e-banking-120412093356-phpapp02

8/12/2019 e-banking-120412093356-phpapp02

1/28

8/12/2019 e-banking-120412093356-phpapp02

2/28

VARIOUS FORMS OF E-BANKING

INTERNET BANKING

nternet +anking lets you handle many banking transactions #ia your personal computer.For instance, you may use your computer to #iew your account balance, request transfersbetween accounts, and pay bills electronically.

nternet banking system and method in which a personal computer is connected by anetwork ser#ice pro#ider directly to a host computer system of a bank such that customerser#ice requests can be processed automatically without need for inter#ention bycustomer ser#ice representati#es. The system is capable of distinguishing between those

customer ser#ice requests which are capable of automated fulfillment and those requestswhich require handling by a customer ser#ice representati#e. The system is integratedwith the host computer system of the bank so that the remote banking customer canaccess other automated ser#ices of the bank. The method of the in#ention includes thesteps of inputting a customer banking request from among a menu of banking requests ata remote personnel computer/ transmitting the banking requests to a host computer o#er anetwork/ recei#ing the request at the host computer/ identifying the type of customerbanking request recei#ed/ automatic logging of the ser#ice request, comparing therecei#ed request to a stored table of request types, each of the request types ha#ing anattribute to indicate whether the request type is capable of being fulfilled by a customerser#ice representati#e or by an automated system/ and, depending upon the attribute,

directing the request either to a queue for handling by a customer ser#ice representati#eor to a queue for processing by an automated system.

%-T0&%TE1 TE22E3 &%4"E5 (%T&)%n unattended electronic machine in a public place, connected to a data system andrelated equipment and acti#ated by a bank customer to obtain cash withdrawals and otherbanking ser#ices. %lso called automatic teller machine, cash machine/ %lso called moneymachine.%n automated teller machine or automatic teller machine (%T&) is an electroniccomputeri6ed telecommunications de#ice that allows a financial institutions customers todirectly use a secure method of communication to access their bank accounts, order or

make cash withdrawals (or cash ad#ances using a credit card) and check their accountbalances without the need for a human bank teller (or cashier in the -7). &any %T&salso allow people to deposit cash or cheques, transfer money between their bankaccounts, top up their mobile phones prepaid accounts or e#en buy postage stamps.0n most modern %T&s, the customer identifies him or herself by inserting a plastic cardwith a magnetic stripe or a plastic smartcard with a chip, that contains his or her accountnumber. The customer then #erifies their identity by entering a passcode, often referred to
http://mbanetbook.blogspot.com/

8/12/2019 e-banking-120412093356-phpapp02

3/28

as a ' ('ersonal dentification umber) of four or more digits. -pon successful entryof the ', the customer may perform a transaction.f the number is entered incorrectly se#eral times in a row (usually three attempts percard insertion), some %T&s will attempt retain the card as a security precaution to

pre#ent an unauthorised user from disco#ering the ' by guesswork. 4aptured cards areoften destroyed if the %T& owner is not the card issuing bank, as noncustomersidentities cannot be reliably confirmed.

The ndian market today has appro*imately more than 89,::: %T&;s.

TE2E +%7

8/12/2019 e-banking-120412093356-phpapp02

4/28

5mart cards can also be used with a smart card reader attachment to a personal computerto authenticate a user. 5mart cards are much more popular in Europe than in the -.5. nEurope the health insurance and banking industries use smart cards e*tensi#ely. E#ery

8/12/2019 e-banking-120412093356-phpapp02

5/28

+EEFT5B404E35 0F E+%78. %ptech 4omputerEducation was established in 8C> following the e*periment of T.+efore large scale computerisation, computer education became popular in ndia and

co#eted by bright students, when se#eral Engineering 4olleges and Technical nstitutesintroducing 'ost

8/12/2019 e-banking-120412093356-phpapp02

18/28

%gainst this backdrop, the 4ommittee on 4omputerisation in +anks was set up onceagain under 1r.3angara@ans 4hairmanship to draw up a perspecti#e plan forcomputerisation in banks. n its report submitted in 8C>C, the 4ommittee acknowledgedthe gains of the initial efforts and sought to mo#e away from the standalone dedicated

systems to an online transaction processing en#ironment in branch banking. trecommended that the thrust of bank computerisation for the following D years should beto fully computerise the operations at both the front and back offices of large branchesthen numbering around D::.3E40&&E1%T05 0F 40&&TTEE 0 TE4"020

8/12/2019 e-banking-120412093356-phpapp02

19/28

-ni#ersal +ank. The strategy of 44 bank after the merger with 44 2td. is that ofbuilding a di#ersified portfolio. The merged entity will continue to be into pro@ect financeand the focus will be to tap the potential in retail financing.

44 bank offers a wide spectrum of domestic and international banking ser#ices tofacilitate trade, in#estment, cross border business, treasury and foreign e*changeser#ices). 44 bank hasbeen quick to reali6e that E banking has changed from a somewhat e*perimentaldeli#ery #ehicle into an increasingly mainstream one for deli#ery of broad spectrum ofbanking products and ser#ices. +asic E banking ser#ices are rapidly changing fromcompetiti#e differentiator to competiti#e necessity.

The group has le#eraged on a number of tieups to come up with its #arious offering. Forits nternet banking offering the 44 bank uses nfinity from nfosys, for its credit cardbusiness its uses =ision 'lus from 'ay 5ys, -5%, for $%' ser#ices the tieup with

cellular ser#ice pro#iders 0range and %irtel helps reach out to these users, while the$%' technology is being implemented by the inhouse 44 nfotech ser#ice. Tole#erage the et for its marketing initiati#es 44 bank and 5atyam nfo way ha#e@ointly set up a ?40&? company to promote banking products on the et. The bank hasalso entered into agreements with leading corporate like +'2, 3ediff.com., -sha &artinand Tata 4ommunications for + to 4 solutions in a bid to further strengthen its nternetbanking product ffering and ser#ices. %lso 44 has @oined hands with a consortium ledby 4ompaq to take the lead in offering a solution to the ndian ecommerce community.This consortium offers a ++ and +4 ecommerce payment gateway within ndia.

The +ank has been offering phone banking free of charge and was first to launch an

nternet +anking ser#ice in the country named nfinity. nfinity now pro#ides a host ofonline banking solutions to retail as well as corporate customers. 44s constantendea#our in pro#iding more #alue to the customers has resulted in nfinity being thefrontrunner amongst online banking offerings in the country. %lso, in keeping with thecustomers need for increased security, 4orporate nfinity now pro#ides multiple le#els ofauthentication besides user 1B password and includes security tokens.

44 also stri#es to be a center for leading research on financial engineering in ndia,particularly in the area of #aluation of securities, risk management and deri#ati#es. +yle#eraging on the groups resources 44 pro#ides custom tailored solution that cansupport e#en the most comple* business strategy.

44 is now mo#ing all its operations into the era of #irtual integration. ot only hasthis drastically reduced costs, but it has also increased and impro#ed its ser#ices tocustomers. 8G>> &oney ndia offers a unique facility by 44 of transferring funds tondia. %dditional modules were addedgifting and reminders to broaden its scope andenhance 44s relationship with customers.

The table below gi#es the 5$0T analysis of 44.

8/12/2019 e-banking-120412093356-phpapp02

20/28

4"%22E

8/12/2019 e-banking-120412093356-phpapp02

21/28

super#isor is not adequate. 2icensing is the norm, for e*ample, in the -nited 5tates andmost of the countries of the European -nion. % #irtual bank licensed outside these@urisdictions that wishes to offer electronic banking ser#ices and take deposits in thesecountries must first establish a licensed branch.

1etermining when a banks electronic ser#ices trigger the need for a license can bedifficult, but indicators showing where banking ser#ices originate and where they arepro#ided can help. For e*ample, a #irtual bank licensed in country N is not seen as takingdeposits in country Y if customers make their deposits by posting checks to an address incountry N. f a customer makes a deposit at an automatic teller machine in country Y,howe#er, that transaction would most likely be considered deposit taking in country Y.3egulators need to establish guidelines to clarify the gray areas between these two cases.2egal 3isk Electronic banking carries heightened legal risks for banks. +anks canpotentially e*pand the geographical scope of their ser#ices faster through electronicbanking than through traditional banks. n some cases, howe#er, they might not be fully#ersed in a @urisdictions local laws and regulations before they begin to offer ser#ices

there, either with a license or without a license if one is not required. $hen a license isnot required, a #irtual bankMlacking contact with its host country super#isorMmay findit e#en more difficult to stay abreast of regulatory changes. %s a consequence, #irtualbanks could unknowingly #iolate customer protection laws, including on data collectionand pri#acy, and regulations on soliciting. n doing so, they e*pose themsel#es to lossesthrough lawsuits or crimes that are not prosecuted because of @urisdictional disputes.&oney laundering is an ageold criminal acti#ity that has been greatly facilitated byelectronic banking because of the anonymity it affords. 0nce a customer opens anaccount, it is impossible for banks to identify whether the nominal account holder isconducting a transaction or e#en where the transaction is taking place. To combat moneylaundering, many countries ha#e issued specific guidelines on identifying customers.

They typically comprise recommendations for #erifying an indi#iduals identity andaddress before a customer account is opened and for monitoring online transactions,which requires great #igilance.n a report issued in :::, the 0rgani6ation for Economic 4ooperation and1e#elopments Financial %ction Task Force raised another concern. $ith electronicbanking crossing national boundaries, whose regulatory authorities will in#estigate andpursue money laundering #iolationsJ The answer, according to the task force, lies incoordinating legislation and regulation internationally to a#oid the creation of safe ha#ensfor criminal acti#ities.0perational 3isk The reliance on new technology to pro#ide ser#ices makes security andsystem a#ailability the central operational risk of electronic banking. 5ecurity threats can

come from inside or outside the system, so banking regulators and super#isors mustensure that banks ha#e appropriate practices in place to guarantee the confidentiality ofdata, as well as the integrity of the system and the data. +anks security practices shouldbe regularly tested and re#iewed by outside e*perts to analy6e network #ulnerabilitiesand reco#ery preparedness. 4apacity planning to address increasing transaction #olumesand new technological de#elopments should take account of the budgetary impact of newin#estments, the ability to attract staff with the necessary e*pertise, and potentialdependence on e*ternal ser#ice pro#iders. &anaging heightened operational risks needs

8/12/2019 e-banking-120412093356-phpapp02

22/28

to become an integral part of banks o#erall management of risk, and super#isors need toinclude operational risks in their safety and soundness e#aluations.3eputational 3isk +reaches of security and disruptions to the systems a#ailability candamage a banks reputation. The more a bank relies on electronic deli#ery channels, the

greater the potential for reputational risks. f one electronic bank encounters problemsthat cause customers to lose confidence in electronic deli#ery channels as a whole or to#iew bank failures as systemwide super#isory deficiencies, these problems canpotentially affect other pro#iders of electronic banking ser#ices. n many countries whereelectronic banking is becoming the trend, bank super#isors ha#e put in place internalguidance notes for e*aminers, and many ha#e released riskmanagement guidelines forbanks.3eputational risks also stem from customer misuse of security precautions or ignoranceabout the need for such precautions. 5ecurity risks can be amplified and may result in aloss of confidence in electronic deli#ery channels. The solution is consumer educationMaprocess in which regulators and super#isors can assist. For e*ample, some bank

super#isors pro#ide links on their websites allowing customers to identify online bankswith legitimate charters and deposit insurance. They also issue tips on nternet banking,offer consumer help lines, and issue warnings about specific entities that may beconducting unauthori6ed banking operations in the country.

T"E &%430E400&4 4"%22E

8/12/2019 e-banking-120412093356-phpapp02

23/28

the Tobin ta*Mwhich would ta* shortterm capital flows to increase their cost and,thereby, the sand in the wheelsMwould feel that electronic banking makes an e#en morecompelling case for introducing such a ta*.$hile electronic banking can pro#ide a number of benefits for customers and new

business opportunities for banks, it e*acerbates traditional banking risks. E#en thoughconsiderable work has been done in some countries in adapting banking and super#isionregulations, continuous #igilance and re#isions will be essential as the scope of Ebanking increases. n particular, there is still a need to establish greater harmoni6ationand coordination at the international le#el. &oreo#er, the ease with which capital canpotentially be mo#ed between banks and across borders in an electronic en#ironmentcreates a greater sensiti#ity to economic policy management. To understand the impact ofEbanking on the conduct of economic policy, policymakers need a solid analyticalfoundation. $ithout one, the markets will pro#ide the answer, possibly at a higheconomic cost. Further research on policyrelated issues in the period ahead is thereforecritical.

357 &%%

8/12/2019 e-banking-120412093356-phpapp02

24/28

To facilitate these de#elopments, the 4ommittee has identified fourteen 3isk&anagement 'rinciples for Electronic +anking to help banking institutions e*pand theire*isting risk o#ersight policies and processes to co#er their Ebanking acti#ities.These 3isk &anagement 'rinciples are not put forth as absolute requirements or e#en

?best practice.? The 4ommittee belie#es that setting detailed risk managementrequirements in the area of Ebanking might be counterproducti#e, if only because thesewould be likely to become rapidly outdated because of the speed of change related totechnological and customer ser#ice inno#ation. The 4ommittee has therefore preferred toe*press super#isory e*pectations and guidance in the form of 3isk &anagement'rinciples in order to promote safety and soundness for Ebanking acti#ities, whilepreser#ing the necessary fle*ibility in implementation that deri#es in part from the speedof change in this area. Further, the 4ommittee recognises that each banks risk profile isdifferent and requires a tailored risk mitigation approach appropriate for the scale of theEbanking operations, the materiality of the risks present, and the willingness and abilityof the institution to manage these risks. This implies that a ?one si6e fits all? approach to

Ebanking risk management issues may not be appropriate.For a similar reason, the 3isk &anagement 'rinciples issued by the 4ommittee do notattempt to set specific technical solutions or standards relating to Ebanking. Technicalsolutions are to be addressed by institutions and standard setting bodies as technologye#ol#es. "owe#er, this 3eport contains appendices that list some e*amples current andwidespread risk mitigation practices in the Ebanking area that are supporti#e of the 3isk&anagement 'rinciples.4onsequently, the 3isk &anagement 'rinciples and sound practices identified in this3eport are e*pected to be used as tools by national super#isors and implemented withadaptations to reflect specific national requirements and indi#idual risk profiles wherenecessary. n some areas, the 'rinciples ha#e been e*pressed by the 4ommittee or by

national super#isors in pre#ious bank super#isory guidance. "owe#er, some issues, suchas the management of outsourcing relationships, security controls and legal andreputational risk management, warrant more detailed principles than those e*pressed todate due to the unique characteristics and implications of the nternet distributionchannel.The 3isk &anagement 'rinciples fall into three broad, and often o#erlapping, categoriesof issues that are grouped to pro#ide clarity8. +oard and &anagement 0#ersight/. 5ecurity 4ontrols/ andL. 2egal and 3eputational 3isk &anagement.

3E

8/12/2019 e-banking-120412093356-phpapp02

25/28

electronic banking setting. For e*ample, it recommends that a banks board of directorsand senior management re#iew and appro#e the key aspects of the security controlprocess, which should include measures to authenticate the identity and authori6ation ofcustomers, promote nonrepudiation of transactions, protect data integrity, and ensure

segregation of duties within Ebanking systems, databases, and applications. 3egulatorsand super#isors must also ensure that their staffs ha#e the rele#ant technological e*pertiseto assess potential changes in risks, which may require significant in#estment in trainingand in hardware and software.2egali6ation ew methods for conducting transactions, new instruments, and newser#ice pro#iders will require legal definition, recognition, and permission. For e*ample,it will be essential to define an electronic signature and gi#e it the same legal status as thehandwritten signature. E*isting legal definitions and permissionsMsuch as the legaldefinition of a bank and the concept of a national borderMwill also need to be rethought."armoni6ation nternational harmoni6ation of electronic banking regulation must be atop priority. This means intensifying crossborder cooperation between super#isors and

coordinating laws and regulatory practices internationally and domestically acrossdifferent regulatory agencies. The problem of @urisdiction that arises from ?borderless?transactions is, as of this writing, in limbo. For now, each country must decide who has@urisdiction o#er electronic banking in#ol#ing its citi6ens. The task of internationalharmoni6ation and cooperation can be #iewed as the most daunting in addressing thechallenges of electronic banking.ntegration This is the process of including information technology issues and theiraccompanying operational risks in bank super#isors safety and soundness e#aluations. naddition to the issues of pri#acy and security, for e*ample, bank e*aminers will want toknow how well the banks management has elaborated its business plan for electronicbanking. % special challenge for regulators will be super#ising the functions that are

outsourced to thirdparty #endors.2007< F03$%31%n old 4hinese saying goes f you dont know where you are going you will ne#er getthere.

8/12/2019 e-banking-120412093356-phpapp02

26/28

! 5elling financial products and ser#ices! 4utting operational costs! +randing P &arket recognition! 7eeping profitable customers

E#ery day more and more people are turning to the Technology for their personalbanking. t is a safe, con#enient way to shop for financial ser#ices, maintain bankaccounts and conduct business G hours a day. E#ery one of us has always en@oyed aspecial relationship with their neighborhood bank. $hy are so many people suddenlychoosing their personal computers as the new way to #iew and manage their moneyJAuite simple because it is a #aluable option to ha#e. +ank customers can sa#e time bybanking online. There is no need to stand in one more line to perform the most basictransactions when they can be done quickly from the desktop '4 anytime, day or night.+ut e#en with more complicated transactions or in#estment decisions, people like ha#ingdirect control o#er their finances themsel#es. They find it con#enient to access all oftheir financial information in one place. Ease of use is one of the most important factors.

a#igation through online banking should be simple and intuiti#e. +anks need to appealto customers who may not be technologically sophisticated, and should not require anengineering degree to get started or use the ser#ice. 4ustomers also choose banks whoseonline ser#ices are reliable. &ost +anks now offers a comprehensi#e range of financialproducts and ser#ices, including a F3EE checking account and internet bill payingser#ices. n addition, an array of checking accounts are a#ailable in which you may alsorequest a F3EE check card. "ence most +anks of following Electronic +anking ornternet +anking F3EE ha#e following ser#icesB onlyG Telephone +anking 3s. 8DB only%s e#ery +ank wants to be profitable Ebanking is becoming necessity for sur#i#al.Electronic banking pro#ides enormous benefits to consumers in terms of the ease andcost of transactionsTaking o#er customers from competition+anks seeking new customers can use ad#antages of new distribution channels andacquire most profitable customer from their competition. t is a fact that people using E

8/12/2019 e-banking-120412093356-phpapp02

27/28

banking are the ones who consider time as money and are the one with loads of money.&a@ority of banks see >:R of their business coming @ust :R of the client base. This:R customer base is #ulnerable if the bank does not appreciate their time.+uilding stronger customer relations

0ffering new ser#ices, results in impro#ed customer e*perience and stronger customerretention.+igger share in customer;s wallett is well known fact that customers tend to keep their finances in one place. +anksholding customer accounts therefore ha#e opportunity to cross sell different products andser#ices. 3ecent studies show that banks in the -5% lost :R of their most #aluablecustomers in fa#or of nonbank F fle*ible enough to offer di#ersified ser#ices andproducts.dentifying profitable customers4ustomers using Ebanking ser#ices ha#e higher balances than a#erage branch teller

customers. n#estments are more than twice higher than the a#erage.

4onclusion

From all of this, we ha#e learnt that information technology has empowered customersand businesses with information needed to make better in#estment decisions. %t thesame time, technology is allowing banks to offer new products, operate more efficiently,

8/12/2019 e-banking-120412093356-phpapp02

28/28

raise producti#ity, e*pand geographically and compete globally. % more efficient,producti#e banking industry is pro#iding ser#ices of greater quality and #alue.

Ebanking has become a necessary sur#i#al weapon and is fundamentally changing the

banking industry worldwide. To day, the click of the mouse offers customers bankingser#ices at a much lower cost and also empowers them with unprecedented freedom inchoosing #endors for their financial ser#ice needs. o country today has a choice whetherto implement Ebanking or not gi#en the global and competiti#e nature of the economy.The in#asion of banking by technology has created an information age andcommoditi6ation of banking ser#ices. +anks ha#e come to reali6e that sur#i#al in the neweeconomy depends on deli#ering some or all of their banking ser#ices on the nternetwhile continuing to support their traditional infrastructure.

The rise of Ebanking is redefining business relationships and the most successful bankswill be those that can truly strengthen their relationship with their customers.

$ithout any doubt, the international scope of Ebanking pro#ides new growthperspecti#es and nternet business is a catalyst for new technologies and new businessprocesses. $ith rapid ad#ances in telecommunication systems and digital technology, Ebanking has become a strategic weapon for banks to remain profitable. t has beentransformed beyond what anyone could ha#e foreseen D years ago.

Two years ago, Ebanking was a strategic ad#antage, nowadays/ it is a business reality, ifnot a necessity.

e-banking-120412093356-phpapp02

Documents