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 bank’s 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 customer-
specific 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 Uses special software distributed by the bank, which is

  installed in the users’ PC. Customers access banks via
  modem linked directly to the bank.
Internet banking Customers access their bank account via Internet
Managed network The bank makes use of an online service provided by
  another party such as AOL
TV based banking Use of satellite or cable to deliver account information
  to TV screens of customers
Telephone banking Customers can access their bank via regular phones or
  mobile phones using SMS or WAP services
ATM ATMs provide cash accessibility and account
  information and in some cases enable to transfer
funds
EFTPOS Electronic funds transfer at point of sale (EFTPOS) is
  essentially a payment system for purchases through
  debit cards within the store itself.
Smart cards Microchip based cards can be used between individuals
  to exchange electronic cash or can interface with
ATMs, telephones and retailers.
Electronic Funds Transfer Uses computer and electronic technology as a
(EFT) substitute for checks and other paper transactions.
Electronic Data Transmit financial information and payments in
Interchange (EDI) electronic form.
Electronic Clearing System Paperless mode of effecting payment for handling bulk
(ECS) and repetitive payment transactions.
Shared Payment Network A large network of ATMs, Cash Dispensers belonging
System (SPNS) to different banks to provide anytime and anywhere
banking service.
Different Delivery Channels in E-Banking
Banking Transaction Cost Comparison

Type of E-Banking Average Cost

Normal Branch Banking $ 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 30 28
New* 9 9
Old**
21 19
Public Sector Banks 27 27
Foreign Banks 36 35
All Banks 93 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 e-
banking

 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  Communication

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

 Don’t use the hyperlink

to login to the website of
banks
Suggestions

For Bank
 Should provide specific guidance to
their customers
Suggestions

For Customers  Do not access Corporate

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