Awareness and Adoption of E Banking in Pakistan

Abstract This study aims to understand customers perception towards credence and awargonness of electronic cussing in Pakistan. The outcomes would help the policy makers to develop effective strategies for future outlook of electronic banking in a country. The results apprize that banks customers in Pakistan perceive electronic banking as a tool for minimizing inconvenience, minimizing guess of carrying cash and time saving. Customers and believe that electronic banking increases chances of presidential term access to public data, increases chances of fraud and data losses.It reduces cost and save our unique time. There are also some limitations of e-banking as it requires skills to operate it and passwords can be hacked. This research opus discussed that race of Pakistan are well aware of electronic banking but they are non satisfied with the run provided by the bank and they also feel risk in that ser valetudinarianism thats why they affirm more(prenominal) on employe es. It contains take issueent demographics and their association with research headings. The results conclude that various customers segments do not differ in opinions towards benefits and risks associated with e-banking.This paper also includes recommendations in which it describes that what strategies the banks should choose to increase the bliss of customers Keywords electronic banking e-banking customers perception hook onion Pakistan, e-banking in Pakistan, e-banking, SMS banking, automatic teller machine I. INTRODUCTION The developments taking place in information and communication engineering science are increasing competition in pecuniary institutions worldwide. Development of electronic distribution convey in financial industry has completely transformed the traditional bankcustomer relationship in recent years.It has reduced personal contacts between the assist providers and the customers (Barnes and Howlett, 1998). The scenario is further changed with increased c ompetition among banks and non-bank financial institutions (Zineldin, 1996). therefore an enhanced perceptiveness of why some people adopt one distributional channel and others do not, alongside an realization of the factors that may model this decision is vital to investigate (Patricio, cc3). Thus, the deployment of advanced technologies is essential to achieve a militant edge.In the world of banking, the development of information engineering science has an enormous effect on development of more flexible payments methods and more-user friendly banking assistants. Recently, the banking industry was highly affected by the technology evolution that transformed the focal point banks deliver their services, using technologies such(prenominal) as automated fibber machines, phones, the Internet, assign circulars, and electronic cash. In seam with global trends, electronic banking in Pakistan has been undergoing many changes.Electronic banking is a term for the process by which a customer may perform banking dealings electronic altogethery without visiting a brick-and-mortar institution. Electronic banking refers to systems that enable bank customers to access accounts and general information on bank products and services through a personal reckoner (PC) or other intelligent device. There are many benefits of e-banking as it provides easy way to admonisher an account, we can shop, pay bills, buy items at auction, and transfer money from anywhere at any time, it reduces costs, it saves time, and vice versa.Objectives This study focuses on sensory faculty and adoption of electronic banking in Pakistan. Our objectives of this research were to 1. Check sentience of electronic banking in Pakistan. 2. Check why people are not aware of electronic banking. 3. Know if the people are aware of electronic banking then to how much extent. 4. Check whether banks of Pakistan are providing electronic banking or not. 5. To adjust the critical attributes that custome rs expect grave while using electronic banking. 6.To find the key variables that affect customers evaluations towards risk associated with electronic banking. 7. To understand the relationship between demographic characteristics of customers and their perceptions towards electronic banking. 8. To present results and implications which are insightful to researchers and banks fire in electronic banking. This research is in-chief(postnominal) because it tells bankers that how much people in Pakistan are aware of and adopt the electronic banking and to how much extend. It also tells them to improve their e-banking services in Pakistan.Electronic banking in Pakistan State-owned banks dominated the Pakistani financial market before 1990. The government introduced economic liberalization policies in 1991 when twain smaller banks, Moslem Commercial posit and Allied Bank were privatized. Since then, the government continuously advocated the privatization of existing state-owned enterpr ises and boost the private and unknown banks to setup their businesses in the country. Recent acquisition of locally owned Union Bank by cadence Chartered Bank indicates foreign interest in domestic financial market.According to State Bank of Pakistan (SBP) annual report (2005), there were 35 commercial banks, including 16 private banks (with 797 branches), 11 foreign banks (with 82 branches), 4 privatized banks (with 4,141 branches) and 4 public banks (with 1,543 branches), respectively. Electronic banking is an innovation in the series of technological wonders. Automated teller machine (ATM), telephone banking, internet banking, credit cards and debit cards, etc. lead emerged as effective delivery conduct for traditional banking products.In Pakistan, foreign banks took a lead by introducing ATM and credit cards in mid-1990s followed by domestic banks in late 1990s. Annual Report of SBP (2003, p. 110) explained this delay in electronic banking largely by regulatory hurdles, h igher startup costs, an ongoing banking sectors reforms and lack of technical skills. The government also introduced Electronic Transaction Ordinance in 2002. This ordinance provides legal recognition to digital signatures and documentation. Thus reducing the risks associated with the use of electronic medium of business.At present, almost all commercial banks in Pakistan take hold setup their ATM networks, issuing debit and credit cards and pick out joined one of the two operating ATM Switch Networks. According to Kolachi (2006) Pakistani banks provide the sideline online banking services and products. 1. Enquiry, account contestation enquiry, account balance enquiry, check statement enquiry, fixed baffle enquiry 2. Payment, funds transfer, credit card payments, direct payments, utility bills payments 3. Request, checkbook request, stop payment request, demand draft request, natural fixed deposit request 4.Download, customer profile, statement download, other information and guidelines downloads. 4 Literature review Consumers perceptions towards adoption of electronic banking have attracted many researchers in recent years. Thornton and White (2001) who compared seven distribution electronic channels unattached for banks in US concluded that customers orientation such as convenience, service, technology change, knowledge almost work out and availability of internet affected the usage of different channels.According to Hagel and Hewlin (1997) the Internet banking became very attractive to customers and scads of banks because the technology is being accepted by them and they can now understand and have information nigh the complex products. zero(prenominal)adays banks are also facing a lot of competition and need a high market share and provide better services to its customers so that they can attract the new customers and old customers do not try to leave them. Howcroft et al. 2002) name that the most important factors that have encouraged consum ers to use online banking are lower fees followed by reducing paper work and human error which afterwards minimize the human disputes (Kiang et al. , 2000). Byers and Lederer, (2001 ) concluded that it was changing consumer attitudes rather than bank cost structures that determines the changes in distribution channels they added that virtual banks can only be profi shelve when the segment that prefers electronic media is approximately twice the size of it of the segment preferring street banks.Decrease in percentage of customers visiting banks with an increase in alternative channels of distribution will also minimize the queues in branches (Thornton and White, 2001). Internet banking increases power of the customers to make price parity across suppliers quickly and easily, which subsequently pushes the price and margins downwards (Devlin, 1995). Although, electronic banking provides many opportunities for the banks, it is also the case that the occurrent banking services provi ded through Internet are circumscribed due to protective covering concerns, complexity and technological problems (Sathye, 1999 Mols, 1999).Risks associated to electronic banking Although internet provides many opportunities for banks but it is the case that current banking services through internet are limited due to credentials concerns, complexity and technological problems (Mols, 1999 Sathye, 1999). Hewer and Howcroft (1999) referred the term trust to measure a risk. While, Suganthi et al. (2001) viewed risk in context of security concerns and risk in context of trust in ones bank. Finally, a number of studies also found trust and perceived risks have a significant positive influence on ommitment (Bhattacherjee, 2002 Mukherjee and Nath, 2003) and ultimately leads towards overall satisfaction (Rexha et al. , 2003). Reputation of a service provider is another important factor affecting trust. Doney and Cannon (1997) defined reputation as the extent to which customers believe a supplier or service provider is honest and concern most its customers. Tyler and Stanley (1999) argued that banks can build close and long relationship with customers only if trust, commitment, honesty and cooperation are developed between them. Nancy et al. 2001) study found that customers complaint nigh computer logon time which are usually longer than making a telephone call. Further, the respondents felt that they have to check and recheck the forms filled online, as they are worried astir(predicate) making mistakes. Frequent slow repartee time and delay of service delivery causes customers to be unsure slightly the completion of a transaction (Jun and Cai, 2001). Min and Galle (1999) found crashes in operating systems and disruption of information access as common factors connect to unwillingness to use internet channels for commerce.Liao and Cheung (2002) found that individual expectations regarding accuracy, security, transaction speed, user friendliness, user pursuit and convenience are the most important attributes in the perceived usefulness of internet-based e-retail banking. Confidentiality of consumer data is another important concern in adoption of online banking (Gerrad and Cunningham, 2003). Customers fear about someones unlimited access to personal financial information. White and Nteli (2004) focused on why the internet usage has not been increased in UK as compared to internet usage for banking purposes?Results found that the customers still have concerns about the security and safety aspects of the internet. inadequacy of internet accessibility and a provision of documentary evidence for all proceedings are found important hurdles in the development of electronic banking in Thailand (Jaruwachirathanakul and Fink, 2005). Laforet and Li (2005) found that habit of carrying cash, little accessibility of internet and documentary proof of financial transaction as important hurdles in adoption, in case of China.Lack of specific laws to govern internet banking is another important concern for users. It covers issues such as unfair and deceptive trade practice by supplier, unauthorized access by hackers. Larpsiri et al. (2002) argued that it is not clear whether electronic documents and records are acceptable as sufficient evidence of transactions. Another issue is the jurisdiction of the courts and dispute resolution procedures in case of using internet for commercial purpose. Dispute can make grow from many issues. For instance, websites is not branch of the bank.It is difficult for the court to define location of branch and decide whether they have jurisdiction (Rotchanakitumnuai and Speece, 2003). Other risks associated to electronic banking are job losses, lack of opportunities to socialize and development of lazy orderliness were mentioned by (Black et al. , 2001). Demographic factors Gender alone is not a significant factor, affecting adoption of technology in general (Gefen and Straub, 1997). However, Kol odinsk et al. (2004) found that married couples are more likely to adopt the new technology than either single young-begetting(prenominal)s or womanishs.Research has also linked age and adoption of technology, as issue people are more likely to adopt technology (Lee et al. , 2002). Maturity in population in terms of knowledge, confidence and comfort in computer usage also increase influence towards online banking (Karjaluoto et al. , 2002). maturation in income and education have found positive effects on adoption (Lockett and Littler, 1997 Sarel and Marmorstein, 2003). Mattilia et al. (2003) indicated that young, educated and plastered consumers are most likely to adopt internet banking in Finland.Mature customers prefer personal service and a printed receipt of their transactions. Mature customers also perceive internet banking to be more costly than paying(a) bills over the counter. Methodology The study was conducted in Lahore city which is the second largest city of Pakist an and represents almost 20% of all branches network. Branches for survey were selected on convenience basis but after the permission of respective branch managers. vista covered both residential and commercial areas.In this research data is conducted by using questionnaire as a data collection instrument, in which questions were asked starting from their command on computer and internet usage, following with the awareness of electronic banking and its types, about the benefits of e-banking and then some questions regarding their bank services and the security provide by these banks. The questionnaire includes close-ended questions and they were on liker scale of utilizing a five point categorical. IV. EMPIRICAL RESULTS There is table which shows gender wise(p) association with research questions No. Question Gender Total P values Male pistillate 1 Aware of electronic banking 196 200 396 0. 011 2 Your bank provides electronic banking facility 190 195 385 0. 000 3 Aware of SMS banking 196 195 391 0. 036 4 Aware of profits banking 189 198 387 0. 010 5 Aware of ATM card usage 193 198 391 0. 054 6 Aware of headphone banking 193 199 392 0. 272 7 Satisfied with the E-banking services provided by bank 192 198 390 0. 08 8 Satisfied with the security of E-banking provide by bank 191 195 386 0. 068 9 Want to use e-banking facilities in future 194 197 391 0. 000 Table shows the different questions and their association with gender. First question is about awareness of electronic banking. Total respondents who answered this question were 396 in which 196 were male respondents and 200 were female respondents. Its result shows that awareness of electronic banking is pendent on gender.Next question was answered by 385 total respondents from which the amount of male and female were 190 and 195 respectively. Its results show that providing e-banking services by banks were highly dependent on gender. Third one is about awareness of SMS banking which was answered by 196 male and 195 female respondents. Its result shows that awareness of SMS banking is also dependent on gender. Now the next question is about Internet banking awareness which was answered by 189 male respondents and 198 female respondents and its result shows that awareness of internet banking is dependent on gender.Next question is about awareness of ATM card usage. Total 391 respondents answered that question from which the amount of male and female were 193 and 198 respectively. It results shows that awareness of ATM card usage is not dependent on gender. Now there is a question about Phone banking awareness so total 392 respondents answered that question from which 193 were male and 199 were female and its result shows that phone banking awareness is not dependent on gender.Now the seventh question was asked by respondents about their satisfaction about e-banking services providing by their banks and total 390 answered that question and its result shows that satisfaction about e-banking services providing by banks is depends on gender. Now there is second last question which was answered by 191 male and 195 female respondents and its result shows that satisfaction about security of e- banking providing by banks is not depends on gender. Last question is about the using e-banking service in future and its results are highly dependent on gender. Aware of electronic banking strongly disaccord disagree neutral agree strongly agree Total Gender Male 13 28 46 64 45 196 Female 31 32 53 57 27 200 Total 44 60 99 121 72 396 Now there is a table which shows the commentary of the question, Aware of electronic banking. It shows the amount of respondents from strongly disagree to strongly agree. The highest figures of people are agreed about awareness of e-banking.In male respondents 64 were agree which is 33% of total male respondents. Likewise, in female respondents 57 were agreeing about it which is 29% of total females. High Post No. Question Primary school Secondary Graduate Graduate Frequency P-values 1 Aware of electronic banking 8 7 10 195 164 384 0. 000 2 Use debit or credit cards for online transactions 8 6 8 191 163 376 0. 008 3 Aware of ATM card usage 8 7 10 193 163 381 0. 030 Aware of PHONE banking 8 7 10 194 161 380 0. 155 5 Feel risk about hacking of passwords 8 7 10 192 161 378 0. 555 6 Satisfied with the E-banking services provide by bank 8 7 9 191 163 378 0. 269 more(prenominal) trust on the bank 7 employees with communication than E-banking 8 7 10 191 163 379 0. 680 8 Want to use e-banking facilities in future 8 7 9 192 163 379 0. 69 In this table there is a demographic of education whose relationship with research questions is given in abov e table. No. Age Question Below 20 - 30 - 40 - 50 - in a higher place Frequency P-values 19 29 39 49 59 60 1 Have full command on computer 91 241 30 16 10 3 391 0. 034 2 Involved in banking transactions 91 239 30 14 14 3 391 0 Awareness of usefulness of electronic banking 91 238 30 16 14 3 392 0. 004 4 Your Banks provides online technical assistance or 24 helpline 88 240 30 16 14 3 391 0. 002 5 Use debit or credit cards for online transactions 90 237 30 16 14 3 390 0 6 Aware of INTERNET banking 91 238 29 14 14 3 389 0. 443 Aware of PHONE banking 91 240 30 16 14 3 394 0. 105 8 It provides easy way to monitor a account 91 242 30 16 14 3 396 0. 019 9 Feel risk about hacking of passwords 91 239 30 16 13 3 392 0. 089 10 Have easy access to ATM machine 88 240 30 16 13 3 390 0 11 Satisfied with the E-banking services provide by bank 90 240 30 16 13 3 392 0. 47 12 Satisfied with the security of E-banking provide by bank 89 239 28 16 13 3 388 0. 004 13 More trust on the bank employees with communication than E-banking 90 241 30 16 13 3 393 0. 036 Above table shows the relationship of research questions with age. In first question it is asked about command on computer. This question was answered by total 391 respondents from which from which 91 respondents had age less than 19.