Service providers’ risk in E-banking in India

This paper analyzed the bankers’ viewpoint towards the factors responsible for service providers’ risk in e-banking in India, their potential impacts and the risk management measures taken by selected public, private and foreign banks. A sample of 107, 104 and 100 respondents (bank employees) is taken for data collection from the different branches located in Haryana, Punjab, Chandigarh and Delhi from selected public, private and foreign banks respectively. Statistical techniques such as mean, mode, standard deviation have been used for the analysis of data. ANOVA technique has been applied to arrive at the conclusion. The analysis shows that non-delivery of services by the service providers’ is viewed as the most important factor leading to the service provider risk followed by lack of data integrity and lack of reliability of the system in selected banks. Further, bank may be held accountable by the customers for service provider-induced problems is found as the most potential impact on these banks followed by the possible costs associated with repairing a compromised system. On the other hand, undertaking due diligence before entering into a service contract with service provider is considered as the top most adopting measure for overcoming the service providers risk in public sector banks followed by establishing the backup plans with service providers. However, developing the service provider contracts that establish performance benchmarks is viewed as the top most adopting measure for overcoming the service providers risk in private sector banks followed by undertaking due diligence before entering into a service contract with service provider. Whereas, undertaking due diligence before entering into a service contract with service provider is viewed as the top most adopting measure for overcoming the service providers’ risk in foreign banks followed by developing the service providers’ contracts that establish performance benchmarks.