What is eBanking? (http://www.bankersonline.com/ebanking/gurus_eb030402b.

html)
by Richard Insley, BOL Guru
BIO AND CONTACT INFO

QUESTION: What is eBanking? Without relating to any specific bank, How does it work? What are the advantages and disadvantages using ebanking? ANSWER: There is no official definition of this term, but it generally implies a service that allows customers to use some form of computer to access account-specific information and possibly conduct transactions from a remote location - such as at home or at the workplace. The obvious advantage to the consumer is convenience--one bank recently used the advertising motto "bank naked" to emphasize the customer's freedom to conduct routine banking transactions from the comfort and security of his/her home 24X7. Answer by Hussam Al-Abed:
BIO AND CONTACT INFO

According to A Survey of Electronic Cash, Electronic Banking and Internet Gaming report By FINCEN Electronic banking is an umbrella term for the process by which a customer may perform banking transactions electronically without visiting a brick-and-mortar institution. The following terms all refer to one form or another of electronic banking: personal computer (PC) banking, Internet banking, virtual banking, online banking, home banking, remote electronic banking, and phone banking. PC banking and Internet or online banking are the most frequently used designations. It should be noted, however, that the terms used to describe the various types of electronic banking are often used interchangeably. PC banking is a form of online banking that enables customers to execute bank transactions from a PC via a modem. In most PC banking ventures, the bank offers the customer a proprietary financial software program that allows the customer to perform financial transactions from his or her home computer. The customer then dials into the bank with his or her modem, downloads data, and runs the programs that are resident on the customers computer. Currently, many banks offer PC banking systems that allow customers to obtain account balances and credit card statements, pay bills, and transfer funds between accounts. Internet banking, sometimes called online banking, is an outgrowth of PC banking. Internet banking uses the Internet as the delivery channel by which to conduct banking activity, for example, transferring funds, paying bills, viewing checking and savings account balances, paying mortgages, and purchasing financial instruments and certificates of deposit. An Internet banking customer accesses his or her accounts from a browser software that runs Internet banking programs resident on the banks World Wide Web server, not on the users PC. NetBanker defines a true Internet bank as one that provides account balances and some transactional capabilities to retail customers over the World Wide Web. Internet banks are also known as virtual, cyber, net, interactive, or web banks. To date, more banks have established an advertising presence on the Internet primarily in the form of informational or interactive web sitesthan have created transactional web sites. However, a number of Banks that do not yet offer transactional Internet banking services have indicated on their web sites that they will offer such banking activities in the future. Although Internet banks offer many of the same services as do traditional brick-and-mortar Banks, analysts view Internet banking as a means of retaining increasingly sophisticated customers, of developing a new customer base, and of capturing a greater share of depositor assets. A typical Internet bank site specifies the types of transactions offered and provides information about account security.

Because Internet banks generally have lower operational and transactional costs than do traditional brickand-mortar banks, they are often able to offer low-cost checking and high-yield Certificates of deposit. Internet banking is not limited to a physical site; some Internet banks exist without physical branches, for example, Telebank (Arlington, Virginia) and Banknet (UK). Further, in some cases, web banks are not restricted to conducting transactions within national borders and have the ability to make transactions involving large amounts of assets instantaneously. According to industry analysts, electronic banking provides a variety of attractive possibilities for remote account access, including: Availability of inquiry and transaction services around the clock; worldwide connectivity; Easy access to transaction data, both recent and historical; and Direct customer control of international movement of funds without intermediation of financial institutions in customers jurisdiction.

OPENING AN ACCOUNT There are several ways to open and fund an electronic banking account in the United States. Customers who have existing accounts at brick-and-mortar banks and want to begin using electronic banking services may simply ask their institution for the software needed for PC banking or obtain a password for Internet banking. Either approach requires minimal paperwork. Once they have joined the system, customers have electronic access to all of their accounts at the bank. New customers can establish an account either by completing a PC banking application form and mailing it to an institution offering such a service or by accessing a banks web site and applying online for Internet banking. In either instance, the customer can fund the new online account with a check, wire transfer, or other form of remittance. No physical interface between the customer and the institution is required. Answer by Richard Insley:
BIO AND CONTACT INFO

Thanks, Hussam. This is much more informative, and the term "umbrella term" is the perfect description. Answer by Trent Fleming:
BIO AND CONTACT INFO

This is basically the banking industry's attempt to jump on the "e-business" band wagon. E-banking is a term that attempts to broadly describe today's alternate delivery channels. Different banks - and vendors will describe this differently, but if you are offering on-line banking, you can certainly say that you are "into" e-banking. Rather than spending too much time on the term, I'd suggest you open a dialogue with your customers about the types of services they are interested in, and begin to prioritize your investment in these new services. Ideas would include image delivery via Internet, Internet Commercial cash management, and on-line bill pay.
First published on BankersOnline.com 8/18/03

Online banking
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Online banking (or Internet banking) allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society.

Internet Banking (E-Banking) (http://www.worldjute.com/ebank.html)

E-Banking Frauds

More e-banking projects on the anvil Bangalore June 06, 2008: The Reserve Bank of India (RBI) has taken many steps to provide better service to customers through initiatives like National Electronic Funds Transfer and providing ATM usage under a common umbrella, V Leeladhar, Deputy Governor, Reserve Bank of India, said on Thursday. Other RBI projects on the anvil include the India Card and Cheque Truncation facility to centres other than Delhi for speedier realization of outstation cheques, he said. India has a chance to leapfrog from cash to electronic payment mode, thereby, bypassing cheques, Leeladhar noted. The Reserve Bank has also permitted appointment of individuals as banking correspondents under the financial inclusion project and brought in several changes in the Banking Ombudsman Scheme for speedier redressal of grievances. He called upon banks to make use of technology to provide better customer service. Free ATM use

Internet banking (or E-banking) means any user with a personal computer and a browser can get connected to his bank -s website to perform any of the virtual banking functions. In internet banking system the bank has a centralized database that is web-enabled. All the services that the bank has permitted on the internet are displayed in menu. Any service can be selected and further interaction is dictated by the nature of service. The traditional branch model of bank is now giving place to an alternative delivery channels with ATM network. Once the branch offices of bank are interconnected through terrestrial or satellite links, there would be no physical identity for any branch. It would a borderless entity permitting anytime, anywhere and anyhow banking. The network which connects the various locations and gives connectivity to the central office within the organization is called intranet. These networks are limited to organizations for which they are set up. SWIFT is a live example of intranet application.

Internet banking in india

The Reserve Bank of India constituted a working group on Internet Banking. The group divided the internet banking products in India into 3 types based on the levels of access granted. They are: i) Information Only System: General purpose information like interest rates, branch location, bank products and their features, loan and deposit calculations are provided in the banks website. There exist facilities for downloading various types of application forms. The communication is normally done through e-mail. There is no interaction between the customer and bank's application system. No identification of the customer is done. In this system, there is no possibility of any unauthorized person getting into production systems of the bank through internet. ii) Electronic Information Transfer System: The system provides customer- specific information in the form of account balances, transaction details, and statement of accounts. The information is still largely of the 'read only' format. Identification and authentication of the customer is through password. The information is fetched from the bank's application system either in batch mode or offline. The application systems cannot directly access through the internet. iii) Fully Electronic Transactional System: This system allows bidirectional capabilities. Transactions can be submitted by the customer for online update. This system requires high degree of security and control. In this environment, web server and application systems are linked over secure infrastructure. It comprises technology covering computerization, networking and security, inter-bank payment gateway and legal infrastructure.

Automated Teller Machine (ATM):

ATM is designed to perform the most important function of bank. It is operated by plastic card with its special features. The plastic card is replacing cheque, personal

March 10, 2008: In just over a year from now,, bank customers will able to freely use their ATM cards to withdraw cash from any automated teller machine installed by various commercial bank across the country.

attendance of the customer, banking hours restrictions and paper based verification. There are debit cards. ATMs used as spring board for Electronic Fund Transfer. ATM itself can provide information about customers account and also receive instructions from customers - ATM cardholders. An ATM is an Electronic Fund Transfer terminal capable of handling cash deposits, transfer between accounts, balance enquiries, cash withdrawals and pay bills. It may be on-line or 0ff-line. The on-line ATN enables the customer to avail banking facilities from anywhere. In offline the facilities are confined to that particular ATM assigned. Any customer possessing ATM card issued by the Shared Payment Network System can go to any ATM linked to Shared Payment Networks and perform his transactions. Credit Cards/Debit Cards: E-Banking services are offered The Credit Card holder is empowered to spend wherever and whenever he wants by some prominent banks to with his Credit Card within the limits fixed by his bank. Credit Card is a post paid their customers. Some banks card. Debit Card, on the other hand, is a prepaid card with some stored value. Every as: time a person uses this card, the Internet Banking house gets money transferred to Union e-banking -Corporate its account from the bank of the buyer. The buyers account is debited with the exact refers to the Internet Banking amount of purchases. An individual has to open an account with the issuing bank service (s) offered by Union Bank which gives debit card with a Personal Identification Number (PIN). When he makes of India to the corporate a purchase, he enters his PIN on shops PIN pad. When the card is slurped through customers through Internet. the electronic terminal, it dials the acquiring bank system - either Master Card or Union Bank of India shall VISA that validates the PIN and finds out from the issuing bank whether to accept or endeavor to provide to the decline the transactions. The customer can never overspend because the system customer services such as rejects any transaction which exceeds the balance in his account. The bank never enquiry about the balance in the faces a default because the amount spent is debited immediately from the customer's account (s), type of customers account. assistance Smart Card: to the customer, details about Banks are adding chips to their current magnetic stripe cards to enhance security transactions, statement of and offer new service, called Smart Cards. Smart Cards allow thousands of times account through UBI Corporate of information storable on magnetic stripe cards. In addition, these cards are highly Internet Banking, request for secure, more reliable and perform multiple functions. They hold a large amount of fund transfer and such other personal information, from medical and health history to personal banking and facilities as Union Bank of India personal preferences. may decide to provide time to You can avail the following services through E-Banking. time. Bill payment service You can facilitate payment of electricity and telephone bills, mobile phone, credit card and insurance premium bills as each bank has tie-ups with various utility companies, service providers and insurance companies, across the country. To pay your bills, all you need to do is complete a simple one-time registration for each biller. You can also set up standing instructions online to pay your recurring bills, Any Time Milk (ATM) machines automatically. Generally, the bank does not charge customers for online bill payment. Fund transfer You can transfer any amount from one account to another of the same or any another bank. Customers can send money anywhere in India. Once you login to your account, you need to mention the payees's account number, his bank and the branch. The transfer will take place in a day or so, whereas in a traditional method, it takes about three working days. ICICI Bank says that online bill payment service and fund transfer facility have been their most popular online services. Credit card customers With Internet banking, customers can not only pay their credit card bills online but also get a loan on their cards. If you lose your credit card, you can report lost card online. ANAND (Gujarat), February 05, Railway pass 2008: This is something that would interest all the aam janta. Indian Railways has tied up In a first of its kind, the Amul

Dairy recently began trials for milk cards on its newly- installed milk vending machine in Anand. Apart from Gujarat, Amul brand of liquid milk is available in Delhi, Maharashtra, Rajasthan, Kolkata and Madhya Pradesh among other states. Instead of mere cash, now Amul is experimenting with special cards on the lines of debit cards. The card will have to be recharged periodically to use the ATM. The dairy has plans to install ATMs in major centres soon. According to Amul officials, ATMs would prove beneficial for the dual income households, where husband and wife spend most of their daytime at work and find it difficult to buy milk at odd hours.

with ICICI bank and you can now make your railway pass for local trains online. The pass will be delivered to you at your doorstep. But the facility is limited to Mumbai, Thane, Nashik, Surat and Pune. Investing through Internet banking You can now open an FD online through funds transfer.Now investors with interlinked demat account and bank account can easily trade in the stock market and the amount will be automatically debited from their respective bank accounts and the shares will be credited in their demat account. Moreover, some banks even give you the facility to purchase mutual funds directly from the online banking system. Nowadays, most leading banks offer both online banking and demat account. However if you have your demat account with independent share brokers, then you need to sign a special form, which will link your two accounts. Recharging your prepaid phone Now just top-up your prepaid mobile cards by logging in to Internet banking. By just selecting your operator's name, entering your mobile number and the amount for recharge, your phone is again back in action within few minutes. Shopping With a range of all kind of products, you can shop online and the payment is also made conveniently through your account. You can also buy railway and air tickets through Internet banking.

Advantage of Internet banking

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." Through Internet banking, you can check your transactions at any time of the day, and as many times as you want to. Where in a traditional method, you get quarterly statements from the bank. 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.

Security Precautions
Customers should never share personal information like PIN numbers, passwords etc with anyone, including employees of the bank. It is important that documents that contain confidential information are safeguarded. PIN or password mailers should not be stored, the PIN and/or passwords should be changed immediately and memorised 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.

e-Banking
The evolution of electronic banking (e-Banking) started with the use of automatic teller machines (ATMs) and has included telephone banking, direct bill payment, electronic fund transfer and online banking. According to some, the future direction of e-banking is the acceptance of mobile telephone (WAP-enabled) banking and interactive-TV banking.

However, it has been forecast by many that online banking will continue to be the most popular method for future electronic financial transactions.

What is e-banking? (http://www.tiresias.org/research/guidelines/ebanking.htm)

Electronic funds transfer (EFT), refers to the computer-based systems used to perform financial transactions electronically. The term is used for a number of different concepts including electronic payments and cardholder-initiated transactions, where a cardholder makes use of a payment card such as a credit card or debit card. Card-based EFT transactions are often covered by the ISO 8583 series of standards. A number of transaction types may be performed: Withdrawal: the cardholder withdraws funds from their account, e.g. from an ATM Deposit: where a cardholder deposits funds to their own account (typically at an ATM) Inter-account transfer: transferring funds between linked accounts belonging to the same cardholder Inquiry: a transaction without financial impact, for instance balance inquiry, available funds inquiry or request for a statement of recent transactions on the account Administrative: this covers a variety of non-financial transactions including Personal Identification Number (PIN) change EFT transactions require authorisation and a method to authenticate the card and the card holder. Whereas a merchant may manually verify the card holder's signature, EFT transactions require the card holder's PIN to be sent online in an encrypted form for validation by the card issuer. Other information may be included in the transaction, some of which

is not visible to the card holder (for instance magnetic stripe data), and some of which may be requested from the card holder (for instance the card holder's address or the CVV2 security value printed on the card). EFT transactions are activated during e-banking procedures. Various methods of e-banking include: Telephone banking Online banking Short Message Service (SMS) banking Mobile banking Interactive-TV banking

Telephone banking Telephone banking is a service provided by a financial institution which allows its customers to perform financial transactions over the telephone. Most telephone banking systems use an automated phone answering system with phone keypad response or voice recognition capability. To guarantee security, the customer must first authenticate their identity through a numeric or verbal password or through security questions asked by a live representative. With the obvious exception of cash withdrawals and deposits, telephone banking offers virtually all the features of an ATM. Usually, there is the possibility to speak to a live representative located in a call centre or a branch, although this feature is not guaranteed. In addition to the self-service transactions, telephone banking representatives are usually trained to do what was traditionally available only at the branch: loan applications, investment purchases and redemptions, chequebook orders, debit card replacements, change of address, etc. Online banking Online banking (or Internet banking), allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society. Online banking offers features such as: bank statements; electronic bill payment; funds

transfer; loan applications and transactions and account agggregation that allows users to monitor all of their accounts in one place. It is widely recognised that online banking provides more revenue per customer and costs less per transaction than any other ebanking channel. SMS banking SMS banking is a technology-enabled service permitting banks to operate selected banking services over the customers' mobile phone using SMS messaging. SMS banking services are operated using both Push and Pull messages. Push messages are those that the bank chooses to send out to a customer's mobile phone, without the customer initiating a request for the information. Typically push messages could be either Mobile Marketing messages or messages alerting to an event which happens in the customer's bank account, such as a large withdrawal of funds from the ATM or a large payment using the customer's credit card, etc. Another type of push message is a One-time password (OTPs). Pull messages are those that are initiated by the customer, using a mobile phone, for obtaining information or performing a transaction in the bank account. Examples of pull messages for information include an account balance enquiry, or requests for current information like currency exchange rates and deposit interest rates. The banks customer is empowered with the capability to select the list of activities (or alerts), that he/she needs to be informed. This functionality to choose activities can be done either by integrating to the Internet Banking channel or through the banks customer service call centre. Mobile banking Mobile banking (also known as M-Banking, mbanking, etc.), or Wireless Application Protocol (WAP) enabled banking is a term used for performing balance checks, account transactions, payments etc. via a mobile device such as a mobile phone or Personal Digital Assistant (PDA). Mobile banking is most often performed via SMS or

the Internet accessed through the mobile device, but can also use special programs downloaded to the mobile device. Interactive-TV banking Interactive television is a technique that allows viewers to interact with television content as they view it. It is sometimes called interactive TV, iTV or idTV. As long as the customer subscribes to a satellite or cable television service some banking facilities, such as, checking balances, moving money between accounts, paying bills and setting up overdrafts are made available through a television set. A handful of major banks in the UK have experimented with digital banking services through cable and satellite TV companies.

Statistics
50% of prospective customers registering for online banking give up before signing up 1 in 9 people who have tried online banking in the UK gave up due to poor usability or security concerns In 2001, one third of the top 20 European banks offered some form of interactive-TV banking In 2004, it was estimated that there were over 10 million users of interactive-TV based banking services in Europe In 2007, the estimated number of Europeans banking online is 130 million In 2007, 40% of US households banked online at least once a month 88% of e-banking users visit their bank's web site at least once a week It is estimated that 35% of online banking households will be using mobile banking by 2010 By 2011, it is predicted that 80% of bank customers in the UK will use the internet to connect to their bank In 2000 there were over 2,500 banking websites across Western Europe

Problems encountered by disabled people and the ageing population using e-Banking
Blind and Partially Sighted For blind persons, one problem may be selecting the right card from their wallet and inserting it in the correct orientation into an ATM. When using online banking, the way a website is designed will determine how accessible it is to people with disabilities. In particular, blind people use browsers with speech or braille output which are text-based systems; therefore the site should be navigable independent of the graphics content. For people with low vision, the ability to vary the text size on their browser is essential. A further problem encountered by blind and partially sighted people is that many websites use graphics such that they are not meaningful when accessed by a text-based browser. Using telephones for banking can provide problems as the decreasing size of handsets often means small keypads and small visual displays that people with visual disabilities find inaccessible. Some people are unable to distinguish between certain colour combinations used on mobile telephone screens and keypads. Mailed notifications of PIN change that are not available in alternative formats are inaccessible to blind and partially sighted people. Hearing impaired People with hearing impairments require visual representation of auditory information that a banking website may provide. With the increasing use of multimedia on websites (e.g. podcasts, video streaming), it is important to ensure that information can be understood by those who have hearing impairments. It is also important to appreciate that those using British Sign Language (BSL), use a different sentence structure and vocabulary compared to typical spoken English. Consideration should be given to using simple language and the inclusion of a glossary of banking terms.

For those who are hearing impaired, using a normal telephone for banking is difficult so a bank's services should be operable via a Textphone. Users of hearing aids experience disturbances due to electromagnetic interference (EMI), from digital mobile phones. The rapid pulsation of radio signals from digital mobile telephones can give rise to a buzzing, humming, squealing or squelch inside the hearing aid. Hearing impaired users cannot locate or identify commands or controls that require hearing (e.g. a voice-based interactive mobile telephone that can be controlled only by listening to menu items and then pressing buttons). Physically impaired Those with physical impairments who are banking by mobile telephone may find it hard to hold and activate the buttons. People with a physical disability may have difficulty controlling their hands and arms therefore, holding and using a mouse effectively to use a banking website becomes a problem. Others find prolonged use of their arms or hands tiring. Cognitively impaired Complex banking websites with too many steps or unhelpful messages may be difficult for people who are cognitively impaired. People with cognitive or learning impairments may have problems reading text or become confused by complex page layouts, tables or navigation structures. Moving and blinking text may also be distracting and impede understanding. People with cognitive or learning impairments may experience problems with the operating systems of complicated mobile telephones. Customers often have difficulty in remembering too many PINs (particularly if they are used infrequently), so are prone to writing them down which lessens the security of the system. People with dyslexia can have problems in remembering the digits in the correct order. Ageing population

While older people often experience changes in vision, hearing, dexterity and memory as they age, they might not consider themselves to have disabilities. Yet the accessibility provisions that make banking webpages accessible also benefit older people with diminishing abilities. For example, many people with age-related visual impairments may benefit from being able to alter text size. Elderly people may also experience mobility difficulties when using the mouse. Elderly people can often experience a range of difficulties with mobile telephones, such as the screen being too small to see; incompatibility with a hearing aid and too many complicated specialised functions.

Other problems encountered using e-Banking

Security Protection through single password authentication 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 (keystroke logging). There is also the danger of password cracking and physical theft of passwords written down by users. Security of financial transactions using mobile e-banking involving transmission of financial information over the air, offer the most complicated challenges that need to be addressed jointly by mobile application developers, wireless network service providers and the banks IT department. The following aspects need to be addressed to offer a secure infrastructure for financial transaction over wireless network : 1. Physical security of the hand-held device 2. Security of the application running on the device. In case the device is stolen, the hacker should require ID / Password to access the application

3. Authentication of the device with the service provider before initiating a transaction. This would ensure that unauthorized devices are not connected to perform financial transactions 4. User ID / Password authentication of banks customer 5. Encryption of the data being transmitted over the air 6. Encryption of the data that will be stored in the device for later / off-line analysis by the customer Lack of encryption The lack of encryption on SMS messages is an area of concern that is often discussed and several banks that use it have overcome their fears by introducing compensating controls and limiting the scope of the SMS banking method to where it offers an advantage over other channels. Suppliers of SMS banking software solutions have found reliable means by which the security concerns can be addressed. Typically, the methods employed are by preregistration and using security tokens where the transaction risk is perceived to be high. Sometimes ATM type PINs are also employed, but the usage of PINs in SMS banking makes the customer's task more cumbersome. Fraud Some customers avoid online banking as they perceive it as being too vulnerable to fraud. The security measures employed by most banks can never be completely safe but it becomes less secure if users are careless, gullible or computer illiterate. An increasingly popular criminal practice to gain access to a user's finances is phishing, whereby the user is in some way persuaded to hand over their password(s) to a fraudster. Interoperability There is a lack of common technology standards for mobile banking. Many protocols are being used for mobile banking HTML, WAP, SOAP, XML. It would be a wise idea for the vendor to develop a mobile banking application that can connect to multiple banks. It would require either the application to support multiple protocols or use of a common and widely acceptable set of protocols for data exchange.

There are a large number of different mobile phone devices and it is a big challenge for banks to offer mobile banking solutions on any type of device. Some of these devices support the Java 2 Micro Edition (J2ME) and others support WAP browsers or only SMS. Websites As online banking consists of three main parts: the marketing / information pages, the online application and the transactional banking area, all of these can provide the user with problems: Inconsistent navigation and page layouts On-site search engines that don't find information, even when it is available Bank orientated language that is not explained Poor feedback when using interactive tools and forms Inability to save an application and complete is at a later date Too many steps in transactions and no visibility of progress Unhelpful error messages Pages that are inaccessible to assistive technology

Checklist for e-Banking

What is E-Banking ? Online Banking (http://kalyan-city.blogspot.com/2011/02/ebanking-online-banking-advantages-of.html)

E-banking refers to electronic banking. It is like e-business in banking industry. E-banking is also called as "Virtual Banking" or "Online

Banking".

E-banking is a result of the growing expectations of bank's customers.

Image Credits Jochem Koole.

E-banking involves information technology based banking. Under this I.T system, the banking services are delivered by way of a Computer-Controlled System. This system does involve direct interface with the customers. The customers do not have to visit the bank's premises.

Popular services covered under E-Banking

The popular services covered under E-banking include :-

1. 2. 3. 4. 5. 6. 7. 8. 9.

Automated Teller Machines, Credit Cards, Debit Cards, Smart Cards, Electronic Funds Transfer (EFT) System, Cheques Truncation Payment System, Mobile Banking, Internet Banking, Telephone Banking, etc.

Advantages of E-Banking

The main advantages of E-banking are :-

1. 2. 3. 4. 5. 6.

The operating cost per unit services is lower for the banks. It offers convenience to customers as they are not required to go to the bank's premises. There is very low incidence of errors. The customer can obtain funds at any time from ATM machines. The credit cards and debit cards enables the Customers to obtain discounts from retail outlets. The customer can easily transfer the funds from one place to another place electronically.

E-Banking: Challenges and Opportunities Rupa Rege Nitsure

Economic and Political Weekly Vol. 38, No. 51/52 (Dec. 27, 2003 - Jan. 2, 2004), pp. 5377-5381 (article consists of 5 pages) Published by: Economic and Political Weekly Stable URL: http://www.jstor.org/stable/4414436

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Banking has come a long way from the time of ledger cards and other manual filing systems. Most banks today have Electronic systems to handle their daily voluminous tasks of information retrieval, storage and processing. Irrespective of whether they are automated or not, banks by their nature are continually involved in all forms of information management on a continuous basis. The Computer is of course an established tool for achieving a competitive edge and optimal resource allocation. The most obvious banking application of Computers is customer service. Computerized banks respond immediately to requests from customers for Statement of Accounts, Balance and Account activity enquiries. With Signature and Image verification systems, the time taken to offer typical cashier services like receiving and paying out of cash, is minimized. Better Service With advent of Automatic Teller Machines (ATM), banks are able to serve customers outside the banking hall. Furthermore, computers help banks to reduce the cost of doing business. Although, the effectiveness of the Information Technology deployment in banks is another matter, the fact remains that IT usage is now a reality. This is to be expected in view of the huge amount of information being handled by banks on a daily basis. On the customer's side, cash is withdrawn or deposited, cheques are deposited or cleared, statement of accounts are produced, etc. At the same time, banks need up-to-date information on accounts, credit facilities, interest, deposits, charges, income, profitability indices and other financial control information. How effective is IT deployed by banks? IT investment by banks include IT infrastructure such as Hardware, Software, Networking (local, Wide Area and the Internet). For E-banking to be effective these areas must be well managed. Banking software can be described as the heart and soul of a bank's IT infrastructure. But having a good banking software may be of little value if your hardware is inadequate to meet your needs. Likewise in today's E-banking, Networking cannot be ignored. Banking today is much more than routine storage and retrieval of information. Computers give banks the ability to quickly respond to market trends, changes in the business environment or new directives from regulatory bodies such as the Central Bank and Ministry of Finance. In a highly competitive banking industry speed is a clear-cut advantage. The e-bank E-banking refers to the effective deployment of IT by banks. But hold on, the fact that a bank uses computers is not enough to qualify it as an E-Bank. How is Information Technology is used by the bank to drive the business of banking - for immediate and future goals? It is a fact that today a good number of

banks cannot use their IT infrastructure to adequately deal with their immediate information requirements. Do such banks qualify to be called E-banks? E-banking is about using the infrastructure of the digital age to create opportunities -both local and global. E-banking enables the dramatic lowering of transaction costs, and the creation of new types of banking opportunities that address the barriers of time and distance. Banking opportunities are local, global and immediate in E-banking. The benefits of Electronic banking compasses a broad range of functions and include: Electronic mail (email) improves communication between individuals and the bank, within the bank, with the bank and external parties and between banks. The availability of online information provides bankers and customers with a powerful vehicle for research. Banks can provide information and services online, which customers can pay for, and receive. Banking processes are made more efficient and cost effective by integrating other aspects of banking operations such as treasury management and financial control. If a banking function does not require physical interaction, it may derive the benefits of electronic banking. Where should the Real E-bank be? First of all the bank must fully understand and appreciate the fact that the banking industry now exists in a global village. It must therefore strive to provide local and global banking services using the infrastructure of the Global village. Most current E-banking applications use the Internet. The advantages of online banking are in providing convenience and flexibility for customers. Let's take a look at some. Online banking allows customers to get current account balances at any time. Customers don't need to wonder whether a check has cleared or a deposit has been posted. At the click of a button, customers can easily check the status of their current, savings, and money-market accounts. Through online banking, banks can provide immediate account enquiries/statements online for customers. Customers don't have to wait till month end for historical, snail-mail statements. Online banking gives the ability to pay bills electronically. Electronic payments can be credited the same day or the next. Customers can also download account transactions online. It should be easy to import the transactions directly into typical PC programs at home or office. The transfer of money between accounts is another powerful application of online banking. Online banking provides flexibility, by allowing the customer to access his finances from any part of the globe. The Internet Most of the applications mentioned involve the use of the internet. This is to be expected: the Internet is the infrastructure for the current age. But hold it! E-banking is more than just Internet banking. In the still-evolving e-climate, in the E-conomy, it involves using the Net to exploit new opportunities by transforming products and markets, and business processes. E-banking also means developing new relationships with customers, regulatory authorities, suppliers, and banking partners with digital age tools. For example, it requires an understanding that customer/bank relationships will be more personalized, resulting in novel modes of transaction processing and service delivery. Today, banking executives and managers who still view e-banking as a passing craze risk being left behind. E-banking is essentially about banks using new age methods and tools to expand into new banking markets and grow.

Creating a corporate online presence for your bank should be more than just building a web site; it should be about building a web business for your bank. To do this effectively, the people in charge, i.e. the CEOs, not just the IT Directors and managers, must have a deep knowledge of what E-banking culture demands. Banks can only apply IT effectively if management appreciation exists. Unfortunately, many managers who claim to appreciate IT cannot use IT. Can you give what you don't have? e-business IT today, E-business, E-commerce is not about routine information management or automation. It is about using these unique tools to create opportunities, create new markets, new processes and growth - the creation of e-wealth. This will entail creative ideas and solutions, not simply the transplanting of block-and-mortar concepts onto the Internet. The E-Bank must monitor the environment - local and global, with the aim of understanding and mastering its environment. For E-banks, this involves collaboration (local and international) on payments systems, cashless transactions, digital cash and other electronic based projects. It can be seen that the other immense potentials can only be realized if bank management and staff, not just the systems staff, are sufficiently literate and aware. Presently, the banking industry still has a lot to do in terms of training staff. The speed of change, together with the need for proper orientation for the eworld makes training even more of a necessity. Security For E-banking to be effective, an area that must be addressed is security. For any IT based service, the convenience associated with E-banking increases the need for security. In E-banking, the core security areas must be addressed: Confidentiality, Integrity and Availability. A key concern is that of privacy. You cannot expect to do business on the net without addressing the privacy concerns of people you do business with. Do you have a privacy policy? No customer wants to click away to a negative balance. Security in online banking is typically provided through the use of a user ID and password. These and other security measures must be installed and must be effective to prevent not only the breach of privacy, but other security concerns like the alteration of data, IT fraud, etc. But it is in ensuring system availability that banks still have a lot of work to do. When you are an E-bank, your banking services are totally dependent on IT. Of what use are powerful and functional programs, which are lacking in recovery procedures in an environment where telecommunications services are still at best epileptic. Fault tolerance and robustness of the IT setup in a bank must never be underestimated. Contingency plans should be put in place to handle this persistent problem of availability. As an E-Bank offering worldwide services, the fault-tolerance of its IT infrastructure cannot be compromised. Availability planning must address power supply, telecommunications, Internet service, quality of technical support, backup facilities, robustness of IT setup (Hardware, banking software, Networking).

In conclusion, to be a true E-bank, each bank must identify its own unique targets, focus and style. Banks need to realize that E-banking is more than simply banking on the Internet. E-banking is more than having a web site. E-banking is about building a web business for your bank. Jide Awe