Open Access Research Article
ONLINE BANKING IN INDIA: USER BEHAVIOURS AND DESIGN GUIDELINES
Published Paper
Article Details
ONLINE BANKING IN INDIA: USER BEHAVIOURS AND DESIGN GUIDELINES
AUTHORED BY - PRERNA RAJENDRA KOKARE
LLM 2ND YEAR
MODERN LAW COLLEGE, PUNE-05
ONLINE BANKING
IN INDIA:
USER BEHAVIOURS AND DESIGN GUIDELINES
Abstract:
This
paper documents online banking trends, behaviors and expectations of Indian
consumers and banks. It is based on
excerpts of a large industry case study of users from 4 leading banks. While bank’s view online banking essentially as
a technology solution, it is a relatively new area for Indian consumers and not yet self-supporting.
Being a savings-based culture still, Indian consumers are cautious
about their financial
assets. They are also relatively recent entrants to internet-based services.
Design of these systems must therefore be based on an understanding of
these users’ outlook and priorities
through task centric, security assured
and service-oriented solutions
minus the
technological
challenges. Design lessons suggest viewing online banking not just as a convenience alone anymore but beyond it, to provide
service, simplicity, and security. This will create satisfied online banking customers
and therefore profitability for the bank. Keywords: Banking,
online banking, user perception of banking,
banking in India
Introduction
The
Internet has revolutionized the way we live, shop, entertain and interact and the way we save and invest. Internet
banking arrived in India in the late 1990s. ICICI
was the first bank to champion its usage and introduced internet banking to its customers in 1996. With lower
internet costs and increased awareness about
electronic media, online banking established itself only in 1999. Other
banks followed suit, including HDFC, Citibank, IndusInd,
and the now redundant Times Bank. Internet banking changed both the banking
industry as well as banks’ services
to its customers. ‘Anywhere
banking’ came to be recognized
as an
opportunity also for differentiated and competitive services. Ancillary
online services like checking account
status, fund transfer,
ordering demand drafts,
loan applications, credit card verifications, shopping
portals etc. as well
as not requiring a visit to the
branch during office hours were viewed as high-value offerings and increasingly started to become
a necessity rather than a
service.
Once
banking institutions recognized the low processing cost per transaction via the internet, they began viewing online
banking as an extension of the bank rather
than as an add-on service. The motivation to introduce online banking
now also included new business potential, additional funds from new and existing
customers, expansion in geographical reach, image as a tech-savvy bank especially if targeting the youth and the threat of customers
shifting loyalty if they did not
introduce it. Nationalized banks initially viewed online banking as insecure and counterintuitive and were
therefore hesitant. But eventually, SBI, Canara
Bank, Allahabad Bank, Punjab National Bank, Bank of Baroda, Syndicate Bank and others introduced it. SBI
launched internet banking in 2001 and experienced good response. In general, internet
banking saw an exponential rise in
users. Today, banks encourage their customers to use online banking. Besides cost and revenue impacts, this paradigm
shift is because they also recognize that self-control
transactions have greater potential for customer satisfaction and retention. Online banking has thus come to
be among essential banking services. The
approach to adopting online banking however is often to merely stay abreast of industry
and technology and online
banking is becoming a separate business unit driven by technological
possibilities. The user often has minimal place in such an approach as evidenced by non-human centric experiences
that flourish. However, the cultural
and organizational shift needed by Indian banks to draw old customers into this new banking channel
as well as to draw new customers requires
a user centric focus. But how much have banks paid attention to the user? How is the overall experience and how do
customers perceive their bank as they struggle
unaided in the comfort of their homes? How cognizant are banks that customers silently leave after getting
frustrated? Do they measure how much revenue
they are losing because of a technology focused approach to online banking?
How do Indian consumers behave in this dichotomy between technology
barrier and convenience?
Objectives of the Study:
To
study documents online banking trends, behaviours and expectations of Indian consumers and banks. Being a
savings-based culture still, Indian consumers are cautious about their financial assets. They are also relatively
recent entrants to internet-based services. Design of these systems must therefore be based on an understanding of these users’ outlook and
priorities through task centric, security assured
and service-oriented solutions minus the technological challenges. Design lessons suggest viewing online banking
not just as a convenience alone anymore but beyond it, to provide service, simplicity, and security.
Research Questions
|
Non-Users
|
|
Non- Transactors
|
|
Transactors
|
|
Inhibited
about security of sensitive information
|
|
Felt lost in content jungle
|
|
Looked
for error-free transaction experience
|
|
Found the entire process complex
|
|
Concerned
about online security
|
|
Valued
advanced options that saved time
|
|
Absence of an online demo for initiation is a
roadblock
|
|
Did not
find clear directions
& action points
|
|
Wanted
online, the entire spectrum of
services of the bank
|
Issues of different types of users with online banking
Broadly,
all users emphasized 3 major attributes they considered important for their
online banking experience:
Simplicity, Security, Service.
Simplicity:
Users
and non-users expect online banking to be further simplified than what they see today. Some expectations:
·
Better link label clarity suggestive of action
required
·
Better navigation that highlights and presents
relevant information in context and at the right time needed
·
Better content partitioning according to
popularity and priority of action
Security:
Non-transactors and non-users reported
that they did not transact online because:
• concerns about the security
of their banking information is not fully
addressed
• technical glitches
and unreliability create confusion and anxiety
• additional security
gateways were absent
Service:
Almost all transactors demanded better service.
They wanted:
• More services to be available online
• Better and faster customer
support channels like online chat to
solve banking hurdles
• Innovative and intuitive interface
Indian Banking Industry and Online Awareness of its User Base
A
large chunk of the Indian banking industry still belongs to the public sector banks having the most extensive network of
physical branches. These are followed by large private
banks and lastly by multinational banks (MNC) who have
the smallest physical network and therefore their online banking needs to be the most developed and able to address
user needs without requiring human intervention.
This is depicted in Figure
1. The fact that most government organisations have their payroll
accounts with public sector banks contributes significantly to the large customer bases of these banks. Traditional public sector
banks
have existed for many years and have serviced diverse income groups. This has resulted in their customer base
being huge as well as belonging to a wider demographic representation, given India’s heterogenous population as well.
However,
most of the traditional customers prefer to bank with a ‘bank with a human touch’ and prefer public sector
banks as they form an emotional relationship
with their bank personnel, which is not really encouraged by private sector
or multi-national banks
The
new generation which has been banking for less than a decade prefers faster transactions and more professional
relationships as compared to the traditional
customer. For them, opening a bank account is incidental and connected
to their direct deposit salary
accounts. The private sector bank has captured the corporates and IT sector as compared to the public
sector bank. As a result, banks in the public
sector tend to have a huge user base, but very few of their customers have the technology orientation or the
inclination to use electronic media for banking. This is depicted in Figure 2. Therefore, the awareness of
customers of public sector banks
about online banking as an active banking tool is relatively lower. To tap this type of user base that has an
inherent barrier to and not an obvious need for internet usage, just adding an
internet banking channel to a bank’s
lists of services may not be enough of an incentive.
A streamlined, simple and customer satisfaction-oriented
approach to service novice users only can help banks achieve better
internet banking penetration.
Banking Industry Perspective and Approach to Users
Based
on our client interactions before and after the studies, we found that banks view online
banking as an important medium of servicing its customer base.
While they recognize it as a direct cost savings, they do not necessarily
recognize it as a point of service
and hence do not give it the attention they give customer service at the branch where they take
great pains to satisfy the customer, and to address the smallest of queries common in live banking. A simple example
is their changing banking
terminology without realizing its impact on the customer that can leave an average customer
baffled. A label
like ‘Emonies National
Funds Transfer’ is very confusing for the customer. Changing it to a
simpler ‘Funds Transfer’ reduces
confusion and allows the customer to complete their transaction. Another example
is use of marketing gimmicks resulting in loss of usability. If
other banking portals have a link called ‘SMS Alert’, then coining a similar link called ‘InstaAlert’ only
serves to create confusion. Many banks have now
understood that online banking is here to stay and that they need to upgrade and enhance their offerings for simple
solutions and desired security to retain and
attract customers. They also need to recognize that they must offer the
same convenience and service that
people have come to expect at the branch as well as in other areas of their life like shopping online. Payment for
shopping too requires users to
invariably go through the online banking portals. Banks need to also understand that transition of a new user
to an advanced one is a gradual process that
needs to be supported by encouraging users to explore with confidence by offering intuitive processes and
user-friendly nomenclature. Only when users feel confident with the system, will it be easy for them to explore
new services through
cross-sell banners and other means that are popular and successful in banking. Banks are however yet to regard
online banking as a ‘person-less’ service
counter where the user is left to fend for himself/herself amidst stiff usability barriers and realize that it
costs them. The attention they accord their other
points of service are therefore deficient in online. Setting up the hardware for online banking, which is viewed as the
end point for the bank is often the beginning
from a user’s perspective. That a methodical user-centric rather than a technology-centric design approach is a
systemic investment that creates satisfied customers, reduces
costs, and increases revenue is yet to be accepted by the banking industry.
Design Lessons and Recommendations:
Banking
is a task-focused activity and also deals with people’s money. Both need ease of use and psychological comfort of
the user as fundamental requirements, for
example, giving feedback like ‘your money will be transferred in 24 hours’. It specifically needs a clear task flow,
clarity of language and terminology and always
support available. Further, if a task completion process is intuitive and logical, the user is more likely to gain
confidence and increase usage of the internet
for all their banking needs, thus increasing revenue potential for the bank. An online demo of the service is an easy
way to address both the task centric nature
of banking as well as address the comfort level of the wide variety and vast numbers of novice users. An example of
customer focused online banking would be
specialized banking for the Islamic community. It is a huge business opportunity. To capitalize on that
opportunity, banks must understand and design
for highly specialized user behavior, expectations, and critical aspects
of the various Islamic cultures. Many
Islamic cultures are exceptionally collective in decision-making and tend to be more concrete and risk averse.
There is a wide variety and large numbers
of novice users among Indian online banking customers
today. Their view goes beyond the novelty of online banking. They expect their experience to be like what
they get at a service counter. The unfamiliar virtual
experience cannot be completely different from their familiar physical experience. Indian users have shown their readiness to
accept online banking as a sales
channel by purchasing through cross selling online. But this is possible only if they can navigate the
bank site. Banks need to view and reflect this
through thoughtful designs of their offerings. While banks have clarity of their market segmentation, they must
progress to behavior-based segmentation and user-centred methods and move
beyond predesigned technology
solutions.
Online banking design must create a 'quick in and out' experience,
ensure success in transactions users undertake, arouse curiosity, and attract the customer
to explore. Studying users,
defining user types, benchmarking designs and testing for ease of use
are critical for this. Specific needs therefore are clear task flows,
brevity and clarity of language and terms, basic functions made obvious to average users and support available at all
times. Besides short-term solutions, the long-term
strategy needed is to not just create but also measure user performance with the design to ensure it is
self-evident and transactions are truly self-
controlled.
Conclusions
It
is clearly in the interest of banks to encourage their customer base to use
online banking. Current designs of online banking systems do not address users’ needs and expectations of online banking.
User-centred design methods
can achieve this. Internet, phone, paper, statements,
ATM and visit to the branch all need to appear
as one holistic experience [8] for the customer who is ‘anybody. In India, banking, like several other transactions,
continues to be relation-based and in need
of human assurance and intervention, technology notwithstanding. Hence
this is particularly significant.
True benefits will be seen when banks use this technology to offload customer
service costs and increase sales by maximizing self-service.
As 21st century banking users entrust the care of one of their most
important assets to cyber space, a
seamless, stress free and successful experience is essential. Design with users’ success as focus, content
understandable by ‘anybody’,
supported with demos and help to reduce intimidation, will justify investment in online through
increased usage by satisfied customers.
Article Information
ONLINE BANKING IN INDIA: USER BEHAVIOURS AND DESIGN GUIDELINES
Authors: PRERNA RAJENDRA KOKARE
- Journal IJLRA
- ISSN 2582-6433
- Published 2023/05/26
- Volume 2
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
- Access Open Access
- License CC 4.0
All research articles published in International Journal for Legal Research and Analysis are open access and available to read, download and share, subject to proper citation of the original work.
Disclaimer: The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of International Journal for Legal Research and Analysis.