PROJECT REPORT On Internet Banking of State Bank of India
Submitted To: Dr. Kartik Dave
Submitted by: Hiteshwar Singh Satya Prakash Reddy Faisal Shah Rahul Ghakkar Geetika Rakheja
ACKNOWLEDGEMENT
With immense pleasure I would like to present this project report on internet banking services of State Bank of India. Its has been an enriching experience for us to do this Services Marketing project, which would be not have possible without the goodwill and support of the people around. As students of BIRLA INSTITUTE OF MANAGEMENT TECHNOLOGY, we would like to express our sincere thanks to all those who helped us during our practical training program. We are highly grateful Dr. Kartik Dave to assist us in completing this daunting task.
INDEX 1. Executive Summary 2. Background of the Study 3. Objective of the Study 4. Scope of the Study 5. Methodology 6. Description of the Current Situation 7. Company 8. Industry 9. Major Competitors 10. Selection of Samples and Data Collection 11. Data Analysis and Findings 12. Conclusions 13. Recommendations 14. Limitations of the Project References Appendix
Executive Summary Internet banking has evolved over the last decade from product brochure ware, to a complete financial marketplace for its online customers. Banks see Internet banking as the key channel for growth and customer retention. As such, the online banking model has moved from tactical and lower cost customer service, to a more strategic form of customer engagement. Many banks have adopted the latest technologies and added new Internet banking functionalities and features to stay ahead of the competition. However, when measured by key performance indicators such as customer growth, revenue growth, etc., the value delivered varies from bank to bank. While some banks achieve better customer response and retention from adding new technology/feature bells and whistles, others have received moderate to poor acceptance, which has undermined their return on investment. The challenge is to find the right approach and leverage the right mix of technology and features that keep customers happy and transacting over an extended period of time.
Background of the Study OBJECTIVE:
To understand the banking industry, service marketing mix of SBI with respect to Internet Banking and service quality issues. SCOPE OF THE STUDY:
Understanding the current market, growth and trends of banking industry
Competitor Analysis of SBI
Understanding Service products, Consumers, and Markets in the banking sector by considering State Bank of India. Focus on Internet Banking as the service product of SBI How SBI manages its internet banking service promotes and educates the customers about it.
Designing and management of Internet Banking service by SBI
Improvements in service quality and productivity of SBI in terms of internet banking
METHODOLOGY:
The research method includes a combination of hypothetical analysis (literature review), and empirical analysis (questionnaires). The literature review is composed of studies of publications and theories collected from research reports, books, periodicals, business information, and online sources of information. The aim of the literature review is to present the research that was performed earlier, and that relates to our current study. The empirical analysis is the result of a survey that was sent randomly to 25 SBI customers of Noida branch. Collection of Data
The data collected for the project will be from:
PRIMARY SOURCES
SECONDARY SOURCES
Primary Sources
Information was obtained by conducting interviews with the organization officials and users of internet banking.
Secondary Sources:
The major secondary data will be from the company’s profile of “STATE BANK OF INDIA” and internet forums. Sample Size The sample size our research will be 25 customers of SBI online banking. Sampling Technique The study will be using Simple Random sampling. All sample units will be personally contacted and interviewed.
Description of the Current Situation •
Recently, the RBI took a few important steps to make the Indian Banking industry more robust and healthy which included de-regulation of savings rate, guidelines for new banking licenses and implementation of Basel Norm III.
•
Since March 2002, Bankex (Index tracking the performance of leading banking sector stocks) has grown at a CAGR of about 31%.
•
After a very successful decade, a new era seems to have started for the Indian Banking Industry. According to a Mckinsey report, the Indian banking sector is heading towards being a high-performing sector
•
According to an IBA-FICCI-BCG report India’s gross domestic product (GDP) growth will make the Indian banking industry the third largest in the world by 2025.
•
Current asset size of USD 1,350 billion (2010)
•
Exponential growth expected with asset size growing to USD 28,500 billion by 2025.
According to the report, the domestic banking industry is set for an exponential growth in coming years with its assets size poised to touch USD 28,500 billion by the turn of the 2025.
The following figure shows how banking Industry has performed in the last five years. SBI reported the lowest five-year-average ROA. Currently, it has the highest net NPA to net advances ratio and the lowest CAR. Looking at all this it is expected that Private Banks are better placed to garner growth in the Indian Banking Industry.
State Bank of India (SBI) is a banking and financial services company based in India. It is a state-owned corporation with its headquarters in Mumbai, Maharashtra.
As of Jan 2013
total market value of ₹167,159.52 crores
14,119 branches, including 173 foreign offices in 37 countries across the globe.
It is the largest banking and financial services company in India. The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. The Government of India nationalised the Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India. Business
The bank is listed on the Bombay Stock Exchange, National Stock Exchange, Kolkata Stock Exchange, Chennai Stock Exchange and Ahmedabad Stock Exchange while its GDRs are listed on the London Stock Exchange. SBI group accounts for around 25% of the total business of the banking industry while it accounts for 35% of the total foreign exchange in India. With this type of strong base, SBI has displayed a continued performance in the last few years in scaling up its efficiency levels. The bank also has other units devoted to capital markets, fund management, factoring and commercial services, credit cards, and brokerage services.
Net Interest Income of the bank has witnessed a CAGR of 13.3% during the last five years. During the same period, net interest margin (NIM) of the bank has gone up from as low as 2.9% in FY02 to 3.40% in FY06 and currently is at 3.32%. Today SBI has about 27,000+ ATMs and SBI group (including associate banks) has about 45,000 ATMs. SBI has become the first bank to install an ATM at Drass in the Jammu & Kashmir Kargil region. The Reserve Bank of India owns about 60% of State bank of India .
INTERNET BANKING (E-BANKING):
Internet banking (or E-banking) means any user with a personal computer and a browser can get connected to his banks website to perform any of the virtual banking functions. In internet banking system the bank has a centralized database that is web-enabled. All the services that the bank has permitted on the internet are displayed in menu. Any service can be selected and further interaction is dictated by the nature of service. Once the branch offices of bank are interconnected through terrestrial or satellite links, there would be no physical identity for any branch. It would a borderless entity permitting anytime, anywhere and anyhow banking. The delivery channels include direct dialup connections, private networks, public networks, etc. With the popularity of computers, easy access to Internet and World Wide Web (WWW), Internet is increasingly used by banks as a channel for receiving instructions and delivering their products and services to their customers. This form of banking is referred to as Internet Banking.
ICICI was the first bank to initiate the Internet banking revolution in India as early as 1997 under the brand name. ADVANTAGES & DISADVANTAGES OF INTERNET BANKING: Advantages of Internet Banking Internet Banking has several advantages over traditional banking which makes operating a bank account simple and convenient. Some of the advantages of internet banking are: · Internet banking account is simple to open and easy to operate. · Internet banking is quite convenient as we can easily pay our bills, can transfer funds between accounts, etc. · Internet banking is available all the time, i.e. 24x7. We can perform our tasks from anywhere and at any time; even in night when the bank is closed or on holidays. · Internet banking is fast and efficient. Funds get transferred from one account to the other very fast. Several accounts can be managed easily through internet banking. · Through Internet banking, we can keep an eye on our transactions and account balance all the time. This facility also keeps the account safe. By the ease of monitoring your account at anytime, any fraudulent activity or threat can be detected or before it can pose account to severe damage. · Internet banking is also a great medium for the banks to endorse their products and services. The services include loans, investment options, and many others. Disadvantages of internet banking · Understanding the usage of internet banking might be difficult for a beginner at the first go. So, a person who is new to internet baking might face some difficult y. · One cannot have access to internet banking if you don’t have an internet connection; thus without the availability of internet access, internet banking may not be useful. · Security of transactions is a big issue. Your account information might get hacked by unauthorized people over the internet.
Our Service Product : INTERNET BANKING AT STATE BANK OF INDIA
The Internet Banking service provided by State Bank of India is referred to as OnlineSBI by the bank. OnlineSBI is regarded as the Internet banking portal for SBI. The portal offers anywhere, anytime, online access to banking services for SBI’s retail and corporate customers. OnlineSBI is developed by using advanced technology and tools. The infrastructure is robust and supports secure access to banking services for more than 13,000 branches across India. OnlineSBI is made for all the customers who have an account at an internet enabled branch of SBI. Customers with internet enabled branch are required to get registered for the Internet banking service with the branch. In case the customer’s branch is not internet enabled, he can transfer his existing account from his branch to an OnlineSBI branch.
INTERNET BANKING FACILITY THROUGH STATE BANK OF INDIA: 1. 24x7 facilities for tax payment through SBI e-Tax. 2. Fund transfer between his own accounts. 3. Access of accounts on real time 24x7x365 basis and downloading of account statements. 4. Transfer of fund to other accounts through third party transfer mode. 5. Transfer of funds to PPF and loan accounts 6. Payment of all kind of utility bills like Telephone bill payment. Credit card payment LIC premium payment, Mutual f\Fund Payment, Electricity bill payment Mobile bill payments etc listed on the site. 7. Booking of Railway and Air tickets online. 8. Payments of Taxes viz Direct and indirect tax. 9. Transfer of money to any VISA Debit or Credit Card. 10. Online trading of shares by using 3 in 1 accounts.
SERVICES PROVIDED BY SBI INTERNET BANKING 1. RETAIL BANKING:The Retail banking application is an integration of several functional ar eas, and enables customers to: · Issue Demand Drafts online · Transfer funds to own and third party accounts · Credit beneficiary accounts using the VISA Money Transfer, RTGS/NEFT feature · Generate account statements · Setup Standing Instructions · Configure profile settings · Use eTax for online tax payment · Use ePay for automatic bill payments · Interface with merchants for railway and airline reservations · Avail DEMAT and IPO services
2. CORPORATE BANKING:The OnlineSBI corporate banking application provides features to administer and manage corporate accounts online. The corporate module provides roles such as Regulator, Admin, Uploader, Transaction Maker, Authorizer, and Auditor. These roles have access t o the following functions: · Manage users, define rights and transaction rules on corporate accounts. Access accounts in several branches with a single sign-on mechanism · Upload files to make bulk transactions to third parties, supplier, vendor and tax collection authorities. · Use online transactional features such as fund transfer to own accounts, third party payments, and draft issues · Make bill payments over the Internet. · Authorize, modify, reschedule and cancel transactions, based on rights assigned to the user · Generate account statement · Enquire on transaction details or current balance
3. VALUE ADDED SERVICES: _ Tax payments to central and state governments through site to site
integration. _ Supply Chain Finance( e-VFS- Electronic Vendor Finance Scheme) _ Direct Debit Facility _ E Collection Facilities for: _ Core Banking Transactions _ Internet Bank transactions for incoming RTGS/NEFT Transactions _ Internet banking transactions for SBI and associate banks _ Debit facility where suppliers can directly debit their customer’s account through internet banking
PRODUCTS AND SERVICES:1) E-ticketing: Railway, air and bus tickets can be booked online through online SBI. · To book a train ticket, just log on to irctc.co.in and create an ID. Submit your travel plan and book the ticket(s)-either · i-Ticket or · E-Tickets (wherein after successful payment transactions, an e-ticket is generated which can be printed any time.)
2) SBI e-tax:We can pay our taxes online through SBI E-Tax. This facility enables us to pay TDS, Income tax, Indirect tax, Corporation tax, Wealth tax, Estate Duty and Fringe Benefits tax. The Indirect Tax link is used to make Central Excise and Service Tax payments to Central Board of Excise and Customs. The online payment feature facilitates anytime, anywhere payment and an instant E-Receipt is generated once the transaction is complete.
3) Bill payment: This is a simple and convenient service for viewing and paying our bills online. Using the bill payment we can view and Pay various bills online, directl y from our SBI account. Example
telephone, electricity, insurance, credit cards and other bills can be paid from the comfort of our house or office, 24 hours a day, 365 days a year.
4) RTGS/NEFT:We can transfer money from our State Bank account to accounts in other banks using the RTGS/NEFT service. The RTGS system facilitates transfer of funds from accounts in one bank to another on a "real time" and on "gross settlement" basis. This system is the fastest possible interbank money transfer facility available through secure banking channels in India. RTGS transaction requests will be sent to RBI immediately during working hours post working hours requests are registered and sent to RBI on next working day. We can also schedule a transaction for a future date. We can transfer an amount of Rs.1 lac and above using RTGS system. National Electronic Funds Transfer (NEFT) facilitates transfer of funds to the credit account with the other participating bank. RBI acts as the service provider and transfers the credit to the other bank's account.
5) eZtrade@SBI State Bank of India (SBI) in alliance with Motilal Oswal Securities Limited and SBI Caps Securities Limited (SSL) introduced 'eZtrade@sbi', a State-of-the-Art online trading platform predominantly to cater to every trading need. This service provides us with a 3-in-1 account which is an integrated platform of Bank Account, Demat Account and an Online Trading Account to give us a convenient and paper free trading experience under one roof. They provide online trading of shares of Companies listed on BSE and NSE.
6) E-payment:We can pay our insurance premium, mobile phone bills and also can purchase mutual fund units by coming from the biller’s website and selecting state bank of India in the payment option.
7) Fund transfer:The Funds Transfer facility enables us to transfer funds within our accounts in the same branch or other branches. We can transfer aggregating Rs.1 lac per day to own accounts in the same branch and other branches. To make a funds transfer, we should be an active Internet Banking user with transaction rights. Funds transfer to PPF account is restricted to the same branch.
8) Third party transfer :We can transfer funds to our trusted third parties by adding them as third party accounts. The beneficiary account should be any branch SBI. Transfer is instant. We can do any number of transactions in a day for amount aggregating Rs.1lakh.
9) Demand Draft :The Internet Banking application enables us to register demand drafts requests online. We can get a demand draft from any of our Accounts (Savings Bank, Current Account, Cash Credit or Overdraft). We can set limits for demand drafts issued from your accounts or use the bank specified limit for demand drafts.
10) Cheque Book Request :We can request for a cheque book online. Cheque book can be requested for any of our Savings, Current, Cash Credit, and Over Draft accounts. We can opt for cheque books with 25, 50 or 100 cheque leaves.
11) Account Opening Request:OnlineSBI enables us to open a new account online. We can apply for a new account only in branches where we already have accounts. We should have an INB-enabled account with transaction right in the branch. Funds in an existing account are used to open the new account. We can open Savings, Current, Term Deposit and Recurring Deposit accounts of Residents, NRO and NRE types.
12) Account Statement :The Internet Banking application can generate an online, downloadable account statement for any of our accounts for any date range and for any account mapped to the username. The statement includes the transaction details, opening, closing and accumulated balance in the account. The account statement can be viewed online, printed ordownloaded as an Excel or PDF file. You also have the option to select the number of records displayed in each page of the statement. The options are 25, 50, 75, 100 and ALL.
13) Transaction Enquiry :OnlineSBI provides features to enquire status of online transactions. We can view and verify transaction details and the current status of transactions. Our VISA transactions can also be viewed separately. You will be displayed all online transactions you have performed. To view details of individual transactions, you need to click the Transaction Reference number link. You are displayed the debit and credit account detail s, transaction amount, narration and transaction status.
14) Demat Account Statement:OnlineSBI enables us to view Demat account statement and maintain such accounts. The bank acts as our depository participant. In the third party site, we can mark a lien on our Demat accounts and use the funds to trade on stock using funds in our SBI savings account. We can view Demat account details, and generate the following statements: statement of holding, statement of transactions, statement of billing.
15) Donation:We can make donation to religious and charitable institution by using Internet Banking of SBI by logging on to http://www.onlinesbi.com/ with our credentials and go to Payment and transfer and click on make donation link. After selecting the debit account select the religious/charitable institution that we want to offer donation. After successful payment we can print an E-receipt for the donation made.
TERMS OF SERVICE: ONLINE SBI 1. One should register for ‘OnlineSBI’ with the branch where the account is maintained. 2. If one maintains accounts at more than one branc h, you need to register at each branch separately. 3. OnlineSBI services can be used by the customer only after he acknowledges the receipt of password. 4. In a joint account, all account holders are entitled to register, as users of ‘OnlineSBI’, but transactions would be permitted based on the account operation rights recorded at the branch. 5. All accounts at the branch whether or not listed in the registration form, will be available on the ‘OnlineSBI’. However the applicant has the option to selectively view the accounts on the ‘OnlineSBI’.
SECURITY: 1. The Branch where the customer maintains his account will assign: a) User-id & b) Password 2. The User-id and Password given by the branch must be replaced by User Name and Password of customer’s choice at the time of first log-on. This is mandatory. 3. Bank makes reasonable use of available technology to ensure security and to prevent unauthorized access to any of these services. The ‘OnlineSBI’ service is VERISIGN certified which guarantees, that it is a secure site. It means that • You are dealing with SBI at that moment. • The two-way communication is secured with 128-bit SSL encryption technology, which ensures the confidentiality of the data during trans mission. 4. These together with access control methods designed on the site would afford a high level of security to the transactions conducted. SBI will soon be implementing PKI/Digital Signature. 6. There is no way to retrieve a password from the system. Therefore if a customer forgets his password, he must approach the branch for re-registration.
DATA ANALYSIS & INTERPRETATION
Quality Dimension
Question I am able to get on the site quickly It is easy to find what I need on the website
Efficiency
It is quick to complete a transaction through the bank’s website Using the bank’s website does not require a lot of effort The organization and structure of online content is easy to follow When the bank promises to do something by a certain time, it does so My online transactions with the bank are always accurate
Fulfilment
The service delivered through the bank’s website is quick The bank’s site makes accurate promises about the services being delivered The site is always available System for business
System Availability
Availability This site launches and runs right away The bank does not misuse my personal information
Privacy
I feel safe in my transactions with the bank I have confidence in the bank’s service
Assurance/ Trust Site Aesthetics
Trust The bank’s name is well-known and has good reputation The website design is aesthetically attractive
The bank gives prompt responses to my requests by e-mail or Responsiveness other means The bank quickly resolves problems I encounter with my online transactions The bank is easily accessible by telephone Contact The site has customer service representatives available online
Scale Explanation
The service quality matches your expectations
Zone of Tolerance
1
The service quality does not at all live up to your expectations
2
3
4
5
6
7
The service quality exceeds your expectations
Quality Dimension
Question
Mean
I am able to get on the site quickly 5.2
It is easy to find what I need on the website 4.8
Efficiency
It is quick to complete a transaction through the bank’s website 4
Using the bank’s website does not require a lot of effort 4.8
The organization and structure of online content is easy to follow When the bank promises to do something by a certain time, it does so
3.6
4.2
My online transactions with the bank are always accurate Fulfilment
3.2
The service delivered through the bank’s website is quick 5.8
The bank’s site makes accurate promises about the services being delivered
4.8
The site is always available System for business System Availability
5
Availability This site launches and runs right away 3.8
The bank does not misuse my personal information 3.8
Privacy
I feel safe in my transactions with the bank 6.4
I have confidence in the bank’s service Assurance/ Trust
5.6
Trust The bank’s name is well-known and has good reputation 6.6
Site Aesthetics
Responsive ness
The website design is aesthetically attractive 3.8
The bank gives prompt responses to my requests by e-mail or other means The bank quickly resolves problems I encounter with my online transactions The bank is easily accessible by telephone
Contact
4
3
3.2
The site has customer service representatives available online 5.2
Sample Size (n) = 25
The zone of tolerance is defined as the range of customer perceptions of a service between desired and minimum acceptable standards. Basically it is the range of service performance that a customer considers satisfactory. Performance below the zone is seen as dissatisfying and performance above the zone is seen as delighting. From the above data analysis, we can see that most of the services lie in the zone of tolerance. No service is below the adequate level. Also, it can be noted that the reputation and brand image of the bank are its greatest strength. Most of the customers rated SBI reasonably high with respect to the safety of transactions and bank’s name. The area of improvement where the bank can work upon is its website which needs to be technologically upgraded in terms of its efficiency and aesthetic appeal. Though it lies in the zone of tolerance but the potential to improve the service is quite high. The bank also needs to improve upon responsiveness quotient which will enhance the service quality greatly. Customers want to get their complaints resolved in the shortest possible time. Service failure is unavoidable but a quick service recovery can ensure a loyal customer forever. Employees also need to be trained to obtain knowledge regarding I-banking.
Recommendations and Suggestions
Training and awareness among employees:-
It is recommended that State Bank of India should conduct various training programmes for the employees, so that they will get aware with the terms of internet banking. After such programmes they can create awareness amongst the consumers.
Exchange of information on threats and vulnerabilities at appropriate forums:-
There should be an open end discussion on the threats and vulnerabilities coming across the functioning of internet banking work by the employees in the various official forums and meets.
Bank should anticipate and get prepared for regulatory changes:-
Laws regarding IT or cyber laws get change as per the need. SBI should anticipate such kind of changes and get loaded with various plans and actions.
Focus on identifying core competence:-
SBI possess some unique characteristics or positive points in it and with the help of them it can become a leader in market. Bank should identify such points and concentrate to flourish them more. This can be done with the help of internet banking, as internet banking of SBI is getting largely accepted by customers.
Increasing usage of mobile phones is going to revolutionize the banking culture in near future:-
Mobile banking is also getting popular in the segment of internet banking thus this can add some more steps to progress for SBI. Bank is into the mobile banking but it is providing limited features.
More stress should be given on security concern on internet :-
There are some people who are into unethical practices of hacking of accounts of customers. This is nothing but the breach in the security of the SBI on internet. There should be some measures in order to prevent such practices. IT structure should be unbreakable.
