E-BUSINESS AND BANKING ORGANIZATIONS
ABSTRACT
This paper focuses on the significance of e-business for the banking organizations.
Electronic business methods enable companies to link their internal and external data
processing systems more efficiently and flexibly, to work more closely with customers to
better satisfy the needs and expectations of their customers. E-business involves business
processes spanning the entire value chain: electronic transaction of bank with its
customers, processing request electronically, handling customer service, and cooperating
with business partners. E-business can be conducted using the Web, the Internet,
intranets, extranets, or some combination of these. A core component of successful ebusiness practice is assessing and redesigning how an organization provides value to its
customers.
Keywords: Intranet, Extranet, Data Processing System, Business process
INTRODUCTION
E business is the use of internet technologies to internet work and empower business
processes electronic commerce and enterprise communication and collaboration within a
company and with its customers, suppliers and business Stakeholders.
Information technology helps various banks to design and structure the organization to
increase the efficiency and quality through automated production processes to create tieups and partnership with support service providers to collect information, to adopt group
decision support systems for workers, to eliminate physical documents for routine
transactions.
The benefits of e-business for banks is in increasing revenue, reducing cost, improving
profit, improving quality, creating new opportunities and improving the overall structure
of organization.
Special technical standards for e-business facilitate the exchange of data between various
banks. E-business software solutions allow the integration of intra and inter banks
business processes.
E-business success depends on how well bank executives make such decisions while
crafting an e-business path. When crafting its e-business direction, management must pay
careful attention to three interlocking layers: e-business design, e-business application
infrastructure and e-business info structure
E-business Design
E-business Infrastructure
CRM
ERP
Value Proposition
Customer Segments
Customer Priorities
Organizational Capabilities
E-Procurement
Financial Control
EAI
Selling Chain
Scalability
Reliability
Hosting
Storage
Security
E-business Info structure
Business Intelligence
Supply Chain Management
Web Servers
Databases
Middleware
App Servers
ASP
The following tool devised by Professor Don Marchard shows different ways in which
information can create value for the organization.
C
Cuussttoom
meerr
aanndd m
maarrkkeett
vvaalluuee
M
Maannaaggee
rriisskkss
R
Reedduuccee
ccoossttss
C
Crreeaattee nneew
w rreeaalliittyy,, nneew
w
pprroodduuccttss,, nneew
w sseerrvviicceess,, nneew
w
bbuussiinneesssseess
The application of e-business for betterment of banking transaction is the basis of
winning a competitive edge over others for any banking organization.
LITERATURE REVIEW
E business creates value. chaffey &wood (2004) have emphasized much of organization
value created by e-business. The number of internet users is increasing which also
signifies that online purchasing is increasing. (Joines, scherer & scheufele). The rapid
increase is explained by the growth in the use of broadband technology combined with
change in consumer behavior (Oppenheim & Ward, 2006). Evolution of e-commerce has
been identified by Smith &Rupp (2003) as the significant contribution in information
revolution.
Customer satisfaction and customer retention are increasingly developing into key
success factors in e-banking (Bauer et al, 2005).
The following figure is rightly shown by Ali, Alawneh and Ezz, Hattab(2009)
OBJECTIVE




To explore the factors responsible for proper e-business functioning in the bank.
To test the impact of e-business on bank’s functioning
To explore the customer perception of e-business with respect to banks.
To explore business value created by banks.
METHODOLOGY
The exploratory studies have been made from the primary viz Employees of Banks,
customers of banks and secondary sources i.e. published sources, journals, company’s
official websites etc.
Sample size is of 200 out of which 100 is taken from customers and 100 are taken from
bank executives of mix of large and small banks. The mode of research chosen is
questionnaire. All 200 respondents have been served with questionnaire and their views
have been analyzed thereon.
The sampling method used in convenience sampling. (It is a type of non probability
sampling which involves the sample being drawn from that part of the population which
is close to hand. That is, a sample population selected because it is readily available and
convenient) The reasons of using this sampling type are twofold. First, it offers an easy
way to obtain the raw data for the further analysis. Second, it saves times and costs since
the respondents can be randomly selected.
The statistical technique used is “Hypothesis Testing” (i.e. Randomized block design)
and non parametric statistical measure i.e. chi-square.
DATA ANALYSIS
The information are gathered from banks executives and customers under the study are
analyzed so as to meet the requirements for objectives laid for the study.
Table 1: Profile of respondents (Bank Executives & Customers)
Demographics
Items
No. of respondents Percent
Gender
Male
125
1 .25
Female
75
.75
Age group
20-30
70
.7
31-40
54
.54
41-50
46
.46
> 50
30
.3
Education
Secondary
10
.1
education
Graduate
100
1.0
Post graduate
90
.9
Other
0
Occupation
Public sector
70
.7
Private sector
100
1.0
Self employed
25
.25
Other
5
.05
 Adequacy of IT professionals- In current scenario, experience counts when the fierce
competition amongst banks are seen. Experience of handling IT resources effectively.
 Technology readiness- The skills are aptly being utilized in the bank’s internal
operation which leads to better performance in banks.
 Bank Size- The size of bank matters when the value creation is important as ebusiness effective usage is possible when value is created. E-business is much more
than electronic transactions.
 Financial Resources- This limits any bank’s effective functioning as far as e-business
implementation is concerned.
 IT Strategy- IT strategy implementation leads to growth of bank’s routine as well as
innovative transactions.
 Competition intensity- The pressures of other competitors make the banks to perform
better.
 Regulatory support- The support from the environment is also one of the factor
affecting smooth functioning of e-business.
 Online revenues- Online revenues generated can have the positive effect on the
internal operations in banks.
The eight factors which affect the banks functioning is further taken as NULL
hypothesis for studying the impact of e-business on bank’s performance.
NULL HYPOTHESIS- There is a no difference between various factors on e-business
/ or various sources which affect bank performance.
Table 2:
Factors of e-business and impact on e-business
FACTORS/SOURCES OF E-BUSINESS
Impacts
Adequacy Bank Techno. Regulator Financial Competition IT
Online
Of
Of IT
Size readiness support Resources Intensity
StrategyRevenue
E-business Professionals
Internal
Operations
3
3
5
3
3
2
Coordination
10
and
Communication
Total
20
3
3
2
Sales, services
And
Marketing
5
9
9
2
6
5
3
5
4
3
10
20
4
3
9
Correction factor T ² / N = (100)²/24= 416.66
Sum of squares between impacts of e-business
(20)²/3 + (9)²/3+ (9)²/3+ (6)²/3+ (20)²/3 + (9)²/3+ (12)²/3+ (15)²/3=C
400/3+81/3+81/3+36/3+400/3+81/3+144/3+225/3= 416.66
4
12
Total
5
30
5
30
5
15
40
100
133.33+27+27+12+133.33+27+48+75= 416.66
482.66-416.66= 66
Sum of squares between factors of e-business
(30)²/8 + (30)² /8+ (40)²/8= C
900/8 +900/8+1600/8= 416.66
112.50+112.50+200-416.66= 8.34
Total sum of squares=
(5)²+ (5)²+ (10)²+ (3)²+ (3)²+ (3)²+ (3)²+ (3)²+ (3)²+ (2)²+ (2)²+ (2)²+ (5)²+ (5)²+ (10)²+
(3)²+ (3)²+ (3)²+ (4)²+ (4)² +(4)²+ (5)²+ (5)²+ (5)²=416.66
25+25+100+9+9+9+9+9+9+4+4+4+25+25+100+9+9+9+16+16+16+25+25+25=416.66
516-416.66=99.34
Residual or Remainder= Total sum of squares –sum of squares between factors of ebusiness-sum of squares between impacts of e-business
R=99.34-66-8.34
= 25
Degree of freedom for remainder
(c-1)(r-1)
(8-1)(3-1)
7x2=14
Table 3: Calculation of F value
Sources of
Sum of squares
df
Mean squares
F
variation
Between
66
11
6
3.34
factors of ebusiness
Between
8.34
6
1.39
.77
impacts of ebusiness
Remainder
25
14
1.79
Total
99.34
31
As the critical value of F (14, 11) with a=.05 is 2.53 which is less than the calculated
value of F=3.34, null hypothesis is rejected that there is no significant difference in the
usage of sources/factors affecting e-business by various banks. In other words the factors
have significant impact on e-business i.e. on internal operations, sales as well as
marketing and coordination/communication.
Banks use one or more sources to improve the e-business of the organization. The factors
have a overall impact on bank’s internal operations, besides sales and marketing, as well
as coordination and communication.
The customer expectation and satisfaction plays a major role in the continuity of business
value in a bank. The business value is created by the above sources1. Bank Size
2. Financial resources
3. Competition intensity
4. IT Strategy
5. Online revenue
6. Regulatory support
7. Technological readiness
8. Adequacy of technology professionals
‘E –business is the heart of every bank.’ Without this no bank can run successfully in
modern information technology enabled economy. The same question has been asked to
respondents whether e-business and bank performance are related or not
Null hypothesis has been set that use of e-business and bank performances are related and
alternate hypothesis is that use of e-business and bank performance are not related.
No. of
customers
Using EBusiness
completely
Not using ebusiness
completely
Total
No. of
customers
Using EBusiness
completely
Not using ebusiness
completely
Total
Table 4: Use of e-business on bank’s performance
Number of customers on improvement of
Small bank’s
Large bank’s
Total
performance
performance
25
25
50
25
25
50
50
50
100
Table 5: Calculation of expected frequencies
Number of customers on improvement of
Small bank’s
performance
25 ; 50 x
50/100=25
Large bank’s
performance
25; 50 x 50/100=25
Total
25; 50 x 50/100=25
25; 50 x 50/100=25
50
50
50
100
50
X² =0 , the critical value of X² at 1 degree of freedom at 5% level of significance is
3.841. The calculated value is less than the critical value, null hypothesis is accepted and
alternate hypothesis is rejected.
FINDINGS

The analysis elucidates that creating e-business application architecture is a
continuous process of integration, encompassing the enterprise’s entire operating
base applications & infrastructure to support the business.

Although e business provides flexibility in performing financial transaction, fast
and easy, however individuals are still reluctant to adopt the system because of
several reasons. First, the security and privacy are two elements in the perceived
risk. Without a proper knowledge of the system, individuals are not interested to
test the system.

The analysis using chi-square (Table 4&5) shows that the performance of bank and
e-business are interrelated.

The hypothesis testing (Table 2&3) used for the analysis of factors affecting ebusiness in banks indicates that there is no significant difference in the factors
which affect the functioning of banks.

Few customers see that usage of e-business improves the large and small bank’s
performance completely and others are in the opinion that less usage of e-business
in the banks can also lead to smooth functioning of banks. Our analysis of the paper
has rightly concluded that e-business is closely related with bank’s performance.
CONCLUSION
The result of this study shows the important determinants of e-business in banks. We
have focused our study on banks carrying out e-business that enabled transactions in
which individual consumers were involved. They called “B-to-C” (business-toconsumer), which are firms that directly and exclusively engage in transactions with
individual customers. This study meets the desired objective and concludes that majority
of customers are accepting e-business because of many favorable factors. Analyses have
concluded that e-business and bank’s performance are interrelated and factors have a
strong and positive effect on customers to accept e-business completely.
REFERENCES
Kalakota, Ravi; Robinson, Marcia, “E-Business 2.0 Roadmap for Success”
Chaffey, Dave, “E-Business and Ecommerce Management”
Bauer, H.H., Hammerschmidt, M. and Falk, T. (2005),“ Measuring the quality of ebanking portals”, International Journal of Bank Marketing, Vol. 23, No. 2, pp. 153-75
European Management Journal, Vol. 18, No. 3, pp. 312–327.
Perumal, V and Shanmugan. (2004). Internet Banking: Boone or Bane. Journal of
Internet Banking and Commerce, Vol. 19, No. 3.
Nedunchelian R, Jaffarulla A, “A study on the impact of information technology on the
functioning of select commercial banks in Chennai City”, international journal of
knowledge management and e-learning July-Dec2010, Vol 2, pp89-94
Oppenheim C , Ward L(2006), “Evolution of website for B2C Ecommerce”
Aslib proceedings, Vol 58, No.3, PP 237-60
Journal of consumer marketing, pp 90-108
Ali, Alawneh; Ezz, Hattab, ‘International Arab Journal of e-Technology’, Vol. 1, No. 2,
June 2009
Safeena, Rahmath; Abdullah ; Date Hema , ‘ Customer Perspectives on E-business
Value: Case Study on Internet Banking’- Journal of Internet Banking and Commerce’ ,
April 2010, vol. 15, no.1