online project.docx
TRANSCRIPT
INTERNET BANKING
Submitted by:
KulsumFatema Rajediya
T.Y.B.C.B.I. (SEMESTER V)
Under the guidance of :
Ms. Angira
Submitted to:
University of Mumbai
RAJASTHANI SAMMELAN’S
Ghanshyamdas Saraf College
Affiliated to University of Mumbai
ACCREDITED BY NAAC WITH ‘A’ GRADE
&
Durgadevi Saraf Junior College
(Arts & Commerce)
S.V. Road, Malad (West),
Mumbai – 400 064.
Year : 2014 -2015
RAJASTHANI SAMMELAN’S
Ghanshyamdas Saraf College
Affiliated to University of Mumbai
ACCREDITED BY NAAC WITH ‘A’ GRADE
&
Durgadevi Saraf Junior College
(Arts & Commerce)
S.V. Road, Malad (West),
Mumbai – 400 064.
CERTIFICATE
I Prof.Angira .hereby certify that Ms. Rajediya Kulsumfatema Gulamhussain a student of
Ghanshyamdas Saraf College of T.Y.B.C.B.I. (Semester V) has completed project on “INTERNET
BANKING” in the academic year 2014-2015. This information submitted is true and original to the
best of my knowledge.
External Examiner : Principal :
Date :
Project Co-ordinator ; College Seal :
Date :
ACKNOWLEDGEMENT
All these years we have just studying and passing. But this time we have got an opportunity to
make such a project study. So it is very obvious for me to thank all those people associated with the
making of the project. I would like to thank the University of Mumbai for giving me this chance.
I owe a great many thanks to my project guide Ms.Angira. who has been a constant support and
guidance throughout the making of my project and for monitoring my project with attention and care.
She has taken the pains to go through the project and make necessary corrections as needed.
I would also like to thank our course coordinator Ms. for being a moral support to us during
this project.
I express thanks to my college Principal for extending her support.
And last but not the least I would take the opportunity to thank my parents without whom the project
would have been a distant reality. Sincere thanks to all my fellow mates and well wishers.
DECLARATION
I Miss.Rajediya Kulsumfatema Gulamhussain, a student of Ghanshyamdas Saraf College of Arts &
Commerce, T.Y.B.C.B.I. (Semester V) hereby declare that I have completed project on “INTERNET
BANKING-” in the academic year2014-2015. This information submitted is true and original to the
best of my knowledge.
Date : Signature of Student :
EXECUTIVE SUMMARY
Technological developments have been growing at an alarming speed in the international arena. Internet
is proudly one of the best in those. So, the banking sector is also making the best utilization of it. In
this study based on INTERNET BANKING, it has been observed that the development of online
banking has increased by leaps and bounds during the past few years. Concentrating on the Indian
economy, the use of online banking is still in the developing stage.
Today in India the scope of online banking is growing by a good decent rise in its usage. The rise in
the usage of the Internet is the main criteria for development of online banking.
This project helps us understand the how the online banking came into existence and its need
in the modern world. It shows us the insights of the online banking in India. It helps us understand
the opportunities and the challenges associated with the online banking in India.
INDEX
SR.NO TOPIC PAGE NO
I
1.
CHAPTER I – INTRODUCTION
Development of Internet Banking through Evolution of Information
Technology & E-Commerce
1 - 42
1 – 6
2. What is Internet banking?
Features Advantages Disadvantages
6 – 14
3. How does online banking work and its structure. 15 – 16
4. Opportunities in Online Banking:
Is there a future in online banking? Changes in trend Why banks encourage online banking?
17 – 23
5. Challenges in Online Banking:
Main concerns Related Problems Adherences to guidelines
23 – 36
6. Solutions 36 – 40
7. Case Studies 40 – 42
8. ICICI Bank 42
II
1.
CHAPTER II – RESEARCH METHODOLOGY
Objectives of the study
43
2. Limits of the study
3. Methodology used
III CHAPTER III – DATA ANALYSIS 44 – 47
IV CHAPTER IV – RECOMMENDATION & CONCLUSION 48 – 49
V CHAPTER V – BIBLIOGRAPHY 50 – 51
CHAPTER I – INTRODUCTION
Online banking is a process that has evolved because of the development of technology over the
years. So before going into detail on the online banking we should have a overview of its birth.
INFORMATION TECHNOLOGY
Information technology (IT) is the acquisition, processing, storage and dissemination of vocal, pictorial,
textual and numerical information by a microelectronics-based combination of computing and
telecommunications. IT (information technology) is a term that encompasses all forms of technology
used to create, store, exchange, and use information in its various forms (business data, voice
conversations, still images, motion pictures, multimedia presentations, and other forms, including those
not yet conceived). It's a convenient term for including both telephony and computer technology in the
same word. It is the technology that is driving what has often been called "the information revolution."
IT is the area of managing technology and spans wide variety of areas that include but are not limited
to things such as processes, computer software, information systems, computer hardware, programming
languages, and data constructs. In short, anything that renders data, information or perceived knowledge
in any visual format whatsoever, via any multimedia distribution mechanism, is considered part of the
domain space known as Information Technology (IT). IT provides businesses with four sets of core
services to help execute the business strategy. These four core services are broken into business
process automation, providing information, connecting with customers, and productivity tools.
IT professionals perform a variety of functions (IT Disciplines/Competencies) that ranges from installing
applications to designing complex computer networks and information databases. A few of the duties
that IT professional perform may include data management, networking, engineering computer hardware,
database and software design, as well as management and administration of entire systems. Information
technology is starting to spread further than the conventional personal computer and network
technologies, and more into integrations of other technologies such as the use of cell phones,
televisions, automobiles, and more, which is increasing the demand for such jobs.
TECHNOLOGY IN BANKING
Many of the largest and most successful banks in the world emerged from the technical changes that
they are able to recognize at an early stage. India’s banking sector has a long way to go before it
can compete globally. Situation is especially maintained in the late introduction of ICT in India banks.
Our information technology is designed to compete with information technology in the world, and
when we are in the area very quickly, it can be difficult for us to benefit from liberalization.
Bank, with the right technology - to provide timely information, to increase productivity and thus see
a competitive advantage. Competetion in the economy, which has been opened, it is certainly the
Indian banks to comply with the latest technology and adapt to its surroundings. Except that the banks
need much improved use of technology to customer-friendly, efficient and competitive in the current
authorities and businesses, they also need the technology to newer products and newer forms of service
and the increasingly dynamic global environment to offer. Information technology allows banks to build
new systems, which bite the needs of many customers that cannot be considered today.
On-line banking, for example, promises customers to conduct banking transactions in a direct access to
the core of the bank customer account works. Customers to verify all information, all so far, all the
checks, all credit card information.
In the future, the banks freed from the constraints of a delivery channel. They can create, package,
market and product niches, and because the tumbling price of the technology, they can do so cost-
effectively.
Technology gives banks the opportunity to be closer to customers, to a broader range of services at
lower costs, streamline the March belang systems so that all information in one place where it can be
used for the trends that can quickly lead into new products. Electronic banking data can be gathered
and analyzed. Interactivity allows the consumer to save the settings, directing the development of truly
new products.
The development of I.T has helped the boom of E – Commerce. So it is also important to
know the concept of E – Commerce.
E-COMMERCE
Electronic commerce, commonly known as eCommerce E-Commerce or E-commerce, refers to the
buying and selling of products or services over electronic systems such as the Internet and other
computer networks. However, the term may refer to more than just buying and selling products online.
It also includes the entire online process of developing, marketing, selling, delivering, servicing and
paying for products and services. The amount of trade conducted electronically has grown
extraordinarily with widespread Internet usage. The use of commerce is conducted in this way, spurring
and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing,
online transaction processing, Electronic Data Interchange (EDI), inventory management systems, and
automated data collection systems. Modern electronic commerce typically uses the World Wide Web at
least at one point in the transaction's life-cycle, although it may encompass a wider range of
technologies such as e-mail, mobile devices and telephones as well.
A large percentage of electronic commerce is conducted entirely in electronic form for virtual items
such as access to premium content on a website, but mostly electronic commerce involves the
transportation of physical items in some way. Online retailers are sometimes known as E-tailers and
online retail is sometimes known as E-tail. Almost all big retailers are now electronically present on
the World Wide Web.
Electronic commerce that takes place between businesses is referred to as business-to-business or B2B.
B2B can be open to all interested parties (e.g. commodity exchange) or limited to specific, pre-
qualified participants (private electronic market). Electronic commerce that takes place between
businesses and consumers, on the other hand, is referred to as business-to-consumer or B2C. This is
the type of electronic commerce conducted by companies such as Amazon.com. Online shopping is a
form of electronic commerce where the buyer is directly online to the seller's computer usually via the
internet. There is no intermediary service involved. The sale or purchase transaction is completed
electronically and interactively in real-time such as in Amazon.com for new books. However in some
cases, an intermediary may be present in a sale or purchase transaction such as the transactions on
eBay.com
Electronic commerce is generally considered to be the sales aspect of e-business. It also consists of the
exchange of data to facilitate the financing and payment aspects of business transactions.
Business applications of E-commerce
Some common applications related to electronic commerce are the following:
Email Enterprise content management Instant messaging Newsgroups Online shopping and order tracking Online banking Online office suites Domestic and international payment systems Shopping cart software Teleconferencing Electronic tickets
E-COMMERCE APPLICATION IN BANKING INDUSTRY
New information technologies and emerging business forces have triggered a new wave of financial
innovation – electronic banking (e-banking). The banking and financial industry is transforming itself in
unpredictable ways (Crane and Bodie 1996), powered in an important way by advances in information
technology (Holland and Westwood 2001). Since the 1980s, commercial banking has continuously
innovated through technology-enhanced products and services, such as multi-function ATM, tele-
banking, electronic transfers and electronic cash cards. Over the past decade, the Internet has clearly
played a critical role in providing online services and giving rise to a completely new channel. In the
internet age, the extension of commercial banking to the cyberspace is an inevitable development (Liao
and Cheung 2003).
E-banking creates unprecedented opportunities for the banks in the ways they organize financial product
development, delivery and marketing via the internet. While it offers new opportunities to banks, it
also poses many challenges such as the innovation of IT applications, the blurring of market
boundaries, the breaching of industrial barriers, the entrance of new competitors and the emergence of
new business models Saatciolu (et g al. 2001, Liao and Cheung 2003). Now the speed and scale of
the challenge are rapidly increasing with the pervasiveness of the internet and the extension of
information economy (Holland and Westwood 2001).
Globally, e-commerce growth has been led by the popularity of online shopping portals like
amazon.com and ebay.com but in India that has not been the case. It is mainly driven by the online
travel industry and banking sector. For instance, 29% of Indian Internet users book airline tickets
online and the figure is expected to touch 46% next year. Online rail ticket booking stands at 39% of
the total bookings. As far as banking is concerned, there are 4.6 million online banking users in India.
This figure is expected to go up to over 16 million by 2007-08 that will include both internet and
mobile banking users. According to the Internet and Mobile Association of India (IAMAI), the e-
commerce industry in India is expected to grow to a size of Rs. 2,300 crore by 2007 against the
Rs.1,200 crore. The total number of internet users which right now is 38.5 million is expected to
reach 100 million by 2008.
WHAT IS ONLINE BANKING?
If you're like most people, you've heard a lot about online banking but probably haven't tried it
yourself. You still pay your bills by mail and deposit checks at your bank branch, much the way your
parents did. You might shop online for a loan, life insurance or a home mortgage, but when it comes
time to commit, you feel more comfortable working with your banker or an agent you know and trust.
Online banking isn't out to change your money habits. Instead, it uses today's computer technology to
give you the option of bypassing the time-consuming, paper-based aspects of traditional banking in
order to manage your finances more quickly and efficiently.
Origin of online banking
The advent of the Internet and the popularity of personal computers presented both an opportunity and
a challenge for the banking industry.
For years, financial institutions have used powerful computer networks to automate millions of daily
transactions; today, often the only paper record is the customer's receipt at the point of sale. Now that
its customers are connected to the Internet via personal computers, banks envision similar economic
advantages by adapting those same internal electronic processes to home use.
Banks view online banking as a powerful "value added" tool to attract and retain new customers while
helping to eliminate costly paper handling and teller interactions in an increasingly competitive banking
environment.
Brick-to-click banks
Today, most large national banks, many regional banks and even smaller banks and credit unions offer
some form of online banking, variously known as PC banking, home banking, electronic banking or
Internet banking. Those that do are sometimes referred to as "brick-to-click" banks, both to distinguish
them from brick-and-mortar banks that have yet to offer online banking, as well as from online or
"virtual" banks that have no physical branches or tellers whatsoever.
The challenge for the banking industry has been to design this new service channel in such a way
that its customers will readily learn to use and trust it. After all, banks have spent generations earning
our trust; they aren't about to risk that on a Web site that is frustrating, confusing or less than secure.
Most of the large banks now offer fully secure, fully functional online banking for free or for a small
fee. Some smaller banks offer limited access or functionality; for instance, you may be able to view
your account balance and history but not initiate transactions online. As more banks succeed online
and more customers use their sites, fully functional online banking likely will become as commonplace
as automated teller machines.
Understanding Online Banking Services
Online banking is a great convenience for many people. Whether people use it to manage traditional
accounts or switch all of their banking to an online-only firm, it is a wonderful improvement over the
days when everything had to be done face-to-face.
No matter what kind of banking is done online, it starts with a secure web site. Usually, the bank
will have certain requirements to ensure password strength as well. This and other security measures
ensure that online accounts are safe from tampering. From there, all of the necessary services can be
accessed.
Online banking is quite simple once the basics are understood. Depositing money is simple, and can
be done in a number of ways. The most popular method is likely direct deposit. Many employers
offer direct deposit of paychecks, and by providing them with your online bank account number, your
checks will go right into that account. Other ways of depositing money include bank and wire
transfers. Some accounts even allow customers to mail their checks in.
Paper checks are typically provided with online checking accounts. This, however, is not likely to be
the most common way a customer will access funds. Online bill payment allows users to pay their
bills without mailing checks, and those who use web-based accounts typically prefer this and other
electronic payment methods. Most types of bills can be paid via a debit card or electronic checks, as
well. This makes it easy to eliminate the need for paper checks entirely. Still, many find it useful to
have a few checks on hand for those few companies that haven’t quite reached the modern age.
The management of traditional accounts is another common use for online banking. Most banks offer
online access to accounts, and all customers need to do to make use of the service is sign up through
their bank’s site. Once this is done, checking your balance, seeing which payments have cleared, and
other common banking operations can be done from the computer. This eliminates the need to call or
visit the bank for simple account maintenance needs.
Every online banking interface is slightly different, but all banks try to make things easy and intuitive
for users. It won’t take long for a new user to figure out exactly how everything works. Sign up for
an online bank account or online access to your current one, and soon you’ll wonder how you could
have lived without it.
FEATURES OF ONLINE BANKING
We need to be able to manage our finances from anywhere in the world. Rich online banking services
are much more important than a physical location. Since I have been doing all of my banking online
with quite a few different online banks as I looked for the best solution, I’ve had a chance to really
experiment with what works and what doesn’t work for us.
Here is a checklist of things to look for in an online bank. Some items you may be familiar with.
Others might be new to you if it isn’t something your current bank offers.
1. Bill Pay Service - One of the biggest reasons for going with an online bank is to get really
good bill payment services. Different banks handle bill payment different ways.
2. Electronic Bill Notification – With electronic bills, your merchant (credit card company, gas
company, electric company, etc.) sends an electronic bill to your bank. You can set it up to pay
automatically or notify you for approval. This can be particularly good for people who are on the road
because it reduces the amount of physical mail you have to somehow get read or forwarded to you.
3. Online Check Images – Most banks will show you an image of the check, which makes it
really easy to balance your account if you can’t remember what a particular payment was for. (Ideally,
you should minimize the number of physical checks you write to reduce fraud.)
4. Online Deposit Slip Images – Most banks just record the total with no image. It will let you
see an image of each deposit slip. Having the images available can be very helpful if you ever have
to prove something for tax purposes or need to remember where that $2581 deposit came from.
5. Reporting Tools – Most banks offer basic reporting tools that will let you see how much you
have spent in each category you’ve created. This may not be an issue if you use desktop money
management software, but it still can be handy if you are traveling and want to see how much you’ve
paid on your mortgage over the past 12 months.
6. Linked Accounts – Can you link your bank account with a brokerage account? Can you add
your minor children as custodial accounts and manage them all centrally? If you and your spouse both
set them up IRAs, is it easy to view them both along side the rest of your finances, or do you have
to have a separate login for each IRA to keep them on separate SSNs? These are small things that
many banks don’t support, but it starts getting really complicated when you have to manage a bunch
of accounts instead of having a single place to manage all of your money.
7. Convenient Deposit Methods - Since you may not be anywhere near the physical location of
your bank, make sure you understand how to deposit money. Payroll can be set up on direct deposit,
but there will be times when you need to deposit checks. Does the bank provide postage paid
envelopes and deposit slips? Some banks work with FedEx or UPS stores to allow you to send in a
deposit overnight for free.
8. Low ATM Fees and Convenient Locations – If you need to get cash, will the bank
refund the ATM fees? Are there only certain ATMs that are free, and if so, are they located near
places you normally go? Are the ATMs available nation wide so you can use them on vacation? What
are the fees for using the ATM internationally and how is the exchange rate handled?
9. Integration with Desktop Software – If you use Microsoft Money, Quicken or something
similar, you’ll want to make sure your bank supports it. Make sure you understand if downloading
transactions require you to login and manually download a file, or if your money management software
can directly connect and download new transactions. If you are using Quicken on a Mac, make sure
the bank is paying Quickens extortion fee so the files will work with Mac users.
10. Many Account Types – Some banks only offer basic checking and savings accounts. Ideally
you want a bank that makes it easy to open money market accounts, IRAs, health savings accounts,
etc. If you have to go to another institution to open a different type of account, it is more difficult to
manage–especially if you are on the road. You want to be able to easily open a CD to take advantage
of a higher interest rate, easily open an IRA to help reduce your tax liability, etc.
11. Free Money Transfers – Be sure to consider how easy it is to move money in and out of
the account. You should be able to set up links with your accounts from other institutions to transfer
money back and forth as necessary. Make sure you understand what type of fees are associated with
these transfers. Good banks should allow a certain number of transfers per month with no fee.
12. Security Balanced with Convenience - Some banks spend so much effort trying to keep
things secure that you’ll find yourself automatically logged out of their website while you try to
balance your account. You want security but you don’t want it to get in the way of you doing your
banking. Also check into what type of additional security features are available. For example, some
banks will offer you an RSA keychain with a number that changes every 60 seconds. In addition to
your password, you will need the number from that key in order to get access to your account.
13. Ease of Use – This is something that most banks seem to struggle with. Right now I have my
personal account with one online bank and my business accounts with another. I dread using the
business accounts and I absolutely love using my personal account. At first I thought I was just more
familiar with the bank where my personal accounts are, but I finally realize that it comes down to the
ease of use. One is ok and the other is superb, but it makes a big difference.
Advantages of online banking:
Convenience: Unlike your corner bank, online banking sites never close; they're available 24
hours a day, seven days a week, and they're only a mouse click away.
Ubiquity: If you're out of state or even out of the country when a money problem arises, you
can log on instantly to your online bank and take care of business, 24/7.
Transaction speed: Online bank sites generally execute and confirm transactions at or quicker
than ATM processing speeds
.Efficiency: You can access and manage all of your bank accounts, including IRAs, CDs, even
securities, from one secure site.
Effectiveness: Many online banking sites now offer sophisticated tools, including account
aggregation, stock quotes, rate alerts and portfolio managing programs to help you manage all of
your assets more effectively. Most are also compatible with money managing programs such as
Quicken and Microsoft Money.
Disadvantages of online banking:
Start-up may take time: In order to register for your bank's online program, you will probably
have to provide ID and sign a form at a bank branch. If you and your spouse wish to view and
manage your assets together online, one of you may have to sign a durable power of attorney
before the bank will display all of your holdings together.
Learning curve: Banking sites can be difficult to navigate at first. Plan to invest some time
and/or read the tutorials in order to become comfortable in your virtual lobby.
Bank site changes: Even the largest banks periodically upgrade their online programs, adding
new features in unfamiliar places. In some cases, you may have to re-enter account information.
The trust thing: For many people, the biggest hurdle to online banking is learning to trust it.
Did my transaction go through? Did I push the transfer button once or twice? Best bet: always
print the transaction receipt and keep it with your bank records until it shows up on your personal
site and/or your bank statement.
How Does Online Banking Work?
Online banking provides many identical services that a traditional bank does with the biggest difference
is in teller availability: Human tellers leave; electronic tellers—the websites—are available virtually all
day, everyday—weekends and holidays, included.
Online Banking Structure:
Online banking mirrors traditional banking procedures in many instances, and in some, actually
improves security and reduces both banks’ and customer’s costs.
In electronic form, online banking still allows:
1. Deposits to the account, whether via payroll deposits or funds transfers.
2. Bill payments via automatic payment schedules or individually ordered payments. Most bill pay
users opt for the bank-generated checks, but payments can be ordered in a one off situation or
scheduled regularly.
3. Statement formats can be electronic or paper; most who prefer online banking choose the electronic
statements for convenience and reduced paper use.
4. Wire transfers to accounts within and without the bank’s structure, though some banks charge
additional transaction fees for wire transfers.
5. Differing services depending on the individual financial institute.
Online Actions
All online banking transactions are initiated by creating an online account identity. Account
login name and password creation is followed by choosing and answering security questions. It’s not
recommended that security questions and answers be common or known by others; they should have
unique answers, whether historically true or not.
For example, if a user chooses a security question, “What is the name your first elementary school,”
choose an answer that is not the actual name or the actual elementary school. Use instead the name
of another school or anything else that is easily remembered.
Provide an email address that is not tied to an Internet Service Provider. If the user changes ISPs,
that email address will be lost. Instead, use a free email address that can last for as long as the user
chooses.
Once the security aspects are in place and verified, look around the bank’s website and note important
areas, such as:
1. Account activity2. Statement delivery change areas3. Customer Service options4. Bill pay procedures, if any5. And any other area provided on the website.
Online banking often reduces funds availability delays and hastens resolution to disputes and inquiries.
While some complaints and problems do require human intervention, Customer Service Agents are
available for longer during a calendar day than local branch personnel are.
Online banking differs from traditional banking when physical checks or cash is deposited; human
interaction via a drive thru lane or at the counter is required. Cashier checks, traveler checks, and
money orders cannot be purchased from the institution via online banking, but because all transactions
allowed are electronic, tracking and accountability are easily provided.
OPPORTUNITIES IN ONLINE BANKING:
Is There a Future in Online Banking?
By this point, no one can dismiss online banking as a fad. However, it is worth considering whether
the trend towards online financial transactions is going to slow or reverse in the years to come. There
will continue to be people who resist online banking in favor of offline transactions just as there are
people who prefer to keep their money in mattresses instead of putting it in banks. Whether these
people will exert serious influence on the movement towards online banking can be examined by
looking at the needs of modern consumers, and the interests of the banks themselves.
The Move to Online Business
The global connectivity provided by the internet, combined with the fallout from the global financial
crisis has encouraged a growing number of entrepreneurs to start their own businesses online. As an
increasing number of people look to save themselves from unemployment or augment otherwise
insufficient salaries by finding new ways to make money online, they will require new ways to send,
receive, and invest their online funds.
The Rise of Mobile Banking
As handheld mobile devices become more sophisticated, users are experimenting with more
sophisticated transactions. Moving beyond ringtone downloads; consumers can now shop online and
purchase software upgrades and augmentations through app stores. In addition to this buying and
selling, anyone with a web browser on their phone can access their bank’s online banking site to
move and manage their money in more locations than ever before.
Staffing Solutions
As banks consolidate and grow larger, they are looking for more ways to cut costs, and reducing the
number of full-time employees on their payroll is an attractive option. Encouraging customers to do
their banking online allows banks to close smaller branches in outlying locations and use economies of
scale to develop customer assistance centers in locations where the labor market is more favorable.
Physical Footprints
Online banking is also more attractive to banks because a reduced physical footprint means reduced
costs in other areas. In addition to saving the money that would normally be associated with operating
and maintaining physical branches, no longer having to print and mail paper statements to customers
would be a huge savings for banks. As an added bonus, banks have been able to take advantage of
current pro-environment sentiment by marketing online banking as a “green” alternative.
By appealing to more mobile customers and more cost-conscious financial service providers alike,
online banking continues to be an attractive option for everyone involved. However, when discussing
the internet it is dangerous to assume that everything is going to be moved online; there will always
be individuals, industries, and transactions that are grounded in the real world with no desire to
change the way they do business
Growth of Internet
The increase in the growth of internet usage will definitely help the cause of growth of online
banking in India. The following chart shows the growth of internet in India during the past decade or
so:
YEAR Users Population % Penetration1999 2,800,000 1,094,870,677 0.3 %2000 5,500,000 1,094,870,677 0.5 %2001 7,000,000 1,094,870,677 0.7 %2002 16,500,000 1,094,870,677 1.6 %2003 22,500,000 1,094,870,677 2.1 %2004 39,200,000 1,094,870,677 3.6 %2005 50,600,000 1,112,225,812 4.5 %2006 40,000,000 1,112,225,812 3.6 %2007 42,000,000 1,129,667,528 3.7 %2009 81,000,000 1,156,897,766 7.0 %2010 100,000,000 1,173,108,018 8.5 %
OVERVIEW
Online banking has enjoyed increased popularity, and some banks actually require it. From standard,
brick-and-mortar institutions to cloud managed institutions, online banking offers flexibility and
convenience for all involved.
BANK ADVANTAGES:
Each visit to a bank costs the institution money, whether in bank teller wages and benefits to
security costs to maintenance costs. Online banking reduces those costs and increases the bank’s
profit margin.
Online banking reduces the need for the number of physical locations and services offered within
each. Because Customer Service Departments are united into fewer locations, asset sharing within
those locations further reduce bank costs.
CUSTOMER ADVANTAGES:
Online security of financial data has evolved tremendously since the early days of online
banking, and often transactions can be even more secure than those conducted in a drive thru
lane.
Online banking transactions require not only a secure login but also require secured password
entry. In-person transactions are based on account information and a photo ID, both of which
can be obtained “under the radar.”Online banking transactions also track the Internet Protocol
(IP) address of the computer used in the transaction. The IP can be traced to the method or
mode of Internet access, often through an Internet Service Provider who always notes activity,
computer, and actions performed under that IP address assigned to the ISP account holder.
Whether a dynamic or changing IP address or a static or unchanging IP address is used, the
ISP always records what IP address is assigned to what ISP account at any time.
Comprehensive Help sections on banks’ websites often reduce on-location inquiries, further
reducing overhead costs for banking institutions. Additional service enrollment or dis-enrollment,
address updates, and account status and verification are all time saving activities for both the
bank and the banking customer.
Online Bill Pay processes reduce stolen or counterfeit checks which cost banks billions of
dollars every month. Each online bill pay transaction allows for a grace period from the
payment order date to the actual check delivery date, which also allows the account holder
additional time to preview activity and account status.
DEVELOPMENT:
Increasingly, more and more people are switching to electronic platforms for executing financial
transactions. The wider usage of cell phone and internet certainly seems to be playing a role in
blurring physical boundaries, and unlocking a whole new world of opportunities for banks in tapping
newer customer segments and in recording greater volume of transactions.
If latest RBI data on retail electronic payment systems is anything to go by, electronic banking is set
to become the catalyst for change in the way money moves. Provisional data show that in FY09 to
January, a total of 5,587.85 lakh transactions were executed through the electronic channel, a rise of
234.76 lakh transactions over the previous fiscal.
This growth was facilitated by the introduction of real-time gross settlement (RTGS) and national
electronic funds transfer (NEFT), which enabled fund transfers among account holders of the same
bank as well as inter-bank transfers.
The growth has also been aided by banks' efforts to offer innovative services and tighten security
measures, and the increase in awareness of services available. RBI outlining guidelines on mobile
banking, setting up of the National Payments Corporation of India and passage of the Payments and
Settlement Act too have given a positive thrust to the growth in electronic payments. The impact of
all these measures is likely to be felt in the current fiscal, which may well mean FY10 could become
a watershed year for e-banking. While opinions of industry players differ on whether FY10 will indeed
prove to be a tipping point, there seems to be consensus that the year would mark a critical phase in
the evolution of the payments and settlement systems in India. "FY10 will certainly herald an
important phase for electronic banking in India and an upsurge in internet and ATM transactions," says
Ashvin Parekh, partner and national industry leader, financial services, Ernst & Young. "At the same
time, traditional fund transfer will continue to hold its own. We are going to witness a co-existence of
these two systems. In the regulatory space, there will be huge changes. As and when India Pay, which
will eventually settle credit card and ATM transactions, comes into the picture, we could witness a
gradual shift away from Visa and MasterCard." The implementation of core banking solutions by all
public sector banks has not only helped banks rationalise their costs, but has also allowed them to
explore new ways of optimally utilising their resources. Core banking, which facilitates linking up of a
bank's branches across the country, has enabled banks to improve their efficiency.
"Now, decisions can be taken remotely and the activities too can be undertaken in a centralised
location. This means that branches need not spend time on processing transactions and other back
office operations, and rather utilise the time and resources to function as selling outlets. Centralised
operations benefit from economies of scale and help in reducing bank costs," explains Janmejaya
Sinha, managing director of India operations, Boston Consulting Group.
Opportunities in e-banking: ARE WE READY?
It has always been a chicken-and-egg dilemma in business. Either firms wait for the market to
mature until customers are ready for the products and services. Or, firms can go ahead and offer the
products and services, hoping that their customers will catch on soon.
The same is true for new products and services that have emerged and continue to emerge in
the world of electronic banking (e-banking). Banking executives interviewed by BusinessWorld Online
have different ways of resolving the issue. Some would go ahead with new ideas, wanting to take the
first-mover advantage. Others would wait in the sidelines, but armed nevertheless just in the case the
market take up suddenly increases.
Whether first-movers or latecomers, there is one partner in the e-banking game that is not waiting for
the chicken to lay the egg, or wait for the egg to hatch into a chick. Technology providers are always
up on their toes, like chicken ready to catch the early worm.
CHALLENGES OF ONLINE BANKING
Information technology analyst firm, the Meta Group, recently reported that "financial institutions who
don't offer home banking by the year 2000 will become marginalized." By the year of 2002, a large
sophisticated and highly competitive Internet Banking Market will develop which will be driven by
Demand side pressure due to increasing access to low cost electronic services.
Emergence of open standards for banking functionality.
Growing customer awareness and need of transparency.
Global players in the fray
Close integration of bank services with web based E-commerce or even disintermediation of
services through direct electronic payments (E- Cash).
More convenient international transactions due to the fact that the Internet along with general
deregulation trends, eliminate geographic boundaries.
Move from one stop shopping to 'Banking Portfolio' i.e. unbundled product purchases.
Certainly some existing brick and mortar banks will go out of business. But that's because they
fail to respond to the challenge of the Internet. The Internet and it's underlying technologies will
change and transform not just banking, but all aspects of finance and commerce. It represents much
more than a new distribution opportunity. It will enable nimble players to leverage their brick and
mortar presence to improve customer satisfaction and gain share. It will force lethargic players who are
struck with legacy cost basis, out of business-since they are unable to bring to play in the new
context.
MAIN CONCERNS IN INTERNET BANKING:
In a survey conducted by the Online Banking Association, member institutions rated security as the
most important issue of online banking. There is a dual requirement to protect customers' privacy and
protect against fraud. Banking Securely: Online Banking via the World Wide Web provides an
overview of Internet commerce and how one company handles secure banking for its financial
institution clients and their customers. Some basic information on the transmission of confidential data
is presented in Security and Encryption on the Web. PC Magazine Online also offers a primer: How
Encryption Works. A multi-layered security architecture comprising firewalls, filtering routers,
encryption and digital certification ensures that your account information is protected from unauthorised
access:
Firewalls and filtering routers ensure that only the legitimate Internet users are allowed to
access the system.
Encryption techniques used by the bank (including the sophisticated public key encryption)
would ensure that privacy of data flowing between the browser and the Infinity system is
protected.
Digital certification procedures provide the assurance that the data you receive is from the
Infinity system.
Security concerns:
Security fears have served as deterrents to online growth. Of particular concern are threats of pharming
and phishing. Phishing is an internet fraud, through which innocent people are enticed to divulge their
personal information like user ID and passwords, which are later on used by scammers in unauthorized
ways.
The most common method of phishing is sending emails claiming to be from your bank or other
financial institutions which are dealing that already has your personal information and you will be
asked to confirm the details by clicking a particular link (URL) provided in this fake email. This URL
will take you to a fake website which will be similar to your genuine website, and the information
provided by the customer in the forms provided in the fake website will be gathered and used for
committing fraud in their accounts or withdraw funds unauthorizedly from these accounts.
Pharming is another internet fraud, whereby as many as users as possible are redirected before they
reach the legitimate online banking websites they intend to visit and they are lead to malicious ones.
The bogus sites to which victims are redirected without their knowledge or consent, will likely looks
the same as genuine site. But when users enter their login name or password, the information is
captured by criminals.
FURTHER PROBLEMS RELATING TO NET BANKING IN
INDIA:
Given that India is the IT and tech services outsourcing hotspot of the world, it's surprising that
Internet banking has not really taken off. Despite the advent of a very tech-savvy and vast consumer
class in recent years, a mix of industry issues and unique challenges continue to thwart the expansion
of net banking in India. Technology challenges, IT practices, certain cultural issues, industry lethargy,
and workplace constraints have affected widespread acceptance of Internet banking.
Low Broadband Internet Penetration
India has one of the lowest broadband connectivity penetration rates in Asia as compared to Japan,
Taiwan, Korea and Singapore. While the bigger cities such as Mumbai, Delhi, Chennai, and Bangalore
have relatively better broadband penetration rates, PC users in smaller cities and towns still use dial-up
options to connect to the Internet. Slow connectivity speeds often dampen the online banking
experience for many customers eager to use such services.
Banks' Ambivalent Commitment Levels
Internet banking did take off in India at the turn of the millennium but soon faltered due to lack of
takers. In the middle of this decade, multinational and domestic private banks started offering net
banking services as a competitive differentiator. Only recently, state-owned and public sector banks
have started doing likewise. However, banks' ambivalent commitment levels and their reluctance to
allocate huge budgets for net banking branding initiatives, as well as a lack of industry advocacy
efforts, have resulted in poor acceptance levels of Internet banking by customers.
Customers' Preference for Traditional Branches
There are thousands of highly active traditional bank branches in India's crowded cities and major
towns. Office workers take longer lunch breaks to finish banking activities and transactions at these
branches rather than conduct them online. Most customers prefer the personal touch and customized
service offered by staff in brick-and-mortar bank branches. Many Indians are also averse to calling call
centers and banks' customer contact lines to address issues related to online bank accounts.
Fear of Online Threats/Scams
Ubiquitous and prevalent online threats about hackers, identity theft, stolen passwords, viruses, worms
and spyware tend to make customers wary just like in any other country. Conservative Indian bank
customers used to years of saving in an erstwhile mixed-socialist economy are always fearful of losing
hard-earned savings in online scams. These customers are also not sure about the efficacy of banks'
websites and their commitment to allocate funds for reliable encryption mechanisms and robust
back-end technologies and systems.
Other Problems
Workplace constraints and corporate policies about using external websites or pursing personal activities
such as online banking have affected its expected fast-paced acceptance among the growing affluent
class in India. Cultural issues, such as parents giving priority use of the home PC to their children
rather than using it themselves, stifle the potential growth of home access to Internet banking services.
Public sector banks with vast customer bases also don't tend to invest money in training personnel for
e-banking initiatives, resulting in poor customer service levels.
Internet Banking in India – Guidelines
Reserve Bank of India had set up a ‘Working Group on Internet Banking’ to examine different aspects
of Internet Banking (I-banking). The Group had focused on three major areas of I-banking, i.e. (i)
technology and security issues, (ii) legal issues and (iii) regulatory and supervisory issues. RBI has
accepted the recommendations of the Group to be implemented in a phased manner. Accordingly, the
following guidelines are issued for implementation by banks. Banks are also advised that they may be
guided by the original report, for a detailed guidance on different issues.
I. Technology and Security Standards:
a. Banks should designate a network and database administrator with clearly defined roles as
indicated in the Group’s report.
b. Banks should have a security policy duly approved by the Board of Directors. There should be
a segregation of duty of Security Officer / Group dealing exclusively with information systems
security and Information Technology Division which actually implements the computer systems.
Further, Information Systems Auditor will audit the information systems.
c. Banks should introduce logical access controls to data, systems, application software, utilities,
telecommunication lines, libraries, system software, etc. Logical access control techniques may
include user-ids, passwords, smart cards or other biometric technologies.
d. At the minimum, banks should use the proxy server type of firewall so that there is no direct
connection between the Internet and the bank’s system. It facilitates a high level of control and
in-depth monitoring using logging and auditing tools. For sensitive systems, a state full
inspection firewall is recommended which thoroughly inspects all packets of information, and
past and present transactions are compared. These generally include a real time security alert.
e. All the systems supporting dial up services through modem on the same LAN as the
application server should be isolated to prevent intrusions into the network as this may bypass
the proxy server.
f. PKI (Public Key Infrastructure) is the most favoured technology for secure Internet banking
services. However, as it is not yet commonly available, banks should use the following
alternative system during the transition, until the PKI is put in place:
1. Usage of SSL (Secured Socket Layer), which ensures server authentication and use of
client side certificates issued by the banks themselves using a Certificate Server.
2. The use of at least 128-bit SSL for securing browser to web server communications and,
in addition, encryption of sensitive data like passwords in transit within the enterprise
itself. (Para 6.4.5)
g. It is also recommended that all unnecessary services on the application server such as FTP (File
Transfer Protocol), telnet should be disabled. The application server should be isolated from the
e-mail server. (Para 6.4.6)
h. All computer accesses, including messages received, should be logged. Security violations
(suspected or attempted) should be reported and follow up action taken should be kept in mind
while framing future policy. Banks should acquire tools for monitoring systems and the
networks against intrusions and attacks. These tools should be used regularly to avoid security
breaches. The banks should review their security infrastructure and security policies regularly
and optimize them in the light of their own experiences and changing technologies. They should
educate their security personnel and also the end-users on a continuous basis.
i. The information security officer and the information system auditor should undertake periodic
penetration tests of the system, which should include:
1. Attempting to guess passwords using password-cracking tools.
2. Search for back door traps in the programs.
3. Attempt to overload the system using DDoS (Distributed Denial of Service) & DoS
(Denial of Service) attacks.
4. Check if commonly known holes in the software, especially the browser and the e-mail
software exist.
j. The penetration testing may also be carried out by engaging outside experts (often called
‘Ethical Hackers’).
k. Physical access controls should be strictly enforced. Physical security should cover all the
information systems and sites where they are housed, both against internal and external threats.
l. Banks should have proper infrastructure and schedules for backing up data. The backed-up data
should be periodically tested to ensure recovery without loss of transactions in a time frame as
given out in the bank’s security policy. Business continuity should be ensured by setting up
disaster recovery sites. These facilities should also be tested periodically.
m. All applications of banks should have proper record keeping facilities for legal purposes. It may
be necessary to keep all received and sent messages both in encrypted and decrypted form.
n. Security infrastructure should be properly tested before using the systems and applications for
normal operations. Banks should upgrade the systems by installing patches released by
developers to remove bugs and loopholes, and upgrade to newer versions which give better
security and control.
II. Legal Issues
a. Considering the legal position prevalent, there is an obligation on the part of banks not only to
establish the identity but also to make enquiries about integrity and reputation of the prospective
customer. Therefore, even though request for opening account can be accepted over Internet,
accounts should be opened only after proper introduction and physical verification of the
identity of the customer.
b. From a legal perspective, security procedure adopted by banks for authenticating users needs to
be recognized by law as a substitute for signature. In India, the Information Technology Act,
2000, in Section 3(2) provides for a particular technology (viz., the asymmetric crypto system
and hash function) as a means of authenticating electronic record. Any other method used by
banks for authentication should be recognized as a source of legal risk.
c. Under the present regime there is an obligation on banks to maintain secrecy and confidentiality
of customers‘ accounts. In the Internet banking scenario, the risk of banks not meeting the
above obligation is high on account of several factors. Despite all reasonable precautions, banks
may be exposed to enhanced risk of liability to customers on account of breach of secrecy,
denial of service etc., because of hacking/ other technological failures. The banks should,
therefore, institute adequate risk control measures to manage such risks.
d. In Internet banking scenario there is very little scope for the banks to act on stop-payment
instructions from the customers. Hence, banks should clearly notify to the customers the
timeframe and the circumstances in which any stop-payment instructions could be accepted.
e. The Consumer Protection Act, 1986 defines the rights of consumers in India and is applicable
to banking services as well. Currently, the rights and liabilities of customers availing of Internet
banking services are being determined by bilateral agreements between the banks and customers.
Considering the banking practice and rights enjoyed by customers in traditional banking, banks’
liability to the customers on account of unauthorized transfer through hacking, denial of service
on account of technological failure etc. needs to be assessed and banks providing Internet
banking should insure themselves against such risks.
III. Regulatory and Supervisory Issues:
As recommended by the Group, the existing regulatory framework over banks will be extended to
Internet banking also. In this regard, it is advised that:
1. Only such banks which are licensed and supervised in India and have a physical presence in
India will be permitted to offer Internet banking products to residents of India. Thus, both
banks and virtual banks incorporated outside the country and having no physical presence in
India will not, for the present, be permitted to offer Internet banking services to Indian
residents.
2. The products should be restricted to account holders only and should not be offered in other
jurisdictions.
3. The services should only include local currency products.
4. The ‘in-out’ scenario where customers in cross border jurisdictions are offered banking services
by Indian banks (or branches of foreign banks in India) and the ‘out-in’ scenario where Indian
residents are offered banking services by banks operating in cross-border jurisdictions are
generally not permitted and this approach will apply to Internet banking also. The existing
exceptions for limited purposes under FEMA i.e. where resident Indians have been permitted to
continue to maintain their accounts with overseas banks etc. will, however, be permitted.
5. Overseas branches of Indian banks will be permitted to offer Internet banking services to their
overseas customers subject to their satisfying, in addition to the host supervisor, the home
supervisor.
Given the regulatory approach as above, banks are advised to follow the following instructions:
a. All banks, who propose to offer transactional services on the Internet should obtain prior
approval from RBI. Bank’s application for such permission should indicate its business plan,
analysis of cost and benefit, operational arrangements like technology adopted, business partners,
third party service providers and systems and control procedures the bank proposes to adopt for
managing risks. The bank should also submit a security policy covering recommendations made
in this circular and a certificate from an independent auditor that the minimum requirements
prescribed have been met. After the initial approval the banks will be obliged to inform RBI
any material changes in the services / products offered by them.
b. Banks will report to RBI every breach or failure of security systems and procedure and the
latter, at its discretion, may decide to commission special audit / inspection of such banks.
c. The guidelines issued by RBI on ‘Risks and Controls in Computers and Telecommunications’
vide circular DBS.CO.ITC.BC. 10/ 31.09.001/ 97-98 dated 4th February 1998 will equally apply
to Internet banking. The RBI as supervisor will cover the entire risks associated with electronic
banking as a part of its regular inspections of banks.
d. Banks should develop outsourcing guidelines to manage risks arising out of third party service
providers, such as, disruption in service, defective services and personnel of service providers
gaining intimate knowledge of banks’ systems and misutilizing the same, etc., effectively.
e. With the increasing popularity of e-commerce, it has become necessary to set up ‘Inter-bank
Payment Gateways’ for settlement of such transactions. The protocol for transactions between
the customer, the bank and the portal and the framework for setting up of payment gateways as
recommended by the Group should be adopted.
f. Only institutions who are members of the cheque clearing system in the country will be
permitted to participate in Inter-bank payment gateways for Internet payment. Each gateway
must nominate a bank as the clearing bank to settle all transactions. Payments effected using
credit cards, payments arising out of cross border e-commerce transactions and all intra-bank
payments (i.e., transactions involving only one bank) should be excluded for settlement through
an inter-bank payment gateway.
g. Inter-bank payment gateways must have capabilities for both net and gross settlement. All
settlement should be intra-day and as far as possible, in real time.
h. Connectivity between the gateway and the computer system of the member bank should be
achieved using a leased line network (not through Internet) with appropriate data encryption
standard. All transactions must be authenticated. Once, the regulatory framework is in place, the
transactions should be digitally certified by any licensed certifying agency. SSL / 128 bit
encryption must be used as minimum level of security. Reserve Bank may get the security of
the entire infrastructure both at the payment gateway’s end and the participating institutions’ end
certified prior to making the facility available for customers use.
i. Bilateral contracts between the payee and payee’s bank, the participating banks and service
provider and the banks themselves will form the legal basis for such transactions. The rights
and obligations of each party must be clearly defined and should be valid in a court of law.
j. Banks must make mandatory disclosures of risks, responsibilities and liabilities of the customers
in doing business through Internet through a disclosure template. The banks should also provide
their latest published financial results over the net.
k. Hyperlinks from banks’ websites, often raise the issue of reputational risk. Such links should
not mislead the customers into believing that banks sponsor any particular product or any
business unrelated to banking. Hyperlinks from a banks’ websites should be confined to only
those portals with which they have a payment arrangement or sites of their subsidiaries or
principals. Hyperlinks to banks’ websites from other portals are normally meant for passing on
information relating to purchases made by banks’ customers in the portal. Banks must follow
the minimum recommended security precautions while dealing with request received from other
websites, relating to customers’ purchases.
2. The Reserve Bank of India have decided that the Group’s recommendations as detailed in this
circulars should be adopted by all banks offering Internet banking services, with immediate effect.
Even though the recommendations have been made in the context of Internet banking, these are
applicable, in general, to all forms of electronic banking and banks offering any form of electronic
banking should adopt the same to the extent relevant.
3. All banks offering Internet banking are advised to make a review of their systems in the light of
this circular and report to Reserve Bank the types of services offered, extent of their compliance with
the recommendations, deviations and their proposal indicating a time frame for compliance. The first
such report must reach us within one month from the date of this circular. Banks not offering any
kind of I-banking may submit a ‘nil’ report.
4. Banks who are already offering any kind of transactional service are advised to report, in addition
to those mentioned in paragraph above, their business models with projections of cost / benefits etc.
and seek our post-facto approval.
SOLUTIONS:
Here are some simple tips to prevent you from falling into the trap of cyber criminals. Remember, a
simple ignorance or oversight can make a huge dent in your hard- earned savings.
Securing your account: Avoid online banking on unsecured wifi systems and operate only
from PCs at home. Never reveal password to anyone. Do not even write it on a piece of paper on
diary. Just memorise it. It should be alphanumeric and change it frequently.
Never reply to queries from bank online about account or personal details. The personal information
should not be kept in a public computer or in emails.
Phishing: A person's personal details are obtained by fraudsters posing as bankers, who float a
site similar to that of the person's bank. They are asked to provide all personal information about
themselves and their account to the bank on the pretext of database upgradation. The number and
password are then used to carry out transactions on their behalf without their knowledge.
Phishing involves using a form of spam to fraudulently gain access to people's online banking details.
As well as targeting online banking customers, phishing emails may target online auction sites or other
online payment facilities. Typically, a phishing email will ask an online banking customer to follow a
link in order to update personal bank account details. If the link is followed, the victim downloads a
program which captures his or her banking login details and sends them to a third party.
Spam: Spam is an electronic 'junk mail' or unwanted messages sent to your email account or
mobile phone. These messages vary, but are essentially commercial and often annoying in their
sheer volume. They may try to persuade you to buy a product or service, or visit a website where
you can make purchases; or they may attempt to trick you into divulging your bank account or
credit card details.
Nigerian Scam: Nigerian or Frauds 409 or 419 are basically the lottery scam in which some
overseas persons are involved to cheat innocent persons or organizations by promising to give a
good amount of money at nominal fee charges. Their intention is to steal money in the form of
fee against the lottery prize.
Spyware: Spyware such as Trojan horse is generally considered to be software that is secretly
installed on a computer and takes things from it without the permission or knowledge of the
user. Spyware may take personal information, business information, bandwidth; or processing
capacity and secretly gives it to someone else.
"Trojan Horse" scheme unfolds when malicious software (malware) embeds to a consumer's computer
without the consumer being aware of it. Trojans often come in links or as attachments from unknown
email senders. After installation the software detects when a person accesses online banking sites and
records the username and password to transmit to the offender. People using public computers, in
places like Internet cafes, are often susceptible to Trojans like malware or spyware.
Check sites URL: Always check the URL of your bank's web site. Fraudsters can lure you to
enter your user ID and password at a fake website that resembles your bank. If you see anything
other than the bank's genuine URL, it has to be fake.
Never enter your user ID or password or such sensitive information without ascertaining that you are
on the right website. Always type the Web address of your bank into the browser address space.
Never click on the link in the email.
Fool-proof password: Change your online banking password at regular intervals. Also, avoid
easy-to-guess passwords, like first names, birthdays, kid's or spouse's name and telephone numbers.
Try to have an alpha-numeric password, one that combines alphabets and numbers.
If you have several bank accounts, never use the same online banking password for all. Never select
the option on browser that stores or retains user name and password. As it can easily be cracked by
cyber criminals. Also, never paste your password, always type it in. This little amount of `finger
exercise' will go a long way in safety.
Always check 'last logged': Most banks have a 'last logged in' panel on their websites. If
your bank has it, check the panel whenever you log in. If you notice irregularities (like you are
logging in after two days, but the panel says you logged in that morning!), report the matter
immediately to your bank and change your password right away.
Always log out when you exit the online banking portal. Close the browser to ensure that your secure
session is terminated. Never exit simply by closing the browser.
Keep your system up to date: Regularly check for security updates for your computer
operating system. Most security updates are aimed at reducing risks to your computer, these may
be data-related or otherwise. Make sure that your operating system and browser have the latest
security patches installed. And, always install these only from trusted websites.
Install a personal firewall to prevent hackers from gaining unauthorised access to your computer,
especially if you connect to the Internet through a cable or a DSL modem.
Public access can be injurious: Don't leave the PC unattended after keying in information
while transacting on the website. Avoid accessing your bank online at cyber cafes or on a share or
public computer. Also, avoid locations that offer online connections through wireless networks (Wi-
Fi), where privacy and security are minimal.
Follow Bank instructions: Banks say that appropriate upgradations are carried out from time
to time by their IT departments for risk mitigation. They issue instructions to the customers to
manage their accounts through virtual keyboards by way of which the characters typed by them are
not identified by hackers. SMS alerts are also an important tool since any transaction carried out
on account is reported to the account holder through an SMS.
Protection: Learn the ways to protect yourself from online banking fraud schemes. Detect
Trojans that appear on your PC in the form of viruses, spyware or malware through Antivirus
Software, anti Spyware, and Adware. Also, learn to keep your cards, documents and passwords
safe, and monitor your accounts to safeguard yourself from bank fraud committed through
identity theft.
CASE STUDIES:
1. Email password Hacking-
One day a lady came to cyber cell office and reported that she and her brothers e-mail ID’S
had been hacked by someone she suspected him to be her husband. The lady had already lodged a
case against him for dowry and was pending for trial in Bhopal court.
The suspect had hacked lady’s and her brother e-mail ID account and copied all the information to his
e-mail and produced selected e-mails to claim that . she was happy with him and case of dowry is a
false one .
To malign the image of her brother the suspect sent a copy of FIR lodged against him at police
station Habibganj. This indicated that the husband of the lady was behind the whole affair but police
had not any evidence against him.
Cyber cell started enquiry by an order of IGP and obtained the login logs from rediff.com .The logs
indicated that the email IDs password were changed and anonymous emails were sent from the house
of lady’s husband and sent from his.
Cyber cell registered a case under section 66 IT act and submitted Challan has been filed against the
suspect and trial is over.
Court has hold the conviction against the suspect Sabrish Pillai but found that the matter came before
the court as Sabrish was having family dispute with his wife and the, act of hacking was not against
the society at large, Hence let him free after warning.
2. Internet Lottery Fraud :
MP Cyber police has investigated several case of cheating through Internet lottery offer which
is commonly known as Nigerian 419 scam. In this kind of cheating the culprits used to send bulk
emails, bulk SMS to millions of users using software, stating that the receiver has won lottery worth
thousands of pounds or dollars which comes out to be crores of Indian rupees, in a lucky draw. They
used to create fake lottery winning certificate using logo and text from original website, which seems
to be original at a glance. This kind of sending bulk emails or SMS is an act of commonly known as
Phishing attack. Those who are lured by such offer often tempted to contact them. The culprits then
ask the target to fill a form and thus receive all the personal information of the target and asks him
to deposit token money in various names to earn the lottery prize. The target who is hoping to earn
huge amount of money finds these charges to be minimal. The culprit asks the target to deposit
money in the name yellow tag, custom clearance UN anti terrorism certificate, RBI charges or any
other name they feel it to suitable to convince the target. The culprits ask the target to deposit in
various bank accounts and once the money is deposited by the target it is withdrawn same day by the
suspect.
After losing lakhs of amount people come to know that they are being cheated. In this kind of
cheating the contact number are usually taken in the fake names or in the other Indian guys name,
account are being opened in the fake names or acquired on the basis of commission by fooling the
account holders.
Mp cyber police has investigated the case of Internet lottery fraud and arrested Nigerian national
Godspower from Meharauli Delhi with the suspected mobile used for communication, one laptop,
printer and box used for black dollar scam.
Mp cyber police has investigated the case of Internet lottery fraud Crime no 07/09 420,468,34 IPC
and crime no 05/10 420,468,34 AIPC and arrested Nigerian national Idiiogbe Joseph from Mumbai
with the suspected mobile used for communication, laptop, fake Income tax certificate and seals.
Apart from the above MPCP is investigating two more such cases in which suspects are being
monitored and efforts are being made to arrest them.
ICICI BANK
ICICI bank (formerly known as Industrial Credit and Investment Corporation of India) is the largest
private sector bank in India. ICICI is the first bank to introduce Internet banking in India.
ICICI bank offers various online banking services to its customers under the name ICICI Net Banking.
The ICICI net banking system allows you to access your bank account any time of the day from the
privacy of your home or office. Moreover, you can transfer funds to any bank account across India
instantly using ICICI net banking facility.
CHAPTER II - RESEARCH METHODOLOGY
Objectives of the study:
1) The main objective of this study was to understand the growth of the online banking sector
in India.
2) To study the opportunities for growth of online banking in India, since India is a very fast
developing country.
3) To study the challenges associated with the growth of online banking.
4) To understand the scope and the infrastructure that is there in India for its development.
Limits of the study:
The study of this project is limited to 25 people of Mumbai who have been questioned to
understand the project well.
Methodology used:
A. PRIMARY DATA: -
Questionnaire distributed among people having bank accounts. A sample questionnaire of 10
questions distributed to 25 people.
B. SECONDARY DATA :-
Internet
Reference books
CHAPTER III - DATA ANALYSIS
A survey was conducted on online banking in India for the primary data among 25 people. The
analysis of this survey or data is as follows:-
Q. What kind of banking do you prefer?
Traditional Online Both0
2
4
6
8
10
12
14
POLL out of 25: Traditional – 5 ; Online – 8 ; Both – 12
FINDINGS: This shows us the preference of the people towards the type of banking. They prefer to
use the services of both the online and traditional banking rather than a particular type.
Q. Do you think online banking is better than traditional banking?
YESNOCAN'T SAY
POLL out of 25: Yes - 13; No - 5; Can’t Say – 7
FINDINGS: The people understand that online banking is better than the traditional banking because
of its nature. While a few of the people are still not fully convinced.
Q. Do you feel you account is secured in online banking?
YES NO CANT SAY0
2
4
6
8
10
12
Poll out of 25: Yes - 11; No - 7; Can’t Say – 7
FINDINGS: Majority of the people think that their Account is secured, but not all. Their security
concern should be eradicated. This will attract customers.
Q. How frequently do you use banking services?
WEEKLY MONTHLY REGULARLY RARELY0
2
4
6
8
10
12
POLL out of 25: Weekly - 5; Monthly - 11; Regularly - 2; Rarely – 7
FINDINGS: Most of the people do not need the services of banks regularly or maybe there is no
need. They may transact with the bank on monthly basis for most of the time.
Q. How happy are you with services of online banking provided by your bank?
COMPLETELY PARTIALLY FAIRLY NOT AT ALL0
2
4
6
8
10
POLL out of 25: Completely - 4; Partially - 9; Fairly - 9; Not at all - 3
FINDINGS: The satisfaction level of people with the online banking services of their banks has a
mixed review. This may be due to multiple reasons.
Q. What type of transaction do you make in online banking?
CHECK BALANCES
PAYMENTS TRANSFER OF FUNDS
OTHER
POLL out of 25: Check balances - 11; Payments - 7; Transfer of fund - 2; Other -5
FINDINGS: The utility of the online banking is service is not used to the extent is should be and it
is being majorly used for the purpose of checking the balance in the account. The reason for this is
the low volume of transaction among the people.
CHAPTER IV
RECOMMENDATIONS & CONCLUSIONS
CONCLUSION:
People are not confident enough to whether to rely completely on online banking. There is
hesitancy in their minds with regards to preference. So they use both the techniques of banking
i.e. Online and Traditional.
Because of the complexity and the unawareness in the people regarding the online banking,
there is less utilization of the online banking services provided by the banks.
People are not sure whether their account is completely secured in online banking. Security
concern is the main and the core reason why people do not tend to use online banking.
People in India are not aware of the full utility of online banking and the services that can be
availed of in online banking.
Most of the Indian population are salaries employees who do not have that volume of
transaction that can be used for online transaction.
RECOMMENDATION:
After analyzing the entire study on online banking with respect to both the primary and the secondary
data, the following recommendations can be put forth:-
The infrastructure for the development is not being implemented in way that could be
beneficial.
There are various obstacles in the banking scenario with regards to guidelines and issues for
functioning. This has led to decline in the usage of the online banking service of the banks.
The people having accounts can be urged to take up an internet banking facility. They should
be motivated rather than just being told that there exists a service of online banking.
There are more people who are not actually aware of all the benefits that they reap out of the
transaction of online banking. They should be proper awareness.
Most of the people o not count online banking due the problems of security concerns. Proper
security software should be developed and people should be convinced that their accounts are
secured in online transactions.
CHAPTER V- BIBLIOGRAPHY
INTERNET:
http://www.onlinebanking.net/online-banking-services/
http://www.productivity501.com/choosing-online-bank/244/
http://www.thewisdomjournal.com/Blog/pros-and-cons-of-online-banking/
http://www.onlinebanking.net/how-does-online-banking-work/
http://www.onlinebanking.net/future-of-online-banking/
http://www.onlinebanking.net/why-banks-encourage-online-banking/
http://en.wikipedia.org/wiki/Electronic_commerce
http://www.indianmba.com/Faculty_Column/FC889/fc889.html
http://www.banknetindia.com/banking/ibkg.htm
http://www.sendmoneyindia.org/icici-net-banking.php
http://economictimes.indiatimes.com/opinion/money-banking/e-banking-could-open-opportunities-for-
banks/articleshow/4461581.cms
http://www.ehow.com/about_5147496_problems-related-net-banking-india.html
http://www.ehow.com/about_5340363_different-types-online-banking.html
http://www.networkmagazineindia.com/200302/feature.shtml
http://theonlinebankingblog.blogspot.com/2011/04/challenges-of-online-banking-security.html
http://searchcio.techtarget.com/definition/e-commerce
http://searchdatacenter.techtarget.com/definition/IT
http://nedogluka.com/internet-banking-global-way-for-banks-in-india.html
http://nedogluka.com/the-size-and-growth-of-the-banking-jobs-in-india.html
http://mpcyberpolice.nic.in/casestudies.htm#top
http://www.internetworldstats.com/asia/in.htm
REFERENCE BOOKS:
R.K. UPPAL BANKING WITH TECHNOLOGY
NEW CENTURY PUBLICATIONSNEW DELHI
APPENDIX
INTERNET BANKING IN INDIA (Survey)
Q.1 WHICH BANK DO YOU HAVE AN ACCOUNT?(1 – Private sector bank; 2 – Public sector bank; 3 – Other)
Q.2 WHAT KIND OF BANKING DO YOU PREFER?
(1 – Traditional; 2 – Online; 3 – Both)
Q.3 DO YOU THINK ONLINE BANKING IS USEFUL?
(1 – Yes; 2 – No; 3 – Can’t say)
Q.4 HOW FREQUENTLY DO YOU USE BANKING SERVICES?
(1 – Weekly; 2 – Monthly; 3 – Regularly; 4 – Rarely)
Q.5 DO YOU THINK ONLINE BANKING IS BETTER THAN TRADITIONAL BANKING?
(1 – Yes; 2 – No; 3 – Can’t Say)
Q.6 DO YOU FEEL ONLINE BANKING HAS A GROWTH POTENTIAL IN INDIA?
(1 – Yes; 2 – No; 3 – Can’t Say)
Q.7 WHAT TYPE OF TRANSACTION DO YOU MAKE IN ONLINE BANKING?
(1 – Check balances; 2 – Make payments; 3 – Transfer funds; 4 – Other)
Q.8 DO YOU FEEL YOUR ACCOUNT IS COMPLETELY SECURED IN ONLINE BANKING?
(1 – Yes; 2 – No; 3 – Can’t Say)
Q.9 ARE YOU HAPPY WITH THE SERVICES OF ONLINE BANKING PROVIDED BY YOUR
BANK?
(1 – Completely; 2 – Partially; 3 – Fairly; 4 – Not at all)
Q.10 FOR ME ONLINE BANKING IS
NAME:
PHONE:
EMAIL ID: