Data is collected through primary sources which are examined IA frequency analysis and mean score analysis. The results indicate that Seems use banks mainly for depositing cheeses and cash, withdrawing cash and transferring funds. They least use banks for transactions related to foreign exchange and credit. Seems are well aware about the presence of electronic banking In a country and 62. 30% of the respondents regularly use this faculty for financial transactions purposes.

The study identifies payment of utility bills, complaint handling and daily account report' as most desired facilities from Seems. Which also perceive electronic Nanking as tools for time saving, facilitates quick response and minimizes risk of carrying cash. Seems further believe that electronic banking increases chances of government access to public data, chances of fraud and chances of data losses. The study also segregates the data into electronic banking (BE) users and non- users basis to identify discrepancies in their perceptions towards the available financial services or facilities.

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BE users consider minimizes inconvenience as most desired benefit while BE non-users consider funds transferring and providing up to date Information as important benefits of electronic banking. Lastly, BE users think heavy costs for services as an additional risk associated to electronic banking. Development of electronic distribution channels has attracted both academicians and practitioners in recent years. IT based distributional channels reduce personal contacts between the service providers and the customers which inevitably lead to a complete transformation of traditional bank-customer relationship (Barnes and Hewlett, 1998).

Opposite, e-channels allow customers to compare prices across suppliers quickly and easily (Delving, 1995) hence increase competition among banks and from non-bank financial institutions (CB, 1999). The situation demands an enhance understanding of why some people adopt one distributional channel and others do not, alongside an identification of the factors that may influence their decisions (Patricia et al. , 2003). The relationship between Seems and the banks has not been the subject of much attention (Banks and New, 1998, Medial et al. , 2002).

Unlike large businesses that have ready access to debt and equity markets; Seems' have little or no choice for credit facilities but the banks (Gerard and Cunningham, 2000). Even within the banking sector there is a growing reorganization that Seems not only represent a viable market segment in terms of the number and value of accounts but also provide considerable amount of a retail profit (Carroll, 1999). Thus, it would be in the best interests of banks to attract and retain this profitable segment and facilitate their growth in the longer term (Gerard and Cunningham, 2000).

This study investigates the Seems owners/executives/managers perceptions towards electronic banking in Pakistan. The country has 3. 2 million registered Seems units which directly contribute 78% of non-agricultural employment and 30% of GAP. Seems also represent 25% of the total exports and 35% of the total value added goods manufactured in a country (State Bank of Pakistan, 2005). Realizing the importance, State Bank of Pakistan (SSP) has setup separate Seems department and introduced separate prudential regulations for Seems.

Objectives To identify the main types of financial transactions the Seems in routine perform with their respective banks. To explore the sort of facilities Seems demand from electronic banking. To find the critical attributes those Seems believe important when using electronic banking. To find the key risks associated to electronic banking in Seems perception. To present results and implications that will be Banking in Pakistan Electronic banking is the latest in the series of technological wonders. ATM, Tell Banking, Internet Banking, Credit Cards and Debit Cards etc. Eve emerged as effective delivery channels for traditional banking products. In Pakistan, foreign banks took the lead by introducing ATM and credit cards in mid ASSES followed by domestic banks in late sass's. The government only introduced Electronic Transaction Ordinance in 2002 to provide legal recognition to digital signatures and documentation. This delayed entry in electronic banking largely by regulatory rudder, higher start up costs, on going banking sectors reforms and lack of technical skills (SSP annual report, 2003: p. 110).

At present, commercial banks in Pakistan are encouraged to setup online branches, install ATM networks, issue debit and credit cards. According to Chocoholic (2006) Pakistani banks provide the following online banking services and products. (1) Inquiry; Account statement inquiry; Account balance inquiry; Check statement inquiry; Fixed deposit inquiry (2) Payment; Funds transfer; Credit cards payments; Direct payments; Utility bills payments (3) Request; Checkbook request, Stop payment quest; Demand draft request; New fixed deposit request (4) Download; Customer profile; Statement download; Other information and guidelines downloads.

A quick glance at Table 1 shows that the number of online branches, ATM networks, debit and credit cards holders have sharply increased since year 2000. It is important to note that domestic banks are the major supplier of ATM facility while foreign banks mainly Citibank and Standard Chartered dominate the credit cards business in a country and accounting over 95% of total amount transactions (SSP annual report, 2005: p. 111). Table 1 Electronic Banking Statistics in Pakistan

I Item 12005 11,581 259 1240 12000 12001 I I No of online branches | 2002 1322 12003 12004 1450 1777 1206 1 12,475 1399 1415 12,897 1 Holders (000) | 552 | 786 11,028 I I No of Debit Cards Holders (000) 1736 11,257 11874 12,240 1 1 Inefficient cards 1217 1292 1369 1 397 | 808 11,041 (Source; SSP annual report, 2005: p. 66) Literature Review criterion. Turnbuckle (1983) found high usage rates for short- and medium-term loans, Dungaree et al. (1984) found personal relationship and the knowledge about your business was the most important criterion, Burger and Lurch (1986) found pricing, Schlesinger et al. 987) found accessibility of borrowing, lending rates and wide range of services, Prince and Scouts (1990) found confidentiality, Lacey (1990) found personalized and flexible service. Nielsen et al. (1998) who studied a sample mixture of small, medium and large enterprises in Australia found that long term relationship following by pricing are the most important selection criterion. Gerard and Cunningham (2000) found that Singapore hotels consider pricing, geographical location and accuracy of bank statements are the main criterion before selecting bank.

Since sass's, researchers have tended to focus more on the existing relationship twine customers and their bank. Barky (1994) found that cost of recruiting new customer is said to be five times more than the cost of retaining an existing customer Blackwell and Winter (2000) observed that developing relationship with the bank can prove to be a valuable asset for many small businesses. Thus building of a long term banking relationship is not only beneficially for small businesses but it can also provide huge benefits to banks (Carpenter, 1998). Chasten (1993) examined whether the banker-customer relationship had undergone changes in I-J.

He looked at the factors influencing opinions about banks ND then compared the responses with his earlier survey conducted in 1987 (Chasten, 1987). He concluded that the banker/customer relationship has clearly deteriorated. Zinfandel (1995) examined the relationship between banks and the corporate clients in Sweden. He found that small and medium size firms have more stable relationship with their banks than do large firms. He also found that confidence and trust, competitiveness on loans and speed of decision are the most important factors in the bank selection.

Personal contact with the bank and the level of technology bank using are not sufficient reason of bank selection. Summarizing the discussion earlier studies argued that strong personal interaction is beneficial for both customers and the banks. However, increase usage of IT based delivery systems change the traditional bank-customer relationship. Robinson (2000) argued that the online banking extends relationship with the customers through providing financial services right into the home or office of customers.

The banks now enjoy the benefits in terms of increase customers loyalty and satisfaction (Multi and Williams, 2000). Thornton and White (2001) compared seven distribution electronic channels available for banks in US concluded that customers' orientation such as convenience, service, technology, change, knowledge about computing and internet affected the usage of different channels. Hookworm et al. , (2002) found that the most important factors encourage consumer to use online banking are lower fees followed by reduce (Kiang et al. , 2000).

Convenience of conducting banking outside the branch official opening hours has been found significant in case of adoption. Banks provide customers convenient, inexpensive access to the bank 24 hours a day and seven days a week. Gerard and Cunningham (2003) found positive correlation between convenience and online banking. They remarked that a primary benefit for the bank is cost saving and for the consumers a primary benefit is convenience. Multi-functionality of an IT based services may be another feature to satisfy customers needs (Sermon, 1998).

Decrease in percentage of customers visiting banks with an increase in alternative channels of distribution will also minimize the queues in the branches (Thornton and White, 2001). Increase availability and accessibility of more self-service distribution Hansel help banks administration in reducing the expensive branch network and its associate staff overheads. Vacant bank employees and office space may be used for some other profitable ventures (Birch and Young, 1997). Internet banking also increases competition within the banking system and from non-bank financial institution (CB, 1999).

The internet increases the power of the customers to make price comparison across suppliers quickly and easily. Subsequently, push the prices and margins downward (Devils, 1995). Institutional encouragement to use IT based services and lower service charges are another important dimension to explore (GHz at al. , 2002). Central (1997) conducted a banking survey in US found that increase in service fees was one of the main driving forces behind the move of some large bank customers to smaller community banks.

Yashmak (2001) pointed out that banks are responding to the internet differently and those which see the internet as a complement and substitute to traditional channels, achieved better communication and interactivity with customers. Mouthing and Phillips (2002) emphasized that Scottish bank managers considered efficiency and enhancement of customer service as the two perceived advantages of internet Nanking. Similarly, faster, easier, and more reliable service to customers, and improvement of the competitive position were highlighted to be the most important drivers of online banking among the banks and IT managers in Kuwait (Aladdin, 2001).

Byers and Altered, (2001) concluded that it was changing consumer attitude rather than bank cost structure that determines the changes in distribution channels, they added that virtual banks can only be profitable when the electronic preferring segment is approximately twice the size of the street banks preferring segment. Nancy et al. (2001) argued that customers likely to interact with humans rather than machines. Customers find more possibilities of asking questions and believe that banks clerks are less prone to errors.

Polytonal and Skin (2001) found that low levels of email usage and a preference of doing over the counter Turkey. The opportunity to conduct trail may confirm how it is easy to use to reluctant customers (Black et al. , 2001). Boon and Mining (2003) concluded that the banks in Malaysia should concentrate on enhancing their operation and product management through the mixture of branch banking as well as e-channels like Atoms, phone Nanking and PC banking. Finally, a number of studies also found trust and perceived risks have a significant positive influence on commitment (Batcher]e, 2002; Musketeer and Nathan, 2003).

Reputation of a service provider is another important factor affecting trust. Done and Cannon (1997) defined reputation as the extent to which customers believe a service provider is honest and concern about its customers. Tyler and Stanley (1999) argued that banks can build close and long lasting relationship with customers only if trust, commitment and honesty based cooperation are developed between them. Banks overall reputations combine with reputation in IT based services make banks more or less attractive (Arithmeticians and Speed, 2003).

Internet provides many opportunities for the banks but it is a fact that current banking services through internet are limited due to security concerns, complexity and technological problems (Estate, 1999: Molls, 1999). Nancy et al. , (2001) study found that customers' complaint about computer logon time which are usually longer than making a telephone call. Further the respondents felt that they have to check and recheck the forms filled in online, as they are worried of making mistakes. Frequent slow response time and delay of service delivery causes customers unsure that the transaction was completed Noun and Cal, 2001).

Min and Eagle (1999) found destruction in operating system and disruption of information access as common factor related to unwillingness to use internet channels for commerce. Lila and Chemung (2002) found that individual expectations regarding accuracy, security, transaction speed, user friendliness, user involvement and convenience are the most important attributes in the perceived usefulness of internet based e-retail banking. Confidentiality of the consumer data is another important concern in the adoption of the online banking (Gerard and Cunningham, 2003).

Customers fear that someone will have unlimited access to personal financial information. White and Intel (2004) study focused on why the increase in the number of internet users in the I-J has not been paralleled by increases in internet usage for banking purposes? Results found that the customers still have concerned with the security and the safety aspects of the internet. Lack of specific laws governing internet banking is another important concern and cover issues such as unfair and deceptive trade practice by suppliers, unauthorized access by hackers. Lairs et al. (2002) argued that it is not clear whether electronic Another issue is the Jurisdiction of the courts and dispute resolution procedures in case of using internet for commercial purpose. Dispute can arise from many issues. For instance, website is not the branch of the bank. It is difficult for the court to define the location of the branch and decide whether they have Jurisdiction (Arithmeticians and Speech, 2003). Other risks associated to electronic banking are Job losses, lack of opportunities to socialize and development of lazy society (Black at al. 001) Methodology The survey was designed and conducted in Lahore which is the second largest city of Pakistan. Seems were selected from the yellow pages and every hundredth company was targeted randomly. A specifically designed questionnaire was used as a tool and Seems owners/executives/managers were requested to participate. Computer literacy was essential for the participants due to specific nature of the survey. Trained students under the supervision of an author distributed to and collected back the questionnaires simultaneously.

The experience showed that the telephone numbers ND addresses used by many firms in the metropolitan centers were not necessarily location addresses. In addition, some of the Seems refused to participate in the research. Further, some incomplete questionnaires were also rejected and their names were subsequently excluded from the list. Overall 221 questionnaires were finally selected for analysis purpose. Five points Liker scale was used to measure all the statements (1 = strongly disagree to 5 = strongly agree). Participants were asked to express the level of their agreement with attributes/factors identified earlier from the literature.

Attributes covered respondents present business requirements, their awareness towards electronic banking, their expectations towards the benefits/advantages and risks associated to the electronic banking. Data was analyzed via frequency analysis and mean score analysis. In answering the questions, respondents were assured about the confidentiality of their responses and their names were not published. Finally, a pilot study with ten Seems was conducted in order to refine the questions before the field work. Empirical Results Table 2 I Designation 9. 95% 134. 39% I I 155. 66% I I I Annual Sales I Owners

I Executives I Managers I Less than 5 million IN = 221 122 | 76 1123 1101 185 124 129 165 | 47 180 1105 113 1114 14. 98% 145. 70% 138. 46% 110. 86% 113. 12% 129. 41% 121. 27% 136. 20% 19. 50% 132. 13% 147. 51% | 5. 88% 151. 58% I Working Experience I Between 5 to 10 million I Between 10. 01 to 20 million I More than 20 million I Less than 1 year I Between 2 to 5 years I Between 6 to 9 years I More than 10 years I Level of Computer literacy I Professional Degree I Part of Degree I Short Courses I Self Learning or from Friends I I Sector Belonging I Trading I Manufacturing I Services I More than one sector

The characteristics of the sample Seems are outlined in table 2. The data shows that 34. 39% and 55. 66% of the respondents are either executives or managers at Seems while 9. 95% owners participate in the survey. Annual sales based classification of Seems includes less than 5 million (4. 98%), between 5-10 million (45. 70%), between 10. 01- 20 million (38. 46%) and more than 20 million (10. 86%). 29 respondents hold less than 1 year work experience, 65 respondents fall in category between 2-5 years, 47 respondents fall in category between 6-9 years and 80 respondents hold more than 10 years of work experiences.

The data also shows that 32. 13% and 47. 51% of the respondents have either attended computing short courses or self learning or from friends respectively. Lastly, 13 participating firms belong to trading sector, 47 firms from manufacturing and 114 firms from the services sector. The figures clearly indicate the dominance of services firms in metropolitan areas of Lahore which is quite expected. What level of business transactions do you have with banks in routine work? I No I Type of Business Transactions I Queue deposits in routine work are I Mean IS.

D 14. 66 10. 80 14. 61 14. 54 14. 46 14. 13 14. 06 13. 98 are 12 1 Cash deposits in routine work are 10. 78 10. 90 10. 94 II . 35 11. 43 11. 36 1 13 1 Cash withdrawals in routine work are 1 14 1 Salary transfer in routine work is I | 5 | Domestic funds transfer in routine work are 1 16 1 International fund transfers in routine work are 1 17 1 Paying utilities bills in routine work are 1 18 1 Foreign exchange related transactions in routine work routine work are 13. 09 II . 37 119 12. 88 I Credit related facilities in 11. 2 Table 3 presents Seems current routine level and type of transactions with their respective banks. Respondents' preferences are computed in terms of mean scores ND mentioned in ascending order. The highest preferences go to queue depositing (4. 66) followed by cash deposit (4. 61) then cash withdrawal (4. 54) and salary transfer (4. 46). Seems least preferences are credit related facilities (2. 88) and then foreign exchange related transactions (3. 09). Table 3 concludes that Seems contact their banks mainly for business related transactions.

They do not frequently utilize credit related facilities and their involvements in international businesses are also low. Table 4 I Have you ever accessed to your bank website for financial purposes? 64. 80% I No 135. 20% Has your firm given taken special access to your bank website for financial affairs? 162. 30% 137. 70% How frequently do you visit your banks website for financial purposes? I Daily 1 133. 60% I Weekly 126. 40% I Monthly 13. 30% I Never Table 4 presents the sample respondents views towards their access to banks websites for financial purposes. 4. 80% of the respondents accepted that they have accessed their bank websites. 62. 30% of the total respondents confirmed that they have taken special access to their banks websites for financial transactions purposes. When asked, how frequently do you visit your bank website for financial purposes? Indicates that overall 37. 70% respondents did not use their banks websites for transactions and information purposes. The figure also includes 35. 20% of the total respondents who had not even once visited their banks websites.

Based on findings, it may suggest that banks at initial level can launch special awareness campaign to introduce their websites and online facilities to existing non users. Table 5 What sort of services/facilities do you mostly demand through electronic banking system? I Users I BE Users I Statements FEB. Non- Ranking I Mean I Ranking I Latinity bills payments through electronic banking are 14. 80 II handling through electronic banking is 14. 04 1 1 14. 79 2 13 I I Daily account reports through electronic banking are I I Complaints 14. 04 1 14. 75 13. 98 14 book, etc. Through 14. 71 I Availability of request forms (demand draft, Queue 14 13. 96 15 I electronic banking are I I Stop payment request through electronic banking is 14. 54 5 13. 89 17 I Bank reconciliation through electronic banking is 14. 49 16 14. 41 I I Direct payments through electronic banking are 13. 93 14. 43 13. 83 18 I I Funds transferring through electronic banking is 18 14. 02 13 Table 5 segregates the data into electronic banking (BE) users and non users. It covers various types of services/facilities which respondents demand from electronic banking.

Results are computed in terms of mean scores and presented in ascending order. Table 5 shows that both BE users and non users rank statement "utility bills payments through electronic banking, complaints handling through electronic banking and daily account reports through electronic banking" among the most demanded facilities. In case of least demanded facilities, both BE users and non- seers agree on the statements "bank reconciliation through electronic banking and direct payments through electronic banking. The main discrepancy in opinion between BE users and non users exist in statement "funds transferring through electronic banking. " BE users rank this statement on last position while BE non users rank the same statement on third position. Transfer of funds through electronic banking is a relatively new facility in Pakistan. Presently the service is not free of cost and the banks charge their customers on per transaction basis. Bank can attract existing BE non users once the transaction costs are reduced.