasalso increased from 3721 per day – 48000 per day and value from Rs. 1.93 crore to Rs 15 crore. It isadditionally said that the value of point of sale machines have increased from 15.2 lakh per day-98.1 croreand in value terms it is up from Rs 112 crore – Rs 1751 crore. As per the government data, the quantity ofevery day exchanges through e-wallet service such as Oxigen, Paytm and MobiKwik has shot up from 17 lakhas on November 8 2016 to 63 lakh as on December 7 2016. Just in a period of 1 month a growth of 271% wasseen which is noteworthy.

III. SCOPEGlobal mobile phone internet user penetration 2014-2020

The worldwide mobile phone internet customers was 48.80% in 2014 and it is relied upon to increase to65.87% by 2020. This simply indicates that the market share of mobile wallets will increase more at a verygood pace in the coming years. Individuals now have diminished their reliance on money exchange andmoved their inclination to digital payments. Indian telecommunication services scenario indicates that themobile phone service scenario is growing tremendously since the past 5 years and is expected to grow more inthe coming years. The number of mobile banking transactions has ascended from 16.8 million in December2014 to 39.5 million in December 2015, as indicated by RBI information.

The year on year development rate of registered web clients in India remains at a great 32%. India has thesecond largest web client base on the planet with more than 350 million users, after China with more than 600million Internet clients. Shockingly, India is ahead of United States with an expected 279 million users. Thisunmistakably demonstrates that India is a major platform internet banking provided by different financialorganizations.

Indian Prime Minister – Mr. Narendra Modi being an immense enthusiastic of e-Governance has started aventure which is evaluated to be at INR 20,000 crore to build a broadway highway connecting 2.5 lakh




panchayats across the country. When it is completely set up, it would help support the rate of onlineexchanges in the nation.

Clients are now already aware about digital banking and these clients are now willing to try the services ofpayment banks as well. In the survey also it was found that half of the digital banking clients were keen to tryit. They are keen to try that whether these new bank will offer them with better facilities than what they arepresently experiencing.

But at the same time i don’t think that the clients of traditional banks will so easily shift to payment banks asthey will get better rate of interests with deposits with the traditional banks. But many would like to try it outif payment banks are simplified and it come up with intuitive offerings.

IV. INTERPRETATION

.

Out of 173 respondants 49.1% werefemales and 50.9% were male

38.7% people were between the of theage group of 20yrs-25yrs22.5% were between the age group of25yrs-30yrs28.9% people were of the age group of30yeras and above

The annual family income of 33.5%people was between 5lakh – 10lakh26.6% people had an annual familyincome of 10lakh and above Whereas as22% of the people had an annual familyincome between 3 lakh – 5 lakh




The main reason why people visit theirbank branch is to make deposits andsometimes to withdraw cash. To inquireabout a balance is something thatpeople prefer the least while visiting abank branch.

38.7% of the people visit their bankbranches 1-3 times a month whereas21.4% of the people visit their 3-8times

Approximately 50-70 people visit Branch banking, ATM, Online Banking and MobileBanking 1-3 times in a month. Close to 40-50 people use ATM, Online banking, Mobilebanking and Payment Banks 3-8 times a month




73 out of 148 people got to know aboutmobile banking through social networkingsites.

73 out of 173 people got to know aboutmobile banking through socialnetworking sites.

Maximum people use mobile banking for funds transfer within own bank and then forpayments of bills and recharges and then for fund transfer with other banks

81 out of 148 people got to know aboutonline banking through social networkingsites.

148 people have used the digital servicesbefore whereas 25 people have never usedthe digita platform before.




Maximum people use online banking for funds transfer within own bank and payments ofbills and recharges and then for fund transfer with other banks

Maximum people use payment banks for payments of bills and recharges and then for fundtransfer with other banks. Many people use payment banks for Ticketing also.

49.7% of the people said that theywould probably go for paymentbanks if it provided them with betterfacilities whereas 34.4% of thepeople said that they woulddefinitely prefer it.

Maximum people felt secure while using mobile banking, online banking and payment banks.Security is not a major concern for many people who use the digital services




68.1% people who do not us digitalservices because they are primarilyconcerned about securities

41.4% people said that willPROBABLY start using digitalservices and 34.5% people wouldDEFINATELY start using theseservices.

44% people consider Branch banking good and on a average 40% people consider onlinebanking/mobile banking and payments banks good.As per the survey debit/credit cards are the services which satisfy the clients the most.




On an average people fell convenient while using mobile banking, online banking and paymentbanks and maximum people feel convenient while doing online banking(44%)

49% people also agreed to the fact that they would recommend it to others

43.9% people said the they willdefinitely recommend these services toothers whereas 14% of the people

20% People said that they are very satisfied with mobile banking25% People said that they are very satisfied with online banking19% People said that they are very satisfied with payment banks




V. Literature ReviewFrust, Lamg (2000) in their paper addressed the significant gaps in the existing knowledge about the internetbanking landscape. They further added that large banks are more likely than small banks to offer a broadrange of services on the internet. Floh, Treiblmaire (2006) in their paper investigated the importance offactors on online banking loyalty like trust, satisfaction, quality of the service and quality of website. Thispaper focused on how to keep the online banking clients loyal to a specific provider. They conducted a surveyon more than 2000 clients and came to the conclusion that satisfaction and trust were the most importantfactors that contributed to the loyalty of the e banking clients. Laukkanen (2007) conducted 30 qualitative in-depth interview with e-banking clients out of which 20 people used internet banking a a means to pay billswhere as 10 respondents had an experience of paying bills via mobile banking. The results of the studyindicated that convenience, efficiency and safety are the most important factors that determine the differencesin the customer value perceptions between internet and mobile banking. Mas, Kumar (2008) in their studytalk how banks have the power to convert the potential of mobile phones into greater financial access for thepoor people. Sultana, Rasheda (2009) said that the future of banking will be based on mobile bankingservices to a large extend. Mobile network has the ability to provide mobile banking to 61% of the worldpopulation. Kopala ( 2010) in his study clearly indicated that mobile banking is a definite tool for financialinclusion for India. According to the study a branchless banking channel using mobile phone could be farmore preferable to poor than available options like travelling to and queuing at distant branches. Astha (2010)in her paper studies the evolution of mobile banking revolution in different stages of economic developmentand offers possible reasons for such different evolutions. Similar evidences as Floh, Treiblmaire (2006) werereported by Wu, Lin Et.al (2010). Their study further offered a marketing insight for managers to effectivelydeploy online system and services. Close attention to the information content should be given while designingonline banking services as it should be considered usefull and relevant by the clients. Mas, Colin (2011) intheir study talk about the diversified functions of mobile money platform which provide the clients with theability to initiate real time electronic payments from their mobile and to keep funds in store of value account.Sahut (2011) in his report discussed about the quality of online banking from both customer’s and provider’sprospective. Omar, Sultan Et.al (2011) revealed in their research that mostly the clients of banks are unawreof the online banking services and there is lack of trust among the clients on online banking services. Al-Jabri, Sohail (2012) in their survey did a research on 330 mobile banking users and found that it has arelative advantage and a positive impact on its users. Mas, Porteous (2014) discuss about the new pathwaysthat will open up for the financial services when most most the people will have a Smartphone. The pathwaysreflect a number of ways in which the individual might be included. Goel (2015) says that there is an excitingopportunity for Payment Banks for digital financial inclusion in India. His paper also throws some light on theguidelines issued by Reserve Bank of India and issues involved in its operations. Nidhi Chandarana (2015)did a conceptual study with the objective to know the concept and working of a payment bank and to knowthe need of payment banks in India. His study has clearly indicted a bright future for payment banks in India.Pande (2015) says that the introduction of payment banks in India is a major positive disruption in thebanking sector. He also added that payment banks will ahve to face challenges from existing lenders.Profitability will also be a challenge for payment banks as they will be working on narrow margins. Kesavan(2015) also did a conceptual research stating the importance of payment banks for changing the bankingsector for a better future. It also indicated the importance of payment banks for financial inclusion in India.Sharma (2016) in her study clearly states the advantages of e-banking over traditional banking. Theconvenience of being capable to access accounts any time as well as from anywhere has drawn many people’sattention. In India 64% of the people are unbanked or do not use any financial services a a large number ofpeople belong from a rural area. Damel, Thenuan Et.al (2016) in their survey said that Payment Banks areproposed with the primary objective to provide small saving accounts, payment and remittances services tolow income households and small businesses. Abid (2016) in his paradigm shift in Indian banking systemwith the inclusion of new age banks and said that payment banks are a game changer. In his research he also




stated that Payment banks would basically aim to reach the non-banked areas of the country. He also addedthat it will serve as a channel to allow people to eventually migrate to full-service banks, which is quite likely.

VII. ConclusionThe part innovation is expanding step by step. The different parts of India are developing at a much fasterspace with the assistance of innovation. The achievement of internet managing an account, portable keepingmoney and payment bank is likewise a consequence of the new advancements that have come up andupgraded the client encounter and has additionally advanced the saving money works in India. Todayeverybody has a cell phone in his/her hands. The quantity of cell phone clients got second position on theplanet. The expanding recurrence of portable web clients offers lift to the versatile managing an account.Internet relying upon the other hand has additionally turned into the most critical piece of Indian managing anaccount segment. It offers modern items and administrations to the customers with the persistent item andprocess advancements. One of the issues related with web based managing an account in India is that one can'taccess to web based keeping money in the event that he/she don't have a web association and numerouscountry territories in India still don't have a web association. Payment banks will be a distinct advantage. Thisis one of the real strides taken by RBI in pushing the money related incorporation in the nation. Thisadvancement is relied upon to quicken India's adventure into a cashless economy.

VII. References1. Furst, Karen and Lang, William W. and Nolle, Daniel E., (September 1, 2000). Internet Banking: Developments and

Prospects Office of the Comptroller of the Currency E conomic and Policy Analysis. Working Paper No. 2000-9.JEL Classification: G2, G20, G21, G28, L2 Available atSSRN: https://ssrn.com/abstract=1988503 or http://dx.doi.org/10.2139/ssrn.1988503

2. Floh, Arne and Treiblmaier, Horst, (March 26, 2006). What Keeps the E-Banking Customer Loyal? A MultigroupAnalysis of the Moderating Role of Consumer Characteristics on E-Loyalty in the Financial Service Industry. JELClassification: M30 Available at SSRN: https://ssrn.com/abstract=2585491 http://dx.doi.org/10.2139/ssrn.2585491

3. Tommi Laukkanen, (2007),"Internet vs mobile banking: comparing customer value perceptions",Business Process Management Journal, Vol. 13 Iss: 6 pp.788–797Available at:https://www.researchgate.net/publication/242335914_Internet_vs_mobile_banking_Comparing_customer_value_perceptions

4. Mas, Ignacio and Kumar, Kabir, (2008). Banking on Mobiles: Why, How, for Whom? CGAP Focus Note, No. 48,June 2008. Available at SSRN: https://ssrn.com/abstract=1655282 or https://ssrn.com/abstract=1655282

5. Sultana, Rasheda, (December 8, 2009). Mobile Banking: Overview of Regulatory Framework in Emerging Markets4th Communication Policy Research, South Conference, Negombo, Sri Lanka. Available atSSRN: https://ssrn.com/abstract=1554160 or http://dx.doi.org/10.2139/ssrn.1554160

6. Kopala, Martina Rani, (September 9, 2010). Mobile Banking: A Tool of Financial Inclusion for India. JELClassification: 030 https://ssrn.com/abstract=1674328 or http://dx.doi.org/10.2139/ssrn.1674328

7. Ashta, Arvind, Evolution of Mobile Banking Regulations (April 1, 2010). JEL Classification: E4, E5, G21, G29,K00, K2, D72 Available at SSRN: https://ssrn.com/abstract=1583080 or http://dx.doi.org/10.2139/ssrn.1583080

8. Wu, Hsueh-Ying and Lin, Chun-Chun and Li, Oscar and Lin, Hsing-Hui, (2010). A Study of Bank Clients’Perceived Usefulness of Adopting Online Banking .Global Journal of Business Research, Vol. 4, No. 3, pp. 101-108,2010. Available at SSRN: https://ssrn.com/abstract=1871268

9. Mas, Ignacio and Mayer, Colin, (September 2, 2011). Savings as Forward Payments: Innovations on MobileMoney Platforms. Available at SSRN: https://ssrn.com/abstract=1825122 or http://dx.doi.org/10.2139/ssrn.1825122

10. Sahut, Jean-Michel, (February 5, 2011). Quality Management of Internet Banking Services Available at JELClassification: G21, L86, M11, M15 SSRN: https://ssrn. com/abstract=1755497 or http://dx.doi.org/10.2139/ssrn.1755497

11. Omar, Abdullah Bin and Sultan, Naveed and Zaman, Khalid and Bibi, Nazish and Wajid, Abdul and Khan, Khalid,(August 1, 2011). Customer Perception Towards Online Banking Services: Empirical Evidence from PakistanJournal of Internet Banking and Commerce, Vol. 16, No. 2, August 2011. Available at SSRN: Available atSSRN: https://ssrn.com/abstract=2035807




12. Al-Jabri, Ibrahim M. and Sohail, M. Sadiq, (2012). Mobile Banking Adoption: Application of Diffusion ofInnovation Theory Journal of Electronic Commerce Research. Vol. 13, No. 4, pp. 379-391, 2012.https://ssrn.com/abstract=2523623

13. Mas, Ignacio and Porteous, David, (November 22, 2014). . Pathways to Smarter Digital Financial Inclusion CAPCOInstitute´s Journal of Financial Transformation,Vol. 42, October 2015. Available atSSRN: https://ssrn.com/abstract=1858377 or http://dx.doi.org/10.2139/ssrn.1858377

14. Goel, Anusha, (May 1, 2015). Payments Banks: A New Landscape for Indian Banking Sector International Journalof Research in Commerce, IT & Management Volume No. 5 (2015), Issue No. 05 (May). JEL Classification: G2Available at SSRN: https://ssrn.com/abstract=2707155

15. Chandarana Nidhi, (November, 2015). Research in Commerce & Management PAYMENT BANK – A NEED OFDIGITAL INDIA Volume 4, Issue 11 Online ISSN-2277-1166 Available online on www.abhinavjournal.com

16. Pande, (2015). C.J “Payment Banks” – A Newer Form of Banks to Foster Financial Inclusion in India Volume-4,Issue-11, Nov-2015 • ISSN No 2277 – 8160

17. Kesavan Varun, (August 2015). The Diversification Of Banks To The Era Of Payment Banks By Reserve Bank OfIndia With Specific Reference To Indian Banking Sector. International Journal of World Research, Vol: I Issue XX,August 2015, Print ISSN: 2347-937X

18. Sharma Sonia, (2016). A detail comparative study on e- banking VS traditional banking International Journal ofApplied Research 2016; 2(7): 302-307

19. Damle Madhavi, Thenuan Pushpendra and Raval Jimit (2016) Genesis of Payment Banks: It’s Stimulus on thefinancial inclusion in India,International Journal of Scientific & Engineering Research, Volume 7, Issue 3, March-2016 783 ISSN 2229-5518 IJSER © 2016 http://www.ijser.org

20. Abid Saba, (Dec 2016) Payment Banks: A Revolutionary Step in Indian Banking System. IOSR Journal ofEconomics and Finance (IOSR-JEF) e-ISSN: 2321-5933, p-ISSN: 2321-5925.Volume 7, Issue 6 Ver. I (Nov. - Dec.2016), PP 81-83 www.iosrjournals.or

Documents

Comparative Study on Online Banking, Mobile Banking and ...ijetmas.com/admin/resources/project/paper/f... · Over the globe, banks are investigating ways to convert into a more digital