A Study on the Demographic Factors Influencing the Adoption of E-Banking in India Essay

E – Banking has become a rising concern for academics. It is the innovation of e- banking that has resulted in cost and time reduction for the employees and consumers for the completion of their banking transactions. Banks have now devised more internet based solutions. The research has a wide scope as it focuses on the factors that influence the acceptance of the software offered by banks. Overview In the recent years information technology has fundamentally changed the banking industry worldwide. The innovation of internet banking has changed the way banking is being done and has offered the banks with a lot of challenges and opportunities. Banking industry faces a critical challenge in the adoption of online banking as the knowledge is very limited in India and there is an essential need to study that. The slow adoption of e- banking in India can also be because of poor education, economies, infrastructure and trust also plays an important role. This research will help in understanding the factors that affect the adoption of internet banking such as social, demographic and customer attitudes and perception which will enable banks to find out solutions to attract the customers through the e- banking services and hence gain a high market share in the banking industry. The motivation for this research arose because there has been a rapid development of e- banking in India but the concern is that whether customers demand for these services based on their income, education, internet usage and levels of customer ownership and acceptance. There has been an increase in the number of internet users but a very small fraction of those do their banking transactions online because of lack of trust and several other factors. This study will explore e- banking facilities through the consumer’s eyes and seek to understand the attitude and behavior of consumers towards e-banking which will help the banks to formulate campaigns to encourage the adoption of e-banking. Research Question This research will examine the factors playing an important role in the adoption of e- banking by the people in India. This report will give a recommendation on the improvement of the banks future course of action for the increasing use of e- banking. The final report will benefit the bank in improving the accessibility of the service to improve the adoption of e- banking which will form the basis of the research. The research includes the following questions: 1. What are the drivers for the adoption of e- banking in India? 2. What is the influence and role of age on the adoption of e- banking? 3. What is the influence of education and its role on adoption of e- banking? 4. What is the influence of income and its role on adoption of e- banking? 5. What is influence of trust or social influence or social status in accepting internet banking? 6. What are the steps recommended that should be undertaken by banks to improve the adoption among customers? Aim The main aim of the research is to point out on the barriers and benefits of adopting e-banking services in India and enriching the understanding and knowledge of factors influencing the adoption of e- banking services. Objectives 1. To examine the role of income, age, education, social status and their impacts on adoption of e- banking in India. 2. To understand other factors responsible for the acceptance of e – banking. 3. To understand the importance of e- banking in the improvement of banking facilities provided to the customers. 4. To understand the risks faced from e – banking  5. To describe the demographic difference between the users of e-banking and the nonusers, this will help understand the behavioral strategies of the customers. 6. Develop recommendations for banks on improving the accessibility and security for the customers. 7. To analyze the factors that discourages the customers from using e- banking services. Literature Review The research is based on theory testing. A number of factors have been identified that are responsible for the hampering or proliferation of adoption of technology among general public (Kumbhar, 2011). Recently, internet has been found as the prime channel for devising banking solutions for general public (Kumbhar, 2011, Tan et al., 2009). This popularity of internet has made the global and local competition very fierce (Gan.C, Mike.C, Limsombunchai.V.et.al 2006). The behavior or intentions of people have been considered as the main determinant in successful adoption of internet and technology (Fishbein and Ajzen, 1975). Researcher in the past have paid attention to the factors such as convenience, trialability, compatibility and relative advantage for the adoption of new technology, with almost less attention towards the demographic factors and their influence (Or et al., 2011, Rogers,1995). There are very few who have identified factors of age, income and education level and gender on the acceptance of the banking technologies (Al-Gahtani and King, 1999, Al-Somali et al., 2008). Moreover, age, accessibility of internet, education and the awareness of electronic banking and resistance of users were of paramount importance (Sohail and Shanmugham, 2004). Others have identified age, marital status, ethical background, qualification, income and residence area as the drivers (Gan et al., 2006). The disparities among the adoption of male and female users were deemed to be varying according to studies (Sharman and Kirsty, 2006). Many of the researchers have based their findings on the empirical evidence that acceptance of electronic banking is more in cases with higher level of education and higher level financial status in consumers or general public (Kolodinsky et al., 2000). Individual attitudes that consumers have and their beliefs are of more importance that factors of demographics for the adoption of new technology (Kolodinsky et al., 2000). Other factors such as privacy, security and convenience were found to be more prevalent among female users than males (Shergill and Li, 2005). Context The banking industry has revolutionized with the advances in information technology and the emergence of electronic banking. Increase in the competition and globalization has resulted in the change of the banking and the financial services. There is a rapid change in the demand of these financial services and the consumer’s behavior towards these services. It has become necessary to adopt new strategies with the change of traditional banking to electronic banking. Studies show that the awareness of new technologies and software in India is less which is the biggest obstacle. Though the e- banking system has reached globally there is huge gap in the adoption of these services between the developed countries and the developing countries. (licker and Motts, 2004). The problem in India is that the customers have not transferred their attitude towards using bank operations over the internet they believe in the old traditional way of banking. Some customers do not know how to use a computer others do not like the technology. There is lack of proper infrastructure and the internet connections are broken and slow in some places. Customers are not very confident using ATM machines. They are afraid of making purchases over the internet as they think that any small error will result in loosing money. Many people find the internet connections costs expensive. Despite of having such easy and better internet banking services the customers do not use it therefore the customer’s acceptance of e- banking need to be understood and the factors affecting the intention of their use of e – banking. The issue is critical as the answer to it will help in promoting a new form of e – banking system in future.