CHAPTER troublesome for banks to convince their customers to



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1.1  Introduction

main intension of this chapter is to give a brief description about background
of the study, research problem, hypothesis, research questions, research
objectives, significance and limitations of the study.

1.2  Background
of the study

sector is one of the major sources of financing to the many enterprises,
organizations and people in Sri Lanka. By embracing different processes for
financial development, banks have an impact on both quality and amount for monetary
development and improvement in the country. Therefore, the banking sector plays
an important role in promoting environmentally sustainable and socially
responsible investment.

banking means promoting environmental friendly practices and reducing carbon
footprint from banking activities (Schultz, 2010). Simply, green banking refers
to the efforts taken by banks to encourage environmentally friendly investment
and green banking essences are an active & smart way towards future
sustainability. According to the Institute for Development and Research in
banking Technology (2013), Green banking is an umbrella term referring to
practices and guidelines that make banks sustainable in economic,
environmental, and social dimensions. The ultimate objective of practicing
green banking is to protect the natural environment, to make proper use of
organizational resources, to reduce paper work, to get the cost and efficiency
of time.

companies want to take on green initiative’s, they have to apply the model of
green banking into all aspects of banking activities (Ottman, 1992 ). Because
the society is more ready to buy eco-friendly products with enough dependable
information, corporation have to provide trustworthy information for their
customer in order to develop their green brand and enhance green knowledge
(Peattie, 1992 ).It is troublesome for banks to convince their customers to
purchase their items without giving adequate data to their clients. Bank must
show more information about the green execution of their items to get their

idea of green banking was built up in 1980 at Triodos bank from Dutch which
started environmental sustainability in the banking sector. The first green
bank was commenced its operations in Mt. Dora, Florida, United States in 2009.
After that the banks everywhere throughout the world, for example, banks in
Bangladesh, India, and so on are persuaded to continue with green banking

Sri Lanka, banking sector is begun to rehearse the green banking concept in
2013. This valuable concept is firstly introduced by one of private sector bank
in Sri Lanka, the commercial bank PLC. Among the 25 licensed commercial banks
and 7 licensed specialization banks in Sri Lanka (Annual Report, 2015), only
few domestic commercial banks are formally initiated green banking concept
including private sector banks such as Commercial bank PLC, Hatton National
Bank, Sampath Bank PLC, and Seylan Bank PLC limited.

Bank has recently announced the launch of Sri Lanka’s first ecological-friendly
savings product for youth under the name of “YES”. They launched the green
banking concept parallel to their 54th anniversary celebration
(Annual Report,2015).The “YES” account has made a large part of the youth to
promote savings across Sri Lanka, now it is designed to offer paperless banking
services. So, this account is expected to encourage the younger generation to
preserve the environment with minimal use of paper, which can lead the route
for a more sustainable future in the coming time. Under the concept of “YES
with green”, the account holders will no longer receive any correspondence
through the paper, but will be encouraged to receive all their banking services
electronically in it, including the bank e-statement, debit and credit card
increasing the use of mobile banking and internet banking involves taking
advantage of the banking services themselves and other means of paperless
communication. People’s Bank is hopeful to popularize the topic to change its
banking services and reach the electronic form, marking the bank’s commitment
towards operation as an environment-friendly organization.

Bank has initiated a paradigm shift to its traditional banking model through
the introduction of green banking concept. Currently the bank provides internet
and mobile based banking facilitiesthat reduce environmental impacts and all
credit applications are screened for environmental impacts where such impact
assessments are required by law. The Bank is also developing green products
that will be delivered entirely on an electronic, paperless platform. The bank
hopes to gradually transfer the entire banking process into a secure,
electronic platform. (Annual Report, 2015)

now there are numerous green banking products available in the People’s Bank,
with the Young Executive Savings (YES) account. Among them, green accounts with
E-Statements, Green loans, green deposits, Green debit and credit cards, Mobile
banking and Internet Banking facilities are available to the clients.  People’s Bank Internet Banking entrance will
enhance with present day innovation & administration effectiveness. This is
one of the real saving money directs in future. Relocating banking transaction
to an electronic stage will see sensational decreases in paper consumption.
People’s Bank mobile banking application is as now developing as a strong
business development channel which diminishes resource consumption. Indeed yes
is intended to use through web and e-mail, Rather than traditional saving
books, YES savers get bank statements through E-mail. 

to the People’s Bank Green Banking Circular of 2015, by practicing this green
banking, the bank aims to achieve the following objectives;

To open doors for younger savers from
green banking YES account and establishing the image of it as the most
attractive account among the other accounts.

To promote the green banking concept
among the people through the biggest branch network consists with more 740
branches plus service centers and their well aware employees.

To increase the market share by
attracting environmental friendly younger customers through YES account.

To begin an entrance of the paperless
Savings by introducing YES E-Statement facility for customers instead of the

To expand the eco sensitive younger
business and customers society.

To reduce the transaction time, cost,
and documentation by freely introducing people’s Mobile Banking and People’s
Internet Banking facilities for YES Account holders.

To encourage the environmental friendly
projects by offering low interest green loan schemes.

bank is dependably gives need for their clients as well as for the earth, they
are practicing many environmental friendly green banking practices, for example
Carbon footprint reduction, Automated Teller Machines (ATMs), Cash Deposit
Machines, Use of solar and wind energy, Green building, Paper recycling, Water
management, Ethical environmental practices, CSR activities and so forth.

this significant idea, every one of the partners of the bank, such as the bank
administration, employees, customers, shareholders, competitors and ultimately
the environment, all these parties are benefitted,

Clients can deposit cash and transfer
cash, exchange cash among accounts, paying cash for phone bills and electricity
bills without slips and passbook.

Instead of cash withdrawal vouchers,
customers can use ATMs.

Reduction of transaction cost and time.

Instead of using physical cash,
customers can use green debit and credit cards for bill payments.

Ensuring the social safety and security.

Online account opening from for opening
green account, E-statement will be generated and sent to the customers’ email
and etc.

Reductions of giving loans to certain
environmentally harmful projects.

though there are so many convenient facilities and benefits available in green
banking in people’s Bank since 2015, really the issue is that there is a less
customers’ agreeableness on these green banking products. As indicated by the
systemized information and discoveries from past related investigations, there
are few studies on factors affecting for customers’ intention to use green
banking products.

to fulfill this research gap, the objective of this study is to find the
factors affecting for the customers’ intention to use green banking products in
Sri Lanka with special reference to the People’s Bank.

1.3Research Problem

1980, the concept of green banking has been developed and practices by many
banks around the world. But according to many research and related studies,
this problem is less awareness of this valuable concept. Even though green
banking practice are available in banks in Sri Lanka since 2013. There are
different factors affecting for customers’ choice on green products. Sometimes,
it may be green preference, Proud of Use, Recommended to others or so on. Therefore,
the reason for purchase is verify from person to person. Hence it is very
important to identify the factors that are affecting for customers’ intention
to use green products. Because it is necessary to bank to implement different
strategies in order to enhance this green product prefernce.

other countries many research works have been done for the concept of green
banking initiatives, practices, products, possibilities, strategies, benefits,
challenges, problems and opportunities. In any case, there are not very many
investigation in Sri Lanka, started towards green banking. They also only
focused and limited to the areas of green banking practices and not much
research have been done to study about ways to increase customer’s intention
for use green products.

to the literature reviews, most of the past research articles highlighted that
there is a less customer awareness and purchase on Green Banking product and
they recommended that there is an urgent need of identify the factors affecting
for customers’ intention to use green products.

few research works have been done on green banking dimension and no studies
have looked at all these together and no instrument has been developed to
measure green banking in Sri Lanka. There are few empirical studies embraced in
Sri Lankan setting in regards to green banking products and clients’ intention.
With a specific end goal to satisfy this hole, this investigation will be led
theoretically and empirically in People’s Bank Sri Lanka.

Research Questions

How Green product awareness affect the
customers’ intention to use green banking products in People’s bank?

How Green product benefit affect the
customers’ intention to use green banking products in People’s bank?

How Green product trust affect the
customers’ intention to use green banking products in People’s bank?

How Green product image affect the
customers’ intention to use green banking products in People’s bank?

How Green product perceived value affect
the customers’ intention to use green banking products in People’s bank?

How Green product security and privacy affect
the customers’ intention to use green banking products in People’s bank?


Research Hypothesis

brand awareness has significant relationship 
with customers’ intention to use green products.

Green brand trust has significant relationship with customers; intention to use
green products.

Green brand image has significant relationship with customers’ intention to use
green products.

Green Product Benefit has significant relationship with customers’ intention to
use green products.

Green Perceived value has significant relationship with customers’ intention to
use green products.

Product security and Privacy has significant relationship with customers’
intention to use green products.


Objectives of the study

Main Objective

To find factors affecting for the
Customers’ intention to use green banking products in people’s bank.

Sub objective

To examine the effect of green brand
dimensions on customers’ intention to use green banking products.

To identify the benefits of the bank and
customers and society through green banking practices.


significance of the study

study focuses primarily on finding influencing factors for customers’ intention
to use green banking products in People’s Bank. Apart from this, this study is
focused on measuring customer awareness levels on green banking products and
studying the effect of demographic factors on the customers’ intention to use
green banking products in people’s Bank.

present, the green banking concept is available only in the YES saving account
in people’s bank, which has less customer awareness and use. There is a quote
that the customer is the king of any business. Therefore, each bank aims to
attract and retain more and more customers by offering competitive banking
products. Therefore, this study has benefited the bank management, which can
identify the most affected factors for intention to use green products and can
take steps to promote the concept by increasing green account holders.

from this research, the bank management has to decide on the dividend, which is
spread from the saving account to other banking products, and also benefited
from the bank employees to identify the most affected factors for the
customers’ intention to use green products and to identify their strengths and
weaknesses regarding the promoting of this product, and also to take advantage
from the findings and suggestions of this research to take actions for increase
the intention to use green products.

following the findings of this research, it is very important source for the
other banks those practice green banking to identify drawbacks and promote
their green banking products for increase their customers more and more. This
research gives a motivation factors to other banks which aim to go with green
banking concept in future, to study the background of the green baking and
identify the concept as well as customers’ intention to use on it.

findings and recommendations of this study will be benefited to the academics,
students, and future researchers to get the idea on the customers’ intention to
use green banking products. This research will help to other researchers to
develop same other research by taking this research as basis.



Limitation of the study

study is centered only on People’s Bank among the banks those are practicing
green banking concept in Sri Lanka. Apart from this, this study is limited to
the only Pelmadulla branch among more than the 740 of People’s bank branches
network. The results of this study will be based on samples of only 381
customers, which is comparatively much comparable to the total population.
Although many factors are being affected for customers’ intention to use green
banking products, although only six factors have been considered here such as
Green product Awareness, Green Product Benefit, Green Product Trust, Green
Product security & Privacy, Green Perceived value, Green Product Image. Due
to Bank’s privacy, it is also very difficult to find internal statistical data.

chapter organization

the topic of “factors affecting for customers’ intention to use green banking
products in People’s Bank”, this research consists of five main chapters such
as introduction, literature review, methodology, Analysis, and discussion and

one is the introduction chapter which provides detailed explanation about the
background of research study. Also provides a basic understanding of the
problem to be addressed throughout the study. So it expresses the questions,
hypothesis and objectives related to the study which is to be obtained from the
study. After this, chapter one discusses why research is important for research
site and decision makers and others. In the later part of the chapter, it
presents limitations of the study and how chapters are organized in this

the chapter two, it discusses the theoretical aspects of the green banking
concept and the literature review completely. This chapter discusses the
definition of green banking, the development of concept, its adaption to the
Sri Lanka and People’s Bank, and use with the findings of previous literature.

three discusses the methodological part of the study. Under the research
methodology, it first discusses the conceptualization and operationalization
and then it discuss about the research approach, research design, population
and sampling methods, methods of data collection and the tools used for data

four contains analysis and discussion of the research. It shows the results of
the collected data and decides about the results of the data analysis. At the
same time, this chapter provides the theoretical and managerial implications of
the findings. Finally, chapter five provides conclusions and recommendations
for the findings of this study.