Badruka college of commerce and arts

Kachiguda,Hyderabad

Project on

Role of IT in banking industry

Srikanth Gudala

ROLL NO -1064-18-684-002

Project Guide PROF.DEEPA MA’AM

Osmania university

ACADEMIC YEAR-2018-2021
 ACKNOWLEDGEMENT

I am most thankful to my internal guide, Prof.

Deepa ma’am., for her guidance through out the project

and for encouraging me all the time. I value very much

that she has been extremely available, even when her

work schedule was very tight. I also value his generosity.

I am also grateful to my college

friends
TABLE OF CONTENT

1. INTRODUCTION

2.NEED OF THE STUDY

3.SCOPE OF THE STUDY

4.OBJECTIVES OF THE STUDY

5..LIMITATION OF THE STUDY

6.E-BANKING: IN SCENT STAGE IN INDIA

7.THE FUTURE OF PLASTIC MONEY

8..LEADING ISSUES IN BANKING TECHNOLOGY

9.TECHNOLOGY & FRAUDS

10.CREDIT CARD FRAUD ON INTERNET

11.INFORMATION TECHNOLOGY RISK IN

BANKING: MANAGEMENT & MEASUREMENT

12..FINDINGS & CONCLUSIONS

13.SUGGESTIONS & RECOMMENDATI0NS

 1. INTRODUCTION

The Indian Banking system has an old age legacy. Earlier

there were indigenous bankers who consisted mainly of unorganized

moneylenders, mahajans and sahukars. Later, when British came to

India they brought with themselves the concept of organized

banking. British while leaving India left behind large number of

small and privately held banks. In 1964, the first major banking

reform took place when 14 banks were nationalized. It led to the

rising of Indian Public Sector Banks. The second banking reform

was witnessed in 1990s when Indian Banking Sector underwent

complete change after the recommendations of the Narsimhan

Committee. Private and MNC banks entered banks entered into the

Indian Banking arena and challenged the monopoly of the PSU

banks. The Private and MNC banks brought new technologies and

technology intensive services with themselves. They rendered

quality service, which PSU banks were not providing, to service

starved Indian customers. There were a series of technological

innovations and up-gradations, e.g., ATMs, Internet Banking, credit

cards and online banking, etc. Private banks and MNC banks had to
provide something extra and it was their service, which attracted a

bulk of customer from the PSU banks. Indian customers were

lacking the world-class service in baking; they were accustomed to

the PSU (Sarkari) culture and the service of Private and MNC banks

was a delight for them.

When private and MNC banks initiated the world class

service to their customers and started snatching customers from

Public Sector Banks, Public sectors banks were bound to follow the

path of Private Banks. The PSU banks felt the heat and realized their

mistake. They also followed the Private Banks in their technology

initiatives and services.

The Indian Banking Sector with the progress in Technology is

facing the biggest challenged of rapidly changing customer

expectations against the backdrop of LPG (Localization,

Privatization and Globalization). Retail banking clients today

demand more care and extra facilities. They want more mobility of

investments, interactive accounts, and better segmentation of

banking products to cater to different segmental needs, convenience

and untimely hour services. Even the PSU culture could not adjust to

the pace of the new technology and changes. At present also it is

moulding and adapting itself to new needs and the dynamism of the

environment.

Technology is helping the Indian Banks to cater to customer

needs in a much more efficient manner continuous and error free

services to customers. With the help of computerization and the use

of modern software, which can be called the gift of technology, the

banks have been able to provide single window system to their

customers. In a single window system, all the needs of the customers

are taken care at a single counter. It is like a multipurpose counter

where one can deposit cheque, receive payments and deposit cash

etc. This has been made possible only due to the use of technology.

Earlier one had to move from one counter to the other counter for

different sort of works. Thus this type of service not only helps in

better customer service but also minimizes the customer service time

as it avoids duplication of work and unnecessary hassles to the

customers. With the use of technology, banks are trying to minimize

there per customer service cost. According to industry estimates,

assume teller cost Re.1 per transaction, ATM transactions cost

Re.0.45, phone banking at Re.0.35, debit cards at Re.0.20 and

Internet banking at Re.0.10 per transaction. So, now the emphasis is

more on net banking then on real banking or brick and mortar

banking. Indian Banking system is moving from real banking realm

to virtual banking realm. Banks are establishing more and more

ATMs at different convenient locations and interconnecting these

ATMs not only with their networks but also with their partner banks.

Network with whom they have got mutual understanding for sharing

ATMs. With the least cost of Internet banking, banks are paying

higher emphasis on Internet banking.

As per IDC estimates, the total number of registered users for

Internet banking in India is over two million. But this figure needs to

be adjusted for dormant users and multiple accounts (a user having

accounts with more than one bank). India has one million active

Internet Users populations. Thus, this is just around 0.1% of the total

population; to represents 15% of the India’s Internet user (most of

the people in India use internet from cyber café). Thus, indicating

that the concept of Internet banking is surely catching on. India is far

behind in the use of Internet banking than the other Asian countries

like Korea and Singapore where nearly 10% of their population is

banking over the Internet but India is fast catching up. In India, the

biggest drawback for Internet banking is the Internet penetration

among the masses. We lack the infrastructure facility for providing

Internet services but with the IT ministry keen on expanding the

Internet penetration the day is not too far when greater part of our

population would be using the Internet banking facilities.

In India, ICICI bank was the pioneer to introduce Internet

Banking. And later Citibank, HDFC Bank and other banks followed

the suit. PSU banks have lagged far behind in adoption of the

Internet banking facilities. But State Bank of India, which entered

the arena of ATM banking quite late, was able to expand at a rapid

pace and cover almost all the cities of India. Now ATM banking has

become an integral part of traditional cheque or withdrawal based

banking. These services have helped the PSU banks to maintain their

customers. Now money is transferred more in electronic form than

in physical form. With the cost of PC fast declining and the

government’s initiative in providing the infrastructural facilities for

net banking and the faster developments in the telecommunication

sector would be helping in the adoption of new technology and IT-

based banking services. Some authors’ view that the Internet

banking is just the extension of the traditional banking services

because it is the same service with customer friendly technological

interface. So, it is the value addition to the existing services. Banks

are reaping following benefits with the use of technology:

 With low investment, banks would be able to

satisfy large customer base. The technology has

allowed the banks to move from brick and mortar

building to virtual interface which cost less in

comparison to the rising real estate prices which in turn

leads to increase investment. Low investment in turn

helps in satisfying large client base.

 With modern facilities more and more customers

get attracted to the banks and they are viewed as

technology savvy and modern or state-of-the –art

banks. Brand image of the banks also get enhanced

thus building their goodwill and brand equity. Even

customers want to be associated with the brand

personality of the banks.

 With the increase in quality and competition, the

customers are having several choices among which to

choose instead of Hobson’s choice in some case. Now

banking services have become customer centric instead

of service centric or bank centric approaches as in

earlier cases. Now, it is the customers market rather

than a sellers (bankers) market. All the services are

customer driven.

 Network sharing by different banks is enabling

the banks to reduce their investment (sharing of ATMs

of partner banks) and provide better services to the

customers. This is also helping them in delivering

quick services and it also reduces the risk of fraudulent

practices as verification becomes quite easier and

quick.

 These practices are leading to lower service cost

per customer. Thus leading to enhance profitability for

the banks, which in turn enhances the corporate image

of the banks.

 With the use of technology banks are in a

position to obtain the customer database with a press of

key and this helps the bank to maintain high profile

customers because it is an accepted marketing principle

that 80% of the revenue are generated by 20%

customers (20:80 principle). Thus, the modern

technology helps in tracking the key customers and

provides them better services or customized services.

 The alternative channels of service helps the

bankers to add new products to their portfolio and it

helps them to device new products according to

customer needs. The banks can provide customized

value added services or tailor-made service to each

customer based on his/her requirement, e.g., foreign

money transfer service, electronic money etc.

 It helps the banks to manage their funds in a

much better way as the technology provides round the

clock interface to the outside world and thus it helps in

hedging the risk of the banks at real time. Banks are

able to minimize the risk and maximize returns by

investing in different avenues and they have greater

control over the fund investments.

 Technology helps in increasing the labor

productivity because it increases the output per labor to

multifold. Earlier works had to be performed manually

and it used to take days to complete in minutes or in

seconds. So, it helps in updating the customer status as

well as increased labor productivity.

 The customer service cost decreases and the

productivity of the staff increases and this adds to the

profitability of the banks. This helps the banks to take

care of even larger customer base and this will

ultimately ass up too the bottom-line of the banks.

 Public sector banks have been shy in implementing new

technology brick mortar banking in comparison to the technology

driven banking while the client base of Private and MNC banks are

mostly young people who are technology-savvy and who like to

interface more with the technology than man. Aged people are not

comfortable with the technological interface. They feel complexity

and uncomfortable with technology intensive services.

With the present avenues being saturated and greater

competition due to the entry of more players in the arena, the banks

are diversifying into new areas where they can use their financial

expertise in financial consultancy, insurance sectors, and fee-based

earnings instead of fund-based earnings. The mushrooming of the

multichannel, multifunction, self-service electronic delivery

channels is fast replacing the brick and mortar branches (real to

virtual). There is a need to redefine the business model of the Indian

banking sector so that to optimize the resources and deliver world

class service in the light of modern day technology. Today’s concept

is to minimize the visit of the customer to the bank and let him use
the technology or let technology handle him-this is the new survival

mantra in the cutthroat scenario for banks.

2.NEED OF THE
STUDY
Information Technology enables sophisticated product development, better
market infrastructure, implementation of reliable techniques for control of
risks and helps the financial intermediaries to reach geographically distant and
diversified markets. Internet has significantly influenced delivery channels of
the banks.

3.
3.SCOPE OF THE STUDY
The study covers the services offered by banks to the customers by the use of
technology. More specifically latest technological delivery channels, namely
ATM/Debit card, Credit card, Internet Mobile Banking etc. have been taken
up for the purpose of study.This project is an analytical study based on
random sampling to ascertain the usage and satisfaction level and customer
attitude towards these channels. The study also gives an idea of rendering
secure, 24X7X365 E-banking services at a lower cost, without compromising
with the quality there by resulting in the widening of customer base.
 4.OBJECTIVES OF THE STUDY

The objectives of the project “The Study Of Application of

Information Technology In Banking Sector” includes the following:

 To know the present condition of technology in Indian

banking sector.

 To know about the electronic payment system.

 To know about the hackers and frauds in online banking.

 To know about the risk management policies of Indian

banking sector.

 To know about the electronic banking

 5.LIMITATIONS OF THE STUDY

The scope of the project “ The Study Of Application Of

Information Study In Banking Sector” has been restricted to some

extent i.e. the project does not include the following: -

 Supervision of Electronic Banking by Reserve Bank Of India

 Information Technology in Banks in International Scenario

 Software Application to Protect from Hackers & Frauds

 Case Studies Related To Hackers & Frauds

 6.E-BANKING: IN ANSCENT STAGE IN INDIA

To keep pace with the changing environment worldwide, Indian

banking industry is fast adopting technology. It has embraced many

new features like Internet banking, ATMs, Phone banking etc. With

the help of new technology, banks are now able to offer products

and services, which were difficult or impossible with traditional

banking. But the banks in India still have to go a long way before

making themselves technology savvy.

With IT integration, a paradigm shift in the banking norms is on

cards. Banking fundamentals are thus facing major overhauls/

reengineering/ restructuring.

Two major trends have emerged in the transition of traditional

banking to high-tech banking:

➢ Advancements and restructuring through mergers, acquisition

and alliances.
 ➢ Universal banking where one stop shop provides all related

products and services to a customer.

At this point, it should be emphasized that mergers, acquisitions,

alliances, and adoption of Universal Banking concept are just

outcomes of IT-banking integration.

B ANKING AND IT
Advancements and innovations in IT industry have created a

revolution in the communication and distribution system of various

products and services through Web networking. Networking, as we

know has connected people around the globe, thus creating a

revolution in modern business activities.

Integration of these technological advances and existing

banking structures has changed and will change the definition and

faces of global banking. Internet banking has made banking a

commodity where quality is measured by efficient servicing and

effective pricing and timeliness.

 However, PC banking is not new. Bank of Scotland Started

offering its Home Office Banking Services (HOBS), more than a

decade ago, although it was only in 1996 that it was upgraded to

make software work with the now dominant windows operating

systems. HOBS later joined hands with TSB, which in 1996

launched banking services accessible through the CompuServe

online network, nationwide.

Technology Solutions for Indian Banks

Two types of technology stock bank products are available in

the market.

➢ Hardware products like ATMs and

Software products like branch connectivity, cluster-banking software, and

trade finance
7.THE FUTURE OF PLASTIC MONEY

Use of plastic Money is growing at an unprecedented rate in

India. Lesser number of installed Point-of sale (PoS) terminals is the

major obstacle in the growth of debt cards; smart card has many

innovative features, which may spurt the use of cards in India. Smart

card is safer to use in electronic form than the present form of cards

“ Credit card business is a volume game and initially highly capital

intensive.”

- A senior banker

Plastic money is growing by leaps and bounds in India.

Today, many banks are offering cards. Though the foreign banks

have a dominant share, aggressive entry of the Indian banks like

SBI, ICICI and HDFC Bank may soon change the rules of the game.

Today, SBI-GE is the third largest issuer of credit cards.

The credit card market in India is projected to grow at the rate

of 20-25% per annum in the coming years. There are currently

around 3.8 million credit card users compared to 3.0 million in 1990.
Visa credit card grew by 46.4% in India while the growth in Asia

Pacific was only 6% for Q3 of 2003. The competition among banks

has been growing and they are offering so many add-on incentives

like waiver of first year annual fee, discount on retail stores,

personal loans etc., to woo the customers.

Debit card is another segment, which is catching up fast.

There are only 80,000 to 90,000 merchants having point-of-sale

(PoS) terminals installed and majority of them are located in metros,

which is the major obstacle to the growth of debit cards. To increase

the usage of debit cards, banks should concentrate on increasing

installation of PoS terminals in semi-urban and rural areas.

Smart Card: A Future Card

Smart cards are the wave of the future for consumer use,

commercial use and terminal network security. Smart cards are in

much wider use in Europe than in US.

A smart card is a plastic card with an imbedded computer

chip that has been stored inside the card. It has the capacity to store

up to 80 times more information than other magnetic stripe cards.

This mini-computer using an intelligent chip, stores payment

information similar to a magnetic stripe card, but it also includes

additional information such as online authorization controls, credit

limits, stored value (gift card), reward points (loyalty), Personal

Identification Number (PIN), etc. Smart cards can be contact less,

suggesting that the chip transfers data via a built-in antenna without

physically touching the smart card reader.

There are over 3 billion smart cards in use currently. Today,

smart cards are used worldwide and it is the most flexible payment

option available in the world. Smart cards have been used in Europe

for over 10 years and now they are the accepted mode of payment.

In developing countries and continents such as Africa and Asia, the

use of smart cards has been growing rapidly. In the US, major

retailers, banks and processors are preparing to accept global cards

and some are adding smart gift cards and promotional application to

build loyalty for the growth of their business. American Express and

Financial Institutions have issued over 21 million PIN-secured smart

cards to their customers. By the end of 2005, there will be over 100

million smart cards to their customers. By the end of 2005, there will

be over 100 million smart cards in use in the United States.

 In order to accept smart cards, the business must have an

EMV ready smart card Point-of-Sale (PoS) terminal. Merchants can

be standalone PoS smart card terminals or smart card readers that are

integrated with cash registers. Currently, over 90% PoS terminals

are not EMV smart card ready.

Smart Cards and Internet Payment

Issues of security and fraud are major drawbacks to using

credit and debit cards over the Internet. Unlike the hand-written

receipts, there are no signed sales receipts associated with today’s e-

commerce transactions. Without such evidence, it is difficult as

much as 84% of all electronic commerce transactions.

At the same time, consumers are holding back on making

Internet purchases due to lingering security concerns. According to

Master Card, 90% of Internet non-buyers worry that their personal

and financial information may fall into the hands of hackers. It is

this reluctance that is the real barrier to building an online business.

Using smart cards along with a strong Internet authentication will

help overcome these issues.

American Express, Master Card and Visa smart cards currently support Internet authentication and
payment using built-in digital certificates and digital signatures. For smart cards to be successful,
the cardholders must connect an EMV approved smart card reader to their PCs. Smart cards have
the capacity to replace the thirty plus years old magnetic stripe ca
8.LEADING ISSUE IN BANKING TECHNOLOGY

Many Indian banks are adopting the information technology

not merely as a frill, but as a dire need. It is helping the banks in

many core and diversified functions. Technology is key business

enabler in six critical areas of banks. These are augmentation profit

pool, operation efficiency, customer management, product

innovation, distribution and reach, and efficient payment and

settlement system. For the success of any IT program, integration of

IT and business strategy is crucial factor.

Banking basics have undergone radical shifts, thanks to the

advent of modern technology, increasing pace of globalization and

the need for stronger fundamentals to operate in the fiercely

competitive environment. The digital divide among Indian banks

that was quite discernible before the millennium has considerably

narrowed down with many banks taking to technology not merely as

a frill, but as a dire necessity. Technology today catalyzes many core

and diversified functions in banks, including issues like transaction

automation and multiple delivery channels, product innovation, data

warehousing and effective MIS, secured storage mechanisms and a

real-time based payment and settlement system.

Seen in the present context, technology is a key business

enabler in six critical areas of banking.

Augmenting Profit Pool; Operational Efficiency; Customer

Management; Product Innovation; Distribution and Reach; Efficient

Payment and Settlement.

Augmenting Profit Pool

Sustained profits and profitability have been major yardsticks

for assessing the true health of banks in a fiercely competitive and

compelling business environment. Technology has proved, at least

in case of new generation banks and major public sector banks to be

a major profit driver. With progressive decline in interest rates,

banks’ spreads have come under pressure, which per se, affects their

profitability. However, technology had a favorable effect in terms of

reducing the operating cost and improving the burden to a

considerable extent. Technology also enable commissioning of new

products like Net banking, mobile banking and other forms of 24X7

banking like ATMs and Networked services across branches like

anywhere banking, electronic funds transfer, customer relationship

management, call centers across the banks. Hi-tech and hi-touch

services, it goes without saying, have also enlarged the clientele base

in banks and commanded considerable customer loyalty.

Technology has created an enabling environment for banks to

diversify into various fee-based activities like bancassurance and

funds transfer arrangements.

Operational Efficiency

Operational efficiency, in terms of optimum utilization of

resources, has been one of the most positive offshoots of

technological application in banks. Thanks to greater technological

application, banking system has seen a near consistent improvement

in the intermediation efficiency and consequent decline in

transaction cost. Yet, technology application has been by and large

confined, especially in the state-owned banks, towards cost saving

and improved service standards through product innovation. While

savings in cost and improvement in service quality could turn out to

be short-term in nature, it is essential that technology is leveraged as

a long-term and efficient cross-functional application. It is also time

that the focus of technology shifts from product innovation to

process innovation commonly referred to as Business Process

Reengineering (BRP), for banks to gain long-term operational

efficiency.

Customer Management

Technology also spells significant benefits on the realm of

customer research and management. In a predominantly buyers’

market and high propensity if customers to switch service providers,

customer management need no longer be a front office function, but

a bank-wide obsession. Many banks have duly realized the

significance of such functions and introduced new models like the

High Net Worth clients’ branch, imbued with state of the art

technology, exquisite ambience and quickest possible processing of

transactions. Customer management is a very sensitive issue entity

hears only from 4% of its dissatisfied customer, while 96% of its

customers quietly go away of which 91% never come back.

Technology, thus, already implemented the tech aided e-CRM

application as strategic tool to retain as well as expand their

customer base. The bottom line is that banking products are getting

commodities and price wars are slowly leading to a zero-sum game.

In such a scenario, technology backed customer orientation will hold

the key to take service standards anywhere near to world-class.

Product Research

In the field of product research as well, technology plays a

decisive role, in terms of swift product innovation, an active R&D

set up effective pricing of products to protect banks’ margins and

safeguard customers’ interests. Banking product life cycles are

getting shorter day by day and more than delivery, product servicing

defines competitive edge for banks. Marked to market product

processes are equally important for sustained improvement in the

value chain of services and command ‘top of the mind recall’ from

the customers. Technology also aids product profitability research

and review, which have not adequate attention in many of the banks.

Distribution Reach

The thumb rule for strategic management masters is that

structure must follow strategy in any business reorganization.

Technology, thus, calls for attendant restructuring endeavors that

will be in tune with the level of technology application. For instance,

many banks need to put in a place a leaner structure and remove

intermediate decision-making tiers. That is how one can see that

many of the regional outfits of banks are slowly being dismantled

while branch expansion is not being accorded the thrust it used to be

given earlier. Rightsizing of human and physical overheads is a

major strategy adopted by many banks wherein the role of the earlier

brick and mortar banking is slowly getting dissipated. In turn,

devices like Internet and mobile banking. Technology, thus,

facilitates downsizing of overheads cost without compromising

much on clientele reach. Public sector in the rural and semi-urban

areas. Many of these branches are not performing to their potential

mainly because of their typical business mix, cost diseconomies and

lack of technology-based services offered in these branches.

Technology can facilitate the branch rationalization exercise such as

setting up mobile branches and satellite branches, especially in the

rural areas, and bring many of those into the “Performing” category

without affecting the extent of client reach.

Efficient Payment and Settlement

Innovation in technology and worldwide revolution in

information and communication technology have emerged as

dynamic sources of productivity growth. This is true about banking

as well as its relationship with technology has become symbiotic

fundamentally. Payment system is probably the most important

mechanism in the banking sector where technology’s interactive

dynamics is getting manifested in an increasing measure each day.

Banking system has adopted a holistic approach for designing

a modern, robust, efficient and integrated payment system. The

approach to the modernization of the payment and settlement system

has been basically three pronged – consolidation, development and

integration. Consolidation of the payment system has revolved round

strengthening computerized cheque clearing and expanding the

reach of electronic clearing services through state-of-the-art

technology. Critical elements under the developmental strategy

related to the opening of new clearing houses, interconnectivity of

clearing houses through INFINET and optimizing the development

of resources the Negotiated Dealing System, Structured Financial

Messaging System (SFMS) and the recently introduced Real-Time

Gross Settlement (RTGS) system. Integration is the next stage that

the banking system is currently going through which is premised on

a high degree of standardization within a bank and seamless

interfaces across banks, leading to Straight Through Processing

(STP) of transaction on a regular basis. Further, cheque truncation

system will also pave way to expedite settlement of payments

process.

However, so far as integration is concerned, Indian banks

still have a fair distance to traverse. In order to efficiency leverage

an integrated payment and settlement systems, banks, especially

those in the public sector, need to address certain core issues

expeditiously. These include the following:

 Toning up of infrastructure in terms of standardization and

build up security features like firewalls, Intrusion Detecting

System (IDS) and implementing a security policy.

 Total inter-branch connectivity.

 Popularization of electronic funds transfer mechanism.

 Institute collaborative arrangements, including outsourcing

of IT expertise.
 In addition to the above, banking sector is also confronted

with a classic dilemma. It relates to differentiating between and

mapping the role of business vis-à-vis the role of information

technology, a feature typifying an enterprise wide technology

initiative. This is where the significance of integrating business and

IT plans comes to the fore.

9.TECHNOLOGY AND FRAUDS

ATM CRIMES FRAUDS:

ATM crimes and frauds are rising throughout the world.

ATM industry and money other organizations are fighting with them

in many ways like, by issuing security tips, making ATMs more

innovative etc. In India, where the use of ATMs is growing by

exponential, banks have to take benefit from international

experiences and safeguard their customers from frauds.

ATM crimes and frauds are mounting day by day. Even

though they make up a small percentage of criminal activities they

are not less important. Criminals are raiding millions every year.

Popular Ways to Card Frauds:

Some of the popular techniques used to carry out ATM

crime are:

➢ Through Card Jamming ATM’s card reader is tampered with

in order to trap a customer’s card. Later on the criminal

removes the card.

 ➢ Card Skimming is the illegal way of stealing the card’s

security information from the card’s magnetic stripe.

➢ Card Swapping, through this customer’s card is swapped for

another card without the knowledge of cardholder.

➢ Website Spoofing, here a new fictitious site is made which

looks authentic to the user and customers are asked to give

their card number, PIN and other information, which are used

to reproduce the card for removing the cash.

Global Measures to Fight the Frauds

To guard against these frauds ‘The Global ATM Security

Alliance (GASA)’, which was formed in June 2003, has issued the

customers guide and some tips to prevent against card-related

frauds.

The World’s Top 20 tips for ATM Use to Enhance the ATM

customer Experience and Security

CHOOSING AN ATM

Tip 1: Where possible, use ATMs with which you are most familiar.

Alternatively, choose well-lit, well-placed ATMs where you feel

comfortable.

Tip 2: Scan the whole ATM area before you approach it. Avoid

using the ATM altogether if there are any suspicious-looking

individuals around or if it looks too isolated or unsafe.

Tip 3: Avoid opening your purse, bag or wallet while in the queue

for the ATM. Have your card ready in your hand before you

approach the ATM.

Tip 4: Notice if anything looks unusual or suspicious about the ATM

indicating it might have been altered. If the ATM appears to have

any attachments to the card slot or keypad, do not use it. Check for

unusual instructions on the display screen and for suspicious blank

screens. If you suspect that the ATM has been interfered with,

proceed to another ATM and inform the bank.

Tip 5: Avoid ATMs which have messages or signs fixed to them

indicating that the screen directions have been changed, especially if

the message is posted over the card reader. Banks and other ATM
owners will not put up messages directing you to specific ATMs,

nor would they direct you to use an ATM, which has been altered.

USING AN ATM

Tip 6: Is especially cautious when strangers offer to help you at an

ATM, even if your card is stuck or you are experiencing difficulty

with the transaction. You should not allow anyone to distract you

while you are at the ATM.

Tip 7: Check that other individuals in the queue keep an acceptable

distance from you. Be on the lookout for individuals who might be

watching you enter your PIN.

Tip 8: Stand close to the other ATM and shield the keypad with your

when keying in your PIN (you may wish to use the knuckle of your

middle finger to key in the PIN).

Tip 9: Follow the instructions on the display screen, e.g., do not key

in your PIN until the ATM request you to do so.

Tip 10: If you feel the ATM is not working normally, press the

cancel key and withdraw your card and then proceed to another

ATM, reporting the matter to your financial institution.

Tip 11: Never force your card into the card slots.
Tip 12: Keep your printed transaction record so that you can

compare your ATM receipts to your monthly statement.

Tip 13: IF your card gets jammed, retained or lost, or if you are

interfered with at an ATM, report this immediately to the bank

and/or police using the help line provided or nearest phone.

Tip 14: Do not be in a hurry during the transaction, and carefully

secure your card and in your wallet, handbag or pocket before

leaving the ATM.

MANAGING YOUR ATM USE

Tip 15: memorize your PIN (if you must write it down, do so in a

distinguished manner and never carry it with your card).

Tip 16: NEVER disclose your PIN to anyone, whether to family

member, bank staff or police.

Tip 17: Do not use obvious and guessable numbers for your date of

birth.

Tip 18: Change your PIN periodically, and, if you think it may have

been compromised, change it immediately.

Tip 19: Set your daily ATM withdrawal limit at your branch at

levels you consider reasonable.

Tip 20: Regularly check your account balance and bank statements

and report any discrepancies to your bank immediately.

While the ATM industry is aggressively addressing ATM-

related frauds and crimes, few in the industry know about these

extraordinary efforts. Some of the important works are given below:

❑ From time to time the Electronic Funds Transfer Association

(EFTA) with the help of ATMIA is publishing tips on PIN

security.

❑ To combat the cross-border crimes, GASA is working in

association with Interpol, the Metropolitan Police Flying

Squad for New Scotland Yard and leading card issuers.

❑ ATMIA is educating the people and ATM industry about

most effective way of fighting ATM crimes and frauds and

honoring with award that contributes significantly counter the

fraud.

❑ Fair Isaac Card Alert – it is a service, which analyzes millions

of daily transaction, identifies the suspicious transactions and

sends the card number and related information of suspicious

transaction to the concerned bank. This services has helped a

 lot in solving many card-related frauds including high-profile

skimming cases.

❑ Leading ATM manufacturers are producing innovative

ATMs, which are helping to counter the frauds. Biometric

technology is one of the examples, which removes the need of

Personal Identification Numbers (PINs).

Biometric systems identify or authenticate a person’s

identity using different alternatives like face expressions,

fingerprint, hand geometry, voice, retina, etc.

INTERNET BANKING AND FRAUDS

Fraudsters are using innovative ways like Web and Mail spoofing,

attacking the bank’s server etc. to break the security walls and

commit fraud. There is a need for arrangements, which help

presence of integrity, confidentiality and authorization of

information.

“Thieves are not born, but made out of

opportunities”
 This quote exactly reflects the present environment

related to technology, where it is changing very fast. By the time

regulators come up with preventive measures to protect customers

from innovative frauds, either the environment itself changes or new

technology emerges. This helps criminals to find new areas to

commit the fraud.

Some common Internet banking frauds and their causes have

been discussed here.

❑ Attacking the Bank’s Server

In this case, the fraudster takes control of the server of the

bank and by visiting the bank’s website carries out transaction

through impersonation.

These attacks are due to bad programming, which mostly

prevail in general purpose software. Such attacks are called buffer-

over-flow attacks. Due to buffer-over-flow defects in the software,

fraudster can use the commands on the server without providing

essential information like password etc.

❑ Mail Spoofing
 In the mail spoofing or e-mail forgery, the fraudster sends

the information to bank customers in such a form that it seems that

information is from the authentic bank source. One such incident

happened with ICICI Bank customers to disclose passwords and

other information. The e-mail said:

“For security purpose your account has been randomly chosen

for verification. To verify your account information we are asking

you to provide us with all the data we are requesting. Otherwise, we

will not be able to verify your identity and access to your account

will be denied. Please click on the link below to get to the ICICI

secure page and verify your account details. Thank you.”

Mail spoofing happens due to lack of criteria to verify the source

address authenticity. Anyone can set up a mail server and can

forge a mail posing as an authentic source.

❑ Web Spoofing

In Web Spoofing, customers of the bank are lured to log in at

the fraudster’s website, which is similar to the bank’s website. Once

the customer provides sensitive information, they can be stolen

easily by the fraudster, who uses the stolen sensitive information like
password and username etc., to carry out the transaction on the bank

as a real customer.

In the whole case, the only loser is the customer because he

does not have any means to prove that it was not he who did those

transactions, but the fraudster.

Ignorance of the customer to intercept Universal Resource

Locator (URL) is the major cause of Web spoofing. Look at the

following two URLs

 http://secure.bankname.com/carloanfind/carloans.asp

 http://secure.bankname.com?

@569857125/carloanfind/carloans.asp

It is very difficult for a normal customer to understand the

difference between these two URLs. He can be easily cheated

because the first URL will drive him to the original site while the

second one to the fraudster’s site.

Denying Service from Bank’s Server

The fraudster’s intent here is not to commit any fraud but to

create inconvenience for the banks. The customer here literally

cannot access the services of the bank.

Intervention of fraudster’s with Transmission Control

Protocol/Internet Protocol (TCP/IP), the computer communication

languages, Router Poisoning that help the customers to reach

different parts of the network and Domain Name System (DNS)

service, that helps the two computers to communicate through IP

number are some reasons for such inconvenience.

It is clear that to plug all the loopholes is very difficult for

any regulator. This is a challenge to the mission of fast automation.

It is essential on the part of the banks, the regulators and the service

providers to create a source and safe automation environment that

has the confidence and trust of the customers.

10.CREDIT CARD FRAUD ON INTERNET

Credit card fraud has become regular on Internet. All the agencies

involved in the transaction, cardholders, online merchants and the

card issuers suffer losses. However, it is the online merchant who

suffers the most. This article examines the nature of credit card

fraud, types of credit card frauds, and the effects. This article also

discusses the preventive measures.

Internet commerce is growing very fast. From a customer base of

28.8 million spending US$12 bn in 1999, Internet Commerce has

grown exponentially during the past few years and is still growing.

But, unfortunately, the growth is not on the expected lines. The

credit card fraud, which has become common, has retarded the e-

commerce growth. A 1999 survey by US National consumer’s

league reported that 7% of customers were victims of the credit card

fraud; recent surveys indicate that one out of three online customers

have become victims to this kind of fraud. Customers, credit card

companies, banks and merchants are battling this problem; still this

crime is on ascendancy.
Common Types of Card Frauds

There are different types of frauds involving credit cards. The

fraudulent activities start from the application process itself.

Application Fraud:

In application fraud, the fraudster obtains personal

confidential information of the other person needed in the credit card

applications, like social security number, date of birth using a

variety of means. Internet search engines and databases are making

these tasks easier. Using this information, he fills in an application

for a credit card and after receiving it, uses it as if he is the true

holder. The person in whose name the card is issued might come to

know about this only after the damage is done.

Counterfeit Cards:

In this, a criminal gains access to a valid card number and

other information. For example, the salesperson at the supermarket

briefly takes possession of the customer’s card during payment

process, which he runs on a terminal. But without the knowledge of

 the cardholder, the salesman can also run it on another machine,

which can capture all the details in the card. Using this information

and tools like embossing machines, a fraudster can create a

counterfeit card. This process is known as ‘skimming’ and simple

hand-held devices are now available for the purpose. Further, the

information skimmed can also be used for purchases on the Internet

or Telephone.

Account Takeover: In account takeover, the fraudster first all

the personal confidential information about the other person. Then

impersonating as the other person, he informs the bank that there is a

change in his residential or office address. Next, he informs them

that his credit card is lost and request for a new card on the new

address. After receiving the card, the criminal successfully takes

over the account.

Stolen and Lost Cards:

By far, this is the most common form of fraud in the market

place. When the criminal has access to a stolen or lost card, he also

gains access to all the personal information. Apart from using this

card fraudulently, the criminal can also use the information to

‘broaden’ the fraud by applying for new cards or fabricating new

ones.

Other Forms:

From the point of view of a merchant, credit card frauds can

be divided into three ways. There are organized fraud, opportunistic

fraud and cardholder fraud. The advantages offered by Internet are

also attracting the criminals in a big way. In an organized criminal

activity, the gang’s obtain credit cards using any of the means

discussed above. They normally identify a drop location like a

vacant house or warehouse, spend the card up to the maximum limit,

and ask the merchandise to be dropped at this selected location.

These gangs have a thorough understanding of the system and take

advantage of the fact that there is normally a time gap of more on to

the next card. Opportunistic fraud is committed normally by

amateurs who get an opportunity of handling credit cards, like

waiters in restaurants. Cardholder fraud involves the cardholder

himself who might claim that he never placed the order or he never

received the goods. It could also involve one of his family members

or friends who used the card without his knowledge.

 Bust Out Fraud:

According to Daniel Buttafogo of Juniper, an Internet-based

credit card company, in this fraud, true customers gradually build up

as much available credit card and then ‘bust out’ with large

purchases of items that could easily resold like jewelry or draw large

cash advances etc. Here the fraudster will draw bad checks on one

account to pay when this cannot be done any longer, the customer

does a vanishing act. This kind of fraud is the most difficult to catch,

as the customer exhibits exemplary behavior till the last moment.

Friendly Fraud / Denial of Receiving Product:

Friendly fraud occurs when the actual cardholder carries out a

transaction but later denies or claims that his card was stolen or used

without his authorization. Customers might deny receipt or signing

or even ordering the product.

Nature of E-Commerce Transactions:

In e-commerce transaction, face-to-face contact between the

merchant and customer is absent and this causes most of the credit
card frauds. In online transactions, after filling in the online order

form, the customer is expected to give his credit card number to

conclude the transaction. In real world, after the purchase, the

customer hands over the credit card, which the merchant swipes

using a terminal. The merchant also obtains the signature of the

customer on the credit card receipt. He also verifies the charge

authorization. In case of fraudulent use of a card like using a stolen

card, the merchant or the customer are reimbursed by the credit card

company. In online transactions, the card is not present during the

transaction and there is no signature of the customer on the receipt.

These transaction, treated as card not present transactions, in which

the card issuing companies do not reimburse the merchant. In

reality, speed, which is the most important benefit of the Internet,

facilitates the fraud. A physical transaction takes several minutes;

where as Internet transaction takes only a few seconds. Real-time

transaction reduces the overheads, but at the same time, increase the

number of fraudulent transactions. For example, a fraudster can give

the same fraudulent card number to a number of e-business sites

simultaneously and there is no way the merchants can know about it.
11.INFORMATION TECHNOLOGY RISK IN BANKING:

MANAGEMENT & MEASUREMENT

Information Technology (IT) is not merely a technical function, but a

management process, which needs to be managed effectively. To measure the

IT risk in banks there are various methodologies available. All of them at large

follow the same primary steps like threat analyst etc. for technology risk

assessment; American Banker Association has recommended various resources.

Risk management approach had widely the baseline approach

in which a baseline/ standard set of polices and practices are

followed in taking business decision without considering the

criticality of the business asset or decision. In business sense, risk is

the probability of getting loss from taking or not taking a business

decision. The loss can be tangible or intangible. Risks can be

avoided, controlled, shared, transferred and accepted. Risks can be

controlled through objectives, policies and procedures.

Risk management approach enables the management to give

appropriate treatment to the business assets and decisions based on

their criticality to business goals and business continuity. While the

basic concepts remain the same, Information Technology introduces

new vulnerabilities as well as new techniques for risk management.

 As such, technology risk management, while following the

fundamentals, needs to address these new vulnerabilities.

Technology Risk Management

Information Technology Risk is the risk that can arise due to

use or non-use of technology in business or for business. The

primary objective of an organization and its ability to conduct

business. The business of IT in business is to see that the business

continues. IT risks management has to ensure that this purpose is

achieved. As such IT risk management process should not be treated

as a mere technical function carried out by the IT people and should

not just confine to IT assets. It is essentially a management function.

However, the role of IT people is also vital because IT security and

IT risk management are interrelated and an effective risk

management process is an important component of a successful IT

security program.

The broad objective of performing IT risk management is to

enable the organization to achieve its business goals by better

securing the IT systems and enabling management to make well-

informed risk management decisions in areas where technology is

involved.

IT risk management is to the process that helps to balance the

operational and economic costs of risk mitigation measures and

achieve gains by protecting the IT systems and data that support

their organization’s goals. A well-structured risk management

methodology, when used effectively, can help management identify

appropriate controls for providing the mission-essential security

capabilities.

Various organizations worldwide have come out with risk

management frameworks, policies, standards and principles that are

quite useful in IT risk management and measurement.

The committee set up Bank for International Settlement (BIS)

has identified fourteen Risk Management Principles for Electronic

Banking to help banking institutions expand their existing risk

management policies and processes to cover their electronic banking

activities.

Similarly, the Committee of sponsoring Organizations of the

Tread way Commission (COSO) Board and Project Advisory

Council took on the responsibility to expand and address the

 remodeled components of internal control. The end product of this is

the COSO Enterprise Risk Management (ERM) Framework.

The Information Systems Audit and Control Association

(ISACA) has developed a framework called Control Objectives for

Information and related Technologies (COBIT) which helps in IT

risk management.

The ERM and COBIT frameworks provide a useful evaluation

tool for informing management, directors and other stakeholders

about a process, procedure and policy to identify, measure, prioritize

and respond to finding risk.

In India, RBI has been providing much guidance in this area

to Indian banks. There is a good number of references and

guidelines provide in the reports of various RBI Committees. The

report of the RBI Committee on computer audit provide a

comprehensive checklist covering many technology-related areas,

which is useful in Technology Risk Assessment.

Technology Risk Assessment/Measurement

Risk assessment/measurement is a process used to identify

and evaluate risks and their potential effect/exposure. Risk exposure

is equal to the amount of probability multiplied with impact on

business.

Risk management covers three processes: Risk assessment,

risk mitigation, and evaluation. Risk assessment is the first process

in the risk management methodology and also is necessary for the

extent of the potential threat and the risk associated with an IT

system throughout is System Development Life Cycle (SDLC). The

output of IT risk assessment process helps to identify appropriate

controls for reducing or eliminating risk during the risk mitigation

process.

Unlike financial risk, technology risk cannot be easily

quantified or measured. But, banks can gain financial and

operational benefits by conducting an effective Technology Risk

Assessment (TRA). These include enhancing corporate governance

over IT activities, proactively identifying vulnerabilities and

implementing risk business imperatives, and efficiently using

corporate risk management resource, including audit, in ensuring a

cost-benefit control environment.

Threats to an IT system must be analyzed in conjunction with

the potential vulnerabilities and the controls in place for the IT

 system to determine the likelihood of a future adverse event and its

impact. Impact refers to the magnitude of harm that could be caused

by a threat. The level of impact is governed by the potential impact

on organizational goals and, in turn, determines the level of

criticality of an IT asset/resource.

Technology Risk Assessment (TRA) Methodologies

The quality of the technology risk assessment affects the

effectiveness of risk-based decision of management. With the

increasing interest in operational risk management and concerns

about corporate governance, may proprietary enterprise risk-

management methods/solutions came in the market to help banks to

meet the assessment challenge. Since these methodologies are

mostly developed for and by traditional risk managers, they are

generally weak in areas relating to technology, although they

provide an adequate perspective from a credit, financial, and

environmental standpoint.

Risk assessment methodology generally follows the following

primary steps:
  Threat and Vulnerability Identification

 Probability/Likelihood Determination

 Impact Analysis

 Risk Determination

 Control Recommendations

 Results Documentation

Technology Risk Assessment (TRA) methodologies are not

much different from general risk assessment methodologies and

they, too, follow these steps. However, the risk assessment tools

would be different in case of technology risk because to assess

adequately and to prioritize technology risk, the risk assessment

tools must be supplemented with methodologies specifically geared

to technology.

As in the case of enterprise risk assessment tools, ready-made

methods and tools developed by vendors can be used for TRA also.

However, a number of challenges are involved in using these ready-

made tools like vendor methodologies which may not continuously

update the TRA throughout the year due to the costs involved; the
 outsourced methodology/tool may not understand the bank’s specific

issues, etc.

The American Bankers Association lists the following

recommended resources for TRAs:

 International Standards Organization (ISO) 17799 (ISO

Standards)

 Control Objectives for Information Technology (COBIT)

 SysTrust

 Operationally Critical Threat, Asset and Vulnerability

Evaluation (OCTAVE)

 National Institute of Standards and Technology (NIST)

These resources are inexpensive to implement and serve the

purpose in most cases. They are based on extensive research from

government and professional security experts and are vendor neutral.

These methodologies enjoy excellent reputation among corporate

governance experts.

A summary description of each of the above TRA methods is

as follows:

ISO Standards
 The ISO along with the International Electro-technical

Commission forms the specialized system for worldwide

standardization. The stated purpose of the ISO standards is to

“provide a common basis for developing organizational security

standards and effective security management practice and to provide

confidence in inter organizational dealings.” Originally, developed

in Britain, it is a favored TRA approach in Europe. The standard is

often referenced and leveraged by other prominent methods and

covers 10 areas namely, Security policy, Communications and

operations management, Organizational security, Access control,

Asset classification and control, System development and

maintenance, Personal security, Business continuity management,

Physical and environment security, and Compliance.

COBIT

COBIT has been developed as a generally applicable and

accepted standard for good IT security and control practices that

provides a reference framework for IT governance. COBIT is

sponsored by the IT Governance Institute, established by the

Information Systems Audit and Control Association (ISACA), and

 addresses risk from both the business and technology perspectives. It

is an internationally recognized tool, incorporating both operation

management and audit concerns, which have been adopted in

organizations including the US House of Representatives, Charles

Schwab & Co., and Swift.

The framework compromises 34 high-level control objectives

belonging to four domains. For each control objective, audit

procedures and management guidelines are provided. The latter

guidelines uniquely provide COBIT with a business management

perspective; maturity models, critical success factors, key goal

indicators, and key performance indicators are provided for each of

the high-level control objectives.

COBIT focuses on processes and their ownership. It provides

excellent methodology for various parts of an organization to have

the same perspective at IT risk management. However, COBIT is

more of a general assessment tool and detailed issues are to be

considered in the form of audit programs. As such some consider it

to be too theoretical.

Sys Trust
 The American Institute of Certified Public Accountants

(AICPA) and the Canadian Institute of Chartered Accountants

(CICA) introduced a service to provide assurance on the reliability

of systems. The purpose of this service, known as Sys Trust, is to

increase the comfort of management, customers and business

partners with the systems that support a business or particular

activity. The service considers four principles to evaluate whether a

system is reliable.

 Availability: The system is available for operation and use at

times set forth in service level statements or agreements.

 Security: The system is protected against unauthorized

physical and logical access.

 Integrity: System processing is complete, accurate, timely

and authorized.
  Maintainability: The system can be updated when required

in a manner that continues to provide for system availability,

security and integrity.

Although, SysTrust was not necessarily developed as a risk

management tool, many organizations have found that the SysTrust

principles could be adopted as an effective RA tool since the

principle provide a stake holder’s perspective on the impact of

technology on business activities. The AICPA/CICA is currently

considering a new version of the SysTrust tool that would also

incorporate e-commerce activities. Under the revision, five

principles would replace the four above. Principles consider would

include security, availability, processing integrity, online privacy

and confidentiality.

SysTrust provides good high-level questions for an overview

on overall reliability but may not provide detailed methods for

intended objectives. It is more of an executive level assessment

perspective rather than at operational level. However, it also has

provision for third party assessment and covers security also.

OCTAVE
 Developed by the Software Engineering Institute (SEI) at

Carnegie Mellon University, OCTAVE is a comprehensive, self-

directed approach to TRA. It differs from traditional TRAs in that it

first determines which information assets really need to be protected

and then evaluates the technology infrastructure to determine the

vulnerability of those assets. OCTAVE presents an exciting TRA to

ORMs because the SEI is home to the CERT alerts and other

information relating to managing security vulnerabilities. This

robustness of tools, workshops, and publications relating to

OCTAVE significantly enhances an effective assessment by the

ORM.

Specially, OCTAVE uses a three-phased approach to identify

the technology risk management needs of an enterprise:

 Build asset-based threat profiles: Identify important

information assets, the threats to those assets, security and current

risk mitigation strategies.

 Identify infrastructure vulnerabilities: Examine technology

infrastructure for vulnerabilities that can be compromised.

  Develop security strategy and plans: Based on the results of

the first two phases, develop a strategy-based on business priorities

to mitigate risks.

OCTAVE is a full methodology with supporting tools and

leverages from a combination of academic research and industry

practices but, it is geared to larger institutions and the use of it

without formal training is difficult.

NIST

The Information Technology Laboratory (ITL) at the NIST in

USA is a body, which provides technical leadership for the nation’s

measurement and standards infrastructure. These include developing

standards and guidelines for the cost-effective security and privacy

of sensitive unclassified information in federal computer systems.

Like the other organizations mentioned previously, NIST

provides a detailed checklist of IT-related risk mitigation strategies

that should be assessed as a part of a TRA. In addition to its detailed

coverage of security issues, the checklist enables to determine if risk

is managed by using five “levels of effectiveness”.

 1. Control objectives documented in a security policy.

2. Security controls documented as procedures.

3. Procedures have been implemented.

4. Procedures and security controls are tested and reviewed.

5. Procedures and security controls are fully integrated in to a

comprehensive program.

However, this is mostly followed by big government

organizations and following these methodologies could be too

burdensome in a smaller organization.

12.RESEARCH METHODOLOGY

PRIMARY DATA & ITS ANALYSIS

The primary data has been collected through surveys in banks

(questionnaire) viz., Bank of Maharashtra, ICICI bank, HDFC bank.

Q.1) I.T. in banks is much more advanced than traditional banking?

Agree Disagree Fifty-Fifty

ANALYSIS: -

Bank of ICICI HDFC

Maharashtra
AGREE 96% 98% 100%
DISAGREE 3% 2% 0%
FIFTY-FIFTY 1% 0% 0%

GRAPH: -
 100%
99%
98%
97%
96%
95%
94%
Bank of ICIC HDFC
Maharashtr I
a
AGREEDISAGREEFIFTY-FIFTY

EXPLANATION: -
It is cleared from questionnaire method that every one agrees
to the statement “I.T. in banks is much more advance than traditional
banking”. Approximately ninety eight percent of bank employees
agree to the above statement.

Q.2) The ratio of online transaction v/s manual transaction.

1:2 2:1 Equal Can’t Say

ANALYSIS: -
 Bank of Maharashtra ICICI HDFC

1:2 30% 0% 0%
2:1 60% 100% 100%
Equal 0% 0% 0%

Can’t Say 10% 0% 0%

GRAPH: -

100
%

80%
Can’t
60% Say
40% Equal
2:1
20% 1:2
0%
HDF ICIC Bank of
C I Maharashtr
a

EXPLANATION: -

According to the above data collected it is clear that

approximately ten percentage of employees says that the ratio of

online transaction v/s manual transaction is 1:2, eighty seven

percentage says it is 2:1, zero percent says it is equal & three percent

cant say anything.

Q.3) Information technology in banks encouraging online frauds.

Yes No To some extent

ANALYSIS: -

Bank of Maharashtra ICICI HDFC

Yes 90% 92% 98%

No 6% 5% 1%
To some extent 4% 3% 1%

GRAPH: -
 100%

80%
60%
To some extent
40% No
Yes
20%

0%
Bank ICIC HDFC
of
Maharashtr I
a

EXPLANATION: -

According to the above data collected it is clear that

approximately ninety three percent of employees says yes, four

percent says no and three percent says to some extent.

Q.4) Type of banking facility that will be friendly to illiterate
customer.

Online banking Manual-banking Both

ANALYSIS: -

Bank of Maharashtra ICICI HDFC

Online banking 2% 0% 0%
Manual banking 97% 98% 100%
Both 1% 2% 0%

GRAPH: -
 100% 1 2 0
% % %
80%
60%
97 98 10
40% % % 0
%
20%
0% 2 0 0
Bank%of %
ICICI %
HDFC
Maharashtra

Online bankingManual bankingBoth

EXPLANATION: -

According to the above data collected it is clear that

approximately ninety seven percent of employees says that manual

banking type of facility is friendly to illiterate customers, two

percent says online banking and one percent says both online as well

as manual banking is friendly to the illiterate customers.

Q.5) In what way I.T. in banks affects the work of the employees.

Increases the work Decreases the work

Same at both levels

ANALYSIS: -

Bank of Maharashtra ICICI HDFC

Increases the work 45% 30% 40%

Decreases the work 50% 63% 55%
Same at both levels 5% 7% 5%

GRAPH: -
 100% 5 7 5
% % %
80%
50 55
60% % 63
%
%
40%
45 40
20% 30
% %
%
0%
Bank of ICICI HDFC
Maharashtra

Increases the workDecreases the workSame at both levels

EXPLANATION: -

According to the above data collected it is clear that

approximately thirty eight percent says I.T. in banks increases the

work of the employees, fifty six percent says decreases the work and

six percent says it is same at both the levels.

Q.6) Does I.T. in banks increasing the cost of banking operations /

banking transaction.

Yes No Equal

ANALYSIS: -

Bank of Maharashtra ICICI HDFC

Yes 98% 94% 100%

No 2% 5% 0%
Equal 0% 1% 0%

GRAPH: -
 100% 02 15 0
% % %
80%

60%
98 10
94
40% % 0
%
%
20%

0%
Bank of ICICI HDFC
Maharashtra

Ye NoEqual
s

EXPLANATION: -

According to the above data collected it is clear that

approximately eighty seven percent of employees says yes i.e. I.T.
increases the cost of banking operations or banking transactions, two
percent says no and one percent says equal.
SECONDARY DATA AND ANALYSIS

Indian Scenario

Major players in the Indian Market

Banks No. of cards in lakhs

2002 2003
16 20
Citibank
14 18
Stan Chart
9 13
SBI-GE
 According to an analyst, it is estimated that the Indian smart

card industry is growing around 45% annually, would reach the size

of $6 bn by 2010. In the next five years, the number of smart cards

being used in the country can touch 400 million from around 50

million cards today.

To standardize the smart card, the Government has recently

standardized the technical aspects of smart cards. An operating

system called “SCOSTA” (Smart Card Operating System for

Transport Application) developed by IIT Kanpur has been chosen as

the standard operating system for transport-related projects. India is

planning to issue smart card based identity cards to citizens. State

Governments are also planning to issue smart card based driving

licenses. Kerala recently tried a ration card project at

Thiruvananthapuram. But the lack of resources with state

governments may halt many such projects. States like Kerala have

stopped several smart card related projects due to resources crunch.

“ It is the market for SIM cards for mobile phone that is

growing faster in India-at about 70-80% annually. Once the National

Identity Card project is launched, the demand for smart cards will
skyrocket,” opines Sanjay Dharwadkar, Head of Systems Marketing,

Smart Chip Ltd.

13.FINDINGS AND CONCLUSIONS

According to the survey conducted in Bank of Maharashtra,

ICICI Bank & HDFC Bank, the following points are concluded:
1. I.T. in banking sector is much more advanced than traditional
banking.
2. Online transactions are widely used than manual transactions.
3. Manual banking facility is more friendly to illiterate
customers.
4. I.T. in banks to some extents reduces the work of employees.
5. I.T. in banks to some extent encourages online frauds.
6. Online banking is much more costlier than manual banking. It
increases the cost of banking operations.
7. Online banking facility can lead to progress of the banking
sector.
 14. SUGGESTIONS AND RECOMMENDATIONS

1. Some highly advanced softwares / programs should be

implemented in banking sector in order to prevent hackers and

frauds.

2. Online banking operations cost or banking transaction cost

should be reduced so that middle class customer can have access to

online banking facility.

 CERTIFICATE

I Srikanth gudala here by certified that I have completed project on

ROLE OF IT IN BANKING SECTOR in the academic year 2018-21.
The information submitted is true & original to the best of my
knowledge.

SIGNATURE OF
PROJECT
GUIDE