PROJECT REPORT DOCUMENTATION

ON

SUBMITED BY CALVINCE HARST ABUTO MUC-BIT-0001/2008

A report submitted in partial fulfillment of The requirements of MUCST Academic Program [Project unit, class of 2012] Meru campus-constituent of Jomo Kenyatta University

TABLE OF CONTENTS Chapter One: Introduction.................4 Chapter Two: Literature Review...9 Chapter Three: Methodology12 Chapter Four: Chapter Five: Chapter Six: Chapter Seven:

Acknowledgement I would like to express my gratitude to all who gave me the possibility to complete this project. I would like to express it to my guide Mr. LEONARD WAKOLI and to my faculty head J. IKIARA for continuous guidance. In the end, I express this gratitude to my friends who inspired me in this work because without their inspirations the work would have been futile-thats me. Signature CALVINCE HARST ABUTO BIT-0001/08

Declaration I am CALVINCE HARST and this project report is my original work and has not been submitted in any form as a part of another project. Information derived from the published and unpublished works of other people and has been acknowledged in the list references given in the bibliography. CALVINCE HARST ABUTO BIT-0001/08 Bibliography Book: E-banking in India Banking service operation (ICFAI) Indian Banking Money & Banking Links Visited www.google.com www.icici.com www.hdfc.com www.wikipedia.com

ABSTRACT Since online banking services were introduced, banks have offered to clients transaction and account management functions and did not propose many innovations. However the situation is changing. Banks have to compete with third party companies and are forced to change the way online banking is offered. This report describes the changes in online banking and banking in general. The aim is to identify, describe and analyze the innovative trends as well as to propose a technical solution for online banking, taking into account the innovations which have to be implemented. The architecture of the proposed application is prepared for integration into existing information system. Emphasis has been put on modularity and testability of the application. Chapter One INTRODUCTION The main purpose that banks have been serving since their inception is keeping our money safe for us. While keeping our money safe, they also let us earn a certain amount of interest on the money deposited with them. Traditional banks have been doing this, and internet banks continue the same function. The only difference is in the way the transactions are made. We all know about internet banking and most of us use it quite often as well, but few of us actually understand about the history of internet banking and how it all came out. Knowing the history of internet banking can be incredibly useful, especially since it will allow us to have more respect for the little things that we take for granted. Computers themselves have really come an enormous way since their initial establishment, as the earliest electronic computers were so large that they would take up the entire area of a room, while today some are so small that they can hardly be seen at all. In today's world, computers play an incredibly large role in the way the world exists in general, and the majority of tasks could actually not be completed if not for the use of computers. Although there are certainly some areas and jobs that cannot yet be completed solely by computers and which thus still require actual manpower, for the most part, computers have helped to make life significantly easier, productive, and more convenient for us all. Internet banking has been around for quite a few years now, but has really only become prominent over the past year or so in particular. Internet banking offers an array of different advantages to the user, including: account balances and history including year-to-date information, the ability to transfer money from one account to another and to payees for bill payments, check history, reorders, and stop payments, check credit card balances and statements, complete online loan applications, secure interactive messaging with staff, and much more. Internet banking basically allows you to be able to do everything that you can in your regular banking institution, only with the benefit that you can do it all right from the convenience of your own home. Not only is this great because you can be comfortable and have peace of mind knowing that you can keep track yourself of all your banking issues, but as well it allows for more ease because you never have to worry about rushing out and making it to the bank. The delivery channels include direct dialup connections, private networks, public networks, etc. with the popularity of computers, easy access to Internet and World Wide Web (WWW), Internet is increasingly used by banks as a channel for receiving instructions and delivering their products and services to their customers. This form of banking is generally referred to as Internet Banking, although the range of products and services offered by different banks vary widely both in their content and sophistication.

PROBLEM STATEMENT With the problems and limitations associated with manual banking procedures as witnessed in most parastatals today, complied with the problems associated with the existing application programs even much more in the presence of serious technological advances aimed at improving information system. This is activities aimed at shedding light upon the need for improvement in accounting activities and the means of achieving its efficiency, effectiveness, reliability and success promising future through computer intervention. Internet banking identifies a particular set of technological solutions for the development and the distribution of financial services, which rely upon the open architecture of the Internet. With the implementation of an Internet banking system, the banks maintain a direct relationship with the end users via the web and are able to provide a personal characterization to the interface, by offering additional customized services. OBJECTIVES The aim of this project is to develop a secured online banking system with the following objectives: Create a banking system that is easily accessible by customers from the comfort of their homes, offices etc. Reduce the flow of human traffic and long queues at banks Reduce the time wasted in going to banks to stay on queues. Promote efficient and effective banking for the banks by focusing on those services that still require physical presence at the banking hall. JUSTIFICATION FOR THE STUDY/PROJECT DEFINITION OF E-BANKING For this booklet, e-banking is defined as the automated delivery of new and traditional banking products and services directly to customers through electronic, interactive communication channels. E-banking includes the systems that enable financial institution customers, individuals or businesses, to access accounts, transact business, or obtain information on financial products and services through a public or private network, including the Internet. Customers access e-banking services using an intelligent electronic device, such as a personal computer (PC), personal digital assistant (PDA), automated teller machine (ATM), kiosk, or Touch Tone telephone. While the risks and controls are similar for the various e-banking access channels, this booklet focuses specifically on Internet-based services due to the Internets widely accessible public network. Accordingly, this booklet begins with a discussion of the two primary types of Internet websites: informational and transactional.

E-BANKING SUPPORT SERVICES WEBLINKING A large number of financial institutions maintain sites on the World Wide Web. Some websites are strictly informational, while others also offer customers the ability to perform financial transactions, such as paying bills or transferring funds between accounts.

WIRELESS E-BANKING Wireless banking is a delivery channel that can extend the reach and enhance the convenience of Internet banking products and services. Wireless banking occurs when customers access a financial institution's network(s) using cellular phones, pagers, and personal digital assistants (or similar devices) through telecommunication companies wireless networks. Wireless banking services in the United States typically supplement a financial institution's e-banking products and services. Person-to-Person Payments Electronic person-to-person payments, also known as e-mail money, permit consumers to send money to any person or business with an e-mail address. Under this scenario, a consumer electronically instructs the person-to-person payment service to transfer funds to another individual. The payment service then sends an e-mail notifying the individual that the funds are available and informs him or her of the methods available to access the funds including requesting a check, transferring the funds to an account at an insured financial institution, or retransmitting the funds to someone else. Person-to-person payments are typically funded by credit card charges transfer from the consumers account at a financial institution. Since neither the payee nor the payer in the transaction has to have an account with the payment service, such services may be offered by an insured financial institution, but are frequently offered by other businesses as well. Banking Services through Internet: 1. The Basic Level Service is the banks web sites which disseminate information on different products and services offered to customers and members of public in general. It may receive and reply to customers queries through e-mail; 2. In the next level are Simple Transactional Web sites which allows customers to submit their instructions, applications for different services, queries in their account balances, etc. but do not permit any fund-based transactions on their accounts; 3. The third level of Internet banking service are offered by Fully Transactional Web sites which allow the customers to operate on their accounts for transfer of funds, payment of different bills, subscribing to other products of the bank and to transact purchase and sale of securities, etc.

The Indian Scenario: Internet banking, both as a medium of delivery of banking services and as a strategic tool for business development. At present, the total internet users in the country are estimated at 9 lakh. However, this is expected to grow exponentially to 90 lakh by 2003. Only about 1 percent of Internet users did banking online in 1998. This is increased to 16.7 percent in March 2000. - (India Research, May 29, 2000, Kotak Securities) Cost of banking service through the Internet from a fraction of costs through conventional methods. Rough estimates assume teller cost at Re.1 per transaction, ATM transaction cost at 45 paise, phone banking at 35 paise, and debit cards at 20 paise and Internet banking at 10 paise per transaction. Plastic Cards as Media for Payment: There are four types of plastic cards being used as media for making payments. These are: 1. Credit Card 2. Debit Card 3. Smart Card 4. ATM Card 1. Credit Cards: The credit card enables the cardholders to: Purchase any item like clothes, jewelry, railway/air tickets, etc. Pay bills for dining in a restaurant or boarding and lodging in hotel Avail of any service like car rental, etc. 2. Debit Cards: A debit card is issued on payment of a specified amount by the issuing company like a telephone company to a customer on cash payment or on debiting his account by a bank. Thus it is like an electronic purse, which can be read and debited by the required amount. It may be noted that while through a credit card, the customer first makes a purchase or avails service and pays later on, but for getting the debit card, a customer has to first pay the due amount and then make a purchase or avail the service. For this reason, debit card are not as popular as credit cards.

3. Smart Cards: Smart Cards have a built-in microcomputer chip, which can be used for storing and processing information. For example, a person can have a smart card from a bank with the specified amount stored electronically on it. As he goes on making transactions with the help of the card, the balance keeps on reducing electronically. When the specified amount is utilized by the customer, he can approach the bank to get his card validated for a further specified amount. Such cards are used for paying small amounts like telephone calls, petrol bills, etc.

4. ATM Cards: The card contains a PIN (Personal Identification Number) which is selected by the customer or conveyed to the customer and enables him to withdraw cash up to the transaction limit for the day. He can also deposit cash or cheque. WHY USE ONLINE BANKING? Online banking services have grown from simply allowing customers to check balances, to trading assets. Today, banks like ING Direct are functioning entirely online, with no brick and mortar building. With the costs saved by requiring fewer employees and the lack of facility expenses, these virtual banks can often offer higher interest rates than their traditional counterparts. Internet banking gives you the power to control your finances completely. You are no longer tied down to managing your money during the hours the bank is open. If you want to transfer a balance after business hours, you can! If you have access to the Internet and have a number of recurring monthly bills, then you should use Internet banking to make your life easier. ONLINE BANKING HOW IS IT DIFFERENT? Many consumers today are turning to the ease and convenience of Internet banking to take care of their financial needs. With the new levels of access made possible by the Internet, people can now check the status of their finances with the click of a button. The history of Internet banking has evolved from simply allowing customers to check balances online, to now being able to trade stocks and bonds from the comfort of their own home! FEATURES OF ONLINE BANKING Today, online banking services are quite varied. One of the best features of online banking is putting the user in control. The user controls all bill paying, transfers, and investments from home. There are other features, though of online banking. One of these is increased accessibility to your account information. Users of online banking services can access their account information from anywhere in the world! This is particularly helpful for businesses. Internet business banking is becoming increasingly popular, as businesses are becoming more global in their reach. Now business people can access their accounts, even when on overseas business trips. Business Internet banking is extremely popular for this reason. A particularly popular aspect of online banking services is the ability to make bill payments electronically .With a minimum degree of set-up, customers can enter the amounts of their paper bills (or opt to receive electronic bills) and process all their payments at one time, from one screen. SCOPE OF THE STUDY The scope of this project is limited to the activities of the operations unit of the banking system which include opening of Account, Deposit of funds, Withdrawal of funds and transfer.

CHAPTER TWO LITERATUREREVIEW [INDIA] A new review by Tower group of 10 top US e- banking web sites evaluated several aspects of core online banking components. Group found that there is difference in terms of actual functionality and usability, among different banks and their services. The UK's first home online banking services were set up by the Nottingham Building Society (NBS) in 1983 ("History of the Nottingham", Retrieved on 2007-12-14.). The system used was based on the UK's Prestel system and used a computer, such as the BBC Micro, or keyboard (Tan data Td1400) connected to the telephone system and television set. The system (known as 'Home link') allowed on-line viewing of statements, bank transfers and bill payments. In order to make bank transfers and bill payments, a written instruction giving details of the intended recipient had to be sent to the NBS who set the details up on the Home link system. An American study conducted last year by Booz-Allen projects that by the year 2000, 16 million US households will be using Internet banking. While these numbers do not appear to be significant as compared to the total population, each Internet user is projected to be 50-250% more profitable than the average banking customer. It is expected that these Internet customers will be some of the banking system's most profitable customers representing close to 30% of all retail banking profits. The study projects that by 1999, 1,500 banks will have Internet Web sites and at least 500 of these banks will be offering full-fledged Internet banking services. In 2001 Micro banker send detailed questionnaire to the leading vendors of internet banking software27 companies responded with information on thirty programs the aggregate outcome of the outcome was that almost all the companies have developed functions for internet banking and have inbuilt feature to aid with one to one marketing on the web. ICICI Bank ICICI Bank Online Banking Services provide the largest private bank in India right here at your desktops. Banking becomes a pleasure as the transactions and services become instant with ICICI Bank online Internet banking. The services provided are totally secure and unique. These cover online account transactions and operations, credit card and account applications and payments, share trading and investments through mutual funds, bill payments, statement generation and a virtual demo of each service. See in brief in final report. Role of customer when using e-banking You can access ICICIBank.com only by using your User ID and Password. During the first login attempt, it is mandatory to change both passwords - login and transaction which would have been mailed to you by the bank. If you forget your password, you will have written to us using the "Email Us" option. The Bank will then issue a new password and send it to your mailing address as per our records. Kindly check with your branch that this address is updated... Make sure no one can see the account login name or password you are entering when you log on to ICICIBank.com. Log-out of ICICI Bank while moving to the next Websites. While leaving PC, "close" the browser.

 Do not write your ICICIBank.com login name or password anywhere. Do not leave your login name and password such that someone sitting at your computer could see them. Never reveal your ICICIBank.com login name and password to anyone (no representative of ICICI Bank will ever ask you for your ICICIBank.com password). Notify ICICI Bank immediately you notice any unusual account activity. Keep all documents that include your account information in a secure location. When you login you can view the date and time of your last log in. Features offered by ICICI bank for internet banking 1) Balance enquiry and statement 2) Transfer fund online 3) Card to card fund transfer 4) Use debit card online 5) Prepaid mobile recharge 6) Subscribe for mobile banking 7) Link bank account to ATM 8) Lock / activate debit cards /ATM 9) Request a cheque book 10) Stop payment HDFC Net Banking is HDFC Bank's Internet Banking service. Providing up-to-the-second account information, Net Banking lets you manage your account from the comfort of your mouse -anytime, anywhere. Features offered by HDFC bank for internet banking i. ii. iii. View account balances and statements Transfer funds between accounts Request stop payments

iv. v. vi.

Pay bills Create fixed deposit online Order cheque books

Chapter Three Methodology, Requirement Analysis and Specification Data collection Primary Data: In this research with a sample size of nearly 20 customers data will be available in form of questionnaire collected in terms of different questions influencing the use of internet banking. Internet banking is considered as dependent on awareness among customers which will be studied with help of different independent variable. Only the customers of HDFC & ICICI bank are taken as samples for study but some other banks were also in concern through online means. Secondary data: Collection of information from different kind of books the data of the company what they maintained. METHODOLOGY This project employs the object oriented approach of software engineering using appropriate (UML TOOLS) an object oriented approach. Some of the steps to be taken are: Feasibility study understanding and identifying of existing system and associated study. Analysis proper analysis and suggested solution to tackle such problems will be considered. Design designing the new system will be achieved through an object oriented software tools (UML). Coding this is implemented as a 3tier architecture model using java language. The 3 layers of the application are as follows. i. Java server pages / html pages front end ii. Java server pages / servlets middle end iii. SQL server as the back-end MODE OF OPERATION E-banking in Kenya will contain self-explanatory hyperlinks that customers can click to make any request or perform a task. If a customer clicks on account opening links, he is taken to page where he fills a form and clicks the submit button if he is through. A successful filling of the form gives a response that confirms the customer account is open and activated. Thus such a customer can receive money into such an account through funds transfer. Account details are sent by the bank to the customers email box. Registered customers or Account holders of the bank can now login using the account details posted to their email box to login before they can perform financial transactions. The system is secured such that you cannot operate another persons account even if you knew his account details because a new transaction number is always sent to a customer for each login. This transaction number is what will be used to authenticate any transaction per time.

DESCRIPTION E-banking in Kenya is built on the three tier architecture of web applications.

www.fantasticbank.com

HOME PAGE

Internet
JSP/Servlet
(Application logic)

Database

Back-end

Front-end

E-Banking in Kenya Server (Web server)

Middle-tier

When a request is made on a web page through the browser, a jsp/servlet script that is residing on the web server (the web Server) processes the request. It connects to the database to retrieve the requested information and sends its response back to the browser which displays the output on another web page. The advantage of this architecture is that the database is more secured as it is only accessible by the application logic (jsp/servlet script) that resides on the web server. SOFTWARE TOOLS USED IDE: Net Beans 7.0 Language: Java/php Web Server: Apache Tomcat 7.0/Xampp 2.5 Web Technology: JSP/Servlet Database: Ms Access / SQL Server This is an exploratory research that evaluated different factors that why consumers in Pakistan are reluctant to adopt e-banking. Data collection methods are an integral part of research design. Both primary and secondary data are used in this research. Three research methods; surveys, case studies and research articles had been used for this paper. A questionnaire was developed to gather data from the banking consumers, which consisted of two sections to which there were 145 respondents forming a Non-Probability Sample. The sample data consisted of 34 Online Banking users while 111 were non-users

Once the findings are finalized by a research, suggestions should be made for the betterment of enterprise. The data collected from questionnaire will be tabulated and analyzed so that. The result can be presented as simple as possible. There are a number of ways like Pie-chart Graphs After having explained to users about the variety of banks and information about internet banking I came up with the following questionnaire to examine the users response online: NB: the questionnaire is carried online, where users will fill the forms online and response is retrieved from the database. Data Collection QUESTIONNAIRE: 1. Name of the customer:-

2. Do you like E-banking a. Yes b. No 3. Tick which bank you preferred a. ICICI b. CFC STANBIC c. KCB d. CBK e. STANDARD CHARTERED f. HDFC g. NBK 4. Why this bank a. Service is good

b. They provide security c. Cheaper service fees.

5. Which type of service mostly you use?

a. b.

Balance and transaction history search Transfer fund online Card to card fund transfer Open FD Lock / activate debit cards /ATM Request a cheque book Stop payment Railway pass / ticket Shopping Share payment

c. d.

e. f.

g. h.

i. j.

6. Services of the bank are. i. Poor ii. Good iii. Very good

iv. excellent 7. Are you satisfied with the using of E-banking? a. Yes b. No

Data analysis 1) Users of E-banking Yes No 65% 35%

2) No. of user of the banks

ICICI CBK NBK KCB Standard Chartered HDFC

20% 30% 20% 10% 8% 12%

3) PREFERENCE FOR ONLINE BILL PAYMENT SERVICES Yes No 60 40

4) PREFERENCE FOR ONLINE SHOPPING Yes No 70% 30%

5) PREFERENCE FOR ONLINE FUND TRANSFAR Yes 35% No 65%

6) SATISFIED CUSTOMERS No Yes

65% 35%

7) PREFERED MEANS OF PAYMENT (TO BANK) Cheque Cash E-banking 50 25 25

Kenya

8) SPEND PER BILL FOR ON LINE BILL PAYMENT

Findings 1. In the users ratio of internet banking 65% of customers are using this service. 2. More banks are connecting to the any software co. to running the E-banking service. In these services the ICICI banks is top in service of E-banking. 3. The services that are mostly used by maximum customers are transactions, online trading, bill payment, shopping etc. 4. The mode of the cash deposit in bank is for use to online truncation cash, cheque & e-banking. 5. Different banks different charge for online service.

1.

Suggestions To prevent online banking from remaining customers to prompt this service through advertising co. After repairing this basic deficiency, banks must ensure that there services is competitive. Banks is not taking more charge from their customers. Conclusion

2.

3.

The basic objective of my research was to analyze the awareness among customers for internet banking in KENYA. It gives direction to research tools, research types and techniques. Although the findings reveal that people know about the services but still many people are unaware and many of them are non users so the bank should by promotion try to retain the customers. Banks should look forward to have some tie ups with other financial institutions to increase the service base.

Chapter Four 4.0 System Design Chapter Five System Construction and Unit testing Chapter Six System Implementation Chapter Seven Conclusions and Recommendations References