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E Banking
E Banking
Meaning:
Electronic banking is a form of banking in which funds are
transferred through an exchange of electronic signals rather than
through an exchange of cash, checks, or other types of paper
documents. Transfers of funds occur between financial
institutions such as banks and credit unions. They also occur
between financial institutions and commercial institutions such
as stores. Whenever someone withdraws cash from
an automated teller machine (ATM) or pays for groceries using
a debit card (which draws the amount owed to the store from a
savings or checking account), the funds are transferred via
electronic banking.
Electronic banking relies on intricate computer systems that
communicate using telephone lines. These computer systems
record transfers and ownership of funds, and they control the
methods customers and commercial institutions use to access
funds. A common method of access (or identification) is by
access code, such as a personal identification number (PIN) that
one might use to withdraw cash from an ATM machine.
1 – This is the basic level of service that banks offer through their
websites. Through this service, the bank offers information about
its products and services to customers. Further, some banks may
receive and reply to queries through e-mail too.
A.Banks:
In India, since 1997, when the ICICI Bank first offered internet
banking services, today, most new-generation banks offer the
same to their customers. In fact, all major banks provide e-
banking services to their customers.
1. Operational Risk
Operation risk or transactional risk is the most common type of
risk of e-banking. It includes:
Some reasons for this risk are a system or product not functioning
as expected, significant deficiencies in the system, security
breaches (external or internal), misinforming customers about the
processes and policies of using e-banking, certain communication
issues that hinder the customer from accessing his account, etc.
4. Legal Risk:
Whenever there is a violation of laws, regulations, or prescribed
practices, or when the legal rights and obligations of any of the
parties to a transaction are not established, then there is a legal
risk involved.
6 Cross-border Risks:
The core idea of electronic banking is to extend the geographical
reach of both banks as well as customers. This means that the
expansion can go beyond national borders. This leads to several
cross-border risks:
All the risks mentioned above can arise due to some flaws in
design, insufficient technology, negligent employees, and
unauthorized system access (intentional or not). Therefore, it is
important that banks adopt the right technology and systems and
have proper access control for a secure transacting environment.
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