Awareness and Adoption of E Banking in Pakistan

Abstract This study aims to register customers cognizance towards adoption and certainness of electronic bordering in Pakistan. The outcomes would help the policy makers to develop effective strategies for future outlook of electronic slanging in a country. The results suggest that believes customers in Pakistan perceive electronic banking as a apparatus for minimizing inconvenience, minimizing risk of carrying cash and time saving. Customers that believe that electronic banking increases chances of politics rag to public data, increases chances of fraud and data losses.It reduces cost and save our unprecedented time. There atomic number 18 in addition some limitations of e-banking as it requires skills to operate it and passwords rump be hacked. This look piece of music discussed that peck of Pakistan atomic number 18 well awargon of electronic banking but they atomic number 18 not satisfied with the services returnd by the bank and they also feel risk in that s ervice thats wherefore they trust more on employees. It contains contrasting demographics and their association with research examinations. 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 satisfaction of customers Keywords electronic banking e-banking customers perception adoption Pakistan, e-banking in Pakistan, e-banking, SMS banking, asynchronous transfer mode I. INTRODUCTION The festerings taking place in culture and communication applied science are increasing competition in pecuniary institutions existencewide. Development of electronic distribution channels in financial industry has completely transformed the traditional bankcustomer affinity in modernistic-made years.It has reduced personal contacts between the service providers and the customers (Barnes and Howlett, 1998). The scenario is further changed with increased competition among banks and non-bank financial institutions (Zineldin, 1996). Thus an enhanced understanding of why some race adopt one distributional channel and others do not, alongside an identification of the factors that may influence this decision is vital to check into (Patricio, 2003). Thus, the deployment of advanced technologies is essential to achieve a competitive edge.In the world of banking, the development of study technology has an enormous effect on development of more flexible redressments methods and more-user friendly banking services. Recently, the banking industry was highly affected by the technology evolution that transformed the right smart banks deliver their services, use technologies a good deal(prenominal) as automated teller machines, phones, the cyberspace, recognition cards, and electronic cash. In narration with global trends, electronic banking in Pakistan has been undergoin g m any(prenominal) changes.Electronic banking is a terminal figure for the process by which a customer may perform banking transactions electronically without visiting a brick-and-mortar institution. Electronic banking refers to systems that enable bank customers to retrieve accounts and general information on bank products and services through a personal calculating machine (PC) or other intelligent device. There are many benefits of e-banking as it provides easy way to monitor an account, we faecal matter 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 awareness and adoption of electronic banking in Pakistan. Our objectives of this research were to 1. Check awareness of electronic banking in Pakistan. 2. Check why population are not aware of electronic banking. 3. Know if the people are aware of electronic banking then to how some(prenominal) extent. 4. Ch eck whether banks of Pakistan are providing electronic banking or not. 5. To find the critical attributes that customers expect important term using electronic banking. 6.To find the key variables that affect customers evaluations towards risk associated with electronic banking. 7. To understand the kindred between demographic characteristics of customers and their perceptions towards electronic banking. 8. To present results and implications which are insightful to researchers and banks affaireed in electronic banking. This research is important 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 s lackening policies in 1991 when two smaller banks, Muslim Commercial Bank and ally Bank were privatized . Since then, the government continuously advocated the privatization of existing state-owned enterprises and encouraged the private and impertinent banks to setup their businesses in the country. Recent acquisition of locally owned backing union Bank by Standard Chartered Bank indicates foreign interest in domestic financial market.According to State Bank of Pakistan (SBP) annual report (2005), there were 35 commercialised 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 instauration in the series of technological wonders. Automated teller machine (ATM), earpiece banking, earnings banking, credit cards and debit cards, etc. have emerged as effective delivery channels 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 resist in electronic banking largely by regulatory hurdles, higher startup costs, an ongoing banking sectors reforms and lack of technical skills. The government also introduced Electronic Transaction ordination in 2002. This ordinance provides legal recognition to digital signatures and documentation. Thus cut down the risks associated with the use of electronic medium of business.At present, al approximately all commercial banks in Pakistan have setup their ATM networks, issuing debit and credit cards and have joined one of the two operating ATM Switch Networks. According to Kolachi (2006) Pakistani banks provide the following online banking services and products. 1. Enquiry, account statement enquiry, account balance enquiry, check statement enquiry, fixed lodge enquiry 2. Payment, funds transfer, credit card payments, direct payments, utility bills payments 3. Request, checkbook request, stop payment request, demand draft request, new fixed wedge request 4.Download, customer profile, statement download, other information and guidelines downloads. 4 writings 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 available for banks in US concluded that customers orientation such as convenience, service, technology change, familiarity almost computing and availability of internet affected the usance of different channels.According to Hagel and Hewlin (1997) the Internet banking became very attractive to customers and lots of banks because the technology is be accepted by them and they can now understand and have information active the complex products. noneadays banks are also facing a lot of competition and need a high market fortune and provide better services to its customers so that they can attract the new customers and old customers do no t try to leave them. Howcroft et al. 2002) found that the most important factors that have encouraged consumers to use online banking are lower fees followed by reducing paper work and human error which subsequently play down 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 productive when the segment that prefers electronic media is approximately twice the size of the segment preferring pass banks.Decrease in percentage of customers visiting banks with an increase in alternating(a) channels of distribution will also minimize the queues in branches (Thornton and White, 2001). Internet banking increases power of the customers to make price comparison across providers quickly and easily, which subsequently pushes the price and margins downwards (Devlin, 1995). Although, electronic bank ing provides many opportunities for the banks, it is also the eccentric person that the accredited banking services provided through Internet are limited due(p) to warranter 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 security 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 scene 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 compulsive 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 other important fac tor affecting trust. Doney and cannon (1997) defined reputation as the extent to which customers believe a supplier or service provider is honest and concern to the highest degree its customers. Tyler and Stanley (1999) argued that banks can build close and long- wearing relationship with customers only if trust, commitment, honesty and cooperation are developed between them. Nancy et al. 2001) study found that customers complaint or so information processing system logon time which are usually longer than making a forebode call. Further, the respondents felt that they have to check and recheck the forms filled online, as they are overturned about making mistakes. Frequent slow response time and delay of service delivery causes customers to be unsure about 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 related to unwillingness to use internet channels for commer ce.Liao and Cheung (2002) found that individual expectations regarding accuracy, security, transaction speed, user friendliness, user booking and convenience are the most important attributes in the perceived public utility company of internet-based e-retail banking. Confidentiality of consumer data is another important concern in adoption of online banking (Gerrad and Cunningham, 2003). Customers hero-worship 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 soothe have concerns about the security and safety aspects of the internet. Lack of internet handiness and a provision of documental evidence for all transactions 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, le ss 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 figure out whether electronic documents and records are acceptable as sufficient evidence of transactions. another(prenominal) issue is the jurisdiction of the courts and dispute resolution procedures in case of using internet for commercial purpose. Dispute can arise from many issues. For instance, websites is not branch of the bank.It is difficult for the court to define location of branch and set 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 society 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, Kolodinsk et al. (2004) found that married couples are more potential to adopt the new technology than either single priapics or fe priapics. research has also linked age and adoption of technology, as young 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). Increase in income and didactics have found positive effects on adoption (Lockett and Littler, 1997 Sarel and Marmorstein, 2003). Mattilia et al. (2003) indicated that young, ameliorate and wealthy consumers are most likely to adopt internet banking in Finland. maturate customers prefer personal service and a printed receipt of their transactions. Mature customers also perceive internet banking to be m ore costly than compensable bills over the counter. Methodology The study was conducted in Lahore city which is the second largest city of Pakistan and represents almost 20% of all branches network. Branches for survey were selected on convenience nucleotide but after the permission of respective branch managers. Survey cover both residential and commercial areas.In this research data is conducted by using interrogativenaire as a data collection instrument, in which challenges were asked outset 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. confirmable RESULTS There is table which shows gender wise association with research questions No. marvel Gender Total P v alues Male young-bearing(prenominal) 1 sensitive 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 earnings banking 189 198 387 0. 010 5 Aware of ATM card usage 193 198 391 0. 054 6 Aware of PHONE 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 necessity to use e-banking facilities in future 194 197 391 0. 000 Table shows the different questions and their association with gender. first off question is about awareness of electronic banking. Total respondents who answered this question were 396 in which 196 were manly respondents and 200 were fe manful respondents. Its result shows that awareness of electronic banking is bloodsucking on gender. nei ghboring 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 reliant 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 mutually beneficial on gender. in a flash 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 mal e 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 disagree disagree sluggish 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 translation of the question, Aware of electroni c 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. suspense Primary School Secondary Graduate Graduate absolute frequency P-values 1 Aware of electronic banking 8 7 10 195 164 384 0. 000 2 utilise 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 trust on the bank 7 employees with communication than E-banking 8 7 10 191 163 379 0. 680 8 regard 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 above table. No. Age Question Below 20 - 30 - 40 - 50 - Above 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.