E-Banking

Agenda

❚ Technology Commencement in Banking

❚ Product Based Banking
❚ Customer Based Banking
❚ Data Warehouse
❚ CRM
❚ Alternative Delivery Channels
❚ Banks Position in the New Economy
Technology Commencement
in Banking

❚ In 70’s, banks started to establish centralized data

processing centers.
❚ Essentially the roles of these data processing centers
are:
❙ collect the handwritten documents from branches
❙ compile the documents
❙ manual data entry by the operators
❙ generate reports for the bank staff and the central
bank
❙ execute some banking transactions
Branch Automation
❚ In 80’s, banks started technology investments
for the branches.
❚ The first step is offline branches.
❚ Terminals connected to local branch computer
❚ Second step is online branches connected
centrally. Most of the transactions started to be
performed in the central mainframe.
Product Based Banking
❚ In the mid-1980s, banks accepted product based banking
and competed with their products.
❚ Banks developed new products for their customers.
❙ Credit card
❙ Credit deposit account (Super Account)
❙ Debit cards
❚ Beside branch, banks brought new channels to give better
service to their customers.
❙ ATM
❙ POS
❙ IVR
Plastic Cards
❚ The plastic card usage grown enormously in last 2 decade.
❚ Plastic card became the main media for bank customers.
❚ Number of credit card in Turkey:

Credit Card Type National Cards International Cards Total

Visa 1.200.704 7.043.834 8.244.538
MasterCard 488.881 4.820.965 5.309.846
Other 13.599 36.884 50.483
total 1.703.184 11.901.683 13.604.867

data collected from BKM

Plastic Cards
❚ Number of debit card in Turkey:
Debit Card Type Debit card
Electron (Visa) 6.230.782
Plus (Visa) 68.304
Electron ve Plus 2.881.126
(Visa)
Cirrus ve Maestro 14.225.245
(MasterCard)
Private Label card 6.893.479
Total 30.298.936

data collected from BKM

ATM
❚ In the mid-1980s, that cash dispensers truly became a
worldwide phenomenon.
❚ It took 16 years for the first 100,000 cash dispensers to be
installed, but only four years more for the next 100,000.
❚ Now,ATM became the electronic face of banking for most
customers.
❚ Beside cash withdrawal, there exist various transaction
options from transfer to fund buying/selling.
❚ Now there are 12.174 ATM installed in Turkey (Ref: BKM)
Point Of Sale

❚ New habits in shopping

❚ Increased the use of plastic cards
❚ Now there are 313.140 POS installed in
Turkey (Ref: BKM)
ATM and POS Application Architecture

Debit Card
Authorization

Switch System

Credit Card
Authorization
IVR
❚ Interactive Voice Response (IVR) is a software application
that accepts a combination of voice telephone input and
touch-tone keypad selection and provides appropriate
responses in the form of voice
❚ IVR has come into our life at the beginnings of 90’s.
❚ First step in Telephone Banking
❚ Peak transaction volume in salary payment days for
balance inquiry
❚ Integrated with ATM system
Customer Based Banking
Product Based Customer Based

• Customer introduction •One customer information

file
on different systems
• Difficulty in creating
•Product factory
new products
• Different user •Standard graphical user
interfaces for different interface
environments
• Product based •Consolidated customer
Customer - Bank data
relation
 Banking Application Architecture
Relationship Management

Portfolio
CIF Product Factory
Management
ATM
I
N
Deposit Promissory FX F
POS FBS Securities Notes Import / Export
(TD,DD) O

Information Delivery
C
Loans&Credits NBS EFT Cheques Merchant
Delivery Services

Teletel E
N
T
Sales Support E
Telerom CMS Treasury Payments YKB HR
System
R

Teller (Branch)
Corporate Tables

DAL
Internet Banking
GL / Accounting

Settlement Reporting
Phone Banking
Batch Operations

Internet Shopping

Campaign Credit Risk

PCM Productivity
Management Management

Management & Control

Data Warehouse
❚ Electronic repositories of summarized historical data
❚ The main idea behind data warehouse is get all company
data working together so users can see more,learn more,
and make the organization work better
❚ Data Warehouse helps users to identify trends, find
answers to business questions and derive meaning from
historical and operational data.
❚ Data access is easier and less costly
❚ Decision support solutions run faster and are more
accurate.
 Data Warehouse Process
Life Cycle Design Transform Extract Deliver

Transaction Data Load, Publish

Data Scrubbing and and
index and
Extraction Cleansing Subscribe
Aggregate
Partial
Solutions
Data Data Data Histories Data
Mapping Replication and Access
Summaries Tools

Complete
Integrated Integrated Data Warehouse Infrastructure
Solution
CRM
❚ CRM is an integrated sales, marketing and service
strategy
❚ CRM goals are :
❙ Use existing relationships to grow revenue
❙ Use integrated information for excellent service
❙ Introduce more repeatable sales processes and
procedures
❙ Create new value and loyalty
❙ Implement a more proactive solution strategy
The Three Phases of CRM
Acquire
New
Customer
Differentiation
•Innovation
•Convenience

Enhance The Bundling Adaptibility Retain

Profitability •Reduce Cost •Listening
Profitable
of Existing Customer
•Customer service •New products
Customer
 Integrated CRM
Applications
Life Cycle Acquire Enhance Retain

Direct Cross Sell Proactive

Marketing and Up Sell Service
Partial
Functional
Solutions Sales Force
Automation Customer Support

Complete
Integrated Integrated CRM Applications
Solution
Alternative Delivery
Channels

Anytime, anywhere banking

– Telephone Banking
– Internet Banking
– Mobile Banking
– Television banking
– Next ???
Telephone Banking
❚ 7x24 banking through the phone
❚ Main components
❙ Switch
❙ IVR
❙ CTI(Computer Telephony Integration)
❘ Manage each call using the computer
❘ Pop up the user information while transferring the call
❙ Agent Desktop Application
❘ Win32,ActiveX, HTML
❙ Host Application
Telephone Banking
Infrastructure

Telecom

IVR CTI HOST

Internet Banking
• More and more banks are coming to realize that internet is a part of banks'
alternative delivery channel strategies activities concentrated in the business-to-
consumer segment, focused on retaining clients
• In Internet banking, security is a primary concern. Security concerns have been
addressed from every angle within the architecture of the Internet banking
application.
Sample Internet Banking Architecture
Mobile Banking

❚ Current Mobile Banking Applications:

❙ SMS Banking
❙ WAP Banking
❙ STK (Sim Toolkit) Banking
SMS Banking
❚ Basic banking inquiry transactions(balance inquiry, funds,
exchange rate inquiry…) are performed by the cooperation
of bank and the GSM operator
❚ Security is the main problem

Leased line
GSM Operator
GSM Bank SMS
Application
Network Server
Gateway

GSM Bank
Operator
SMS DB
SMS
DB Bank Host
WAP Banking
❚ Wireless application protocol (WAP) is an application
environment and set of communication protocols for
wireless devices designed to enable manufacturer-,
vendor-, and technology-independent access to the
Internet and advanced telephony services.
❚ WAP is a global standard and is not controlled by any
single company
❚ Various banking transactions offered in WAP
environment by banks.
❚ Similar architecture with SMS banking
SIM Toolkit
❚ SIM card enables to keep and load different applications.
❚ SIM Application Toolkit has been agreed as a GSM standard
❚ SIM Application Toolkit is independent of phone manufacturers and designs.
❚ SIM Application Toolkit allows the flexibility to update the SIM to alter the services and
download new services over the air
❚ SIM Application Toolkit is designed as a client-server application. On the server
side, SimCard platform and the client side, phone that supports the SIM
Application Toolkit
❚ In the near future, banks will start to offer banking transactions in this platform.
Television Banking
❚ Digital television (DTV) is the transmission of television signals
using digital rather than conventional analog methods.
❚ Advantages of DTV over analog TV include:
• Superior image resolution (detail) for a given bandwidth
• Smaller bandwidth for a given image resolution
• Compatibility with computers and the Internet
• Interactivity
• Superior audio quality
• Consistency of reception over varying distances
• Banks offer their banking transaction in this new environment
• T-commerce in the near future.
What is the Next channel

Microwave
Banking
???
Channel Costs
2

1,5

0,5

0
Web ATM Call Center Branch
Channel Integration Evolution
❚ Channel Integration evolution
❙ Reuse
❙ Efficiencies of Scale
❙ Reduction of Redundancies
The Role of Banks in the New Economy

❚ Internet and mobile devices have brought new rules

to economy and shaped the way to do business
❚ Banks has also evolved according to the new
economy and took their places in this new world to
add value to their customer
❚ The new ways to do business are :
❙ e-commerce (B2C)
❙ m-commerce
❙ B2B
E-commerce - B2C
❚ E-commerce is the buying and selling of goods and services on the Internet.
❚ Main feature of e-commerce
❙ 24-hour availability
❙ a global reach
❙ the ability to interact
❙ provide custom information and ordering
❙ and multimedia prospects,
❚ The Web is rapidly becoming a multibillion dollar source of revenue for the world's
businesses.
❚ Banks provide secure payments infrastructure - virtual POS
M-commerce
❚ Mobile commerce applications involve using a mobile phone
to carry out financial transactions- this usually means making
a payment for goods or transferring funds electronically.
❚ As content delivery over wireless devices becomes faster,
more secure, and scalable, there is wide speculation that m-
commerce will surpass wireline e-commerce as the method of
choice for digital commerce transactions.
B2B
❚ A housands of companies that sell products to other companies
have discovered that the Web provides not only a 24-hour-a-day
showcase for their products but a quick way to reach the right
people in a company for more information.
❚ In the B2B, the bank role is to provide a reliable payment
infrastructure that add value to corporate business
❚ This infrastructure should cover:
❙ Bill presentment
❙ Bill payment
❙ Different payment types(credit card, deposit account, loan)
❙ Information after payment
E-Security
❚ To improve the e-business, all the users should feel secure to
perform the transaction this environment
❚ The main concepts in e-security are:
❙ PKI (public key infrastructure) enables users of a basically unsecure
public network such as the Internet to securely and privately exchange
data and money through the use of a public and a private
cryptographic key pair that is obtained and shared through a trusted
authority.
❙ Public key is a value provided by some designated authority as a key
that, combined with a private key derived from the public key, can be
used to effectively encryption messages and digital signature.
❙ Private or secret key is an encryption/decryption key known only to the
party or parties that exchange secret messages. Public key is used
together with a private key
E-Security - continued
❙ Digital certificate is an electronic "credit card" that establishes your credentials
when doing business or other transactions on the Web. It is issued by a
certification authority (CA).
❙ CA (certificate authority) is an authority in a network that issues and manages
security credentials and public key for message encryption. As part of a public
key infrastructure, a CA checks with a registration authority to verify information
provided by the requestor of a digital certificate
❙ An RA (registration authority) is an authority in a network that verifies user
requests for a digital certificate and tells the certificate authority to issue it.
Smart Cards
❚ About the size of a credit card, a smart card is a plastic card with an embedded microchip that can be loaded
with data, used for telephone calling, electronic cash payments, and other applications, and then periodically
"recharged" for additional use.

❚ smart card contains more information than a magnetic stripe card and it can be programmed for different
applications. Some cards can contain programming and data to support multiple applications and some can be
updated to add new applications after they are issued
❚ Benefit of smart cards:
❙ enhanced security
❙ off line transaction
❙ programmable card
❘ loyalty
❘ customer information
Related Links
❚ www.ykb.com
❚ www.teleweb.com.tr
❚ www.bkm.com.tr
❚ www.visa.com
❚ www.europay.com
❚ www.banktech.com
❚ www.bai.org
❚ www.mobilesimtoolkit.com
❚ www.itworld.com