Professional Documents
Culture Documents
E-BANKING IN INDIA
A
Project
On
INDIAN BANKING STUCTURE
SUBMITTED BY
Surbhi Anjeev Singhal
TY BCBI, Sem- V
PROJECT GUIDE
PROF. Rashmi Bhatacharya
SUMITTED TO
UNIVERSITY OF MUMBAI
RAJASTHANI SAMMELANS
Ghyamshamdas Saraf College
Of Arts & Commerce
Affiliated to University of Mumbai
Reaccredited by NAAC with A Grade
S.V Road, Malad (W)
Mumbai- 400064
A.Y. 2014- 2015
TYBBI
E-BANKING IN INDIA
RAJASTHANI SAMMELANS
Ghyamshamdas Saraf College
Of Arts & Commerce
Affiliated to University of Mumbai
Reaccredited by NAAC with A Grade
S.V Road, Malad (W)
Mumbai- 400064
A.Y. 2014- 2015
CERTIFICATE
I Prof. Rashmi Bhatacharya hereby certify that Surbhi Anjeev Singhal a
student of Ghyanshyamdas Saraf College of Arts & Commerce,
TYBCBI Sem-V as completed Project on E-Banking in India in the
Academic Year 2014-2015.
Thus information submitted is true and original to the best of the
Knowledge.
Project Guide:
Date:
External Examiner:
Date:
Principal
College Seal
TYBBI
E-BANKING IN INDIA
ACKNOWLEDGEMENT
I take this opportunity to thank the UNIVERSITY OF MUMBAI for
giving me a chance to do this project.
I express my sincere gratitude to the Principal Dr. Sujata Karmarkar ,
Chief Co-ordinator Dr. Rajyalakshmi Rao , Guide Prof. Rashmi
Bhatacharya , teaching faculty and our librarian for their constant
support and helping for completing the project.
My deep sense of gratitude to the staff and employees of State Bank of
India (Branch: Liberty Garden) for their support and guidance.
I am also grateful to my friends for giving me moral support during the
course of my project work. Lastly, I would like to thank each and every
person who helped me in completing the project successfully especially
MY PARENTS.
TYBBI
E-BANKING IN INDIA
DECLARATION
Surbhi Anjeev Singhal a student of Ghyanshamdas Saraf College of
Arts & Commerce, Malad (W) TY BMS Sem- V hereby declare that I
have completed project on E-Banking in India in the Academic Year
2014-2015. This information Submitted is true and Original to best of
my Knowledge.
Date:
Signature of Student
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E- BANKING IN INDIA
Sr.
No.
Contents
1.
E-Banking In India
Intoduction of E-Banking In India
1.1
1.2
Introduction
Definition
Page
No.
1
2
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Scope of E-Banking
Objectives of E-Banking
What is E-Banking
Evolution of E-Banking
1.6.1 Reasons of E-Banking Evolution
Need For E-Banking
History of E-Banking
Why is E-Banking Important
1.9.1 Choice And Convenience For Customers
1.9.2 Attracting High Value of Customers
1.9.3 Enhanced Image
1.9.4 Increased Revenue
1.9.5 Easier Expansion
1.9.6 Load Reduction on Other Channels
1.9.7 Cost Reduction
1.9.8 Organizational Efficiency
E-Marketing
Features Of E-Banking
Usage Of E-Banking
Global View Of E-Banking
3
4
5
2.
2.1
Risk In E-Banking
2.1.1 Transactional or Operational Risk
2.1.2 Credit Risk
2.1.3 Reputional Risk
2.1.4 Compliance or Legal Risk
2.1.5 Strategic or Legal Risk
2.2
2.3
2.4
2.5
Security Measures
7
9
1.3
1.4
1.5
1.6
1.7
1.8
1.9
1.10
1.11
1.12
1.13
Security Problems
Security Precautions
Benefits of E-Banking
2.5.1 Benefits to Consumers
2.5.2 Benefits to Banking Industry
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2.6
2.7
2.8
E-Banking to E-Commerce
3.
Products of E-Banking
3.1
Online Banking
3.1.1 Features and Benefits of E-Banking
3.1.2 Disadvantages of E-Banking
Mobile Banking
3.2.1 Advantages of Mobile Banking
3.2.2 Reserve Bank has brought out a set of operating
guidelines for adoption by Banks
Tele Banking
3.3.1 Features and Benefits of E-Banking
Automated Teller Machine(ATM)
3.4.1 Benefits of ATM
3.4.2 Disadvantages of ATM
Debit Card
3.5.1 Advantages of Debit Card
3.5.2 Disadvantages of Debit Card
Credit Card
3.6.1 Advantages of Credit Card
3.6.2 Disadvantages of Credit Card
Potential Area Where E-Banking Used
3.2
3.3
3.4
3.5
3.6
3.7
4.
4.1
4.2
4.3
4.4
Indian Scenario
4.1.1 The Entry of Indian Bank into Net Banking
4.1.2 Product and Services Offered
Future Scenario
How E-Banking Ease Your Life
Internet Banking v/s Traditional Banking
5.
5.1
INTRODUCTION
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5.2
5.3
5.4
HISTORY
E-BANKING IN BARODA
CASE STUDY OF E-BANKING
6.
CONCLUSION
BIBLOGRAPHY
6.1
6.2
6.3
6.4
CONCLUSION
DATA
ANALYSIS
APPENDIX
DATA ANALYSIS
APPENDIX
BIBLOGRAPHY
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1.2 Definition:
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
Our e-banking and e-commerce solutions facilitate integration with a variety of electronic
delivery channels, like ATM, tele-banking, Internet and mobile banking, and call centre
operations. And our development efforts have helped us design popular e-Banking
products such as eTreasury, eBankWorks and eHelpdesk, an Internet-based assistance tool.
The flexibility of our business offerings provides our banking clients the choice of
engaging us right through to implementation, or only up to a particular stage, or to even
proceed from wherever another consultant may have left off. The considerable experience
that we bring to the table makes our highly regarded implementation and integration
expertise available to your organization. And we focus on the functional perspective
rather than on the information system.
Electronic banking, also known as
electronic funds transfer (EFT), is simply the use of electronic means to transfer funds
directly from one account to another, rather than by cheque or cash. You can use
electronic funds transfer to:
Have your paycheck deposited directly into your bank or credit union checking account
Withdraw money from your checking account from an ATM machine with a personal
identification number (PIN), at your convenience, day or night.
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Instruct your bank or credit union to automatically pay certain monthly bills from your
account, such as your auto loan or your mortgage payment.
Have the bank or credit union transfer funds each month from your checking account to
your mutual fund account.
Have your government social security benefits check or your tax refund deposited
directly into your checking account.
Buy groceries, gasoline and other purchases at the point-of-sale, using a check card
rather than cash, credit or a personal check.
Use a smart card with a prepaid amount of money embedded in it for use instead of
cash at a pay phone, expressway road toll, or on college campuses at the library's
photocopy machine or bookstores.
Use your computer and personal finance software to coordinate your total personal
financial management process, integrating data and activities related to your income,
spending, saving, investing, record keeping, bill-paying and taxes, along with basic
financial analysis and decision making .
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speed broad- band connections and the increasing maturation of the Internet user
population. Another factor in e-banking growth is that banks have discovered the benefits
of e-banking and have become keener to offer it as an option to customers.
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Protection through single password authentication, as is the case in most secure Internet
shopping sites, is not considered secure enough for personal online banking applications
in some countries. Online banking user interfaces are secure sites (generally employing
the https protocol) and traffic of all information - including the password - is encrypted,
making it next to impossible for a third party to obtain or modify information after it is
sent. However, encryption alone does not rule out the possibility of hackers gaining
access to vulnerable home PCs and intercepting the password as it is typed in (key
logging). There is also the danger of password cracking and physical theft of passwords
written down by careless users.
Many online banking services therefore impose a second layer of security. Strategies
vary, but a common method is the use of transaction numbers, or Tans, which are
essentially single, use passwords. Another strategy is the use of two passwords, only
random parts of which are entered at the start of every online banking session. This is
however slightly less secure than the TAN alternative and more inconvenient for the
user. A third option, used in many European countries and currently being trialled in the
UK is providing customers with security token devices capable of generating single use
passwords unique to the customer's token (this is called two-factor authentication or
2FA). Another option is using digital certificates, which digitally sign or authenticate the
transactions, by linking them to the physical device (e.g. computer, mobile phone, etc).
While most online banking in the United States still uses single password protection, the
FDIC has issued regulations requiring that banks implement more secure authentication
mechanisms by the end of the year 2006.
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the PIN and/or passwords should be changed immediately and memorized before
destroying the mailers.
Customers are advised not to provide sensitive account-related information over unsecured
e-mails or over the phone. Take simple precautions like changing the ATM PIN and
online login and transaction passwords on a regular basis. Also ensure that the logged in
session is properly signed out.
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All services that are usually available from the local bank can be found on a single
website.
The Growth of credit card usage also owes greatly to E-banking. Now a customer can
shop world wide without any need of carrying paper money with him.
Banks are available 24 hours a day, seven days a week and they are only a mouse
click away.
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Since the internet has become a popular place to buy and sell goods, online banking
services have made their way into most homes. Easier to pay bills, manage money, and
transfer money to other accounts, internet banking is a convenient way to handle money.
Many employers now have direct deposit, which makes it easier to put money into one's
account. No more trips to the bank every day. The money is in the account the night
before and is available for use on next morning. Most banks now offer some type of
banking services on the net.
3] Requests
Request a cheque book or give stop payment instructions.
4] Bill Payments
Our Bill Payment facility allows you to pay your utility bills online, at
convenience.
your
5] Other Services
Services (Secure Mail box and Bulletins).
6] Protection Cover
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As a personal customer, you are fully protected against third party fraud when banking
using Barclays Online Banking/mobile banking. You will not suffer any loss if money is
taken from your account without your permission provided you have not acted
fraudulently or negligently.
7] Security
Admittedly, such a service requires complete privacy protection and security of the
highest nature. We provide a completely secure environment, using 128-bit encryption
SSL (Secure Sockets Layer), digitally certified by Verisign. 128-bit SSL guarantees
world-class security for Internet and e-commerce applications.
3.1.2 Disadvantages
The
was
you
and
world has come from far and we are every day digging into the unknown, what
unthinkable then is now a practice. Today, you can bank right from the comfort of
home and benefits come with it. However, though internet banking is such a good
desirable innocent, it has some disadvantages as listed;
3] Learning difficulties:
Banking sites can be difficult to navigate at first. Getting acquitted with the banking
sites software may require some time to read the tutorials in order to become
comfortable in your virtual lobby.
5] Customer service:
There is no personal contact with any of the staff, and if talk to any staff through the
telephone, you have guarantee you are talking to the best person available
6] Internet account:
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You need to get an account with an Internet Service Provider (ISP) which may be
another hectic experience
7] Security concern:
Even though online banking sites are heavily encrypted, with the developing technology,
its hard to rule out the "hackers" who may access your bank accounts
8] Switching banks:
This can be more cumbersome online than in person
9] Money usage:
You cant spend your money from the online bank account as you wish, in the end;
you will need to go to an ATM to withdraw money for usage.
Mobile banking through cell phone is really catching up. Now you can access your
account, transfer funds or make payments with your mobile. Mobile connectivity is vast
and this makes mobile banking very successful.
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1] Mobile banking has an edge over internet banking. In case of online banking, you
must have an internet connection and a computer. This is a problem in developing
countries. However, with mobile banking, connectivity is not a problem. You can find
mobile connectivity in the remotest of places also where having an internet connection
is a problem.
2] You can make transactions or pay bills anytime. It saves a lot of time
3] Mobile banking thorough cell phone is user friendly. The interface is also very
simple. You just need to follow the instructions to make the transaction. It also saves
the record of any transactions made.
4]. Cell phone banking is cost effective. Various banks provide this facility at a lower
cost as compared to banking by self.
5] Banking through mobile reduces the risk of fraud. You will get an SMS whenever
there is an activity in your account. This includes deposits, cash withdrawals, funds
transfer etc. You will get a notice as soon as any amount is deducted or deposited in
your account.
6] Banking through cell phone benefits the banks too. It cuts down on the cost of
tele- banking and is more economical.
7] Mobile banking through cell phone is very advantageous to the banks as it serves
as a guide in order to help the banks improve their customer care services.
8] Banks can be in touch with their clients with mobile banking.
9] Banks can also promote and sell their products and services like credit cards, loans
etc. to a specific group of customers.
10] Various banking services like Account Balance Enquiry , Credit/Debit Alerts, Bill
Payment Alerts, Transaction History, Fund Transfer Facilities, Minimum Balance Alerts
etc. can be accessed from your mobile.
11] You can transfer money instantly to another account in the same bank using
mobile banking.
Mobile banking has become really popular owing to the convenience that it gives its
customers. You can access your account, pay bills, and make cash transfers through cell
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phone banking. It offers many benefits over internet banking and banking in person.
With the wide range of mobile connectivity, mobile banking through cell phone can be
accessed by anyone.
information
to
be
breached
by
hackers.
4]
Most banks are not charging their customers additional fees for this service. However,
your cell phone bill will increase due to Internet usage. Some mobile banking programs
also allow customers to pay their bills from their phone. In this regard, the service might
actually be less expensive than online bill payment programs.
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Only banks which are licensed and supervised in India and have a physical
presence in India will be permitted to offer mobile banking services.
The services shall be restricted only to customers of banks and holders of
debit/credit cards issued as per the extant Reserve Bank of India guidelines.
Only Indian Rupee based domestic services shall be provided. Use of mobile
banking services for cross border transfers is strictly prohibited.
The guidelines issued by the Reserve Bank 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 apply mutatis mutandis to mobile banking.
The guidelines issued by Reserve Bank on Know Your Customer (KYC), Anti
Money Laundering (AML) and combating the Financing of Terrorism (CFT)
from time to time would be applicable to mobile based banking services also.
Only banks who have implemented core banking solutions would be permitted to
provide mobile banking services.
Banks shall file Suspected Transaction Report (STR) to Financial Intelligence Unit
India (FID-IND) for mobile banking transactions as in the case of normal
banking transactions.
Banks shall put in place a system of document based registration with mandatory
physical presence of their customers, before commencing mobile banking service.
On registration of the customer, the full details of the Terms and Conditions of
the service offered shall be communicated to the customer.
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5. Inter-operability
Banks offering mobile banking service must ensure that customers having mobile
phones of any network operator is in a position to avail of the service.
Restriction, if any, to the customers of particular mobile operator(s) is permissible
only during the initial stages of offering the service, up to a maximum period of
six months subject to review.
The long term goal of mobile banking framework in India would be to enable
funds transfer from account in one bank to any other account in the same or
any other bank on a real time basis irrespective of the mobile network a
customer has subscribed to. This would require inter-operability between mobile
banking service providers and banks and development of a host of message
formats. To ensure inter-operability between banks, and between their mobile
banking service providers banks shall adopt the message formats like ISO 8583,
with suitable modification to address specific needs.
8. Transaction limit
A per transaction limit of Rs. 2500/- shall be imposed on all Mobile Banking
transactions. Subject to an overall cap of Rs. 5000/- per day, per customer.
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Banks may also put in place monthly transaction limit depending on the banks
own risk perception of the customer.
9. Board approval
Approval of the Board of Directors (Local Board in case of foreign banks) for
the product as also the related security policies must be obtained before
launching the scheme.
Banks wishing to provide mobile banking services shall seek prior one time
approval of the Reserve Bank of India, by furnishing full details of the proposal.
3.3.1 Introduction
Telebank helps track and control finances, all from the comfort of home or office.
Designed to save time and money, Telebank allows 24 hour access to bank accounts via
the telephone. You can access current balances, transfer money between accounts, and
much
more.
It
is
safe
and
secureand
free!
United Bank of India offers Tele-Banking Services to its Retail Customers. The IVR
(Interactive Voice Response) supports three languages Hindi, English & Bengali. The
facility is available for Savings, Current, Cash Credit, Overdraft, Deposit and Loan
accounts.
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Stop a cheque
Order copies of your statements and change the date you receive them
orders
3.4.1 Introduction
A wallet-sized plastic Automatic Teller Machine (ATM) card linked to your bank account
makes financial transactions a breeze by eliminating the waste of writing checks or the
dangers of carrying large sums of cash. Also known as a debit card, ATM cards benefit
both consumers and the banking institution where they originated.
On most modern ATMs, the customer is identified by inserting a plastic ATM card with
a magnetic or a plastic smart card with a chip, that contains a unique card number and
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3.4.2 BENEFITS OF
ATM:
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business owner doesn't have to pay a fee. And, consumers don't have to pay interest or
annual fees when using an ATM card, like they would with use of a credit card.
3.4.3.1 Security
Unlike bank tellers, ATMs do not require the person
performing the transaction to present a picture identification. Rather, the person must
only insert a bank card and enter a personal identification number. If the bank card is
stolen and the number ascertained, an unauthorized person can easily access the account.
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3.4.3.3 Fees
With the advent of ATMs came ATM fees. Not only do banks of which
you are not a member charge fees for the use of their ATMs, but users are often
charged surreptitious fees by their own banks for using other banks' ATMs--meaning the
customer is docked twice for the same transaction.
3.4.3.4 Privacy
Unlike banks, in which security guards and tellers are present to ensure the
person performing a transaction receives privacy, there is no such guarantee when using an
ATM. People may try to spy on users as delicate information appears on the screen, without
the user being aware.
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Debit card:
3.5.1 Introduction
A debit card (also known as a bank card or check card) is a plastic card that
provides the cardholder electronic access to his or her bank account(s) at a financial
institution. Some cards have a value with which a payment is made, while most relay a
message to the cardholder's bank to withdraw funds from a designated account in favor
of the payee's designated bank account. The card can be used as an alternative payment
method to cash when making purchases. In some cases, the primary account number is
assigned exclusively for use on the Internet and there is no physical card.[1][2]
In many countries, the use of debit cards has become so widespread that their volume
has overtaken or entirely replaced cheques and, in some instances, cash transactions. The
development of debit cards, unlike credit cards and charge cards, has generally been
country specific resulting in a number of different systems around the world, which were
often incompatible. Since the mid 2000s, a number of initiatives have allowed debit
cards issued in one country to be used in other countries and allowed their use for
internet and phone purchases.
Unlike credit and charge cards, payments using a debit card are immediately transferred
from the cardholder's designated bank account, instead of the them paying the money
back at a later date.
Debit cards usually also allow for instant withdrawal of cash, acting as the ATM card
for withdrawing cash. Merchants may also offer cash back facilities to customers, where
a customer can withdraw cash along with their purchase.
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Obtaining a debit card is often easier than getting a credit card. If you qualify to
open a bank account, you can usually get a debit card.
Unlike when you write a check, using a debit card saves you from having to
show identification or give out personal information at the time of the transaction.
It can save you from having to stock up on traveler's checks or cash when you
travel.
Debit cards may be more readily accepted than checks, especially in other states
or countries.
If you return merchandise or cancel services paid for with a debit card, the
transaction will be treated as if it were made with cash or a check. Customers
usually get cash back for on-line purchases; for off-line transactions, the amount
is credited to your account.
Most ATMs will allow you to get a cash advance against the line of credit on
your credit card, using your credit card and a separate PIN. You do not
necessarily have to have a bank account to do this.
Unlike a credit card, debit card transactions give you no grace period. They are a
quick, pay-now deal.
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They can make balancing your account tricky if you are not fastidious about
keeping receipts and recording transactions in a timely fashion. It is easy to
forget, for example, when you pay at the gas pump with a debit card and drive
off without your receipt.
Using a debit card may mean you have less protection than you would with a
credit card for goods that are never delivered, are defective or were
misrepresented. But, as with credit cards, you can dispute unauthorized charges or
other mistakes within 60 days. Contact your bank if a problem with a merchant
cannot be resolved.
Fees -- The convenience can be costly, especially when using an ATM that is not
affiliated with your bank.
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3.6.1 Introduction
A credit card is a payment card issued to users as a system of payment. It allows the
cardholder to pay for goods and services based on the holder's promise to pay for them.
[1]
The issuer of the card creates a revolving account and grants a line of credit to the
consumer (or the user) from which the user can borrow money for payment to a
merchant or as a cash advance to the user.
A credit card is different from a charge card: a charge card requires the balance to be
paid in full each month.[2] In contrast, credit cards allow the consumers a continuing
balance of debt, subject to interest being charged. A credit card also differs from a cash
card, which can be used like currency by the owner of the card.
The size of most credit cards is 85.60 53.98 mm (33/8 21/8 in),[3] and conform to
the ISO/IEC 7810ID-1 standard. Credit cards have an embossed bank card number
complying with the ISO/IEC 7812numbering standard.
allow
you
to
withhold
payment
for
4. They are cheaper for short-term borrowing - interest is only paid on the
remaining debt, not the full loan amount.
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3.6.1.3 Disadvantages:
1. You may become an impulsive buyer and tend to overspend because of the ease
of using credit cards. Cards can encourage the purchasing of goods and services
you cannot really afford.
2. Credit cards are a relatively expensive way of obtaining credit if you don't use
them carefully, especially because of the high interest rates and other costs.
3. Lost or stolen cards may result in some unwanted expense and inconvenience.
4. The use of a large number of credit cards can get you even further into debt.
5. Using a credit card, especially remotely, introduces an element of risk as the card
details may fall into the wrong hands resulting in fraudulent purchases on the
card. Fraudulent or unauthorized charges may take months to dispute, investigate,
and resolve.
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and timing of operations. Anywhere banking: Citizen can deposit/withdraw their money
anywhere in country irrespective of the branch where their parent account is held. This
will give greater security for traveling business people to deposit money collected from
traders/clients. ATMs is another mode of anywhere banking, consumer can use services
of ATMs anywhere in country, reducing burden of carrying money while traveling. Smart
Card Solutions: Smart cards will give helpful in bringing governmental services and
banking more closer to people. Farmer service centers are example of this initiative.
Smart cards will be greater flexibility to users reducing the frauds and malpractices what
debit cards and credit cards are not able to offer. On the other hand smart card can be
used as identification card for number of other services like driving license, passport,
election id card and other things. The application of online banking in e-governance can
explain by two real life case studies.
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Penalty due to non-payment of bill is not new to anyone of us. And quite obviously,
who likes the long procedure of writing a cheque, standing in a long queue and then
ensuring that the particular amount is available in your bank account?.
Indian banks are trying to make your life easier. Not just bill payment, you can make
investments, shop or buy tickets and plan a holiday at your fingertips. In fact, sources
from ICICI Bank [ Get Quote ] tell us, "Our Internet banking base has been growing at
an exponential pace over the last few years. Currently around 78 per cent of the bank's
customer base is registered for Internet banking."
To get started, all you need is a computer with a modem or other dial-up device, a
checking account with a bank that offers online service and the patience to complete
about a one-page application--which can usually be done online. You can avail the
following services.
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In spite of so many facilities that Internet banking offers us, we still seem to trust our
traditional method of banking and is reluctant to use online banking. But here are few
cases where Internet banking will turn out to be a better option in terms of saving your
money.
'Stop payment' done through Internet banking will not cost any extra fees but when done
through the branch, the bank may charge you Rs 50 per cheque plus the service tax.
Through Internet banking, you can check your transactions at any time of the day, and
as many times as you want to.
On the other hand, in a traditional method, you get quarterly statements from the bank
and if you request for a statement at your required time, it may turn out to be an
expensive affair. The branch may charge you Rs 25 per page, which includes only 30
transactions. Moreover, the bank branch would take eight days to deliver it at your
doorstep.
If the fund transfer has to be made outstation, where the bank does not have a branch,
the bank would demand outstation charges. Whereas with the help of online banking, it
will be absolutely free for you.
As per the Internet and Mobile Association of India's report on online banking 2006,
"There are many advantages of online banking. It is convenient, it isn't bound by
operational timings, there are no geographical barriers and the services can be offered at
a miniscule cost."
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by mid nineteen thirties it was the third largest building society in the
country with assets of over 38m. Growth continued during the 1940s and
50s. The 1960s saw the transformation of the Bank A into a modern
financial services institution, with the opening of a new dedicated
administration centre. By 1970, half of all UK families owned their own
homes and the strong demand for mortgages enabled the Bank A to
establish itself as a national building society, with high street branches in
most of England. The Bank A was one of the first financial institution to
network its branches, using countertop on-line terminals linked to the central
mainframe. Deregulation in the mid-1980s enabled building societies to
compete in many new areas that had previously been the traditional
preserve of the banks and insurance companies. The Bank A took a lead in
this through diversification into new areas. It developed several subsidiary
companies offering a wide range of services includ- ing life assurance unit
trusts, estate agency, insurance and direct sales. Abroad, the Bank A has
established its subsidiaries in many European countries such as Italy, France
and Germany. In late 1990s, like any other building societies it floated in
London Stock Exchange to become a Public Limited Company
E-Banking at Bank A
Most of the financial services at the Bank A are designed to be accessible through a
variety of different channels such as branches, telephone, the Internet, digital televisions
and mobile phones. This means that many customers (those with right equipment of
course) have all-time access to their finances. This gives a flexibility to customers to
manage their finances wherever they are, and whenever they want, instantly. Using any
of the e-Channels available at the Bank A, customers can view their current account and
saving accounts; view the balance/valuation of any Bank A account including mortgage;
savings, current account, personal loan, and unit trusts; pay bills; arrange to pay bills or
transfer funds on future dates up to six weeks ahead; move money between their
accounts and mortgage; change their pin; apply for personal loans, new accounts or
mortgages. To provide this kind of access and flexibility, the Bank A continuously
invested heavily in technology and has gone through many organizational changes, which
are discussed in a later section.
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solutions which meet customer needs Another reason was the fast changing environment
in the retail banking industry with new entrants, such as Egg and Smile providing
financial services using innovative business models and tech- nologies. Relative maturity
of Internet technologies meant provision of convenient services (via Internet, mobile
phones and iTV) to customers was now more feasible with a promise of much lower
transaction costs. Taking these factors into account, the Woolwich decided to be an
innovation leader in the area of e-commerce rather than drag behind its competitors.
Enhancement of the companys image for both customers, as well as investors, was
another key objective. Increasing customer retention through depth of relationship and
service was also an important objective. Internet technology was seen as a key enabler
for this purpose because it can provide rich information about customers, enabling the
Woolwich to personalise financial services according to the needs of the individual
customers, thus enriching the relationship and as a result achieving greater loyalty. Very
early into the e-banking implementation, they noticed that customers who have signed up
to Woolwich e-banking service are 65 per cent more profitable for the bank because
these channels were attracting high-income customers. They were also getting customers
from the remote areas of UK, where they had no penetra- tion in past.
Understanding Customers
This factor has been seen as a key to success at the Bank A. They invested heav- ily in
relevant technologies, which enables them to gather and analyze extensive customer
information. At a basic level they used a systems called QuickStream which helped them
to analyze (by providing the record of customers clicks in the form of a stream)
customers behaviour during their visit to the Bank As website. This information is
very useful for both design and marketing purposes, said the Manager for Customer
Support for e-Channels. They also used a software tool, called Webtrend, which records
where people enter the home page and how they navigate through it and how they leave
the site. According to the e-commerce En- hancement Manager, This enables us to
evaluate our advertising campaigns as well as get continuous feedback on our services
and accessibility issues (design of website etc.). They also used a software webcollaboration tool, which was a call agent that could see where a customer is on their
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website. It could record how long they have been on each individual page. Viewing this
information on screen in real time, a sales agent could type in a message on customers
screen, offering help and advice. This initiative was aimed at improving their customer
services and increasing sales. This combined with other factors has helped them expand
current customer base by acquiring new customers as well as enriching existing
relationships.
Organizational Flexibility
The Bank A has changed considerably in terms of departmental structures and business
process in order to web-enable itself. There are new teams such as the e-commerce
development team, which they did not have before but also other business processes
behind that team have been significantly changed. According to e-commerce Enhancement
Manager we did it the wrong way, the re-engineering of business process followed the
introduction of e-commerce rather than other way round. There are many processes
which have now been totally integrated and automated such as delivering check or
deposit books on customers request. Staff number has not reduced, instead their role has
changed and they all are very much geared towards sales. The ability to focus on sales
has resulted in 3.6 products held by each customer, which is much higher than its
competitors. This radical transformation from being a mortgage centred building society
to a customer focused and integrated bank was another reason for its takeover by the
Barclays. Bank As Principal Technical Specialist, pointed out that Barclays want to
utilise the experience of the Bank As managers to transform themselves in similar ways.
That is why there have been number of senior appointments within Barclays from the
Bank As staff.
Web-Specific Marketing
The Bank A is aware of the power and uniqueness of the Internet medium. The Internet
requires a different way of marketing to sell products. Their Manager for Customers
Support for e-Channels stated that, e-Channels have opened up a whole new way of
communicating with customers and we have a dedicated area within our marketing
function that deals with the e-Channels. This means that e- commerce has changed the
way the marketing department works in order to cope with new ways of marketing.
Now the focus is on understanding customers and using that understanding to enrich
relationships with them. Their home website presents adverts on the right hand side of
the screen which keep asking customers about their requirements for other financial
services. If a customer clicks on any of those advertisement windows, they are led to
the relevant page. According to e-commerce Enhancements Manager from next year
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were going to start tailoring advertisements to personalise them. For example, when a
customer logs into our system, we will be able to conduct a quick profile of his/her
account, look at what he/she hasnt got with us and thats what we would start
advertising. This profil- ing ability is also likely to enable them to assess the
requirements of individual customers and offer services accordingly. The main idea
behind this is replacing high margin products with smaller margin multi-product
relations with custom- ers. The management believes that e-banking is key to success in
relationship marketing. So far this strategy has resulted in 65% increase in the average
income per e-banking customer.
Integration
-banking will not drain into upgrading legacy systems. This architecture also allows the
Bank A to add new off-the-shelf systems to quickly increase the capacity of the systems.
Another aspect of integration is helping customers to see the whole financial picture.
This means providing customers with information about all products with the Bank A,
analyzed and summarised on a single page. For example a customer may have a current
account, a saving account distributed into many pots, mortgage and credit card with the
Bank A. It would be useful for him to know at a glance, his financial position to make
informed decisions. Another word used for this type of services is account aggregation.
The Bank A was one of the first bank to offer this kind of services to its customers.
Availability of Resource Instant delivery required extensive integration of business
processes and Informa- tion Systems (IS). One of their senior IT Manager explained that,
the Bank A uses a middleware layer for integration of different systems and channels.
This allows a host of different clients (front end systems) to access a whole lot of backend systems. This middleware layer which provides common interface to all existing
systems, enables them add new systems quickly as the interface has to be implemented
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just once, to the middleware rather than to the all range of different systems. In
addition, said Head of e-commerce at the Bank A, this middleware enabled us to
implement a component-based architecture. Tasks such as checking accounts are available
as business objects in the middleware and can be used by all channels. This makes the
channels interchangeable and allows the bank to add new channels or services without
disrupting core services. As shown in Figure 8.1 the middleware allows access to all
services through all channels. The downside is that if the middleware goes down, it can
have quite a lot of effect on all channels. The technology architecture shown in Figure
8.1. has enabled the Bank A to easily adapt its business model to the new requirements
of e-banking, without touching the legacy mainframes used in the back-end environment.
This ensures that the system will evolve over time and the resources allocated for e
Availability of human and financial resources is critical in all types of projects. In new
technology projects such as e-banking, shortage of readily skilled human resources can
be a severe handicap. The Bank A got round this problem by imple- menting a very
intensive training programme for some carefully selected members of the existing staff.
As an example, their e-commerce Enhancements Manager stated that when we
implemented Wireless Application Protocol (WAP), there was no one in the country who
knew about the implementation of WAP technology for financial services so we decided
to send seven of our people to Helsinki for training. They were the people who
implemented WAP technology on their return from that training. Where need dictated,
people from other organizations such as Unisys were also brought in. Regarding
financial resources, they did not have any considerable problems as top management was
firmly behind this project and providing sufficient resources for uninterrupted progress.
Security
Security is a mentioned as very critical success factor by almost everybody in ebanking field. In fact, lack of it, or consumers fears about it, is one of the biggest
obstacles in the growth of e-banking. The Bank A uses highest levels of encryption to
secure their system. Their Analyst/Programmer further elaborated on this point by saying,
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we use secure layer technology which encrypts all of the information, from a customer
logging in or filling in an application form to storage and feedback to the customer.
Costs of this high level of security are very high but they see it as necessary evil.
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the arrival of e-commerce at the Bank A, customer services were not available 24 hours
a day. To meet these expectations and requirements, support to custom- ers has improved
considerably, with this all- time availability of customer services and increased choice for
customers to use whichever channel they wish to use at any time. The technical help
desk to solve technical problem experienced by the customers support services helpdesk
at the call centres. According to the Bank As Technical Support Analyst our aim is to
develop seamless integrated architecture that will allow the customer to view, access and
interact with the set of services that the Bank A is offering and a few technical
problems are preventing us from this ideal, but well get there soon. To minimise these
technical problems, every new component has to be tested across numerous hardware and
software platforms resulting in very high testing costs. However, it is also a necessity to
reduce load on customer services and to reduce any inconvenience to the customers.
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strategy helps make staff feel an important part of the change and eases resistance to
change. A major benefit of this strategy they experienced was useful feedback, which
was invaluable for improving services and system interface. Another major benefit of
promotion of e-commerce within the organization was that most members of staff were
willing to go along with the changes it brought with it. Their Principal Technical
Specialist stated that weve seen a massive change in technologies and work practices
during the last few years, active promotion of e-commerce helped us get the required
commitment from our people.
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changes required for e-banking, such as the re-engineering of business processes and
some modifi- cations in the organizations management structure to speed up decisionmaking process.
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CONCLUSION
While electronic banking can provide a number of benefits for customers and new
business opportunities for banks, it exacerbates traditional banking risks. Even though
considerable work has been done in some countries in adapting banking and supervision
regulations, continuous vigilance and revisions will be essential as the scope of e-banking
increases. In particular, there is still a need to establish greater harmonization and
coordination at the international level. Moreover, the ease with which capital can
potentially be moved between banks and across borders in an electronic environment
creates a greater sensitivity to economic policy management. To understand the impact of
e-banking on the conduct of economic policy, policymakers need a solid analytical
foundation. Without one, the markets will provide the answer, possibly at a high
economic cost. Further research on policy-related issues in the period ahead is therefore
critical.
BIBLIOGRAPHY
Books:
Banking Finance & Service System
E-Banking
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Website :
www.thefreedictionery.com
www.google.com
o http://kalyan-city.blogspot.in/2011/02/e-banking-online-bankingadvantages-of.html
o http://www.rediff.com/money/2006/nov/17mc.htm
o http://www.worldjute.com/ebank.html
o http://www.scribd.com/doc/21099962/Project-on-E-Banking
www.yahoo.com
o http://www.scribd.com/doc/19146199/ebanking
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