E - BANKING

Onkar Sule

Roll no: - 54

What is E - BANKING

Electronic banking, also known as electronic funds transfer (EFT), it is simply the use of electronic means to transfer funds directly from one account to another, rather than by cheque or cash.

Technology Commencement in Banking In 70’s, banks started to establish centralized data

processing centers. Essentially the roles of these data processing

centers are: Collect the handwritten documents from

branches Compile the documents Manual data entry by the operators Generate reports for the bank staff and the

central bank Execute some banking transactions

Branch Automation

In 80’s, banks started technology investments for the branches.

The first step is offline branches. Terminals connected to local branch computer Second step is online branches connected

centrally. Most of the transactions started to be performed in the central mainframe.

Uses of EFT

Have your check

deposited directly into your bank or credit

union checking account.

Withdrawal of money at your

convenience using your PIN

Online Bill Payment

Buy goods using plastic money

instead of cash

Various forms of E – Banking….

Internet Banking

ATM’s

TELE BANKING

Plastic Money

E - Cheque

Process of all forms of E – Banking…

Internet

Banking AT

M’sTELE Banki

ngPlastic Mone

yE -

Cheque

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 banking application.

ATM.....

In the mid-1980s, that cash dispensers truly became a worldwide phenomenon.

It took 16 years for the first 100,000 cash dispensers to be installed, but only four years more for the next 100,000 and 3 months for the next 100,000.

Now, ATM became the electronic face of banking for most customers.

Beside cash withdrawal, there exist various transaction options from transfer to fund buying/selling.

Now there are 1217463 ATM installed in and around Mumbai

ATM and POS Application Architecture

Credit Card Authorization

Debit Card Authorization

Switch System

Point of Sale

New habits in shopping Increased the use of plastic cards Now there are 313140 POS installed in

India (Ref: www.moneylife.in)

Main components Switch IVR CTI(Computer Telephony Integration)

Manage each call using the computer Pop up the user information while transferring the call

Agent Desktop Application Win32,ActiveX, HTML

Host Application

Telephone Banking Infrastructure

Telecom

IVR CTI HOST

Telecom

Interactive Voice Response (IVR) is a software application that accepts a combination of voice telephone input and touch-tone keypad selection and provides appropriate responses in the form of voice

IVR has come into our life at the beginnings of 90’s. First step in Telephone Banking Peak transaction volume in salary payment days for balance

inquiry Integrated with ATM system

IVR

Plastic Cards

The plastic card usage grown enormously in last 2 decade.

Plastic card became the main media for bank customers.

Number of credit card in India:Credit Card Type National Cards International Cards TotalVisa 12,00,704 70,43,834 82,44,538

MasterCard 4,88,881 48,20,965 53,09,846Other 13,599 36,884 50,483total 17,03,184 1,19,01,683 1,36,04,867

Mobile Banking

Current Mobile Banking Applications: SMS Banking WAP Banking STK (Sim Toolkit) Banking

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

Bank

SMS DB

Leased line

GSM Operator

Application Server

GSM Operator SMS

DB

GSM Network

Bank Host

WAP Banking Wireless application protocol (WAP) is an

application environment and set of communication protocols for wireless devices designed to enable manufacturer-, vendor-, and technology-independent access to the Internet and advanced telephony services.

WAP is a global standard and is not controlled by any single company

Various banking transactions offered in WAP environment by banks.

Similar architecture with SMS banking

SIM Toolkit SIM card enables to keep and load different

applications. SIM Application Toolkit has been agreed as a GSM

standard SIM Application Toolkit is independent of phone

manufacturers and designs. SIM Application Toolkit allows the flexibility to update the SIM

to alter the services and download new services over the air

SIM Application Toolkit is designed as a client-server application. On the server side, SimCard platform and the client side, phone that supports the SIM Application Toolkit

In the near future, banks will start to offer banking transactions in this platform.

Banking Application Architecture

Loans&Credits

FX Import / Export

Deposit (TD,DD)

FBS Securities PromissoryNotes

MerchantChequesNBS EFT

DAL

Batch Operations

ATM

POS

Teletel

Telerom

Teller (Branch)

Internet Banking

Phone Banking

Internet Shopping

PCMCampaign

ManagementCredit Risk

ManagementProductivity

CIF Product Factory PortfolioManagement

INFO

CENTER

Sales SupportSystem YKB HRPaymentsCMS Treasury

Relationship Management

De

liv

ery

Se

rvic

es

Management & Control

Reporting

Info

rma

tio

n D

eli

ve

ry

Settlement

GL / Accounting

Corporate Tables

Data Warehouse Electronic repositories of summarized historical

data The main idea behind data warehouse is get all

company data working together so users can see more,learn more, and make the organization work better

Data Warehouse helps users to identify trends, find answers to business questions and derive meaning from historical and operational data.

Data access is easier and less costly Decision support solutions run faster and are more

accurate.

Data Warehouse Process

Design Transform Extract Deliver

Transaction Data Extraction

Data Scrubbing and Cleansing

Load, index and Aggregate

Publish and Subscribe

Data Mapping

Data Replication

Data Histories and Summaries

Data Access Tools

Integrated Data Warehouse Infrastructure

Partial Solutions

Life Cycle

Complete Integrated Solution

Channel Costs

0

0.5

1

1.5

2

Web ATM Call Center Branch

Channel Integration Evolution

Channel Integration evolution Reuse Efficiencies of Scale

Reduction of Redundancies

The Role of Banks in the New Economy Internet and mobile devices have brought new

rules to economy and shaped the way to do business

Banks has also evolved according to the new economy and took their places in this new world to add value to their customer

The new ways to do business are : e-commerce (B2C) m-commerce B2B

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

M-commerce Mobile commerce applications involve using a

mobile phone to carry out financial transactions- this usually means making a payment for goods or transferring funds electronically.

As content delivery over wireless devices becomes faster, more secure, and scalable, there is wide speculation that m-commerce will surpass wireline e-commerce as the method of choice for digital commerce transactions.

B2B 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 Different payment types(credit card, deposit account,

loan) Information after payment

E-Security To improve the e-business, all the users should feel secure to

perform the transaction this environment The main concepts in e-security are:

PKI (public key infrastructure) enables users of a basically unsecure public network such as the Internet to securely and privately exchange data and money through the use of a public and a private cryptographic key pair that is obtained and shared through a trusted authority.

Public key is a value provided by some designated authority as a key that, combined with a private key derived from the public key, can be used to effectively encryption messages and digital signature.

Private or secret key is an encryption/decryption key known only to the party or parties that exchange secret messages. Public key is used together with a private key

E-Security - continued Digital certificate is an electronic "credit card" that establishes your

credentials when doing business or other transactions on the Web. It is issued by a certification authority (CA).

CA (certificate authority) is an authority in a network that issues and manages security credentials and public key for message encryption. As part of a public key infrastructure, a CA checks with a registration authority to verify information provided by the requestor of a digital certificate

An RA (registration authority) is an authority in a network that verifies user requests for a digital certificate and tells the certificate authority to issue it.

Advantages of E-banking Benefits for Banks

Benefits for Small to Medium Businesses

Benefits for Customers

Benefits for Banks Larger customer coverage

Reducing the costs of operations

Promoting their services and products internationally

Increasing the customer satisfaction and providing a personalized relationship with customers

Benefits for Small to Medium Businesses

To run its operations more effectively

Lower cost than traditional financial management mechanisms

Benefits for Customers

Convenience- 24 hours a day, seven days a week

Cost- Reducing transfer fees

Speed- Faster circulation of assets

Competitiveness- Fostering competition in financial market

Benefits for CustomersCommunication- communicate easily

Environmental- Abolishing the uses of paper

Others

- Offering one-stop-shop solutions

Disadvantages OF E-banking A need for customer skill to deal with computers and

browsers.

E.g. Elderly, Housewives → Inconvenient

Site change it will make the customer have some confusion or delay.

Security Risk

Security Risk Increasing number of fraudulent bank websites

Fake emails purporting to be sent from banks

Use of Trojan Horse programs to capture user IDs and 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

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

Viruses and Worms-Trojan Horse Program

When we open some suspiciouswebsites or email

Trojan Horse Programwill install our computer secretly

Hidden in the computer When you access

bank websites Capture our

account andthe password

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.

Precautionary MeasuresFor Bank:

Should provide specific guidance to their customers

For Customers : Should not disclose their customer IDs (e.g., account

numbers) or PIN to anyone else. Periodically change their PIN Should promptly log out from the service Should regularly check their account balances and

statements to identify unusual transactions.

Do not access Corporate Cyber banking through public terminals.

To safeguard your computer from any other hacker attack, install anti-virus and anti-spyware software on your computer and update it regularly.

Alternative Delivery Channels

Anytime, anywhere bankingTelephone Banking Internet BankingMobile BankingTelevision bankingNext ???

What is the Next channel

Microwave Banking???

THANK YOU