chapter- 7 impact of e-banking on operational...

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CHAPTER- 7

IMPACT OF E-BANKING ON OPERATIONAL PERFORMANCE

OF BANKS

7.1 HR in Banking

7.2 Data Base and Research Methodology

7.3 Descriptive Analysis

7.4 Kendall’s Coefficient of Concordance

7.5 Impact of E-banking on Operational Performance

7.6 Statistical Difference Between Public and Private Sector Banks in Operational

Performance

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CHAPTER VII

IMPACT OF E-BANKING ON OPERATIONAL PERFORMANCE OF BANKS

The major challenge faced by the banks is to protect the falling margins due to

the impact of competition. Falling in profit requires increase in the volume of transaction

which could be increased only by exploiting the advantages of technology and by

providing sound customer based services. So, technology upgradation is required not for

improving the functionalities of the bank but to have sound customer base. It has

changed the method of marketing, advertising, distribution, pricing, financing and cost

saving through electronic channels and products. These changes call for a dynamic,

aggressive, adaptable and changing work-force to meet the demands of customers’

relationship, product differentiation, values, reputation and regulatory prescriptions.

Further, the changes staring at the face of bankers are undergoing a rapid transformation

in response to the forces of competition, efficiency in operations, reduced operating

margins, better asset/ liability management, risk management, anytime and anywhere

banking, etc.

But the profitability of the banks and the qualitative services to the customers

could be provided only if the employees working in the banks are familiar with the usage

of technology. Because they are the people behind the scene who make possible the

required benefits to the customers and the banks. This research is an effort to see whether

e-banking has any impact on the employment needs and operational performance of

banks. The computerization of banking system has created the need for more trained

technical workers to attend both the hardware and software problems. Now the banks

require more computer analysts, software engineers, system operators, designers, data

base administrators, website designers and computer programmers. But the banks cannot

replace their whole staff to meet this requirement and they are giving the required

training to their employees so as to meet the challenges of the market. To some extent, e-

banking has dampened the employment needs also. Automated services through websites

and e-mail permit marketing of e-banking services can be provided without the need of

employees. For example, e-banking dramatically streamlines the sales process by

providing unlimited amount of information on products to customers on the websites.

With all these strategies banks should revitalize their recruitment, selection and

placement policies and developing the human resources to meet the challenges of

paradigm shift. The system of e-banking has its own pros and cons from employees’

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point of view. But for the banking as a whole it has enhanced customer services,

effective distribution, improved operations, faster access to information, and improved

internal processes which have been helpful in developing a global delivery platform.

The following aspects need to be taken into account while introducing any change

in the e-banking system:

• Rightsizing the work-force.

• Adjusting to the changing profile and needs of today’s employees.

• Ensuring customer focus with emphasis on customer-service attitude and

behaviour throughout the organization.

• Establishing employee-involvement programmes to generate a sense of

empowerment and commitment.

• Improving competitiveness through implementation of total quality management

processes.

• Incorporating information systems as an integral part of business and production

strategies.

7.1 HR in Banking

Bankers are increasingly aware of the importance of e-banking technology for

their survival, growth and operations. The technology has totally transformed the way of

business. The new situation has raised many questions like how should an HR manager

respond to the changing scenario? What is the impact of electronic banking on human

resources employed and their performance? The answers to these questions lie in the fact

that if there is any increase in ability to take decisions, their productivity , processing

time, work environment, then the banks should go ahead in adopting the electronic

banking techniques and technology. The following table presents a comparison between

old and new competencies.

Figure 7.1 Changing Competencies

Old Competencies New Competencies

1. Ability to operate in well-defined and stable environment.

Ability to operate in ill-defined and ever changing environment.

2. Capacity to deal with repetitive straightforward and concrete work process.

Capacity to deal with routine and abstract work process.

3. Ability to operate in a supervised work environment.

Ability to handle decisions and responsibilities.

4. Isolated work. Group and interactive work.

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5. Ability to operate within narrow geographical and time horizons.

Ability to operate within expanding geographical and time horizons.

This new and enhanced technology requires the behavioural adjustment in the

human resources. The training programmes and their implementation for human resource

development play an active role in adoption of e-banking modes. Training needs should

be actively involved in the total training process starting from identification of training

needs, evaluation of training aspects and the benefits of training to end users. Skill,

attitude and knowledge of human capital play an important role in determining the

competitiveness of the financial sector. The quality of human resource indicates the

ability of banks to deliver valuable services to customers. Capital and technology are

replicable but not the human capital which needs to be valued as a highly valuable

resource for achieving the required targets of the banks. So, when any new technology is

adopted by the banks, there is need to consider its impact on the employees’ needs.

7.2 Data Base and Research Methodology

The study is mainly based on the primary data collected from the employees

working in the banking sector of Punjab region confined to five districts, viz. Ludhiana,

Patiala, Jalandhar, Bathinda and Mohali with the help of a well drafted pre-tested

questionnaire. Sample of 100 employees was drawn from seven banks in all, four from

the public sector and three from the private sector. These banks include State Bank of

India, Punjab National Bank, Canara Bank, Bank of Baroda, HDFC Bank, ICICI Bank

and AXIS bank. A specifically designed questionnaire was used as tool, and bank

employees were requested to fill it during office hours. Different branches from different

regions were selected for the purpose. At least five employees from every branch were

requested to fill the questionnaire. The respondents were selected among the people

working at different levels like executive manager, assistant manager, relationship

manager, branch manager, officer, cashier, clerk, front desk executive. Some of the

employees refused to respond due to lack of time especially from the private sector

banks. Questionnaires found incomplete were rejected. So, out of 120 questionnaires

distributed to the employees, only 100 were found complete in all respects for further

analysis. Descriptive analysis was used to present the profile of respondent. It includes

average, frequency and percentage of data value for each of the variables etc. Mann-

whitney test was conducted to compare the scores of two groups. The test signifies that

two samples coming from identical population may either be based on R1, the sum of the

ranks of the values of first sample or on R2, the sum of the ranks of the values of second

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sample. If it is true that the samples have come from the same population it is reasonable

to assume that the means of the ranks assigned to the values of two samples are more or

less same. SPSS 13 and 17 version are used to analyze the required data. The results

have been presented in different section.

The present chapter studies the impact of e-banking on operational performance

taking into consideration the employees’ aspect. The reason being that with the

introduction of core banking solution, electronic fund transfer, real times gross

settlement system and electronic clearing services, there is a major change in the

methods of performing their duties and improvement in the productivity and operations.

E-banking has led to change in working hours, reduction in processing of work,

employee productivity, decision-making processes, working conditions, relationship of

employees with the bank and customers, etc. Further, centralized data base, online data

availability, any branch banking, paperless transactions and up-to date information have

led to sweeping changes in productivity and operational performance of the banks.

SECTION-A

7.3 Descriptive Analysis

Descriptive analysis and cross tabulation were carried out to present the profile of

the employees and to know the relationship different categories of employees’ profile.

Mean scores and standard deviation were also calculated for the items to know the

impact of e-banking on employees.

Employees’ Profile

Before formulating any effective research about the banking sector in India, it is

required to maintain an up to date profile information of the employees in the form of

employee based data. Last section of the questionnaire relates to the employees’ profile

covering their age, experience, education and various positions held by them in

respective banks. Such a profile provides the bank with a strong basis for designing

effective plans and programmes regarding training and HR policies of the employees.

Table 7.1

Gender Profile of Employees

Sex Frequency Valid Per cent Cumulative Per cent

Male 66 66 66

Female 34 34 100

Total 100 100

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The table reveals that the male percentage (66 per cent) for the sample is higher

than the female percentage (34 per cent) in both the public and private sector banks

under study.

Table 7.2

Age Profile of Employees

Age Frequency Valid Per cent Cumulative Per cent

Below 30 yrs. 43 43 43 30-40 yrs. 35 35 78 40-50 yrs. 20 20 98 50-60 yrs. 2 2 100 Total 100 100

Table 7.2 presents the age-wise profile of the respondent employees. As is

evident from the table as many as 43% employees are below the age of 30 years, 35%

employees fall in the age category of 30-40 years, 20% in 40-50 years whereas only 2%

fall in the age category of 50-60 years. The table reflects that majority of the employees

are below the age of 30 years in both the sectors.

Table 7.3

Educational Profile of Employees

Educational Qualification Frequency Valid Per cent Cumulative Per cent

Matric and Undergraduate 2 2 2 Graduate 23 23 25 Post-graduate 49 49 74 Professional Degree 26 26 100 Total 100 100

Table 7.3 presents the education-wise distribution of the employees. Majority of

the employees, i.e., 49% are post-graduate, 26% of them have professional degrees, 23%

are graduate, while the remaining 2% are either Matriculate or undergraduate. An

analysis of the table reveals that maximum number of employees belong to post-graduate

category.

Table 7.4

Experience Profile of Employees

Experience Frequency Valid Per cent Cumulative Per cent

Below 5 yrs. 40 40 40 5-10 yrs. 32 32 72 10-15 yrs. 13 13 85 15-20 yrs. 15 15 100 Total 100 100

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Table 7.4 presents the experience-wise distribution of the employees. As is evident

from the table as many as 40 % employees fall in the category of experience below 5

years. Another 32% employees fall in the experience category of 5-10 years, 15% in 15-

20 years category and 13% in 10-15 years category. The table reflects that majority of

the employees fall in the experience category of below 5 years.

Table 7.5

Occupational Position of Employees

Position Frequency Valid Per cent Cumulative Per cent

Executive Manager 15 15 15 Assistant Manager 15 15 30 Branch Manager 13 13 43 Clerk 22 22 65 Cashier 17 17 82 Front Desk Executive 10 10 92 Senior Officer 8 8 100 Total 100 100

Table 7.5 exhibits the occupation-wise distribution of respondents. An analysis of

the table provides that maximum number of respondents, i.e., 22% from both the public

and private sector banks under study, belong to the clerk category, whereas 17%, 13%,

10%, 8% belong to the categories of cashier, branch manager, front desk executive and

senior officer respectively. Similarly, the respondents in equal proportion, i.e., 15% each

belong to the categories of the executive manager and assistant manager.

7.4 Kendall’s Coefficient of Concordance

Kendall’s coefficient of concordance helps to determine the inter-behavioural

similarities and dissimilarities between the demographic factors and the variables chosen

for the study.

Table 7.6

Age-wise Distribution

Variables Kendall’s

Coefficient

Chi-square d.f Level of

Significance

Workload of Employees 0.483 13.528 7 Not Significant Personal Development and Relations

0.314 8.784 7 Not Significant

Processing of Transaction 0.320 8.953 7 Not Significant Convenience and Security 0.533 12.791 6 Significant*

Core Banking Solution 0.493 9.854 5 Not Significant Electronic Data Interchange 0.85 1.367 4 Not Significant Real Time Gross Settlement System


* Values are significant at 5 % level

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Table 7.6 shows the relationship between age of the employees and different

factors considered to measure e-banking impact on operational performance. Regarding

the workload of employees and the age-wise distribution, the value of chi-square is less

than the tabulated value, hence, it is not significant. This shows that irrespective of age

factor of employees, all the employees perceive that e-banking has reduced the workload,

developed inter-personal relations, made the processing of transaction speedier,

introduced core banking solution and immediate settlement of transaction. There is only

one factor where Kendalls coefficient is significant and calculated value of chi-square is

greater than tabulated value, that is, related to ‘convenience and security’. This shows

there is difference in the opinion of employees as far as security issues are concerned.

Table7.7

Experience- wise Distribution


Coefficient

Chi-square d.f Level of

Significance

Workload of Employees 0.729 20.413 7 Significant*

Personal Development and Relations


Processing of Transaction 0.735 17.647 7 Significant*

Convenience and Security 0.541 16.217 6 Significant*

Core Banking Solution 0.437 0.873 5 Not Significant Electronic Data Interchange 0.234 3.744 4 Not Significant Real Time Gross Settlement System

0.459 9.520 4 Significant*


Table 7.7 reflects experience wise distribution and its impact on different

variables of operational performance. The chi-square test indicates that there is a

significant difference between employees in experience wise distribution. Regarding

workload, processing, convenience and security, real time gross settlement, chi-square

value is greater than the tabulated value. This proves that employees having different

experience also have different opinion regarding e-banking applications.

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Table 7.8

Position-wise Distribution


Coefficient

Chi-square df Level of

Significance




Processing of Transaction 0.470 19.721 7 Significant*

Convenience and Security 0.222 9.344 6 Not Significant Core Banking Solution 0.324 11.333 5 Significant*

Electronic Data Interchange 0.041 1.138 4 Not Significant Real Time Gross Settlement System

0.457 16.004 4 Significant*


Table 7.8 carries the data showing position-wise distribution of employees.

Categorically the position of employees has been divided as executive manager, assistant

manager, branch manager, clerk, cashier, front desk executive and senior officer. All the

employees have different opinion according to their position. Chi-square value is

significant in some of the variables which shows there exists a significant difference in

the opinion of employees regarding their workload, processing of transaction, core

banking solution and applicability of real time gross settlement system.

Table 7.9

Education-wise Distribution


Coefficient

Chi-square d.f Level of Significance




Processing of Transaction 0.503 12.081 7 Not Significant

Convenience and Security 0.302 7.239 6 Not Significant

Core Banking Solution 0.566 11.314 5 Significant*

Electronic Data Interchange


Real Time Gross Settlement System



Table 7.9 exhibits education-wise distribution of employees. Education-wise,

Kendall’s coefficient of concordance is significant in two out of seven variables.

Employees having less educational qualifications perceive high work load due to the

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technological advancement, whereas the employees with professional degree are able to

cope up with the electronic banking changes. Similarly, regarding core banking solution,

employees formed different opinion and in the other variables, value of chi-square is not

significant.

SECTION- B

7.5 Impact of E-banking on Operational Performance

This section carries the response data collected from the respondent employees.

Mean scores and standard deviation are calculated for different statements to find out

which key factors influenced the employees most to adopt e-banking and their impact on

operational performance.

Table 7.10

Impact of E-banking on Workload of Employees

Degree o Agreement

Statements Very

Large

Extent

Large

Extent

Not

At All

Little

Extent

Very

Little

Extent WAS

Rank

Increase in number of Hours 2 1 22 49 26 3.96 3 Increase in Decision-making Process 8 61 25 5 1 3.77 5 Division of Work 24 45 17 12 2 3.77 5 Increase in Productivity 37 42 13 7 1 4.07 1 Increase in Knowledge 29 54 13 1 3 4.05 2 Reduction in Processing Time 29 39 27 2 3 3.89 4 Team Performance 17 44 25 11 3 3.61 6 Minimization of Cost 3 19 19 38 21 3.55 7

Table 7.10 presents the impact of e-banking on workload of employees as well as

on their performance and productivity. To know this impact both positive as well as

negative statements are taken into account. A large number of employees believe that e-

banking with quick working techniques, more clarity about objectives, minimum cost

enhancement in their knowledge about the work has resulted in improving the

productivity of banks. However, employees do not agree with increase in number of

hours. There is a very little increase in working hours of their jobs. The employees

further observed that it has reduced the processing time of the transactions as no manual

work for entering and processing the data is required. The decision-making power of the

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employees has also improved to a large extent. So, as far as the workload of employees is

concerned, it has been reduced by division of work and less processing time.

Table 7.11

Impact of E-banking on Personal Development and Relations

Degree of Agreement

Statements Excellent Very

Good

Good Fair Poor

Weighted

Average

Score Rank

HR Policies of the Bank 23 35 25 15 2 3.62 4 Environment after E-banking 28 37 29 5 1 3.86 1 Training to Employees 21 30 41 7 1 3.63 3 Knowledge Upgradation 23 28 32 17 0 3.57 6 Relationship between Employee and Customer 19 36 33 10 2 3.60 5 Relationship between Employee and Employee 18 44 26 7 5 3.63 3 Guidance to Customer 16 40 31 10 3 3.56 7 Promptness in Providing Service 34 29 22 13 2 3.80 2

Table 7.11 reveals that there is a change in personal development and relations

after adoption of e-banking. Employees perceive that environment after introduction of e-

banking has improved a lot with weighted average mean score of 3.86. Secondly, it has

helped to provide prompt service (3.80) to the customers. Further employees are satisfied

with the current HR policies of the bank (3.62). The relations between employees and

customers (3.60) have further improved. The problems faced by the customers are

redressed quickly. No doubt, direct interaction with the customers has reduced

considerably, but due to quick answers to their queries the relations with them have

further improved.. Their knowledge has been continuously upgraded. So we draw the

inference that personal relations among the employees, and with the customers have been

good, and service providing has also increased due to fastest mode of e-banking.

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Table 7.12

Comparison of E-banking with Traditional Banking

Comparison Frequency Valid Per cent Cumulative Per cent

Far Better 43 43 43 Better 48 48 91 Same 9 9 100 Poor 0 0 Total 100 100

The comparison of e-banking with traditional banking has been shown in table

7.12. The response of the respondents is based upon four options, i.e., far better, better,

same, poor. No one agreed that e-banking is poor than traditional banking. However 48%

of the respondent employees believe that e-banking is better than traditional banking,

while 9% believe that they find no difference between e-banking and traditional banking.

So majority of the respondents believe that the service quality has certainly improved

with e-banking.

Table 7.13

Impact of E-banking on Processing Time of Transaction

Degree of Agreement

Statements Substantially

Increased Increased Stable Decreased

Substantially

Decreased WAS

Rank

Time Taken in Transactions Now 6 5 23 34 32 3.81 2

Responding Queries of the Customer 3 7 32 24 34 3.79 3 Complexity in Transactions 12 13 32 42 4 3.13 6 Time Taken in Making of Draft 5 6 26 23 40 3.87 1 Availability of Staff at Counter 7 13 16 34 30 3.67 4 Banking Hours 7 8 30 29 26 3.59 5 Knowledge of Staff about Bank’s Products 33 40 10 7 10 3.79 3

Table 7.13 exhibits the processing time of transactions in banks after the adoption

of e-banking. It was found that there is reduction of work in the banking activities after

e-banking. Time taken in making a draft has somehow decreased as indicated by the

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weighted average score (3.87). Further, the time taken in transactions now has decreased

gradually (3.81) as online transactions consume lesser time than manual transactions. The

knowledge of staff about bank products and responding queries to the customers has been

increased (3.79). As far as the availability of staff at counter is concerned (3.67), it has

also been decreased as customers need not to visit their branches regularly and can

transact through internet banking. Banking hours are somehow stable (3.59) after the e-

banking adoption. However complexity in the transaction (3.13) is stable which is neither

increased nor decreased. The analysis of this table shows that as far as processing time of

transactions after e-banking is concerned, there is reduction in it. As the transactions are

handled through computerized data based system, so manual work has been reduced to

the large extent.

Table 7.14

Employees Perception on Convenience and Security

Degree of Agreement

Statements

Very

large

extent

Large

extent

Not

at all

Little

extent

Very

Little

extent

Weighted

Average

Score Rank

Ease of Use 34 29 19 12 6 3.73 3 Reduction in Monotony of Work 19 42 28 11 0 3.69 4 Security and Privacy 26 45 19 7 3 3.84 1 Increase in Trust 19 49 20 11 1 3.74 2 Reduction of Risk 11 53 22 11 3 3.58 5 Job Losses 15 22 29 28 6 2.88 7 Reduced Interaction with People 11 8 21 34 26 3.56 6

Table 7.14 reflects the convenience and security impact of e-banking on the

efficiency and productivity of employees. Most of the employees perceive that the matters

regarding the problems of customer could be handled easily and fastly. Security concern

has also been sorted out with the highest average mean score of 3.84, employees can now

make online FD’s, large amount of fund transfer through real time gross settlement and

electronic fund transfer. It has increased the trust of employees to a large extent (3.74).

Employees also perceive that electronic banking has made their survival in banking sector

very easy and to a large extent, their working has become easy (3.73). Further they feel

that up to large extent there has been a reduction in their monotonous of work (3.69) as

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they perceive that working through e-banking is fast and interesting. Risk has been reduced

to a large extent as online transfer of fund is safe and secures (3.58). Interaction with the

people has not been reduced (3.56). There is no fear of job losses among employees

(2.88). In fact customers become closer to banks and their staff through fast information

processing, speedy recovery of funds and early grievances of their problems.

Table 7.15

Factors Influenced Bank to Adopt E-banking

Table 7.15 carries out the data showing the factors influenced the bank most to adopt

e-banking. Firstly, the bank employees perceive that it is the globalization in the banking

industry which influences the bank more for the e-banking adoption (4.02). Secondly, it is

the guidelines by RBI to pressurerize the bank to adopt e-banking (3.90). Thirdly, it is

competition from other banks which forced banks to adopt e-banking (3.74). Fourthly, it is

the requirement from the customer side as they want better products and services in the

banking sector (3.30). Fifthly it is the own willingness of the bank to adopt e-banking (3.16)

and cost effectiveness is at last of ranking (2.91). So it’s not the cost efficiency and reduction

but the globalization and competition and RBI instruction to follow e-banking.

Statements Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Rank 6 WAS

Overall

Rank

Own Willingness of the Bank

16 20 5 10 21 28 3.16 5

Guidelines by RBI 28 12 13 24 15 8 3.90 2 Globalization in the Banking Industry

18 22 28 14 12 6 4.02 1

Competition from other Banks

12 19 30 18 12 9 3.74 3

Requirement of the Customer

10 18 12 24 24 12 3.30 4

Cost Effectiveness 28 8 6 9 12 37 2.91 6

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Table 7.16

Employees Perception on Modes E-payment

Payment

Modes

Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Rank 6 Rank7 Rank 8 WAS Overall

rank

EFT 13 20 13 10 4 18 6 16 4.70 3 ECS Dr 13 7 23 9 6 10 25 7 4.47 6 ECS Cr 1 15 10 24 24 16 3 7 4.50 5 RTGS 21 3 11 23 17 5 9 11 4.62 4 EDI 4 5 6 17 19 17 20 12 3.67 8 Credit Cards

11 11 18 4 10 9 14 23 4.11 7

Debit Cards

15 26 7 6 6 11 16 13 4.76 2

ATM’s 25 12 13 8 11 4 6 11 5.11 1

Table 7.16 presents different payment modes adopted by banks after the introduction

of e-banking. The research shows that electronic banking offers number of modes for

payment. It provides fastest and effective mode of payment to the customers anywhere,

anytime. In different modes of payment, ATM is the fastest and easiest mode suitable to

customers. Because the customers can withdraw the money from ATM anytime, anywhere.

Debit cards and credit cards also play a vital role in making payments. Further electronic

fund transfer and real time gross settlement system play an important part in inter- bank fund

transfer. So ATM is the fastest mode followed by debit cards, EFT, RTGS, ECS (Cr), credit

cards and lastly EDI.

Table 7.17

Employee's Perception on Ways to Improve E-banking

Payment

Modes Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Rank 6 WAS

Overall

rank

Employee Education & Staff Training

37 21 13 11 6 12 4.36 1

Gearing up Grievances

10 25 20 24 15 6 3.73 2

Simplification of Rules

17 18 21 19 10 15 3.68 3

Up to date

Infrastructure 12 21 17 20 19 11 2.93 5

Greater Trust in Staff

11 8 15 14 33 19 3.54 4

Reduction in Complexity of Software

13 7 14 11 18 37 2.75 6

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Table 7.17 exhibits suggestions to improve e-banking. The study also suggested the

methods to improve the services of electronic banking. Though every bank is making the

best efforts to provide e-banking services, still there is a need to improvement. Most of

employees feel that there should be staff training and education to tackle the complex e-

banking problems (4.36). Secondly, employees want that their grievances should be

redressed quickly(3.73), so that they can work in a cool atmosphere. Thirdly, rules should be

simplified, it means any complexity in e-banking should either be reduced or should be

clarified (3.68). Fourthly, there should be greater trust in staff (3.54) and up-to-date

infrastructure should be provided with fast going technology modes (2.93) and last rank is

given to reduction in complexity of software (2.75). So complexity does not causes much

problem but employees perceive education and training as most important one, so banks

should make efforts to provide the same to employees.

Mann -Whitney Test

Mann Whitney test is conducted to compare the rank of two statements that is

described in table no.15 and table no.17. This test has been conducted to know that both

samples are taken from the same population. Both questions are divided in to two groups.

Group 1: For factors influenced the bank more to adopt e-banking and Group 2: For

suggestions to improve e-banking by assuming that both statements have been taken

from the same sample. Z value was calculated.

Table 7.18

Ranking on the basis of Mann-Whitney Test

Rank Sum A Rank Sum B Z value

41 37 0.320

Table 7.18 depicts that the value of Z is less than 1.96 so it is significant at 5 % level

that is 0.320 by proving the assumption that both ranks are taken from the same sample of

population. Box and whisker plot by group was used to define the minimum and maximum

of rank score in two groups. Group A is having range from 291 to 402 and group B from 275

to 436. So the minimum and maximum range fall more in Group B.

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Figure 7.1

Boxplot by Group

Variable: score

Median

25%-75%

Min-Max A B

group

260

280

300

320

340

360

380

400

420

440

460

score

Categorized Histogram

Variable: score

group: A score = 6*20*normal(x, 350.5, 44.532)

group: B score = 6*20*normal(x, 349.8333, 58.5471)

score

No of obs

group: A

240

260

280

300

320

340

360

380

400

420

440

460

0

1

2

3

group: B

240

260

280

300

320

340

360

380

400

420

440

460

The above table shows the categorization of two groups by histogram. Group A has

rank scores varying from 291,316,330,374,394,402 and Group B has rank scores varying from

275,293,354,368,373,436. So both scores are equally distributed among the population.

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Table 7.19

Employees Perception on Core Banking Solution

Degree of Agreement

Statements Strongly

Agree

Agree Neutral Disagree Strongly

Disagree

WAS Rank

Facilitate Centralized Data Base 31 24 30 6 9 3.62 5 Online Real- Time Data Availability 26 34 27 28 5 3.68 4 Any Branch Banking 31 38 27 1 3 3.93 2 Facilitative Launch of New Products 35 42 16 4 3 4.02 1 Shifting of Time Consuming Activities to Data Centre 34 35 14 8 9 3.77 3 High Load on Concentrated Branches 22 39 21 10 8 3.57 6

Table 7.19 exhibits core banking solution applicability among public and private

sector banks. The above data reveals that implementation of centralized banking solution

has emerged as one of the most cutting edge factor among the sweeping modernization

taking place in the banking sector. Large number of employees agree that e-banking

facilitates launching of new products, the reason being large number of customers possess

different modes of e-banking through tele-banking, internet-banking, phone banking and can

fulfill their requirement relating to online shopping, e-ticket booking, demat holding, interest

rate updates, share trading, buying and selling of mutual fund etc. The latest information

about all these is regularly upgraded through different modes of e-banking. Customers

through online fund transfer can transact through any branch of the bank. Besides customer

service point of view, implementation of CBS further enables the bank of a reliable

centralized data repository, which has facilitated modern technology tools like data ware

housing and data mining for business intelligence and analysis. Employees also perceive that

CBS has facilitated reliable decision support and executive information systems which

would be available on real time basis. However CBS has put a pressure on branches settled

in highly industrial areas. But the agreement of employees on major statements proves that

CBS provided the multi channel environment by interconnecting all branches of bank with

each other and by providing complete and reliable services round the clock.

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Table 7.20

Employee Perception on Electronic Data Interchange

Degree of Agreement

Statements Strongly

agree


Disagree

Weighted

score Rank

Reduces Inventory Holdings

29 45 16 7 3 3.90 1

Reduces Mailing Costs

23 43 27 1 6 3.76 3

Automatic Reconciliation of Remittance

23 40 28 8 1 3.76 3

Less Reliance on Human Interpretation

26 39 22 13 0 3.78 2

Enables Paperless Transaction

27 44 14 8 7 3.76 3

Table 7.20 carries the data showing impact of electronic data interchange on the

working environment of banks. As is shown in above table that EDI helped in converting

totally computerized based data interchange without any manual work involved in it. It has

facilitated the reduction in processing time. Employees agree with the statement that EDI

reduced inventory holding(3.90) as the data regarding customers could be kept in soft copy

form. So no file keeping record is required. Employees also agree on the term that e-

banking requires less human interpretations(3.78) and reduced the mailing cost(3.76) as

any information regarding banking products and services customers can be accessed

through websites of the bank and banks can also inform regarding any query through their

mailing address. Employees give a strong recommendation regarding this statement as this

is the most desirable benefit of e-banking that every transaction is processed through

technological modes, so no calculation is done by employees manually. It has also enabled

paperless transactions. No data record keeping in the form of papers, files is required.

Every information is stored in computers and data is recorded in form of PDF, excel and

word files and these all modes are paperless.

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Table 7.21

Employee Perception on Real Time Gross Settlement System

Degree of Agreement

Statements

Strongly

Agree


Disagree Mean Rank

Processing and Settlement on Real Time

30 41 20 4 5 3.87 1

Payment are Settled Transaction by Transaction

26 32 33 8 1 3.74 3

Eliminated Settlement Risk

27 31 30 10 2 3.71 4

Immediate Finality of Transaction

26 38 26 8 2 3.78 2

Settlement on FIFO Basis and Priority Wise

21 26 33 13 7 3.41 6

Immediate Credit And Transparent Pricing

28 38 18 7 9 3.69 5

Table 7.21 describes the processing of real time gross settlement system. RTGS is

primarily for online real times inter bank payment and settlement of large funds. In RTGS

processing is on real time basis (3.87). Employees give their agreement say that funds are

immediately transferred (3.78) without exposing themselves to risk. Because a lag between

the time at which information is made available to receiving banks and the time at which

settlement takes place may have important risk implications in large fund transfer systems.

Employees also give their agreement related to transaction by transaction settlement (3.74)

and risk elimination due to elimination of time lag between the statements (3.71). Further

credit is immediately transferred (3.69) with reduction in settlement risks and in a secured

manner and settlement is made on FIFO basis.

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Table 7.22

Employee Perception on Benefits of E-banking

Degree of Agreement

Statements

Strongly

Agree


Disagree

Mean

Scores Rank

Increase in Employee Productivity

38 44 13 2 3 4.12 1

Increase in Branch Productivity

32 44 21 2 1 4.04 2

Increase in Bank Productivity

34 30 32 3 1 3.93 3

Up to Date Information

42 36 8 12 2 4.04 2

Innovation in Products And Services

28 39 17 13 3 3.76 4

Rush of Customers in Bank

26 31 19 14 10 3.49 5

Table 7.22 mentions the overall impact of e-banking on operational performance its

adoption. Employees perceive that e-banking has improved the productivity with 4.12

mean. This conclusion has been drawn on the overall basis of their development in the

form of hour’s reduction, processing time, environment improvement, change in decision

making, reduction in monotony of work, interaction with people etc. Further e-banking has

increase the productivity of the branch (4.04) by reducing rush of the customers in the

bank, facilitates centralized data base, shifting of time consuming activities to data centre,

any branch banking concept and online real time availability of data. E-banking has also

improved the bank productivity (3.93) by reducing mailing cost, inventory holding,

reduction of settlement risks, promptness in providing services etc. Employees also

perceive that e-banking provides innovation in products and services (3.76) and rush of

customers has also been reduced to the large extent.

7.6 Statistical Difference between Public and Private Sector in Operational

Performance

T-test was applied to calculate the difference between public and private sector.

This test helps to signify the statistical difference between different variables and the

scope of further improvement through their mean values.

217

Table 7.23

Sector-wise Employees’ Perception on Workload

Statements Public Private t-value p-value

Increase in no. of Hours 3.90 4.02 -0.713 0.477 Increase in Decision Making Process

3.74 3.66 0.545 0.587

Division of Work 3.70 3.84 -0.693 0.493 Increase in Productivity 4.02 4.12 -0.536 0.594 Increase in Knowledge 3.98 4.12 -0.816 0.416 Reduction in Processing Time 3.72 3.62 0.990 0.890 Team Performance 3.60 3.62 -0.100 0.920 Minimization of Cost 3.60 3.50 0.450 0.653


Table 7.23 shows no statistical difference in any of the statement between two

sectors regarding the workload of employees in public and private sector banks.

However the mean score of private sector banks are higher than the public sector in

five out of eight statements. Insignificant difference implies that e-banking has equal

effect on the workload of employees in both the sectors.

Table 7.24

Sector-wise Employees’ Perception on Personal Development and Relations


HR Policies of the Bank 3.68 3.56 0.566 0.572

Environment after E-banking 3.86 3.56 1.621 0.108

Training to Employees 3.72 3.54 0.969 0.334

Knowledge up Gradation 3.54 3.60 -0.291 0.771

Relationship between Employee 3.62 3.58 0.205 0.883

and Customer

Relationship between Employee 3.64 3.62 0.098 0.922

and Employee

Guidance to Customer 3.64 3.48 0.819 0.414

Promptness in Providing Service 3.70 3.90 -0.902 0.369

** Values are significant at 5 % level

Table 7.24 represents knowledge enhancement and improvement in the

relationship with customers after e-banking adoption. Employees of both the sectors

perceive that e-banking has upgraded their knowledge, relationships and promptness in

providing the service. Regarding HR policies (3.68), environment (3.86), training to

218

employees(3.72), relationship(3.62) and guidance to customers(3.64); public sector

employees are more satisfied with e-banking adoption. This implies that public sector

banks are fastly adopting the modes of e-banking. Further public sector banks are also

giving excellent training to its employees to achieve all the efficiencies.

Table 7.25

Sector-wise Employees’ Perception on Processing of Transaction


Time Taken in Transaction Now 3.66 3.96 -1.342 0.182 Responding Queries of the Customer 3.56 4.02 -2.161 0.003**

Complexity in Transactions 3.30 2.96 1.579 0.115 Time Taken in Making of Draft 3.94 3.80 0.603 0.547 Availability of Staff at Counter 3.52 3.82 -5.306 0.000**

Banking Hours 3.60 3.58 4.38 0.000**

Knowledge of Staff about Banks Products

3.74 4.35 -2.416 0.017**

* *Values are significant at 5 % level

Table 7.25 displays the data regarding the processing of transactions in both

public and private sector banks. Regarding the processing of transaction, statistical

difference was found in four out of seven statements. Private sector banks are more

responsible and quick in responding the queries of customers(4.02) than public sector

banks(3.56) As regard the knowledge of staff about bank products(4.55); private sector

banks are highly satisfied with their knowledge up-gradation and perceive that e-banking

has reduced the availability of staff at counter(3.82) and has reduced the banking hours

to the large extent.

Table 7.26

Sector-wise Employees’ Perception on Convenience and Security


Ease of Use 3.80 4.66 -3.524 0.000**

Reduction in Monotony of Work 3.70 4.28 -3.185 0.001**

Security and Privacy 3.88 3.80 0.402 0.688 Increase in Trust 3.80 3.68 0.645 0.520 Reduction of Risk 4.12 3.58 2.878 0.004**

Job Losses 2.88 2.88 0.000 1.000 Reduced Interaction with People 3.63 3.50 0.463 0.644 ** Values are significant at 5 % level

Table 7.26 depicts that as per employee perception in three out of seven

statements, statistical difference found to be significant at 5% level. Private sector

employees perceive that e-banking services are easy to use (4.66) and has also reduced

219

the monotony(4.28). However, public sector banks have high mean score with regard to

reduction of risk in transaction(4.12) after e-banking adoption. Regarding the job losses

and interaction with the people, trust and privacy, there seems to be no statistical

difference in public and private sector banks.

Table 7.27

Sector-wise Employees’ Perception on Core Banking Solution


Facilitate Centralized Data Base 4.18 3.68 -5.069 0.000**

Online Real- time Data Availability 3.78 3.58 -0.909 0.365 Any Branch Banking 4.06 3.80 -1.38 0.168 Facilitative Launch of New Products 3.96 4.08 0.616 0.539 Shifting of Time Consuming Activities to Data Centre

3.74 3.80 0.239 0.811

High Load on Concentrated Branches 3.52 3.62 0.425 0.671 * *Values are significant at 5 % level

Table 7.27 reveals that the difference between item number 2,3,4,5,6 under

core banking solution is insignificant. The difference was significant at 5% level only in

one dimension namely ‘facilitating the centralized data base’ and public sector

employees seems to have more agreed upon it (4.18) in comparison to private sector

banks (3.68). In the all other dimensions, there seems to be no statistical difference.

Table 7.28

Sector-wise Employees’ Perception on Electronic Data Interchange


Reduces Inventory Holdings 3.92 3.88 0.200 0.842 Reduces Mailing Costs 3.74 3.78 -0.197 0.844 Automatic Reconciliation of Remittance 3.74 3.78 -0.214 0.831 Less Reliance on Human Interpretation 3.82 3.74 0.408 0.684 Enables Paperless Transaction 3.92 4.60 -2.999 0.003**


Table 7.28 carries the data showing EDI impact on both public and private sector

banks. E-banking has facilitated centralized data base and ensured the interchanging of

data electronically which has ensured reduction of paper transaction, mailing cost, less

reliance on human interpretation etc. The difference was significant in one variable in EDI

that is e-banking has ‘ensured paperless transaction’ and private sector banks employees

are strongly agreed upon it (4.60). The employees in public sector perceived that EDI has

reduced the reliability on human interpretation (3.82) as every single and small activity is

done through computer based terminals.

220

Table 7.29

Sector-wise Employees’ Perception on Real Time Gross Settlement System


Processing and Settlement on Real Time 4.02 3.72 1.442 0.152 Payment are Settled Transaction by Transaction

3.88 3.60 1.452 0.149

Eliminated Settlement Risk 3.84 3.58 1.261 0.210 Immediate Finality of Transaction 3.88 3.68 1.010 0.315 Settlement on FIFO Basis and Priority Wise

3.30 3.52 -0.947 0.346

Immediate Credit and Transparent Pricing

3.60 4.40 -3.305 0.001**


Table 7.29 depicts that as per the employees’ perception both the public and

private sector banks are performing well as far as real time gross settlement system is

concerned. It has improved the operational performance of the banks to a large extent. The

statistical difference was significant only in one statement related to the immediate credit

and transparent pricing. Private sector banks are having greater transparency in the pricing

as well as settlement and transfer of credit in the transactions.

Table 7.30

Sector-wise Employees’ Perception on Benefits of E-banking


Increase in Employee Productivity 4.08 4.16 -0.431 0.667 Increase in Branch Productivity 3.98 4.10 -0.713 0.477 Increase in Bank Productivity 3.78 4.08 -1.623 0.107 Up-to date Information 4.00 4.08 -0.370 0.712 Innovation in Products and Services 3.72 3.80 -0.366 0.715 Rush of Customers in Bank 3.40 3.58 -0.697 0.487 ** Values are significant at 5 % level

The data pertaining to the benefits of e-banking and their impact on the overall

working of both public and private sector banks has been presented in Table 7.30.

Employee productivity has increased more in private sector banks (4.16) than in public

sector banks (4.08). Branch productivity (4.10) is also high in private sector banks. The

impact of e-banking on the overall bank productivity (4.08), up-to-date information

(4.08), innovation in products and services (3.80), and rush of customers in the banks

(3.58); private sector banks has been greater than that of the public sector banks. This

shows that operational performance of private sector banks has improved a lot through

electronic banking and public sector banks lag behind in this regard.

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The perception of employees regarding the strategic and operational value of

electronic banking and its impact on their working conditions and performance of the

banks has been studied. It has been observed that both public and private sector banks

are providing electronic banking services to their customers under the guidelines of the

Reserve Bank of India and to retain their customers in the competitive financial market.

The employees also believe that these services are essential for the survival and growth

of banking sector. So, it is mandatory to provide such services, and employees also feel

comfortable in this e-banking environment. This perception is supported by the fact that

a large number of employees gave supportive and positive response regarding e-banking

usage in their respective banks and its impact on banks efficiency and productivity.

From an operational perspective, the study indicates that banks have realized

significant benefits with e-banking. Firstly, e-banking lowers the transaction per cost, thus,

contributing to the cost cut and helpful in making the cost cutting policies. Secondly, e-

banking offers a lot of services to customers like debit cards, credit cards, EFT, fund

transfer, bill payment, etc. Revenue generated from such services is termed as value

addition and profit generated for the banks. Thirdly, launching of more products like

internet, ATM, mobile banking, etc. has improved the quality of service and increased the

transactions in banks. It has been due to these benefits that banks are opting e-banking

services at a large scale. The customers demand more and more new e-banking services,

making it difficult for the banks to come up to their expectations. But with the co-

operation, adoption and fast learning process of the employees, e-banking has

revolutionized the system as it is easily adaptable, more responsive and has become more

customer-oriented which, in turn, has improved the operational performance and

productivity of the banks.

chapter- 7 impact of e-banking on operational...

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