banking electronic

8/11/2019 Banking Electronic

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Banking (ebanking2014)

1.1 Introduction of E-Banking

1.2 Meaning of E-Banking

1.3 Functions of E-Banking

1.4 T!es of E-Banking

1." #d$antages of E-Banking

1.% &i'itations of E-Banking

1.1 Introduction of E-Banking

1

The acceleration in technology has produced an extraordinary effect upon our

economy in general has had a particularly profound impact in expanding the

scope and utility of financial products over the last ten years. Information

technology has made possible the creation, valuation, and exchange of complex

financial products on a global basis and even that just in recent years.

Derivatives are obviously the most evident of the many products that

technology has inspired, but the substantial increase in our calculation has

permitted a variety of other products and, most beneficially, new ways to

unbundled risk.

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$hat is really %uite extraordinary is that there is no sign that this

process of acceleration in financial technology is approaching an end. $e are

moving at an exceptionally rapid pace, fueled not only by the enhanced

mathematical applications produced by our ever rising computing capabilities

but also by our expanding telecommunications capabilities and the associated

substantial broadening of our markets.

&ll the new financial products that have been created in recent years contribute

economic value by unbundling risks and reallocating them in a highly calibrated

manner. The rising share of finance in the business output of India and other

countries is a measure of the economic value added by the ability of these new

instruments and techni%ues to enhance the process of wealth creation. The

reason of course, is that information is critical to the evaluation of risk. The less

that is known about the current state of a market or a venture, the less the ability

to project future outcomes and, hence, the more those potential outcomes will

be discontinued.

1.2 Meaning of E-Banking -

'(bank is the electronic bank that provides the financial service for the

individual client by means of Internet.

1.3 Functions of E-Banking -&t present, the personal e(bank system provides the following services) (

1. Inuir about t*e infor'ation of account -

The client in%uires about the details of his own account information such as the

card*s + account*s balance and the detailed historical records of the account and

downloads the report list.

2. +ard accounts, transfer -

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The client can achieve the fund to another person*s -redit -ard in

the same city.

3. Bank-securities accounts transfer -

The client can achieve the fund transfer between his own bank

savings accounts of his own -redit -ard account and his own capital account in

the securities company. oreover, the client can in%uire about the present

balance at real time.

4. T*e transaction of foreign ec*ange -

The client can trade the foreign exchange, cancel orders and

in%uire about the information of the transaction of foreign exchange accordingto the exchange rate given by our bank on net

". T*e B2+ disburse'ent on net -

The client can do the real(time transfer and get the feedback

information about payment from our bank when the client does shopping in the

appointed web(site.

%. +ient ser$ice -

The client can modify the login password, information of the

-redit -ard and the client information in e(bank on net.

/. #ccount 'anage'ent -

The client can modify his own limits of right and state of the

registered account in the personal e(bank, such as modifying his own login

password, free/ing or deleting some cards and so on.. e!orting t*e oss if t*e account -

The client can report the loss in the local area 0not nationwide1

when the client*s -redit -ard or passbook is missing or stolen.

1.4 T!es of E-Banking -

!. Deposits, withdrawals, inter(account transfer and payment of linked

accounts at an &T2

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. 3uying and paying for goods and services using debit cards or smart

cards without having to carry cash or a che%ues book2

#. 4sing a telephone to perform direct banking( make a balance en%uiry,

inter(account transfers and pay linked accounts2

5. 4sing a computer to perform direct banking( make a balance en%uiry,

inter(account transfers and pay linked

1." #d$antages of E-Banking -

!. &ccount Information) 6eal time balance information and summary of

day*s transaction.

. 7und Transfer) anage your 8upply(-hain network, effectively by using

our online hand transfer mechanism. $e can effect fund transfer on a real

time basis across the bank locations.

#. 6e%uest) ake a banking re%uest online.

5. &ccount information) The complete database that the banks has about ourcompany is available to us at our terminal. It provides us)

-urrent balance in our account on real(time basis.

Day*s transactions in the account.

Details of cash credit limit, drawing power, amount utili/ed, etc.

9. Downloading of account statements as an excel file or text file. The

statements can be integrated with your '6 systems for auto(reconciliation.

:. 7und Transfers) anage our 8upply(-hain network, effectively by using

our online fund transfer mechanism. $e can effect fund transfer on a real

time basis across the bank locations. The product facilities.

0a1 ;ne(to(one fund transfer between two linked account.

0b1 3ulk fund transfers2 In bulk fund transfers, we upload a flatfile containing payment + collection information. ;ur

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systems take care of processing the entire file and once the

file is processed file to our '6 for auto reconciliation.

. -ustomers can Integrate the 8ystem with his own '6) The customer can

download the account statements either as a text file or as an excel file.

The bank can help him in integrating the account statements and bulk

payments files with his '6 system. The bank may charge a nominal fee

depending upon the nature of work involved.

!?.3ill ayment through 'lectronic 3anking) Internet has thus ushered the

concept of anytime and anywhere banking. To the individual the onerous

task of visiting several places to settle his service bills like telephone,

water, electricity, etc., can be overcome through the electronic 3ill ay

service provided by the bank. @e can pay his regular monthly bills0telephone, electricity, mobile phone, insurance, etc.1 right from his

desktop. Ao more missed deadlines, no more loss of interest. @e can

schedule his bills in advance, and thus avoid missing the bill deadlines as

well as earn extra interest on his money.

!!.The 'lectronic 8hopping all) The customer can also make his shopping

payment through the 3ank*s secure website(so that he can shop online

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without any security worries, as the bank can provide online real time

shopping mail services through partner shopping sites

!.'ffecting ersonal Investments through 'lectronic 3anking) The bank*s

website can also allow the customer to invest in shares, mutual funds and

other financial products.

!#.Investing in utual funds) 'lectronic banking also brings the customer

the same convenience while investing in utual funds( @assle free and

aperless Investing. @e can invest in mutual funds without the hassles of

filling application forms or any other paperwork. @e needs to provide no

signatures or proof of identify for investing. ;nce he places a re%uest for

investing in a particular fund, there are no manual processes involved.

@is bank funds are automatically debited or credited while

simultaneously crediting or debiting his unit holdings.

!5.Initial ublic ;ffers ;nline) The customer could also invest in initial

public offers online without going through the hassles of filling &AB

application form + paperwork. Cet in(depth analyses of new initial public

offers issues, which are about to hit the market and analysis on these.

Initial public offer calendar, recent initial public offers listings,

prospectus + offer documents, and initial public offer analysis are few of

the features, which help a customer to keep on top of the initial public

offers markets.

!9.;ther benefits) The e(banking provides some other benefits also.some ofthem are) -onvenience, speed of concluding transactions, safety(banking

from own home, cheaper service fees, highly scaleable, easy

customi/ation, lower cost of both installation and maintenance,platform

independence.

1.% &i'itation of E-Banking

!. 8afety situations around &Ts.

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. &buse of bank cards by fraudsters at &Ts.

#. Danger of giving your card number when buying on(line.

The modern technology has influenced the financial sector to a large extent. It

increases the competitive efficiency of the firms and provides sophistication to

the end users. It makes everyone fittest to survive.

+*a!ter 2 - Internet Banking

2.1 Internet Banking

a) Introductionb) T*e Indian cenario

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c) roduct er$ice offered

2.2 isk e5ards

a) 6!erationa isk

b) ecurit isk

c) ste' arc*itecture design

d) e!utationa isk

e) &ega isk

f) Mone &aundering isk

g) +ross Border isks

*) trategic isk

i) 6t*er isk

7) isk of unfair co'!etion

2.1 Internet Banking-

a) Introduction -

The delivery channels include direct dialup connections, private networks,

public networks, etc. with the popularity of computers, easy access to Internet

and $orld $ide $eb 0$$$1, Internet is increasingly used by banks as a

channel for receiving instructions and delivering their products and services to

their customers. This form of banking is generally referred to as Internet

3anking, although the range of products and services offered by different banks

vary widely both in their content and sophistication.

b) T*e Indian cenario -

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The entry of India banks into Aet 3anking

Internet banking, both as a medium of delivery of banking services and as

a strategic tool for business development.

&t present, the total internet users in the country are estimated at > lakh.

@owever, this is expected to grow exponentially to >? lakh by ??#. only

about ! percent of Internet users did banking online in !>>=. This is

increased to !:.< percent in arch ??? 0India 6esearch, ay >, ???,

otak 8ecurities1.

-ost of banking service through the Internet from a fraction of costs

through conventional methods. 6ough estimates assume teller cost at

6e.! per transaction, &T transaction cost at 59 paise, phone banking at

#9 paise, debit cards at ? paise and Internet banking at !? paise per

transaction.

d) roduct and er$ices 6ffered -

3anks in India are at different stages of the web(enabled banking cycle.

Initially, a bank, which is not having a web site, allows its customer to

communicate with it through an e(mail address* communication is limited

mail account.

$ith gradual adoption of Information Technology, the bank puts up a web

site that provides general information on deposits products, application

forms for downloading and e(mail option for en%uiries and feedback.

Eijaya 3ank provides information on its website about its A6I and other

services. -ustomers are re%uired to fill in applications on the Aet and can

later receive loans or other products re%uested for at their local branch.

& few banks provide the customer to en%uire into his demat account

0security+shares1 holding details, transaction details and status of

instructions given by him. These web sites still do not allow online

transactions for their customers.

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8ome of the banks permit customers to interact with them and transact

electronically with them. 8uch services include re%uest for opening of

accounts, re%uisition for che%ue books, stop payment of che%ues, viewing

and printing statements of accounts, movement of funds between

accounts within the same bank, %uerying on status or re%uests,

instructions for opening of Fetter of -redit and 3ank Cuarantees, etc.

These services are being initiated by banks like I-I-I 3ank Ftd.,

-itibank, Clobal Trust 3ank Ftd., 4TI 3ank Ftd., 3ank of -itibank 3ank

of adura Ftd., 7ederal 3ank Ftd., etc.

8ome of the more aggressive players in this area such as I-I-I 3ank Ftd.,

@D7- 3ank Ftd., 4TI 3ank Ftd., -itibank, Clobal Trust 3ank Ftd., and

3ank of unjab Ftd., offer the facility of receipt, review and payment of

bills online.

The GInfinity* service of I-I-I 3ank Ftd. &lso allows online real time

shopping all payments to be made by customers.

@D7- 3ank Ftd. @as made e(shopping online and real time with the

launch of its payment gateway.

3anks providing internet banking services have been entering into

agreements with their customers setting out the terms and conditions of

the services.

The terms and conditions include information on the access through user(

ID and secret password, minimum balance and charges, authority to the

bank for carrying out transactions performed through the service, liability

of the user and the bank, disclosure of personal information for statistical

analysis and credit scoring also, non(transferability of the facility, notices

and termination, etc.

2.2 isk e5ards -

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a) 6!erationa isk -

;perational risk, also referred to as transactional risk is the most common

form of risk associated with i(banking.

It takes the from of inaccurate processing of transactions, non(

enforceability of contracts, compromises in data integrity, data privacy

and confidentiality, unauthori/ed access + intrusion to bank*s systems and

transaction, etc.

8uch risks can arise out of weaknesses in design, implementation and

monitoring of banks information system.

3esides inade%uacies in technology, human factors like negligence by

customers and employees, fraudulent activity of employees and crackers+

hackers, etc. can become potential source of operational risk.

b) ecurit isk -

8ecurity risk arises on account of unauthori/ed access to a bank*s critical

information stores like accounting system, risk management system,

portfolio management system, etc.

;ther related risks are loss of reputation, infringing customers* privacy

and its legal implications, etc.

&ttackers could be hackers, unscrupulous vendors, disgruntled employee

or even pure thrill seekers.

In addition to external attacks banks are exposed to security risk from

internal sources e.g. employee fraud. 'mployee being familiar with

different systems and their weaknesses become potential security threats

in a loosely controlled environment. They can manage to ac%uire the

authentication data in order to access the customer accounts causing

losses to the bank.

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4nless specifically protected, all data+ information transfer over the

internet can be monitored or read by unauthori/ed persons.

c) ste' arc*itecture and design -

3anks face the risk of wrong choice of technology, improper system

design and inade%uate control processes.

Aumerous protocols are used for communication across internet. 'ach

protocol is designed for specific types of data transfer.

& system allowing communications with all protocols, say @TT 0@yper

Text Transfer rotocol1, 7T 07ile Transfer rotocol1, telnet, etc. is more

prone to attack than one designed to permit say, only @TT.

any banks rely on outside service providers to implement, operate and

maintain their e(banking system

8ecurity related operational risk include access control, use of firewalls,

cryptographic techni%ues, public key encryption, digital signature, etc.

d) e!utationa isk

6eputational risk is the risks of getting significant negative public

opinion, which may result in a critical loss of funding or customers. 8uch

risks arise from actions which cause major loss of the public confidence

in the banks* ability to perform critical functions or impair bank(customer

relationship. It may be due to banks* own action or due to third party*saction.

The main reasons for this risk may be system or product not working to

the expectations of the customers, significant security breach 0both due to

internal and external attack1, inade%uate information to customers about

product use and problem resolution procedures, significant problems with

communication networks that impair customers* access to their funds or

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account information especially if, there are, no alternative means of

account access.

e) &ega isk -

Fegal risk arises from violation of, or non(conformance with laws, rules,

regulations, or prescribed practices, or when the legal rights and

obligations of parties to a transaction are not well established.

& customer, inade%uately informed about his rights and obligations, may

not take proper precautions in using Internet banking products or

services, leading to disputed transactions, unwanted suits against the bank

or other regulatory sanctions.

f) Mone &aundering isk -

o &s internet banking transactions are conducted remotely banks may find

it difficult to apply traditional method for detecting and preventing

undesirable criminal activities. &pplication of money laundering rules

may also be inappropriate for some forms of electronic payments.

o To avoid this, banks need to design proper customer identification and

screening techni%ues, develop audit trails, conduct periodic compliance

reviews, frame policies in internet transactions.

g) +ross-Border isks -

Internet banking is based on technology that, by its very nature, is

designed to extend the geographic reach of banks and customers. 8uch

market expansion can extend beyond national borders. This causes

various risks.

8uch considerations may expose banks to legal risks associated with non(

compliance of different national laws and regulations, including

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consumer protection laws, record keeping and reporting re%uirements,

privacy rules and money laundering laws.

The foreign(based service provider or foreign participants in internet

banking are sources of country risk to the extent that foreign parties

become unable to fulfil their obligations due to economic, social or

political factors.

*) trategic isk -

7or reducing such risk, banks need to conduct proper survey, consult

experts from various fields, establish achievable goals and monitor

performance.

&lso they need to analy/e the availability and cost of additional

resources, provision of ade%uate supporting staff, proper training of staff

and ade%uate insurance coverage.

i) 6t*er isk -

Traditional banking risks such as credit risk, li%uidity risk, interest rate

risk and market risk are also present in internet banking.

These risks get intensified due to the very nature of internet banking on

account of use of electronic channels as well as absence of geographical

limits.

-redit risk) Is the risk that a counterparty will not settle an obligation for

full value, either when due or at any time thereafter. 3anks may not be

able to properly evaluate the creditworthiness of the customer while

extending credit through remote banking procedures, which could

enhance the credit risk.

&nother facility of internet banking is electronic money. It brings various

types of risks associated with it. If a bank purchases e(money from an

issuer in order to resell it to a customer, it exposes itself to credit risk in

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the event of the issuer defaulting on its obligation to redeem electronic

money.

Fi%uidity risk) It is important for a bank engaged in electronic money

transfer activities that it ensures that funds are ade%uate to cover

redemption and settlement demands at any particular time. 7ailure to do

so,besides exposing the bank to li%uidity risk, may even give rise to legal

action and reputational risk.

7) isk of unfair co'!etion -

Internet banking is going to intensify the competition among various

banks. The open nature of internet may induce a few banks to use unfair

practices to take advantage over rivals. &ny leaks at network connection

or operating system, etc. may allow them to interfere in a rival bank*s

system.

Thus, one can find that along with the benefits internet banking carries

various risks for bank itself as well as banking system as a whole.

+*a!ter 4 - 8*at do +o'!uters do in Banks

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T*e different uses of Infor'ation Tec*noog -

a) inge 8indo5 ste'

b) #n Ti'e Banking

c) #uto'ated Teer 'ac*ine

d) *ared a'ent 9et5ork ste'

e) +usto'er er$ice

f) Teebanking

g) :o'e Banking

*) Eectronic Fund Transfer

i) astic +ards as Media for a'ent

1. +redit +ard

2. ;ebit +ard

3. 'art +ard

4. #TM +ard

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4.1 T*e different uses of Infor'ation Tec*noog -

a) inge 8indo5 ste' (8) -

o The cashier or teller who accepts the cash, keys in the data from his

terminal after receipt of the amount.

o The amount is straight away posted to the system.

o If the customer wishes to update passbook the same is also updated

through the security form printer+pass book printer.

o If a customer wishes to obtain a draft, the clerk keys in the details of the

account to be debited and the particulars of the drafts to be issued on the

machine.

o The customer*s account is debited and security form printer prints out

draft and clerk can hand over the same to customer duly signed.

b) #n Ti'e Banking -

This refers to banking service available 5 hours a day and #:9 days a

year.

8uch facility is made available to the customer through the &utomated

Teller machine.

3anking, being a service industry, is primarily driven by customers needs.

'ach customer is willing to pay a price for the services provided it is

made available to him when he wants and where he wants.

In the present day of server competion, banking services are driven by

technology, which is more oriented towards providing better services to

the customer.

The concept of banking hours has been changed from the fixed 5 hours to

5 hours.

This has been made possible through use of &Ts. 'ven under the

manual service, the banks have stated to extend the service from the

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traditional 5 hours to 9 hours and even up to ! hours say from = & to =

.

8ome banks have introduced the practice of 8unday 3anking or @oliday

3anking.

c) #uto'ated Teer Mac*ine (#TM) -

&T is a machine in the nature of a computer in general sense, but is

dedicated to do certain types of specific jobs only.

The hardware and the proprietary i.e. the software used in one machine

can not be used in one machine.

d) *ared a'ent 9et5ork ste' (9) -

The 8A8, named 8$&D@&A, has been sponsored by the Indian 3ank*s

&ssociation 0I3&1.

It is a network of &Ts, points of sale terminals and -ash Dispensers

with a view to pool the resources of the banks and underlines the spirit of

competition through cooperation.

It became operational in umbai on !st7ebruary !>>< and in two years

about !9? &Ts were owned and installed by #= banks including foreign

banks, public and private sector Indian commercial banks as also

cooperative banks.

The biggest advantage of the network is that the &T cards issued by

different banks can used at any member banks &T.

3anks can have as many &T as they want and follow some standards

set by the 8A8 committee.

The heart of the network is the 8witch and its main components are)

Tandem ainframe -omputer, 3&8' 5 8oftware, otorola networking

e%uipments and the leased lines.

e) +usto'er er$ices -

The following customer services are offered through the system

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i. -ash withdrawal 0up to a specified limit1

ii. -he%ue+-ash deposit 0the receipt being only for the deposit of the

envelope containing cash but not for the amount therein1

iii. 'n%uiry about balances

iv. rinting of statement of accounts

v. 6e%uest for che%ue book and standing instructions.

vi. Transfer of funds

vii. IA change

f) Teebanking -

7rom the conventional banking, where the services were provided

manually across the table, it has come to a stage where the customer is

not re%uired to visit the bank en%uiry of balance in the account, sending a

remittance, to get a statement of account, etc.

The concept has become so popular that in 48& customers do not visit

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If the customer needs some information the same can be got by

contacting the bank over the phone as described in the telebanking.

If the customer wants to put through transaction and wishes to see his

account or to get a statement of his account, he may have to use a -.

The home banking service can be broadly classified under two

groups, one without using the information technology and another using

information technology.

$hen customer contacts the bank o the phone no specific

technology is involved and the service of telebanking are provided to

him.

*) Eectronic Fund Transfer (EFT) -

o In India the fund transfers are basically done through ail Transfer, Draft

or Telegraphic Transfer.

o In case of Telegraphic Transfer 0TT1 again the Department of

Telecommunication was the sole provider of Telephone, Telex and

Telegram facilities.

o $ith the process of liberali/ation private operators have started providing

alternative voice communication channels through mobile phones and

vast communication as an alternative channels for data communication.

o It was normal for any TT to be credited to the beneficiary*s account after

delay of to 5 days

o The different forms of '7T prevalent in the use are)

'7T through 'lectronic Data Interchange

3&AA'T

63IA'T

ID63T E8&T Aetwork

'7T from oint of 8ales

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'lectronic -ash

8$I7T( Clobal 8ystem for 7unds Transfer

'lectronic -learing 8ettlement

i) astic +ards as Media for a'ent -

There are four types of plastic cards being used ad media for making payments.

These are)

!. -redit -ard

. Debit -ard

#. 8mart -ard

5. &T -ard

1. +redit +ards -

The credit card enables the cardholders to)

urchase any item like clothes, jewellery, railway+air tickets, etc.

ay bills for dining in a restaurant or boarding and lodging in a hotel

&vail of any service like car rental, etc

2. ;ebit +ard -

& debit card is issued on payment of a specified amount by the issuing company

like a telephone company to a customer on cash payment or on debiting his

account by a bank.

Thus it is like an electronic purse, which can be read and debited by the re%uired

amount.

It may be noted that while through a credit card, the customer first makes a

purchase or avails service and pays later on, but for getting the debit card, a

customer has to first pay the due amount and then make a purchase or avail the

service. 7or this reason, debit card are not as popular as credit cards.

3. 'art +ards -

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8mart -ards have a built(in microcomputer chip, which can be used for storing

and processing information. 7or example, a person can have a smart card from a

bank with the specified amount stored electronically on it. &s he goes on

making transactions with the help of the card, the balance keeps on reducing

electronically. $hen the specified amount is utili/ed by the customer, he can

approach the bank to get his card validated for a further specified amount. 8uch

cards are used for paying small amounts like telephone calls, petrol bills, etc.

In India, a smart card, suiting Indian banking environment, is being developed

and tested at IIT, umbai, in collaboration with the 63I and 83I. The card is

being used as an experimental tool for promoting cashless society in and around

the IIT -ampus. The latest smart card being developed will combine all the

features of electronic purses, credit cards and &T cards.

4. #TM +ards -

The card contains a IA 0ersonal Identification Aumber1 which is selected by

the customer or conveyed to the customer and enables him to withdraw cash up

to the transaction limit for the day. @e can also deposit cash or che%ue.

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+*a!ter " +redit +ard Frauds

".1 +redit +ard Frauds

Meaning

;efrauder

#5are of +redit +ard

#d$antages of +redit +ard

+redit +ard Frauds

".2 T*e re$ention of Frauds

;u!icate +ard

8*ite !astics

Banker,s oe

+ber &a5s

#tering ae ter'inas

Internet eas

Monitoring ;e!osit

isk Manage'ent

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+entra +redit +ard +earing :ouse

&oss of +redit +ards in Transit

Fraud +onsciousness

*sica E$idence

+*eck t*e *and5riting

".1 +redit +ard Frauds -

Meaning -

& credit card is a money transaction device without using cash or fiduciary

documents.;efrauder -

The defrauder has been slow to exploit the credit card, for making a fast buck.

In 48&, he made !9 million dollars. through the cards, in !>=!. in !>= his

earning through the card, rose to 9? million dollars. in !>=#, the fraudulent card

brought over !?? million dollars to its creators. The fraudulent card industry is

rising higher and higher to di//y height every year. Fike other countries if the

genuine credit card has come in India, the fraudulent credit card cannot be far

behind.

#5are of +redit +ard -

The credit card, as already seen, is a money transaction device. The institutions

issuing the credit card give the card holders authority to obtain money, goods,

services or any other thing of value, on credit. They guarantee payment of debit

so raised. These institutions are banks and other financial institutions, clubs and

travel agencies and departmental stores, etc. -redit -ards, 3ob -ards, aster

-ards, Eisa -ards, express -ards, 'uro -ards have wide circulation. 8ome of

them have wide circulation. 8ome of them have world(wide circulation..

+redit +ard Frauds -

-redit card frauds manifest themselves in a number of ways)

!. Cenuine cards are manipulated.

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. Cenuine cards are altered.

#. -ounterfeit cards are created.

5. 7raudulent telemarketing is done with credit cards.

9. Cenuine cards are obtained on fraudulent applications in the

names+addresses of other persons and used.

It is feared that with the expansion of '(-ommerce, (-ommerce, and Internet

facilities being available on massive scale, the fraudulent fund freaking via

credit cards will increase tremendously. The shape it takes will be limited only

by the ingenuity of the future.

".2 T*e re$ention of Frauds

;u!icate +ard -

The duplicate fraudulent credit cards are those where the defrauders have made

sincere efforts to duplicate the original cards through photo(mechanical

processes.

They follow the footsteps of the original manufactures of the genuine credit

cards to produce as close a replica of the genuine card as possible, employing

similar materials and similar processes of printing and embossing, besides

magnetic encodings.

8*ite astic -

The counterfeit credit cards known as Gwhite plastics* are imitations of credit

cards in general aspect.Banker,s oe -

The credit card industry is one of the fastest growing activities of the banking

industry. The artist has to be there 0where the money is1. The banks have to

suffer losses.

+ber &a5s -

Information Technology inistry be approached for stringent laws against

credit card crimes.

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#tering aes ter'inas -

Internet '(ail should be utili/ed on the pattern of @ot 3ox organi/ed about a

decade ago, suitably modified to benefit from the advances the information

technology has made since them.

Internet eas -

-omputers should be pressed into service via internet connection by suitably

upgrading the Television 8ystem Eertical blanking Intervals for notifying the

fraudulent cards in the market.

Monitoring ;e!osit -

onitoring system can help locate the unscrupulous merchants who use or

allow the use of Gwhite plastics* and fraudulent cards, knowing fully well their

fraudulent nature for making a fast back.

isk Manage'ent -

To meet the menace one of the top card companies has imitated risk

management service to

identify these high risk centers where daily all the inter(change transactions of

the areas are scrutini/ed and the credit card number are checked against those

which have been declared fraudulent, stolen or lost.

+entra credit +ard +earing :ouse -

There should be a joint list of credit card holders on central basis with their

addresses and other details, if any. Aew applicants to any bank for credit cards

should be checked) ( If he is holding card from other issuers.

If he has held a card at other times. If so, when $hy did he discontinue

If he has applied to more than one credit card issuers

The new card holder*s business transactions should be watched for some

time.

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&oss of +redit cards in Transit -It must be prevented.It is simple for either

the customer to collect personally or the banker should deliver it personally, or

it should be sent by courier and confirmation obtained on telephone, in addition

to the paper receipt.

Fraud +onsciousness -

The problem of credit card frauds must be brought to the notice of users as well

as of the servers at sale terminals.

roper training in the check up of the credit card in its various aspects has no

substitute and in view of the huge issues the same is indispensable.

*sica E$idence

Immediately on the discovery of fraud all the physical evidence available

should at once be taken into possession and the case reported to the police for

investigation.

+*eck t*e :and5riting -

@andwriting 0in signatures1 is available on sale drafts and on credit cards. The

comparison of hand(writing inter se and with that of the suspect and of genuine

card holders, can lead to the identity or non(identity of alleged writer.

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+*a!ter % - Banks +ontro in 6nine Banking

%.1 8i Banks +ontro 6nine Banking -

Internet Banking in India

ea t*reats

6nine

%.2 uggestions

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%.1 8i Banks +ontro 6nine Banking -

Internet Banking in India -

;nline banking is expected to explode in the ext few years. $e will be entering

the age of non(physical exchange of cash aided by complete transparency

leading to perfectly competitive electronic market place and inevitably to

customer supremacy. Crowth in online banking will be driven by the following

reasons)

Increasing access to low cost electronic services

'mergence of open standards in the banking industry

Improved customer awareness

'ntry of global majors in the market

Integration of banking services with e(commerce and emergence of e(

cash

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-onvenient international transactions as Internet eliminates geographic

boundaries

8hift from one(stop shopping to unbundled product purchases

ea T*reats -

& majority of leading online brokers are beginning to offer banking

products and services as part of their overall offers.

They are actively seeking to capture excess" balances in existing

checking and saving accounts by offering better rates.

There are other threats to banks as well. 8everal leading system providers

have developed bank(in(a(box" solution J unbranded, electronic, full(

service, virtual(bank system J that can be bought, branded, and offered to

consumer by any authori/ed company that wishes to provide banking

service.

%.2 uggestions -

To prevent online banking from remaining an expensive additional

channel that does little to retain footloose customers, banks must act

%uickly.

The first and most obvious step they should take is to see to it that the

basic problem fueling dissatisfaction have been addressed.

&fter repairing this basic deficiency, banks must ensure that there

services is competitive.

;bviously, it should include checking, savings and brokerage services,

which anchor customers to the institution.

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In addition, to meet the challenge of online brokerage and other new

entrants, banks would need to add supermarkets" selling products such

as mortgage, mutual funds and insurance.

+oncusion -Technology innovation and fierce competition among existing banks have

enable a wide array of banking products and services, being made available to

retail and wholesale customer through an electronic distribution channel,

collectively referred to as e(banking. The integration of e(banking application

with legacy system implies an integrated risk management approach for all

banking activities of a banking institution.

3anks have traditionally been in the forefront of harnessing technology to

improve product and efficiency. Technology is altering the relationships

between banks and its internal and external customers. Technology has also

eroded the entry barriers faced by many industries. $ith one time investment,

technology has brought about superior products and channel management with a

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special focus on customer relationship. The incremental costs incurred for

expansion and diversification are also more beneficial.

The major driving force behind the rapid spread of e(banking is its acceptance

as an extremely cost effective delivery channel. 3ut on the

flipside, it is associated with risks such as reputation risk, security risk, cross(

border risk and strategic risk, which are uni%ue to e(banking. 3anks need to

have an effective disaster recovery plan along with comprehensive risk

management tool is significant not only to the bank but also to the banking

system as a whole.

-oming home, India is on threshold of a major banking revolution with the

invasion of net banking. $ith the concept of payment gateway coming in, banks

are vying with one another for the lion*s share in the market.

BIB&I6


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Indian 3anking, 8. Aatarahan and 6. arameswaran

3anking J In the Aew illennium, I-7&I 4niversity

banking electronic

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