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Online Banking

Outline
• What is Online banking?
• Why Online banking?
• Online banking in India
• Guidelines
• Online Banking Activities
• Tools of Online Banking
• Services
• Advantages
• Road Ahead
What is Online banking?
Internet banking (or E-banking) means any user with a

personal computer and a browser can get connected to

his bank’s website to perform any of the virtual banking

functions.

The term "electronic banking" or "e-banking" covers

both computer and telephone banking.

In other words it is said that it is updated 'on-line, real

time'. The system is updated immediately after every

transaction automatically.
Why Online banking?
Differentiation of products from the
others.
A combination of regulatory and
competitive reasons
Stress on branchless banking.
Increasing volumes of banking
transactions.
Providing customers with cost
effective services
Online banking in India
 Opening up of economy in 1991 marked the entry of
foreign banks. They brought new technology with them.
 Banking products became more and more competitive.
Need for differentiation of products and services was felt.
 The ICICI Bank kicked off online banking in 1996.

 Currently78% of its customer base is registered for online


banking.
 1996 to 1998 marked the adoption phase, while usage
increased only in 1999, owing to lower ISP online charges,
increased PC penetration and a tech-friendly atmosphere.
Guidelines
• The Internet Banking policy has to be
approved by the Bank's Board.
• The policy fits into the bank's overall
Information Technology and Information
Security policy and ensures confidentiality
of records and security systems.
• The policy takes into account operational
risk.
• The policy clearly lays down the procedure
to be followed in respect of "Know Your
Customer" requirements, and
• The policy broadly meets the parameters
laid down in the earlier circular.
Facts and figures
• Internet population is expected to
grow to 100 million by 2008-09.
• At present 4.6 million of these use
internet banking. This figure is
estimated to grow to 16 million by
the end of 08-09.
• Only 59 per cent of adult population
have access to a bank account. This
implies 41 per cent of adult
population is “unbanked”.
Tools of Online banking

Automated Teller Machine

Credit Cards/Debit Cards

Smart Card
Services/Transactions
Answering routine queries
Bill payment service
Electronic Fund transfer(EFT)
Electronic Clearing System(ECS)
Credit card customers
Railway Pass
Investing through internet banking
Recharging your prepaid phone
Shopping
Comparison
Advantages Disadvantages

Check account balances and track Need an account with an Internet


recent account activity Service Provider (ISP)

Transfer money between Security concerns, like ‘hackers’


accounts accessing your bank accounts

Authorize electronic bill payments Original setup for e-bill paying


time is
time-consuming but will
ultimately be
a time-saver
Apply for auto, mortgage, home Must have basic computer skills
equity, and
student, or personal loans Internet knowledge
Advantages to banks
• Very low setup cost.
• Capability to cater to a very large
customer base.
• Saves a lot of operational costs. Adds
to the baseline.
• Banks can offer a lot of personalized
services to their customers.
• Reduction of burden on branch
banking.
Advantages to customers
• It is convenient.
• It isn't bound by operational timings.
• There are no geographical barriers.
• Services can be offered at a miniscule
cost.
• Check your transactions at any time of
the day, and as many times as you
want to.
• Getting quarterly statements from the
bank, transferring funds to outstation,
and other such activities can be done
free of charge through online banking.
Pre cautions to be taken
• Customers should never share
personal information like PIN
numbers, passwords etc with
anyone, including employees of the
bank.
• Documents that contain confidential
information should be safeguarded.
• PIN or password mailers should not
be stored, the PIN and/or passwords
should be changed immediately and
memorized before destroying the
Continued….
• Customers are advised not to provide
sensitive account related information
over unsecured e-mails or over the
phone.
• Take simple precautions like
changing the ATM PIN and online
login and transaction passwords on a
regular basis.
• Ensure that the logged in session is
properly signedout.
The road ahead
• Reduction in branch banking.
• Gradual evolution of Virtual banking
• People will want to process more
transactions on the Internet.
• Geography will not be an inhibitor
any more.
• The future of banking would be in
terms of integration.

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