e-banking final-sakshi

8/7/2019 E-BANKING FINAL-SAKSHI

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ELECTRONIC BANKING

³delivery of bank¶s services to a customer at

his office or home by using electronictechnology.´

What is E-banking?

� E-banking: ³This is an umbrella term for theprocess by which a customer may perform banking

transactions electronically without visiting a brick

institution.´

� E-banking is the use of electronic means to deliver

banking services, mainly through the Internet. The

term is also used to refer to ATMs, telephonebanking, use of plastic money, mobile phone

banking.

Development of E-banking

in world

Development of E-banking May 1995

Finland was the first country in the world to have

taken in E-banking.

� Wells Fargo - the first bank in the world

to offer customer access to their accounts

over the internet .

� Allows customer to see their accounts

online

Development of e-banking

in india� ICICI was the first bank to initiate the

Internet banking revolution in India as

early as 1997 under the brand name

'Infinity'.

� 1996 to 1998 marked the adoption phase,

while usage increased only in 1999-due tolower online charges, increased PC

penetration and a tech-friendly atmosphere

Impacts in India� ICICI µs profit to equity holders registered a

growth of 21% percent in 2001.

� Citibank says that its project Suvidha,

which started off in Bangalore in early in

1998, has encouraged customers to interact

with electronically, using telephones, theInternet, and ATMs.

THE IMPACT OF E-BANKING

SYSTEM IN INDIA

Impacts in India� The Vice President of Global Trust Bank, P.C.

Narayan says,

³An electronic transaction costs as much as65% less than a physical one. ATMs have

definitely emerged as the new business model for

the banks and the way banking has been

conducted. I think it is one of the remarkable

things that has happened to Indian Banking

Industry´.

Measures taken by RBI� A Reserve Bank of India (RBI) committee

has come out with the road map for

electronic banking and has sought

legislation on EFT systems to facilitate

multiple payment systems for banks and

financial institutions.� The RBI has been gearing up to upgrading

itself as a regulator and supervisor of the

technologically dominated financial system

Initiatives taken by RBI� Several initiatives taken by the Government of

India as well as the RBI have facilitated the

development of E-banking in India. The Govt.of India enacted the IT Act, 2000 with effect

from Oct.17,2000, which provides recognition

to electronic transactions and other means of

electronic commerce.

RBI & E-Banking :

� RBI & E-Banking The Reserve Bank of India

constituted a working group on Internet Banking.

The group divided the internet banking products in

India into 3 types based on the levels of access

granted. They are:-

� i) Information Only System:

� ii) Electronic Information Transfer System:� iii) Fully Electronic Transactional System

Information Only System� General purpose information like interest rates, branch

location, bank products and their features, loan anddeposit calculations are provided in the banks website.

� There exist facilities for downloading various types of application forms.

� No identification of the customer is done.

� In this system, there is no possibility of anyunauthorized person getting into production systemsof the bank through internet.

Electronic Information Transfer System

� The system provides customer- specific

information in the form of account balances,

transaction details, and statement of

accounts

� Identification and authentication of the

customer is through password.

Fully Electronic Transactional System

� This system allows regular bi-directionalcapabilities

� Transactions can be submitted by the customer for online update

� This system requires high degree of security andcontrol

� In this environment, web server and applicationsystems are linked over secure infrastructure

� It comprises technology coveringcomputerization, networking and security.

Features of e-banking products

± Transact wherever and whenever it suits you - 24/7

� Access your account information and transactions.

� Make electronic funds transfers.

� View, download and print statements.

� View CBA¶s up-to-date daily exchange rates.� Transfer funds between your personal accounts

� Easy set-up.

� User-friendly and secure: The system uses PIN and phone

number combinations to ensure maximum security.

� 24-hour access ± no more space and time constraints.� User support from highly trained and experienced customer

service teams.

Why the drive towards e-banking?

� Rapidly changing customers¶ needs and preferences

� Competitive forces and product differentiation strategies

� Enhancement of Customer Relationship Management

� Pressure to reduce transactional and operation costs and

pass the benefits to customers.

Factors Affecting the Adoption of E-

Banking in IndiaEase of use

Level of Security

The cost of adopting the technologyPreference for personalized services

Reluctance to adopt new technology

Haste of banks to adopt new technology

Constraints for growth of e-banking

� Security: Majority of the customer stay away from E-Banking services

due to security concerns.

� Human face: According some analysts, customers still value

personalized and responsive services from their bankers.� Ignorance: ³on average 30% of bank customers do not even know

whether their banks provide online services.´ (BBC News).

� Computer illiteracy among majority of the population is still significantly

� Poor and/or lack of technological infrastructure and reliable power supply.

SERVICE PROVIDED BY SBI� Self-account funds transfer

across India.

� Third party transfers in thesame branch

� New account opening

� Demand Draft requests

� New Cheque-book request

� Railway tickets booking

� Utility bill payments� LIC and other insurance

premium payments

� LIC and other insurancepremium payments

� SBI Mutual fundsInvestments

� Credit card dues payments

� Deposit your taxes

� Donations

� Setting up SMS alerts for transaction information.

SERVICE PROVIDED BY ICICI

� BILL PAYMENT

� FUND TRANSFER

� ACCOUNT INFORMATION

� SMART MONEY OR DER

�SERVICE REQ

� PREPAID MOBILE RECHARGE

� ACCOUNT TRANSFER

Shared Payment Network System (SPNS)

or SWADHAN

Under the initiative of Indian Bank Association (IBA) in

Mumbai, a pilot project to link up 165 ATMs of 31 member

banks has come up in the form of ³SWADHAN´ a shared

payment network system which has a card base of 1, 00,000with 30,000 transactions per month.

The objective is to provide anytime and anywhere electronic

banking services to the customers in the city of Mumbai,

Vashi and Thane.

Advantages of E-banking

� Benefits for Banks

� Benefits for Small to Medium Businesses

� Benefits for Customers

BENEFITS TO THE BANK � Competitive advantage

� Unlimited network and Larger

customer coverage� Lesser work load

� Marketing tool

�Reducing the costs of operations

� Better customer relationship

� Promoting their services and

products internationally

Benefits for Small to Medium Businesses

� To run its operations more effectively

� Lower cost than traditional financial

management mechanisms

BENEFITS OF E-BANKING� Any time banking

� Any where banking

� Reduction in Cost of transaction� Easy to make utility payments

� Environmental Abolishing the uses of

paper � Others - Offering one-stop-shop

solutions

Customer Benefits Supplier Benefits

Convenience Lower cost per transaction

Tailored products and services Increased customer knowledge

Ease of access to product

information

Ability to tailor products and

services

Ease of shopping around for

best price

Ability to access a large market

Increased customer relationships

Low cost. Reduced errors, time, and

overhead costs

The Benefits of Electronic banking

E- Banking Risks

� Same inherent risk and issues as Internet

Banking, primary risks affected

± Strategic

± Transaction

± Reputation

± Compliance

Security R isk

� Increasing number of fraudulent bank

websites

� Fake emails purporting to be sent from

� Use of Trojan Horse programs to capture

user IDs and passwords

Fake e-mails

� Email send from Fraudulent bank

� Verify the personal information

� Guide customer enter the fraud link

� Disclosing their ATM card numbers and

their passwords

Fraudulent Bank Websites

� A suspicious bank

website:www.sbionline.com

� Original bank website

www.onlinesbi.com

� These website are believed to aim to trick

persons into disclosing their sensitive

personal information

Viruses and Worms-Trojan Horse

Program� When we open some suspicious

websites or email

� Trojan Horse Program will install

our computer secretly

� Hidden in the computer

� When you access bank websites,

capture our account and the

password

Bank Best Practices� Secure architecture

� Training and awareness

�Regular testing, reporting, improving

Persecutions

For Customers

� Should not disclose their customer IDs (e.g.,account numbers) or

passwords to anyone else.� Periodically change their

passwords

� Should promptly log out from the service

� Should regularly check their account balances and statements to identif yunusual transactions.

� Do not access Corporate Cyber banking through

public terminals.� To safeguard your computer from anyother hacker attack ,install anti-virus and

software on your computer and update it regularly.

What¶s Next - We Need

to Focus On� Security

� Authentication and Verification

� Proper Due Diligence and Complete

Understanding of the Issues

� Prepare now for what is ahead

� New Entrants into the Marketplace� International Perspective in the New World

Case From Newspaper

� Don¶t use the hyperlink to login

to the website of banks

� Should deeply check the

postscript of the website� Observe that is it have the

encryption and compare the

login account of encryption cert

is equal to the bank.

What are the forms of e-banking?

± Common embodiments of e-banking include the

following:� Mobile/SMS Banking

� Telephone Banking

� Electronic funds transfers

� Self Service (PC) Banking

� POS Banking (Credit , Debit cards and Smart Cards)

� ATMs

� Interactive TV

� Intranet

Different Delivery Channels in E-Banking

ATM and POS Application Architecture

Credit Card

Authorization

Debit Card

Authorization

Switch System

Telephone Banking Infrastructure

Telecom

IVR CTI HOST

Internet Banking

Sample Internet Banking Architecture

� More and more banks are coming to realize that internet is a part of banks'

alternative delivery channel strategies activities concentrated in the business-to-

consumer segment, focused on retaining clients

� In Internet banking, security is a primary concern. Security concerns have been

addressed from every angle within the architecture of the Internet bankingapplication.

SMS Banking� Basic banking inquiry transactions(balance inquiry, funds, exchange

rate inquiry«) are performed by the cooperation of bank and the GSM

operator

� Security is the main problem

Bank SMS

Gateway

Leased lineGSM Operator

Application

Server

Operator

SMS DB

Network

Bank Host

Delivery Platforms for Electronic Banking

Type of Service Description

PC banking

Internet banking

Managed network

TV based banking

Telephone banking

EFTPOS

Smart cards

Electronic Funds Transfer (EFT)

Electronic Data Interchange (EDI)

Electronic Clearing System (ECS)

Shared Payment Network System

(SPNS)

Uses special software distributed by the bank , which is installed in the

users¶ PC. Customers access banks via modem linked directly to the

bank .

Customers access their bank account via Internet

The bank makes use of an online service provided by another party such

as AOL

Use of satellite or cable to deliver account information to TV screens of

customers

Customers can access their bank via regular phones or mobile phones

using SMS or WAP services

ATMs provide cash accessibility and account information and in some

cases enable to transfer f unds

Electronic f unds transfer at point of sale (EFTPOS) is essentially a

payment system for purchases through debit cards within the store itself .

Microchip based cards can be used between individuals to exchange

electronic cash or can interf ace with ATMs, telephones and retailers.Uses computer and electronic technology as a substitute for checks and

other paper transactions.

Transmit financial information and payments in electronic form.

Paperless mode of effecting payment for handling bulk and repetitive

payment transactions.

A large network of ATMs, Cash Dispensers belonging to different banks

to provide anytime and anywhere banking service.

Television Banking� Digital television (DTV) is the transmission of television signals using

digital rather than conventional analog methods.

� Advantages of DTV over analog TV include:

y Superior image resolution (detail) for a given bandwidth

y Smaller bandwidth for a given image resolution

y Compatibility with computers and the Internet

y Interactivity

y Superior audio qualityy Consistency of reception over varying distances

y Banks offer their banking transaction in this new environment

y T-commerce in the near future.

i f f i i

Delivery Platforms for Electronic Banking

Type of Service Description

PC banking

Internet banking

Managed network

TV based banking

Telephone banking

EFTPOS

Smart cards

Electronic Funds Transfer (EFT)

Electronic Data Interchange

Electronic Clearing System

Shared Payment Network System

(SPNS)

Uses special software distributed by the bank, which is installed in

the users¶ PC. Customers access banks via modem linked directly to

the bank.

Customers access their bank account via Internet

The bank makes use of an online service provided by another party

such as AOL

Use of satellite or cable to deliver account information to TV screens

of customers

Customers can access their bank via regular phones or mobile

phones using SMS or WAP services

ATMs provide cash accessibility and account information and insome cases enable to transfer funds

Electronic funds transfer at point of sale (EFTPOS) is essentially a

payment system for purchases through debit cards within the store

itself.

Microchip based cards can be used between individuals to exchange

electronic cash or can interface with ATMs, telephones and retailers.

Uses computer and electronic technology as a substitute for checks

and other paper transactions.

Transmit financial information and payments in electronic form.

Paperless mode of effecting payment for handling bulk and

repetitive payment transactions.

A large network of ATMs, Cash Dispensers belonging to different

banks to provide anytime and anywhere banking service.

E-COMMERCE

WHERE SOCIETY MEETS

TECHNOLOGY«

Commerce as we know it

Bank A Bank B

Business BusinessTrade

Banking

Buyer Supplier

Clearing

Settlement

E-Commerce� Doing business online

� Buying products and services online

E-Commerce Participants

Brief History1970s:Electronic Funds Transfer (EFT)

� Used by the banking industry to exchange account

information over secured networks

Late 1970s and early 1980s:Electronic Data Interchange

(EDI) for e-commerce within companies

� Used by businesses to transmit data from one business to

another

1990s:the world wide web on the internet provides easy to

use technology for information publishing and dissemination

� Cheaper to do business (economies of scale)

� Enable diverse business activities (economies of scope)

Features of e-commerce

� Online business

� Covers vast amount of B2B and B2C

� Advertisement� Anytime and anywhere service

� Direct contact between buyer and seller

� Reduction of cost

� Medium of interaction� Promptness in surveys

� Expand the business

B2B, B2C and C2C e-Commerce

e-Business

le rin

ettlement

e-Tr de

Business

B nk A B nk B

onsumer

e-B nkin

e-Business

Business

onsumer

B nk erv

� A housands of companies that sell products to other companies have

discovered that the Web provides not only a 24-hour-a-day showcase

for their products but a quick way to reach the right people in a

company for more information.

� In the B2B, the bank role is to provide a reliable payment

infrastructure that add value to corporate business

� This infrastructure should cover:

± Bill presentment

± Bill payment

ifferent payment types(credit card, deposit account, loan)± Information after payment

E-commerce - B2C� E-commerce is the buying and selling of goods and services on the

Internet.

� Main feature of e-commerce

± 24-hour availability

± a global reach

± the ability to interact

± provide custom information and ordering

± and multimedia prospects,� The Web is rapidly becoming a multibillion dollar source of revenue

for the world's businesses.

� Banks provide secure payments infrastructure - virtual POS

Scope of e-commerce

� E-PAYMENT-It does not involve physical

exchange of currency. Its convenient to

make payment via network.

� E-BANK ING- It means anywhere any time

banking.

� E-MARKETING- The growth of internethas created opportunities for consumer and

firms to participate in online global market

place.

ADVANTAGES OF

ELECTRONIC COMMERCE� Cost effective

� Customers are self created

� Middlemen disappear

� Better customer service

� Online payments

� Increased sales

� Decreased costs

DISADVANTAGES OF E-

COMMERCE� Loss of ability to inspect products from

remote locations

� Lack of training programmers

� Competition among sellers

� Change in technology

� Costly

E C P bl

E-Commerce Problems

Snooper

UnreliableMerchant

Unknown

customer

E-Commerce risks

Customer's risks� ±Stolen password

� ± Dishonest merchant

� ± Disputes over transaction

� ± Inappropriate use of transaction details

Merchant¶s risk

� ± Disputed charges

�± Insufficient funds in customer¶s account

Main issue: Secure payment scheme

CONCLUSION

� Thus, we come to the conclusion that e-

commerce has great advantage for

industrialization which has laid torevolutionalization. Thus, increasing the

growth of our country in terms of economy.

What is the Next channel

Microwave

Banking

e-banking final-sakshi

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