Manish Kumar Aery

Assistant Professor
SVSDPG College Bhatoli

E-Banking Concepts and advantages

Technical Framework
Indian Banking Scenario
ICICI Infinity - A Case Study

Imagine a Scenario
A non-resident Indian (NRI) in Paris has an easy way to access
money in this fashion capital of the world.
His Citibank account in India can be accessed through an ATM in
Paris, which in turn transmits information to Citibanks central
hub in the US.
The Indian rupees are converted to US dollars, which are in turn
converted into French Francs at the current exchange rate, the
Indian account is debited and the Francs made available to the
NRI.
Welcome to the era of technology banking!

E-Banking
"is an umbrella term for the process by which a
customer may perform banking transactions
electronically without visiting a brick-and-mortar
institution."

Online banking or Internet banking

In simple terms it does not involve any physical
exchange of money, but its all done electronically,
from one account to another, using the Internet.
From a personal computer, you can access your bank
account information, and perform many banking
functions, like transferring money, making a loan
payment

Once you register yourself on a bank website, you can

view
o Your accounts, credit card & home loan balances
o Accrued interest, fees and taxes
o Transaction details of each account
o Pay bills
o Transfer funds to third party accounts which you nominate
o Open a deposit right from the terminal you are sitting at.

However, till now Internet services in India only allows

for a minimum level of interactivity such as
o Answering e-mail queries
o Feedback forms
o Articles asking for readers opinion at the end

An accountholder, armed with a password, can use the

Net to order a cheque book, stop payment of a cheque
and spot the balance and individual operations in the
account and transfer funds.

Eliminates the use of paper and replaces it with

computer screens
No need to stand in line at the bank, because all you
have to do is log onto the internet & access your account
Its safe, hassle free, saves hours of time a month

It comes with a world of other benefits

Interest earning checking accounts,

Automatic bill payment
ATM/Debit cards
Credit Cards
Direct Deposit
Online Statements
Loans
Money market accounts

Source : Booz ,Allen and Hamilton

As an online bank customer, you have a website that

is at your disposal 24/7
You can get your online statement for the month,
week, day, or year
You can send e-mails with questions or concerns
You can pay bills

Hardware

Servers
Storage device and database
Communication channels and lines
Gateways and remotely located devices (e.g., thin clients
or Internet appliances) serving as interfaces between users
and computers

Software

Operating systems
Firewalls
Database management systems
Security application programs.

Authentication
Verifying your identity using passwords/pass phrases and
certificates

Confidentiality
Non Repudiation
Method by which the sender of data is provided with proof
of delivery and the recipient is assured of the senders
identity

Integrity
Access Control

Mechanisms and policies that restrict access to computer

resources

Availability

Access control restricts the flow of data traffic

Internet Banking uses firewalls in the area of access
control.
Internet Banking two firewalls are used

One before the Internet Banking server

Before the SQL database

Banking uses firewall which fall into two categories

Packet-filtering Gateways
Proxy services.

Public Key Encryption

Secure Socket Layer (SSL)

Digital Certificate
A digital certificate is an electronic ID, which is verified by
a third party, a certification authority (CA)
The CA controls the Public Key Infrastructure (PKI).
A security certificate ,associates an identity with a public
key. Only the owner knows the corresponding private key
that allows the owner to "decrypt" or make a digital
signature.
Eg Barclays UKs Digital certificate

Concept of E-banking is more prevalent in the

technologically developed parts of the world such
as Europe and the US
The number of online banks in Western Europe
has mushroomed. As per Bluesky International
Marketing, a US based research agency, the
number is quoted at 1,845 in mid 1999.
The scene is similar in the US where a recent
Dataquest survey forecasts that the number of US
households banking online will reach 24.2 million
by 2004.

33 private banks and 43 foreign banks

27 public sector banks account for over 84% of
the total deposits and over 82% of the total
banking advances in India
Rough estimates assuming teller at Re 1 per
transaction put ATM transaction costs at 45p,
phone banking at 35p, debit cards at 20p and
Internet banking a measly 10p.

Marriage of technology and banking is inevitable

to keep pace with changes in the global scenario.
The Verma Committee recommended the need for
greater use of IT even in the weak Public sector
banks.
Presently Net Banking facility is offered by ICICI
Bank, Citibank, HDFC Bank, Global Trust Bank
etc.

Jurassic banking is pass.

The Internet is slowly converting retail banking into
a commodity where the days of loyalty to bricks and
mortar banking are obsolete.
Retention of customers
Survival in competitive markets
Reduction of transaction costs

HDFC Bank is planning to introduce third party

payments whereby account holders will be in a
position to make payments to predetermined parties
through the Net.
The ICICI group has also launched an Internet
payment gateway for handling Net transactions of its
clients.
HSBC is working on a comprehensive interactive
financial services in collaboration with IBM which
would be a state-of-the-art local platform.

Emphasis on Human Capital

Customer oriented.
IT enabled Customer relationship management for
banking services.
Maximisation of profitability through the use of
detailed Customer information.
Financial portfolios tailormade to Customers
individual needs.

 Networking

Techniques.
Parallel Systems.
Data Warehousing
Data Mining

Higher customer retention

More cost effective marketing
Reduced Credit risk
Reduced Customer Acquisition costs

ATMs
Personal banking centers
Retail delivery Channels
Home Banking
Telephone Banking

The picture in India, however, is a bit grey. The RBI does

not still allow inter-bank funds transfer through the Net
since the cyber laws are still not in place. Once allowed,
this could pave the way for smooth cash management.
Security also continues to remain a major issue, especially
in the case of corporate, as bulk transactions are done in a
day.
Bankers are aware of the fact reliable transaction
technology as well as management of the security
perceptions of customers are the keys to success.

The infrastructural costs of providing such services

are quite high.
A bank not only has to automate its front-end
systems which the customer interfaces with but also
the back-end systems so that the bank is able to
provide robust functionality.

Internet Banking Service

As per Mr. K.V.Kamath, MD and CEO ICICI Ltd.,

Technology today, particularly via the internet, is
creating a platform-independent, low cost
communication infrastructure permeating all sectors
of the economy and providing an affordable
medium to conduct business.

Infinity - Internet Banking Service was launched in

December 97 and has 15,000 customers. It offers
you convenient remote banking facility. It provides
you an easy and secure access to your accounts with
us. With just a PC connected to the Internet, you can
have your account information at your fingertips,
from anywhere in the world, anytime. So, if you don't
want brick and mortar bank timings to hassle you,
Infinity Internet banking is just the service for you.

Online Services Offered

Account information
Summary of all your Accounts by giving details of each account,
snapshot of balances, available credit lines, record of payments and
transfers.
Allows transaction tracking (retrieval of transaction details based on
cheque number, transaction amount etc)
Provides account statement and transaction reports based on user
defined criteria.
Displays account balance message and also a warning when the Account
balance limit has been crossed.
Allows you to view details of fixed deposits and loan installments due.

Funds transfer
-Transfer money between your accounts across any of the branches
- Third party funds transfer which means you can transfer money to
any other ICICI bank holder.
Requests and intimations
-electronically submit a request for :
-Cheque-book
-Stop Payment Instruction
-Opening a Fixed Deposit
-Opening a Recurring Deposit

Communication with your account manager

-Mail-box facility enables you to send secure mail to your
account manager to find out the status of a request or for
any clarifications.

Personalized Content - Infinity provides

customized content exclusively for its users.
- Personal Finance containing views of experts
- Select articles on electronic commerce, information
technology
- Lifestyle articles on various places of tourist attraction
- News updates

Online investments
Online real time e-shopping payments
-Online shopping payments at rediff.com, fabmart.com,
malamall.com, magiccart.com, indiainfoline.com, eindia.com,
indbazaar.com, shoppersstop.com, sify.com
Utility bill payments
-ICICI Bank has now tied-up with Life Insurance Corporation to
accept the payment of life insurance premium over Internet
-Payment of Bills of the cellular operators

Which equipment and software do I need to

access Infinity?
If you have a PC connected to the Internet, you will be able to use
Infinity. For optimal performance and security, the recommended
browsers are :
Microsoft Internet Explorer 4.x or later
Netscape Navigator 4.x or later

ICICI Bank launched a web banking service for

non-resident Indians (NRIs).
NRIs can now open an account with the bank online by visiting its NRI services section on the
web-site.
The bank presently has over 15,000 NRI
customers, a majority of whom are in the United
States, Middle East and Europe.