Internet Banking Essay

3393 words - 14 pages

Impact of E-Banking on Capital Bank and local area banking industry in India

Coursework- Technology in Business and Society
Shahbaz Singh Samra - B022337

Executive Summary

The task commissioned was to assess the application of a technology to support organizational change. This report concentrates on how electronic banking (e-banking) has contributed to Capital Local Area Bank (CLAB) and the local area banking industry in India. Focus lies upon CLAB’s operations and how the bank incorporated e-banking to revolutionize and set standards for transparent and efficient banking in the state of Punjab.

E-Banking gives strategic value to the organization and the industry because it ...view middle of the document...

Door-to-door marketing is still the most effective marketing technique for banks to market their products in India.

Given the research and findings, it is recommended for CLAB and other local area banks in India to employ e-banking because primarily it adds value to the organisation. E-Banking is the new ‘in thing’ in the banking world in India. Therefore, local area banks would loose ground to their competitors if they do not swiftly adapt to the new trend of e-banking.


Technological developments have revolutionized functioning of banks and delivering banking services in India over the past decade. Parekh and Sambamurthy (n.d.) insist that technology today has become synonymous with banking and Indian banks have put in place a fairly strong infrastructure to leverage its benefits. IT has made a visible difference in the functioning of banks and conduct of banking operations.

With the globalization trends, it is difficult for any nation big or small, developed or developing, to remain isolated from what is happening around. For a country like India, which is one of the most promising emerging markets, such isolation is nearly impossible.
What is a local area bank?

The Reserve Bank of India (RBI), the governing bank of India, introduced the concept of local area banking in August 1996. According to RBI (2002), local area banks were set up with the aim of enabling the mobilization of rural savings by institutions and make them available for investments in the local area. The local area banks were expected to bridge the gaps in credit availability and strengthen the institutional credit framework in the rural and semi-urban areas. CLAB was established in Punjab in January, 2000.

This report critically evaluates the impacts of e-banking and how it has resulted in the benefit of the local area banking industry in India. Challenges faced in implementing e-banking in the banking sector, how the challenges were tackled and critically evaluate the results of applying the technological implements by CLAB and also other local area banks in the industry. The report concludes with recommendations and suggestions based on the profitability of the IT tools CLAB has been applying and whether CLAB should continue employing e-banking or not.

What is E-Banking?

E-banking in simple terms is provision of banking services through electronic mediums. The key channels used in e-banking are ATMs, internet and mobile banking. As per Safeena (2011) Internet banking, tele-banking, credit and debit cards have emerged as very effective and efficient tools of delivering traditional banking services to the masses. Sekar (n.d.) states that foreign banks operating in India made the beginning, but new private sector banks aggressively started pursuing technology based service offerings. According to Internet and Mobile Association of India’s survey, the two most preferred banking channels are ATMs and Internet banking.

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