TRJ VOL. 1 ISSUE 1 MAY-JUNE 2015 ISSN: 2454-7301 (PRINT) | ISSN: 2454-4930 (ONLINE) THE RESEARCH JOURNAL (TRJ): A UNIT OF I2OR theresearchjournal.net 4 | Page Impact of Online Threats on Usage of E-Banking Tejinder Pal Singh Brar 1 , Dr. Dhiraj Sharma 2 , Dr. Sawtantar Singh Khurmi 3 1 Research Scholar, Punjab Technical University, Kapurthala 2 School of Management Studies, Punjabi University, Patiala 3 Bhai Maha Singh College of Engineering, Kotkapura Road, Muktsar Abstract - This study is an attempt to dissect the impact of online threats that affects on the usage of E-banking by retail customers. In general, it seeks to examine customer’s perspective towards fear of various online threats. The data for this study are collected from retail customers. The sample consists of 240 retail customers from public and private sector banks. Data was collected through pre-tested questionnaires. All the retail customers were based in northern India. It has been found that after providing different security mechanisms, customers are still feared about online threats and hence hesitate to transact through online mediums. It is vital to provide robust security mechanisms while conducting transactions via electronic means. Keywords: Retail customers, Security, E-banking, Trust I. INTRODUCTION The unabated plundering of E-banking accounts belonging to retail customers are raising doubts about the authentication and fraud-detection mechanisms now used by banks. In most of those cases, online criminals obtained a retail customer's valid banking log-in credentials by illegal means. Such online threats have prompted government regulators to call on banks to improve their security systems. Most of the online thefts occurred because the customers failed to adequately protect their banking credentials. These kinds of online thefts have impact on public relations because banks are not required to reimburse stolen amount. According to [Yousafzai et al. (2009); Pieters (2010); Avizienis et al. (2004)], trust in the banking sector has not yet been fully translated in the online environment because trust is difficult to achieve without face- to-face interaction and it is doubtful that artificial agents are capable of trusting and/or being trusted. Technology-related variables are also imperative as traditional factors in predicting customer’s behaviour in online environment. Online threat landscape has been changed because online attackers have adopted more intricate methods to break online verification techniques. Advanced levels of security may make online banking more useful, [Alnsour and Al-hyari (2011); Friedman et al. (2000); Gefen et al. (2003); Jarvenpaa et al. (2000); Ponemon (2005)]. With higher belief in online banking, the more a customer trusted the bank and its website. [Yousafzai et al. (2003); Grewal et al. (2004); Avizienis et al. (2004)] found that customers have not adopted B2C e-commerce in the same way primarily because of risk and trust related issues. After examining E-banking risks Goetz E. (2003) reported that banking industry faces a massive amount of physical and cyber threats from hackers and malicious insiders. Vishing and phishing attacks can easily steal passwords. When we examined social networking websites, we found that a large number of answers to challenge questions can be easily found from these online resources. According to a survey conducted by Kaspersky Lab and B2B International, around one third of customers in America users do not feel safe when conducting financial transactions, Alfreds (2013). Despite adoption and growth of online transactions by retail customers, the customer base is still low when compared to traditional banking. Calonia (2014) reported four biggest fears customers have about online banking. It includes identity theft, technology hiccups, misuse of information and lack of documentation. NCRB (2013) reported state-wise scenario in India; 4,356 cases were registered under IT Act during the year 2013 as compared to 2,876 cases during 2012, thus showing an increase of 51.5% in 2013 over 2012. Similarly, according to Gurung (2014) there is an increase in the cyber crime by 51%. Table 1.0 shows incidences of registered cases in top 10 states of India during 2013 and their comparison with cases registered in 2012. TABLE 1.0: YEAR WISE COMPARISON OF DIFFERENT CRIME HEADS IN INDIA Number of authors argued that despite ongoing security efforts, banking sector remains vulnerable to a variety of events [Goetz (2003); Dapp (2012); Chickowski (2006); Klein (2007); Aladwani (2001); Bradley and Stewart (2003)]. Customers are worried about security and ready to move to another bank after only a single security breach. Sathye (1999) conducted study in Australia and found that security concerns and lack of awareness about the internet banking were the two main obstacles for the non-adoption and less usage of E-banking. White and Nteli (2004) found that UK customers ranked the security of bank’s website as the most important attribute of internet banking service quality. Similarly, Indian customers are concerned about security and privacy issues, Malhotra and Singh (2009). Online security