CHAPTER ONE
INTRODUCTION
1.1
Background of the Study
In business field, IT Application is used widely by masses, and has numerous benefits to offer, especially in banking services. Nowadays, people are so busy in their work lives, that they don't even have time to go to the bank for conducting their banking transactions. All banks provide online banking facility to their customers as an added advantage. IT Application enables people to carry out most of their banking transactions using a safe website, which is operated by their respective banks.
The services available online vary from bank to bank. Most of the general services are on all banking websites such as –view account balances, pay bills, view records of transactions, transfer money to linked accounts with the same bank, transfer money to specially selected unlinked accounts, check interest in accounts, send money overseas,
Change your details, etc.
These are not all of the services available because each bank is different and in the competitive nature of banks they are always offering new features to attract customers. Banks create their banking interfaces and websites in a viewable and userfriendly manner, which enable customers to conduct their financial transactions with ease. All online banking services, provided by some banks, are free of cost.
The banking industry has been in Sri Lanka since 1939 with the introduction of the first Bank of Ceylon. Since then banking had taken a somewhat subdued approach in adopting the advances in computing. But in 1987 we saw a vast change taking place in the local banking sector. In 1988 Sampath Bank became the first bank to make use of the then-revolutionary networked ATM (Automated Teller Machine) to serve its customers and subsequently in 1989 the bank introduced the uni-bank system, enabling customers to have access to their money freely through any branch.
These two milestones set the pace in the local banking system as well as e-transaction history. The first credit card (Mastercard) was shortly launched thereafter in 1989,

opening the world’s stores to our local customers. These three products alone showed the way for the future as people in this country began to understand the benefits and convenience of these e-transactions.
However, many Sri lankan banks have been striving to compete with foreign banks by providing better services to meet new IT applications Banking service challenges.
With high rate of NPL (Non-Performing Loans) and economic crisis on-hand, many
Sri lankan banks are forced to reduce cost via reduction of human resources. Many experienced workers have retired with early retirement package offered by the bank.
Remaining employees with less experience have more work to do and work faster within shorter service hours. As a result, customers have to wait longer in line and suffer from error prone transactions at the over the counter services inside the banks.
The open and closing time of bank service hours also have been changed from between 8:30 a.m. to 4:00 p.m.
Therefore, Sri lankan banks have decided to initiate, explore and attempt to launch IT application in banking service as a mean to reduce waiting time, errors, costs, and improve customer satisfaction . The history of the Internet Banking developments in
Sri Lanka is not very long as it was only in 1999; the first domestic commercial bank started offering transactional level Internet Banking services. Considering the fact that
Internet Banking had been there merely for fifteen years, there is no reason why one cannot feel happy about the progress made so far.
According to the Central Bank annual report for the year 2001, six commercial banks operating in Sri Lanka, including five domestic banks, offer transactional level
Internet Banking facilities. In the competitive business environment of today, this number will not remain same for long. In addition, almost all the Sri Lankan commercial and specialised banks maintain advanced and updated websites for promotional purposes. Some commercial bank even provide their Internet Banking facilities through mobile phones, and this has developed to a stage where a customer can use a mobile phone (or handset, as it no longer a mere phone now) to communicate with the nearest ATM in a jiffy.

Their IT applications in banking services allow customers to access and inquiry about their own accounts and perform simple frequently asked transactions via the Internet from their computers at work or home at their convenience time. However, the feedback from customers in terms of satisfaction, complaints, and suggestions remain unknown and needed to be discovered in order to improve or disprove of IT application in banking services. The Sri lankan banks are in early stages of planning, developing and implementing their first IT application in banking services to their customers. Nowadays, Banks have a lot of competitors not only other commercial banks but also international bank that open in Sri lanka .It is better for customers to have more choice to select best brand of bank for them to satisfy their need but for banks, they have to find the ways to satisfy customer and keep competitive advantages above other banks.
Global Finance named HSBC Sri Lanka the country winner in the ‘Best Consumer
Internet Bank’ category for 2006. HSBC also won the regional award for the "Best
Website Design’ and ‘Best Information Security Initiatives’ from Global Finance, the latter award recognising the security initiatives implemented to protect online banking customers.
HSBC Sri Lanka launched Internet Banking in 2001 and is the leading bank in providing online security to Internet Banking customers. The bank provides additional security to its Internet Banking customers through high-level security measures in addition to industry standards such as a secure connection, username and password.
Winning banks were selected based on the following criteria: strength of strategy for attracting and servicing online customers, success in getting clients to use web offerings, growth of online customers, breadth of product offerings, evidence of tangible benefits gained from Internet initiatives, and website design and functionality.
HSBC Sri Lanka has shown continuous improvement in the strategies, services and most importantly, online security provided to enhance the customers online experience. Among the improvements made available since inception are online credit card and loan applications, fully automated e-statement registration, bill payments and third party transfers with no pre-designation requirements.

Two-factor authentication was also implemented at the end of 2005 with the introduction of the Security Token, which has contributed to greater customer confidence in the system.
Yet another value addition from "Number 1 Bank" in Sri Lanka. Bank of Ceylon is pleased to announce that "BOC Online banking "now facilitates companies to make
EPF payment contributions to Central Bank of Sri Lanka around clock/ 365days.
Through this service any company/ organisation in Sri Lanka which has a business account with Bank of Ceylon would be able to upload employee’s details to Central
Bank of Sri Lanka via "BOC Online Banking" facility. Prior to obtain this service companies/ organisations need to register with Central Bank of Sri Lanka. This registration is free of charge.
People’s Bank which has Sri Lanka’s largest branch network further enhances its customer convenience by enabling both mobile and internet banking to its customer base of over 13 million. The services enable the bank’s customers to have access on the go to all of the bank facilities without the hassle of having to travel to a bank branch. The improved phone and online banking services include utility payments, fund transfers, cheque transaction details and cheque book ordering to name a few .
With no registration or annual fee, People’s Bank customers can now enjoy both security and efficiency in carrying out transactions from wherever they are."Facilities available in both our mobile and online banking service comprise of all utility bill payments and Fund Transfers within the People’s Bank network and transfers to other banks for a nominal fee, all other facilities provided in mobile and online banking require no additional charge. We have also enabled the service of activating their SMS alerts to get updates on all transactions made, keeping abreast of all local and NRFC/RFC accounts, fund transfers."
Today banks cannot think about the success of banking system without the help of information technology. The main driver of this change is changing customer needs and expectations. Customers in Sri lanka no longer want to wait in long queues and spend hours in banking transactions. This change in customer attitude has gone hand in hand with the developments of Application of IT like ATMs, phone and net banking along with availability of service right at the customer doorstep. Therefore

customers are satisfied with the efficient application of information technology in bank. So this Study is needed to evaluate customer satisfaction of application of IT among the Sri Lankan banks
1.2
Statement of Research Problem
Customer Satisfaction is perception of customer about a company and in relation to whether his or her expectation is met or not (Praline, 2007).
Over the years a feeling of discontentment among customers and users of bank services developed gradually with regard to irregular rendering of banks statement delay in clearing and crediting changes lodged, failure to receive prior guidance and endless queues at the banking hall and numerous other frustrating and organizing experiences of customers generated dissatisfaction with the banks.
The profits declared annually by the bank generate some resentment to their customers and other uses of the service who believed nightly or through that the service they received from the banks are mostly inadequate and ineffective.
After introducing the IT applications in banks, these shortcomings are reduced which can be observed from the recent banking activities
In that sense, in Sri Lanka Many banks have also introduced internet banking, mobile banking value card credit card, and (ATM) debit card so as to eliminate necessary queues and facilitate easy transaction.
In order to give numerous IT applications to customers ,Many banks also invested huge capital on action plan of IT . Area offices and branches perform efficiently to increase level of customer satisfaction amoung the stiff competition of today’s business world

The use of technology forms the backbone for better results in banking. Benefits from technology are more than three times its cost. Today’s banking situation demands continuous innovation in order to meet the yearnings and aspirations of the everdemanding customers. Hence, banks need to roll out new products and services quickly and effectively, using latest cutting edge technology (Augusto, 2002). One of the benefits banks derive from electronic banking products and services delivery is improved efficiency and effectiveness of their operations so that more transactions can be processed faster and most conveniently, which will undoubtedly impact significantly on the overall customer satisfaction of the banks. The customers on the other hand, stand to enjoy the benefit of quick service delivery, reduced frequency of going to banks physically and reduced cash handling, which will give rise to higher volume of turnover.
When looking opposite side of IT , The traditional channels of offering banking services strongly focus on personal relationships. It is essential to maintain the human touch in customer services (Avkiran, 1999). Customers might be satisfied with the greeting, politeness, neatness of bank employees, ability to express concern for customers' needs, apologize for customer's complaints. The way of staff members serving customers are likely to influence customer satisfaction directly. Internet
Banking completely changes this aspect of customer and bank relationship since it is fully automated.
A traditional bank provides the opportunity to develop a personal relationship with that bank. At a local bank branch, employee can make a conservation to ask their customers' demand or help them to solve their problems, consult their financial decisions. It is increasingly personal contact with customers. The banker also will get to know the customer and his unique needs. Meanwhile, Internet Banking just

performs common transactions without any face-to-face contacts (Cho et al. 2007).
According to Broderick and Vachirapornuk (2003:333), customers do not have interaction with employees in person.
Internet Banking saves infrastructure costs for banks, banks introducing Internet
Banking just made little savings (Young, 2007). The reason is that any savings are offset by above average wages and benefits per worker. Internet Banking needs a more skilled labor force to run the more sophisticated delivery system. Moreover, costs related extra security measures need taken into consideration.
Wireless communications enables Internet Banking become more and more accessible. Although the growth of the Internet has been very fast, there is still a large population who do not own computers or mobile phones connect to the Internet. For example, different from developed countries, Internet connectivity is still a problem in some rural areas and several developing countries. Lack of computer literacy is one of the reasons Internet Banking is less developed (Walczuch et al., 2000).
Convenience is not only a key determinant of consumer satisfaction (Yang et al.,
2003) but also one of the dominating factors in transaction channel preferences
(Ramsay and Smith, 1999). In the field of Internet Banking, this is one of the most cited beneficial features because it offers more leisure-time when doing banking transaction (Devlin, 1995; Daniel, 1999; Liao and Cheung, 2002).
Despite the awareness of Internet Banking's benefit, users are still reluctant to use
Internet Banking. It is very common in developing countries to physically transfer money. The minority of customers are willing to use Internet Banking, whereas a large number of consumers of financial services are still uncomfortable to conduct their financial management online. The reason is that the use of new technology

depends on the technology acceptance of customers and the consumer habits in each country.
Security challenges banks to deal with customer fears in perform financial transactions using website as a channel (Aladwani, 2001; Sathye, 1999; Gerrard and
Cunningham, 2003). In the first quarter of 2005, 80% of global online attacks towards the financial services sector (IDC, 2005).
Customers tend to lack confidence in technology-based services delivery systems
(Walker et al., 2002). For example, they are unsure that the transaction was completed or the transaction is delayed or not. Also, they are afraid that slow response time after completing leads to a delay of service delivery. This can result in transaction risk
(Westland, 2002). This concerns mainly because of the quality of online services systems.
Reputation of the bank also significantly affects customer adoption of new technology-based service delivery (Aladwani, 2001). Interestingly, other researchers found that consumer is very much confident about their bank but they have less confidence in technology (Howcroft et al., 2002). Consumers express their concern that online banking is not likely to keep their information of transaction secure and private (Belanger et al., 2002; Salisbury et al., 2001). Therefore, it is essential for
Internet Banking banks provider higher degree of security that enables customers to trust internet banking at all times and places (Daniel, 1999, Black et al, 2001;
Polatoglu and Ekin, 2001; Suganthi et al, 2001; Gerrard and Cunningham, 2003
The problem here is: are customers really satisfying with these IT applications. In this connection, it is relevant to find out the impact of IT Application on customer satisfaction.

1.3
Research Questions

What is a significant relationship between application of information technology and customer satisfaction in banking sector?

What is the level significant impact of application of information technology on customer satisfaction in banking sector?

How to identify the significant mean difference between gender and customer satisfaction in banking sector?

How to find out the significant mean difference among the age, occupation, income level, education level, IT literacy level on customer satisfaction in banking sector?
1.4
Objectives

To identify the relationship between application of information technology and customer satisfaction in banks.

To find out the impact of application of information technology on customer satisfaction in banks.

To examine necessary indicators for the application of information technology and customer satisfaction of banks.

To suggest possible strategy for banks to build the customer satisfaction via IT application.
1.5
Significance of the study
The significance of the study cannot be over emphasize., The study enables the banking sector see the need for information and communication in the day to day running of its activities and contribution, Information and communication technology has on the efficiencies of its service to their customer‟s the study also provides an insight into the various ways in which Information and communication technology functions in bank as to increase its productivity. The study will also reveal the need for improvement in the use of various Information and communication technology so as to satisfy the demanding,

desires of their customers and compete with their counter parts in the banking industry.
This will also be beneficial to students that will carry out further research work and also to Government for policy making implementation
It is essential to carry out this study since this study can brings advantages to customers, investors, public and insurances providers, by showing how the determinants, which are service quality, perceived value, corporate image, complaint behavior, and role of agent affect customer satisfactions in conventional insurance sector in Malaysia.
Since the customer satisfaction is an indicator for the companies‟ performances, hence it is crucial to carry out this research. This study can impact the customers who are willing to purchase conventional insurance policies. When there‟s dissatisfaction occurred, it will leads to consumers‟ complaint (Singh and Widing, 1991), it is understandable that the particular firm do not meet the expectations of most of the consumers. Thus, the customers are able to make a judgement towards the company‟s performance after surveying all the targeted insurance companies and then the customers will probably able to pick the better insurance company. On the other hand, this study can bring benefits to investors. To ensure the investments have lowest risk, investors need evaluate the profitability of the insurance company. Thus, investors need the result of customer satisfaction of the insurance companies to determine which insurance company should be invested and will has better return because customer satisfaction may influence an insurance company‟s profitability through competitive ability. The insurance company which has higher customer satisfaction is belief to have higher competitive power, thus it will has higher profitability.
Apart from that, this study will be able to benefit to the public, community or social.
The aim for this study is to let public, community or social to know about the right to voice out or speak out the opinion freely through word of mouth to other people and even give feedback to the company if the services or product which provided by the insurance company does not meet the expectations. Another public, community or social have the right to choose which company want to visit. Thus, the company will have chances to improve and growing up become a stronger and perfect company.
1.5 Significance of the Study
1.5.1. Bank Managers
This study is intended to assist bank managers to understand the needs of their credit card customers. The bank managers will be interested in knowing what their customers expect to gain from credit cards when they seek to take up one. They will also seek to know what the customers use the credit cards for as soon as they receive them. The bank managers will seek to find out whether there is a difference between what the consumers expected and what they actually get. From this information they will be interested to find out whether consumers actually get more than they expected from credit cards and are, thus,

very satisfied or whether the credit cards do not satisfy the needs that the customer intended to be satisfied.
1.5.2 Credit card companies
Credit card companies will also be interested to know what needs their customers would like to satisfy with credit cards. This information will assist them in product design to make their product more suited to their customers‟ needs.
Retail outlets will also be interested to know what consumers would like to use credit cards for and how they can be able to benefit from the consumers‟ expectations. Retail outlets may use the information to determine whether it will be profitable to accept credit cards or not.
1.5.3 Marketing practitioners
Marketing practitioners will also be interested in knowing whether consumers are satisfied with the credit cards or not. They will be interested in knowing what the consumer needs are and how to satisfy this needs. Scholars will also find this information beneficial in studying consumer satisfaction.
First the study will be useful for Ethiopian commercial banks in order to see the impacts of e-banking on customers’ satisfaction in comparison with the ordinary mortar and brick banking system.
Second it helps in understanding what attitude customers’ have towards e-banking and what actions should the banks take in order to benefits from the opportunities and how to overcome the challenges.
Third study can be used by other researcher as a reference who wants to study further in this or related areas or to serve as a reading material for anyone who is interested. Last but not least this research will alert bankers tomorrow’s problems today in order to get the intended customers satisfaction as this service can be said it is at infant stage in the country.

The importance application of information technology in banking sector has become a booming factor for the economy of Sri Lanka. Since the financial sector is one of the largest income generators of the country’s economy, improving their profitability and services becomes importance for the development of the nation. Today banks play a vital role of the country’s economy by giving much needed competitive advantage for the industry. As a matter of fact, application of information technology in banking is sector is a very fast growing trend in developed countries, which they have been already implemented in most of the banks in USA, UK and in many parts of Europe.
Since the global access through Internet Banking Services are fast growing and expanding, the low usage rates on application of information technology exist in the
Sri Lankan banking industry. Thus should find appropriate remedies to overcome it.
Even though applications of information technology in banking sector are a common research theme around the world, most of those researches are based on the advantages of information technology, factors affecting the information technology and performance and risk of the information technology in the organizational context.
Since there have been several studies emphasizing the significance of Customer
Satisfaction in Banking industry there has been very few empirical researches that could lead to application of information technology and its impact on customer satisfaction. To the best of knowledge of the author of this document, the impact of application of information technology on customer satisfaction was not performed by any local researcher. So the proposed research becomes an important addition to the existing knowledge base on the application of information technology and its impact on customer satisfaction in Sri Lankan Banking context. From a practical point of view, the identification of impeding factors associated with application of information technology on customer satisfaction becomes extremely constructive for the initiators of Sri Lankan Banking sector. The existing knowledge base does not contain any local insights which might be considerably different from the findings of foreign organizations. So the findings from this research would be highly useful in formulating the Internet Banking Services in Banking industry to retain their valuable customers.
It is equally significant for bank executives and indeed the policy makers of the banks and financial institutions to be aware of application of information technology in

banks with a view to making strategic decisions. The study is also expected to give an insight on the state of application of information technology in banks as a competition to the commercial banks in sri lanka and the factors that have greatly influenced its growth. Players in the financial institution sector will find the study useful as they can use the findings to strategize on how they can mutually benefit from this development. Finally, this study adds to the existing literature, and is a valuable tool for students, academicians, institutions; corporate managers and individuals who want to learn more about application of information technology in sri
Lankan banking sector
1.6 Overview of application of information technology and customer satisfaction in banking sector
Introduction to IT applications in bank
The world is changing at a staggering rate and technology is considered to be the key driver for these changes around us. An analysis of technology and its uses show that it has permeated in almost every aspect of our life. Many activities are handled electronically due to the acceptance of information technology at home as well as at workplace. Slowly but steadily, the Sri Lankan customer is moving towards the application of information technology in banks. The ATM and the Net transactions are becoming popular. But the customer is clear on one thing that he wants netbanking to be simple and the banking sector is matching its steps to the march of technology.
IT applications in banks are a generic term for the delivery of banking services and products through the electronic channels such as the telephone, the internet, the cell phone etc. The concept and scope of IT applications in bank is still evolving. It facilitates an effective payment and accounting system thereby enhancing the speed of delivery of banking services considerably.
Need for IT applications in bank
One has to approach the branch in person, to withdraw cash or deposit a cheque or request a statement of accounts. In true IT applications in bank, any inquiry or transaction is processed online without any reference to the branch (anywhere banking) at any time. Providing IT applications in bank is increasingly becoming a

"need to have" than a "nice to have" service. The IT applications in bank, thus, now is more of a norm rather than an exception in many developed countries due to the fact that it is the cheapest way of providing banking services.
Banks have traditionally been in the forefront of harnessing technology to improve their products, services and efficiency. They have, over a long time, been using electronic and telecommunication networks for delivering a wide range of value added products and services. The delivery channels include direct dial – up connections, private networks, public networks etc and the devices include telephone,
Personal Computers including the Automated Teller Machines, etc. With the popularity of PCs, 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 generally referred to as IT applications in bank, although the range of products and services offered by different banks vary widely both in their content and sophistication.
Diagram of IT Applications In bank

E-COMMERCE
E FINANCE E MONEY
E BANKING
OTHER FINANCIAL
SERVICES AND PRODUCT
INTERNET BANKING
ATM (OTHER ELECTRONIC
DELIVERY CHANNELS)
Application of IT In Bank
MOBILE BANKING
IT applications products related with bank
Automated Teller Machine (ATM ): These are cash dispensing machine, which are frequently seen at banks and other locations such as shopping centers and building societies. Their main purpose is to allow customer to draw cash at any time and to provide banking services where it would not have been viable to open another branch e.g. on university campus.
An automated teller machine or automatic teller machine ( ATM ) is a computerized telecommunications device that provides a financial institution's customers a method of financial transactions in a public space without the need for a human clerk or bank teller. On most modern ATMs, the customer identifies him or herself by inserting a plastic ATM card with a magnetic stripe or a plastic smartcard with a chip that contains his or her card number and some security information, such as an expiration date or CVC (CVV). Security is provided by the customer entering a personal identification number (PIN). Using an ATM, customers can access their bank accounts in order to make cash withdrawals (or credit card cash advances) and check

their account balances. Many ATMs also allow people to deposit cash or checks, transfer money between their bank accounts, pay bills, or purchase goods and services.
Some of the advantages of ATM to customers are:-
• Ability to draw cash after normal banking hours
• Quicker than normal cashier service
• Complete security as only the card holder knows the PIN
• Does not just operate as a medium of obtaining cash.
• Customer can sometimes use the services of other bank ATM’s.
Mobile Banking: Mobile banking comes in as a part of the banks initiative to offer multiple channels banking providing convenience for its customer. A versatile multifunctional, free service that is accessible and viewable on the monitor of mobile phone. Mobile phones are playing great role in Sri lankan banking- both directly and indirectly. They are being used both as banking and other channels.
Features of mobile banking
Using our Mobile Banking service, we can avail of a host of features at your finger tips
• Perform funds transfers
• Get your balance details
• Obtain your last 3 transaction details
• Request a cheque book
• Stop a cheque payment
• Enquire cheque status
• Request an account statement
• Get Fixed Deposit details
• Request for I-PIN generation
• Request a cheque book
Internet Banking: The advent of the Internet and the popularity of personal computers presented both an opportunity and a challenge for the banking industry.
For years, financial institutions have used powerful computer networks to automate million of daily transactions; today, often the only paper record is the customer’s receipt at the point of sale. Now that their customers are connected to the Internet via personal computers, banks envision similar advantages by adopting those same

internal electronic processes to home use. Banks view online banking as a powerful
“value added” tool to attract and retain new customers while helping to eliminate costly paper handling and teller interactions in an increasingly competitive banking environment.
Advantages of E-Banking:-
• Convenience - Unlike your corner bank, online banking sites never close; they’re available 24 hours a day, seven days a week, and they’re only a mouse click away.
With pressures on time and longer travelling periods, more and more people find it tiresome waiting in queues. People want flexibility, and Internet banking offers just that.
•
Ubiquity - If you’re out of state or even out of the country when a money problem arises, you can log on instantly to your online bank and take care of business, 24\7.
•
Transaction speed - Online bank sites generally execute and confirm transactions at or quicker than ATM processing speeds.
•
EfficiencyYou can access and manage all of your bank accounts, even securities, from one secure site.
•
Effectiveness- Many online banking sites now offer sophisticated tools, including account aggregation, stock quotes, rate alert and portfolio managing program to help you manage all of your assets more effectively.
•
Cheaper alternative : - With increasing competition, it seems to be the cost factor that is driving banks to offer the facility. The Internet is still a very cheap alternative to opening a physical branch, and most of the push seems to be coming from the supply side. The costs of a banking service through the Internet form a fraction of costs through conventional methods.
Disadvantages of Internet Banking
• Start-up may take time -In order to register for your bank’s online program, you will probably have to provide ID and sign a form at a bank branch.
•
Bank site changes- Even the largest banks periodically upgrade their online programs, adding new features in unfamiliar places. In some cases, you may have to re-enter account information.

Customer satisfaction
Customer satisfaction, a business term, is a measure of how products and services supplied by a company meet or surpass customer expectation. It is seen as a key performance indicator within business and is part of the four perspectives of a
Balanced Scorecard. In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy.
Organizations need to retain existing customers while targeting non-customers;
Measuring customer satisfaction provides an indication of how successful the organization is at providing products and/or services to the marketplace. Customer satisfaction is an abstract concept and the actual manifestation of the state of satisfaction will vary from person to person and product/service to product/service.
The state of satisfaction depends on a number of both psychological and physical variables which correlate with satisfaction behaviors such as return and recommend rate. The level of satisfaction can also vary depending on other factors the customer, such as other products against which the customer can compare the organization's products.
Satisfaction with banking services is an area of growing interest to researchers and managers. The commercial banking industry like many other financial service industries is facing rapidly changing market. New technologies, economic uncertainties, fierce competition and more demanding customers and the changing climate have presented an unprecedented set of challenges. Intangible assets, particularly brands and customers, are critical to any organization and in today’s competitive environment relationship marketing is critical to banking corporate success.
Banking is a customer oriented services industry. As we know that customer is the king therefore customer is the main focus and customer service is the differentiating factor. Banks have also started realizing that business depends on client service and the satisfaction of the customer and this is compelling them to improve customer service and build relationship with customers. With the current change in the functional orientation of banks, the purpose of banking being redefined. The main

driver of this change is changing customer needs and expectations. Customers look for a relationship with bank when they receive benefits from its services. The banking industry like many other financial service industries is facing a rapidly changing market, new technologies, economic uncertainties, fierce competition and more demanding customers and the changing climate has presented an unprecedented set of challenges .
The banking industry in Sri Lanka has undergone dramatic change post war environment. Banks have also starts realizing that business depends on client service and the satisfaction of the customer and this is compelling them to improve customer service and build relationship with customers. With the current changes in the functional orientation of banks, the purpose of banking is being redefined. The main driver of this change is changing customer needs and expectations. Customers in Sri lanka no longer want to wait in long queues and spend hours in banking transactions.
This change in customer attitude has gone hand in hand with the developments of
ATMs, phone and net banking along with availability of service right at the customer doorstep. Further the world class banking experience provided by private and multinational banks with their ever evolving products and services has raised the bar of customer expectations. With the emergence of universal banking, banks aim to provide all banking products and service offering under one roof and their Endeavour is to be customer centric. The Sri lankan banking industry is also embracing technology rapidly. Big players among the private and public sector banks are reengineering and automating their core banking processes.
1.7 Limitations of the study
The following limitations were observed during the research on finding the impact of application of information technology on Customer Satisfaction
Geographical:
The study was limited to Sri Lankan private commercial banks and state banks with local exposure. Therefore it may not be possible to generalize the findings to other countries and foreign banks.
The information gathering was carried out through specific persons mainly in specific branches of the selected banks. Hence it did not permit to carry out a wide study by

covering substantial persons and geographical locations in the country of the selected banks in Sri Lanka.
Expectation:
The study was limited to Internet Banking users where to identify whether their expectations mainly based on Internet
Banking Services in Sri Lankan Banking context
Industry:
The study was limited to the Banking industry of Sri Lanka. Therefore the findings cannot be generalized to other industries such as manufacturing, service sectors, operations etc.
Time Frame:
The internet users who have deviated from Internet Banking Services for the last one year were considered for the survey.
1.6
Methodology
1.6.1 Data collection Method
Primary data are collected using structure questionnaire. Questionnaires will be distributed by the researcher individually and by e mail. Each completed will be checked immediately, and will be entered for data analysis. The questionnaire of this research is totally based on the above conceptual Framework. As state earlier the conceptual framework is categorized into two main parts. The Part I consists of customer attributes and Part II the elements of Application of information technology
(AIT) and Customer Satisfaction (CS).
1.6.2 Sample size
Sample size refers to the number of elements to be included in the study (Malhothra
2007). Once the target population of the study is defined, it is required to decide the sample size for the study. Number of sampling element in the present study consisted of five banks .There are 500 customers will be surveyed to collect data to identify the impact of IT application on customer satisfaction in banks.
1.6.3 Data analysis
Data analysis in this study consists of both descriptive statistical analysis and inferential statistics in addition to test of reliability there and Validity of the

measurement scales. The statistical package for social sciences (SPSS) Version 21 will be used for data analysis.
1.7 Validity and Reliability
1.7.1 Validity
The purpose of the pilot test is to refine the questionnaire so that the respondent will be no problem in answering the questions and no problem in recording the data in addition it allowed the research to obtain validity and the likely reliability of the data will be collected initially the researcher will be asked the experts to comment on the representativeness and suitability of the questions. This established the content validity (Mitchell 1996) as part of the pilot test researches will be checked the complete pilot questionnaire to ensure that the respondents have no problems in answering which enhances the face validity.
1.7.2. Reliability
The reliability of the questionnaire is concerned with the consistency of response of the questions. (Mitchell 1996). Internal consistency is will be used to assess the reliability of the questionnaire it involves correcting the responses to each questions in the questionnaire which those to other questions in the questionnaire. It therefore measures the consistency of response across either all the questions or subgroups of the questions from the questionnaire.
1.8 Chapterization
Chapter one describes the Background of the study, Research problem, Objectives of the study, Significance of the research. Chapter two reviews the relevant theoretical frame work Literature where academic and practitioners have put forward various views. Chapter three describes the Conceptualization framework,
Definition of concepts and variables, Hypotheses, Methodology and
Operationalization of the key concept variable. Chapter four analysis and discusses the Data gathered and Presented in the previous chapter by using various models described under literature review. The fifth chapter of this study will present the findings and discussions of analyze data and implications of the findings to the existing knowledge related to the present theme. Further it represents conclusion and

presents recommendations wherever appropriated. Finally it will make the suggestions and direction for further studies.
1.8 Chapter Summary
Having illustrated the background of the study it presents the blueprint for finding answers to the research problem. It also outlines the approaches used and the steps taken, as well as the enhancement of the reliability of the methods applied.
The statement of the problem illustrates at what extent application of information technology impact on customer satisfaction in srilankan banking sector. The objective of the study basically focuses under five key areas on impact, relationship, most influence dimension, significant difference, and reducing gap between the application of information technology and customer satisfaction. Also it considers six hypotheses regarding the objectives.
The significance of the study elaborates the importance of the application of information technology in Sri Lankan Banking sector and the high usefulness of formulating the application of information technology in the banking industry to retain their valuable customers. Overview of application of information technology in banking sector illustrates IT application in banka ,need for IT application , IT applications products related with bank, diagram of IT application , IT application products related with bank .automatic teller machine mobile banking, Internet banking, advantages of e-banking , this advantages of Internet banking , Internet banking in Sri Lanka and The limitations of the study are mainly focused on areas such as geographical, expectation, industry and time duration