E-banking

What is e-banking? Development of E-banking RBI & E-banking Advantages of the E-Banking Disadvantages and Risk of E-banking Precaution of risk and security Persecutions

What is E-banking?
The provision of banking service through electronic channels and the customer can access the data without time and geographical limitation. delivery of banks services to a customer at his office or home by using electronic technology.

Development of E-banking
Development of E-banking 1980s Rapid development of the Internet TCP/IP system (communication system) E-commerce

Development of E-banking
Development of E-banking May 1995 Wells Fargo - the first bank in the world to offer customer access to their accounts over the internet . Allows customer to see their accounts online

Development of E-banking
ICICI was the first bank to initiate the Internet banking revolution in India as early as 1997 under the brand name 'Infinity'. ICICI Bank kicked off online banking way back in 1996 But even for the Internet as a whole, 1996 to 1998 marked the adoption phase, while usage increased only in 1999-due to lower ISP online charges, increased PC penetration and a tech-friendly atmosphere.

RBI & E-Banking

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. 1. Information Only System 2. Electronic Information Transfer System 3. Fully Electronic Transactional System

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. 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.

Electronic Information Transfer System

The system provides customerspecific information in the form of account balances, transaction details, and statement of accounts Identification and authentication of the customer is through password.

Fully Electronic Transactional System

This system allows bi-directional 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

Delivery Platforms for Electronic Banking

Type of Service Description

PC banking

Internet banking Managed network TV based banking Telephone banking ATM

EFTPOS

Smart cards

Electronic Funds Transfer (EFT) Electronic Data Interchange (EDI) Electronic Clearing System (ECS) Shared Payment Network System (SPNS)

Uses special software distributed by the bank, which is installed in the users PC. Customers access banks via modem linked directly to the bank. Customers access their bank account via Internet The bank makes use of an online service provided by another party such as AOL Use of satellite or cable to deliver account information to TV screens of customers Customers can access their bank via regular phones or mobile phones using SMS or WAP services ATMs provide cash accessibility and account information and in some cases enable to transfer funds Electronic funds transfer at point of sale (EFTPOS) is essentially a payment system for purchases through debit cards within the store itself. Microchip based cards can be used between individuals to exchange electronic cash or can interface with ATMs, telephones and retailers. Uses computer and electronic technology as a substitute for checks and other paper transactions. Transmit financial information and payments in electronic form. Paperless mode of effecting payment for handling bulk and repetitive payment transactions. A large network of ATMs, Cash Dispensers belonging to different banks to provide anytime and anywhere banking service.

Different Delivery Channels in E-Banking

Banking Transaction Cost Comparison

Type of E-Banking Normal Branch Banking Average Cost

$ 1.07

Telephone Banking

$ 0.54

ATMs

$ 0.27

PC Banking

$ 0.02

Internet Banking

$ 0.01

Automated Teller Machines

(in India)

ATM NETWORK

1,054

15,320

PSBs Private Banks 27,277 Foreign Banks

Source: Annual reports and websites of respective banks

Internet Banking
(in India) Adoption Rates of Internet Banks (As on March 31, 2004)
Number of Banks Number of Banks With Websites

Private Sector Banks New* Old** Public Sector Banks Foreign Banks All Banks

30 9 21 27 36 93

28 9 19 27 35 90

Source: Websites of the individual banks available at www.banknetindia.com/banklinks.htm (accessed during December, 2003 to March 2004) Figures in bracket denote percentage. * includes banks established after the liberalization reforms as recommended by Narsimham Committee in 1991. ** includes banks established before the liberalization reforms as recommended by Narsimham Committee in 1991.

Shared Payment Network System (SPNS) or SWADHAN

Under the initiative of Indian Bank Association (IBA) in Mumbai, a pilot project to link up 165 ATMs of 31 member banks has come up in the form of SWADHAN a shared payment network system which has a card base of 1, 00,000 with 30,000 transactions per month. The objective is to provide anytime and anywhere electronic banking services to the customers in the city of Mumbai, Vashi and Thane.

Different services provided under ebanking ONLINE BILL PAYMENT SHOPPING TICKET BOOKING PRE PAID MOBILE RECHARGE MARKET WATCH INVESTMENT SERVICES ONLINE APPLICATIONS PERSONAL UPDADATE

SERVICE PROVIDED BY SBI

Self-account funds transfer across India. Third party transfers in the same branch New account opening Demand Draft requests New Cheque-book request Railway tickets booking Utility bill payments LIC and other insurance premium payments LIC and other insurance premium payments SBI Mutual funds Investments Credit card dues payments Deposit your taxes Donations to your religious inspirations Donations to Red Cross and such other organizations Setting up SMS alerts for transaction information.

SERVICE PROVIDED BY ICICI

BILL PAYMENT FUND TRANSFER ACCOUNT INFORMATION SMART MONEY ORDER SERVICE REQUEST PREPAID MOBILE RECHARGE ACCOUNT TRANSFER

Advantages of E-banking
Benefits for Banks Benefits for Small to Medium Businesses Benefits for Customers

Benefits for Banks

Larger customer coverage Reducing the costs of operations Promoting their services and products internationally Increasing the customer satisfaction and providing a personalized relationship with customers

Benefits for Small to Medium Businesses

To run its operations more effectively Lower cost than traditional financial management mechanisms

Benefits for Customers

Convenience 24 hours a day, seven days a week Cost reducing Transfer fees Speed Faster circulation of assets Competitiveness Fostering competition in financial market Communication communicate easily Environmental Abolishing the uses of paper Others - Offering onestop-shop solutions

Disadvantages OF E-banking
A need for customer skill to deal with computers and browsers. E.g. Elderly, Housewives Inconvenient Site change: it will make the customer have some confusion or delay. Security Risk

Security Risk
Increasing number of fraudulent bank websites Fake emails purporting to be sent from banks Use of Trojan Horse programs to capture user IDs and passwords

Fraudulent Bank Websites

A suspicious bank website:www.sbionline.com Original bank website www.onlinesbi.com These website are believed to aim to trick persons into disclosing their sensitive personal information

Fake e-mails
Email send from Fraudulent bank Verify the personal information Guide customer enter the fraud link Disclosing their ATM card numbers and their passwords

Viruses and Worms-Trojan Horse Program

When we open some suspicious websites or email Trojan Horse Program will install our computer secretly Hidden in the computer When you access bank websites, capture our account and the password

Case From Newspaper

Dont use the hyperlink to login to the website of banks

Suggestions
For Bank Should provide specific guidance to their customers

Suggestions
For Customers Should not disclose their customer IDs (e.g., account numbers) or passwords to anyone else. Periodically change their passwords Should promptly log out from the service Should regularly check their account balances and statements to identify unusual transactions. Do not access Corporate Cyber banking through public terminals. To safeguard your computer from any other hacker attack, install anti-virus and antispyware software on your computer and update it regularly.

Conclusion
E-Banking Enable Better Business Anywhere, Anytime. E-Banking represent a tremendous opportunity in India. However, Factors such as illiteracy in India, availability of cheaper labor force, reluctance to change by the existing staff of banks and slow growth of technology in India are responsible for slow growth of e-banking in India. Development and acceptance of standards by financial institutions will clearly have a positive impact on the level of security achieved by banks and bank customers. Since opportunities foregone are opportunities lost, the banks have to rise ahead of time so as not to lag behind in the e-banking era.

e-Commerce
Doing business online Buying products and services online

Brief History
1980s:Electronic Funds Transfer (EFT) Used by the banking industry to exchange account information over secured networks Late 1980s:Electronic Data Interchange (EDI) for e-commerce within companies Used by businesses to transmit data from one business to another 1990s:the world wide web on the internet provides easy to use technology for information publishing and dissemination Cheaper to do business (economies of scale) Enable diverse business activities (economies of scope)

Features of e-commerce
Online business Covers vast amount of B2B and B2C Advertisement Anytime and anywhere service Direct contact between buyer and seller Reduction of cost Medium of interaction Promptness in surveys Expand the business

B2B and B2C e-commerce

Scope of e-commerce
E-PAYMENT-It does not involve physical exchange of currency. Its convenient to make payment via network. E-BANKING- It means anywhere any time banking. E-MARKETING- The growth of internet has created opportunities for consumer and firms to participate in online global market place.

PROSPECTS OF GROWTH OF ECOMMERCE IN INDIA

It lowers the purchasing cost. It reduces inventory maintenance cost. It decreases transaction cycle time. It lowers sales/marketing cost. It creates new sales opportunities. In B2B segment, it facilitate exchange of transactional information with other business more cost effectively. In B2C segment, it provides growing channel for efficient delivery of goods and services to consumer.

ADVANTAGES OF ELECTRONIC COMMERCE

E-Commerce is revolutionary Cost effective Customers are self created Middlemen disappear Better customer service Online payments Increased sales Decreased costs

DISADVANTAGES OF ECOMMERCE
Loss of ability to inspect products from remote locations Lack of training programmers Competition among sellers Change in technology Costly

CONCLUSION
Thus, we come to the conclusion that e-commerce has great advantage for industrialization which has laid to revolutionalization. Thus, increasing the growth of our country in terms of economy.

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