Customer Adoption of Banking Technology in Private Banks of India

This paper explores the perception of Indian customers towards the use of technologies with respect to such factors as convenience, privacy, security, ease of use, real time accessibility, and accurate record of varied transaction that enable customer’s adoption of Banking Technology. Other factors such as slow transfer speed, technical failure, frauds and unawareness among customers that make hindrance in adoption, are also tested. The results show that demographic variables such as gender, age, qualification and income play a positive role in adoption of banking technology. All the banks are using information technology as a strategic vehicle to stay competitive against other players. There is no significant difference between adoption rates of banking technologies by the customers of different private banks. The paper also shows that banking technology helps in increasing customer satisfaction, customer loyalty, improvised growth, and performance of the banks.


Introduction
The banking industry in India is steadily expanding. The liberalization of the economy has created a competitive culture that has taken the service industry and particularly the banking industry by storm. The banking sector has been the backbone of every emerging country. It implements and brings about economic reforms. Any change in this sector through technology adoption has a sweeping impact on a country's growth. The development in information collection, storage, processing and transmission technologies have influenced all aspects of the banking activity.
Information technology is a medium that has revolutionized banking and everyday bank operations at the click of a button thus enabling sophisticated product development, better market infrastructure, implementation of reliable techniques for control of risks and reaching geographically distant and diversified markets (Marion 2008).
Banking Technology offers benefits to both banks and customers. Pikkarainen et al.
(2004) mention two fundamental reasons underlying banking technology development and penetration. First, the bank gets significant cost savings in their operation through e-Banking services. It has been proven that online banking channel is the cheapest delivery channel for banking products once established. Secondly, the banks have reduced their branch networks and downsized the number of service staff which paved the way to self-service channels. Customers too enjoy self-service, freedom from time and place constraint and reduced stress of queuing in banking hall. It was indicated that electronic banking services delivery are the cheapest and the most profitable and wealthiest delivery channel for banking products.
This paper is organized as follows. Section 2 attempts a quick review of the literature on this topic. In section 3, we describe the methodology adopted for this empirical work. The results are presented thereafter in sections 3 and 4 with the latter section providing statistical tes results. The paper ends in section 6 as conclusion.

Literature Review
Most studies found to-date focuses on the individual banking technologies and the customer satisfaction level used in the case of banks. For example Mobarek (2007) in his study in Further, the findings helped the ATM section to identify their positive and negative features and the customer recommendation. Wan et al. (2005) study the customers' adoption of banking channels in Hong Kong.
They covered four major banking channels namely ATM, Branch Banking, Telephone Banking and Internet Banking. The study segmented the customers on demographic variables and psychological beliefs about the positive attributes processed by the channels. The psychological factors were ease of use, transaction security, transaction accuracy, speediness, convenience, time utility, provision of different personal services, social desirability, usefulness, economic benefits, and user involvement.
Another study investigated inhibitors and enablers of internet banking in Oman, comparing this to the situation in Australia. Data were collected from interviews with bank managers in each country, based on a consideration of each bank manager's perceptions of four factors that might affect their decisions to adopt internet technologies: relative advantage, organizational performance, customer/organizational relationship and ease of use. It is hoped that the results will be useful in seeing why Omani banks have been slow to adopt internet technology and helps to encourage them to make the change.
There are several competitive advantages associated with the adoption of technology in the banking sector, including the creation of entry barriers, enhancement of productivity, and increased revenue generation from new services (Fitzsimmons and Fitzsimmons, 1997).
Delivery methods have become an increasingly important technique to retain customers in today's dynamic banking environment since customers can make withdrawals, deposits and access balances at their own convenience (Tanzi, 1997).
The importance of security and privacy for the acceptance of online banking has been noted in many banking studies (Sathye, 1999;Hamlet and Strube, 2000;Tan and Teo, 2000;Polatoglu and Ekin, 2001;Black et al., 2002;Giglio, 2002;and Howcroft et al., 2002). Roboff and Charles (1998) found that people have a weak understanding of online banking security risks although they are aware of the risks. Furthermore, they found that consumers often trust that their bank is more concerned about privacy issues and will protect them. Finally, they argue that although consumers' confidence in their bank is strong, their confidence in technology is weak.

Objective of the Study
This paper focuses on exploring the four major factors that influence the adoption of information technology in private banks of India. These factors are: the variables that enable and inhibit customer's adoption for banking technology; influence of demographic variables on banking technology adoption; and level of customer satisfaction with banking technology. The paper also examines the variables associated with ATM banking, branch banking, internet banking and mobile banking.

Sample and Tools for Data Analysis
This study is conducted using respondents involved with four private sector banks (ICICI, HDFC, AXIS, and INDUSIND) in India from Bikaner to Jaipur regions of Rajasthan.
Descriptive research methodology is used to accomplish the objectives using random and convenience sampling techniques. A questionnaire was designed consisting of the following four parts. The data collected are tabulated and analyzed for the purpose of giving precise and concise information. Descriptive frequency statistical tool is adopted for interpretation and hypothesis testing is done using Kruskal Wallis and chi-square tests as appropriate for non-parametric statistics applied to survey data analysis.

Empirical Results
Tables 1 through 4 show the demographic descriptive statistics of the respondents from the selected banks. Gender as a personal variable was found to have a significant role in customer's banking technology adoption. From the Table 1, it is found that ICICI, HDFC, AXIS and INDUSIND bank's male respondents are five times more as users as compared to female respondents. Females are still comparatively lacking banking habits.  (21) 74 (84) 14 (16) 65 (84) 12 (16) 68 (81)  Qualification is the factor that makes the customer aware of the banking technology and also helps them in easy adoption. Among the four banks, about 27 per cent of AXIS Bank respondents belong to the qualification category of undergraduate: this could proxy for income    (16)  12 (14) 32 (42)  24 (31) 13 (17)  8 (10) 35 (42)  20 (24)  18 (21)    Banks in India have adapted and continue to adopt different technologies. Customers were asked to indicate the various technologies their banks have adopted. This was queried to know if the customers are aware of the technologies provided by their banks. Four common technologies were selected: ATM, branch banking, internet banking, and mobile banking. From the tables, it is found that both male and female customers of ICICI belonging to the 30-45 years age category are seen to favor ATM banking, branch banking, internet banking and mobile banking. It shows younger customers belonging to the 30-45 years are tech-savvy and find these services comfortable, to be friendly and easy to use.
Customers from different educational background were asked to indicate the various technologies they like to adopt. Four common technologies selected to present the variables include ATM, branch banking, internet banking, and mobile banking. The variables are labeled in four banks and the result is presented in Table 4.

Kruskal Wallis test
This is a distribution-free non-parametric test used to compare three or more independent groups of sampled data statistics. Seven respondents from each of the four private banks (ICICI, HDFC, AXIS and INDUSIND Bank) were randomly sampled to determine whether customer's ranking of different banking services were the same. If null hypothesis is not true then chi-square value tends to get large and the hypothesis is rejected; vice versa otherwise. The ranks are from high value to low value of banking services. The numbers in Table 5 show that the most frequent usage of banking services are: 35 per cent once in a day, 49 per cent of Axis respondent were found to use banking services thrice in a week, followed by ICICI bank (47 per cent), INDUSIND bank (41 per cent) and HDFC bank (32 per cent).

Chi-Square Test
The chi-square values are used to test the significance of association between two attributes. The data gathered are rated on 5-point Likert scale. The results so obtained are tabulated based on their specific factors. The banking services were classified into four major categories: ATM banking, branch banking, internet banking and mobile banking with their variable factors. The results are given the in the Table 7.
In order to test the hypothesis based on the above mentioned four banking services, we use chi-square values to find the significance of the responses attributed by the respondents. The summarized results of the chi-square test values at 5 per cent level of significance are given in Table 8.
H 02 : There is a significant difference between characteristics of ATM banking services provided by different private banks to the customers.
H a1 : H 02 is not true.
The test results are shown in Table 8. It shows that at 5 per cent level of significance, the calculated value (1.956) is less than the tabulated value (21.026). So, the null hypothesis is rejected. This reveals that there is no significant difference between ATM banking services provided by different private bank's adoption of IT banking services by customers.
H 03 : There is a significant difference between branch banking services and customer satisfaction.
H a3 : H 03 is not true     fourth, better management of services (easy to follow up requests/complaints).  The IT banking services has many benefits but there are many factors that inhibit adoption of IT banking services. These are: lack of awareness/knowledge about internet technology and accessibility of service, increase in fraud due to inefficient safety and security features, slow transfer speed, and delay in transmission due to machine breakdown / machine complexity/technical failure.  Table 11 shows that, at 5 per cent significance level, the calculated value (1.487) is less than the tabulated value (16.919). So, the null hypothesis (H 08 ) is rejected. This reveals that there is no significant difference between unwillingness to use e-channel and customer dissatisfaction.

Conclusion
Customers of private sector banks agree that there exist relationship between factors such as age, gender, income, qualification and adoption of banking technology by customers. Young generation belonging to a category of 30-45 years finds the services comfortable, friendly and easy to use. Customers with post-graduate and graduate qualifications are found to be mostly adaptors of IT banking services It is reflected from the survey that ATM banking remains the most popular banking service among customers after branch banking, mobile banking and internet banking respectively as they provide convenience, privacy, security, ease of use, real time accessibility, and accurate record of various transaction.
Kruskal Wallis test applied to the data collected ensures that customer's usage of different banking services is same for all the banks. From these, it is clear that there is no significant difference between ATM banking, branch banking, mobile banking and internet banking services provided by different private banks to the customers. There is a relation between benefits of banking services and increasing banking technology adoption. Customer's unwillingness to use e-channel for commercial purpose decreases banking technology adoption.