E-banking project
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Slide Content
1
PROJECT REPORT
ON
“AWARENESS & ACTUAL USAGE OF E -BANKING”
A PROJECT REPORT SUBMITTED TO
THE UNIVERSITY OF MUMBAI
FOR THE DEGREE OF
BACHELOR OF MANAGEMENT STUDIES [VTH SEM]
SUBMITTED BY
ARPAN MUKHERJEE
SEAT NO -07
PROJECT GUIDE
PROF CHETAN JIWANI
K. J SOMAIYA COLLEGE OF SCIENCE & COMMERCE
VIDYANAGAR, VIDYAVIHAR, MUMBAI
UNIVERSITY OF MUMBAI
2012-2013
PROJECT REPORT
ON
“AWARENESS & ACTUAL USAGE OF E -BANKING”
A PROJECT REPORT SUBMITTED TO
THE UNIVERSITY OF MUMBAI
FOR THE DEGREE OF
BACHELOR OF MANAGEMENT STUDIES [VTH SEM]
SUBMITTED BY
ARPAN MUKHERJEE
SEAT NO -07
PROJECT GUIDE
PROF CHETAN JIWANI
K. J SOMAIYA COLLEGE OF SCIENCE & COMMERCE
VIDYANAGAR, VIDYAVIHAR, MUMBAI
UNIVERSITY OF MUMBAI
2012-2013
2
PROJECT REPORT
ON
“AWARENESS & ACTUAL USAGE OF E -BANKING”
A PROJECT REPORT SUBMITTED TO
THE UNIVERSITY OF MUMBAI
FOR THE DEGREE OF
BACHELOR OF MANAGEMENT STUDIES [VTH SEM]
SUBMITTED BY
ARPAN MUKHERJEE
SEAT NO -07
PROJECT GUIDE
PROF CHETAN JIWANI
K. J SOMAIYA COLLEGE OF SCIENCE & COMMERCE
VIDYANAGAR, VIDYAVIHAR, MUMBAI
UNIVERSITY OF MUMBAI
2012-2013
PROJECT REPORT
ON
“AWARENESS & ACTUAL USAGE OF E -BANKING”
A PROJECT REPORT SUBMITTED TO
THE UNIVERSITY OF MUMBAI
FOR THE DEGREE OF
BACHELOR OF MANAGEMENT STUDIES [VTH SEM]
SUBMITTED BY
ARPAN MUKHERJEE
SEAT NO -07
PROJECT GUIDE
PROF CHETAN JIWANI
K. J SOMAIYA COLLEGE OF SCIENCE & COMMERCE
VIDYANAGAR, VIDYAVIHAR, MUMBAI
UNIVERSITY OF MUMBAI
2012-2013
3
1.1 Introduction
Electronic banking is an umbrella term for the process by which a customer may perform banking
transactions electronically without visiting a brick-and-mortar institution. The following terms
all refer to one form or another of electronic banking: personal computer (PC) banking, Internet
banking, virtual banking, online banking, home banking, remote electronic banking, and phone
banking. PC banking and Internet or online banking is the most frequently used designations. It
should be noted, however, that the terms used to describe the various types of electronic banking
are often used interchangeably.
Electronic banking is an activity that is not new to banks or their customers. Banks having been
providing their services to customers electronically for years through software programs. These
software programs allowed the user‘s personal computer to dial up the bank directly. In the past
however, banks have been very reluctant to provide their customers with banking via the Internet
due to security concerns.
Today, banks seem to be jumping on the bandwagon of Internet banking. Why is there a sudden
increase of bank interests in the Internet? The first major reason is because of the improved
security and encryption methods developed on the Internet. The second reason is that banks did
not want to lose a potential market share to banks that were quick to offer their services on the
Internet.
Many of the banks like ICICI, HDFC, IndusInd, IDBI, Citibank,Global Trust Bank (GTB), Bank
of Punjab and State bank of India(SBI) were offering E-banking services.The analysts‘
comments that India had a high growth potential for e-banking the players focused on increasing
and improving their E-banking services. As a part of this, the banks began to collaborate with
functions online.
Why is there a sudden increase of bank interests in the Internet? The first major reason
is because of the improved security and encryption methods developed on the Internet. The
second reason is that banks did not want to lose a potential market share to banks that were quick
to offer their services on the Internet.
1.1 Introduction
Electronic banking is an umbrella term for the process by which a customer may perform banking
transactions electronically without visiting a brick-and-mortar institution. The following terms
all refer to one form or another of electronic banking: personal computer (PC) banking, Internet
banking, virtual banking, online banking, home banking, remote electronic banking, and phone
banking. PC banking and Internet or online banking is the most frequently used designations. It
should be noted, however, that the terms used to describe the various types of electronic banking
are often used interchangeably.
Electronic banking is an activity that is not new to banks or their customers. Banks having been
providing their services to customers electronically for years through software programs. These
software programs allowed the user‘s personal computer to dial up the bank directly. In the past
however, banks have been very reluctant to provide their customers with banking via the Internet
due to security concerns.
Today, banks seem to be jumping on the bandwagon of Internet banking. Why is there a sudden
increase of bank interests in the Internet? The first major reason is because of the improved
security and encryption methods developed on the Internet. The second reason is that banks did
not want to lose a potential market share to banks that were quick to offer their services on the
Internet.
Many of the banks like ICICI, HDFC, IndusInd, IDBI, Citibank,Global Trust Bank (GTB), Bank
of Punjab and State bank of India(SBI) were offering E-banking services.The analysts‘
comments that India had a high growth potential for e-banking the players focused on increasing
and improving their E-banking services. As a part of this, the banks began to collaborate with
functions online.
Why is there a sudden increase of bank interests in the Internet? The first major reason
is because of the improved security and encryption methods developed on the Internet. The
second reason is that banks did not want to lose a potential market share to banks that were quick
to offer their services on the Internet.
4
E-banking is defined as the automated delivery of new and traditional banking products and
services directly to customers through electronic, interactive communication channels. E-
banking includes the systems that enable financial institution customers.Individuals or
businesses, to access accounts, transact business, or obtain information on financial products and
services through a public or private network including the Internet,Customers access e-banking
services using an intelligent electronic device.
The E-banking was firstly introduced in India by the ICICI around 1996. There after many other
banks like HDFC, SBI, IDBI, Citibank Trust Banks, UTI, etc followed the service. As today
private and foreign bank had started capturing the market through e-banking hence ―the
competition is heating up and the lack of technology can make a bank loose a customer‖ so now
the public banks are breaking the shackles of traditional set-up and gearing up to face the
competition posed by the private sector counterparts.
E-banking is defined as the automated delivery of new and traditional banking products and
services directly to customers through electronic, interactive communication channels. E-
banking includes the systems that enable financial institution customers.Individuals or
businesses, to access accounts, transact business, or obtain information on financial products and
services through a public or private network including the Internet,Customers access e-banking
services using an intelligent electronic device.
The E-banking was firstly introduced in India by the ICICI around 1996. There after many other
banks like HDFC, SBI, IDBI, Citibank Trust Banks, UTI, etc followed the service. As today
private and foreign bank had started capturing the market through e-banking hence ―the
competition is heating up and the lack of technology can make a bank loose a customer‖ so now
the public banks are breaking the shackles of traditional set-up and gearing up to face the
competition posed by the private sector counterparts.
5
1.2 The Internet-A distribution channel
The internet has become an extension of hotel chains' global distribution systems (GDSs). It
offers three particular strategic possibilities:
(1) To drive revenues by extending the company's reach to broader, more global markets.
(2) To reduce costs by bypassing traditional distribution channels (e.g., airline GDSs), avoiding
commissions, and lowering transaction fees.
(3) To enhance customer service by providing more and better information with multimedia.
The potential of the market for guests' booking their own rooms is considerable, and electronic
bookings are generally less expensive to complete than those from other channels, notably toll-
free telephone lines. The technology is new enough that many difficulties remain, however. Of
the top-ten sites maintained by luxury hotel operators, for instance, none provided for real-time,
online reservations. Midscale and economy operators have been able to make better progress in
online reservations, in part because their rooms are more uniform than those of luxury operators.
Purchasers of corporate travel are able to use electronic booking to monitor and gain better
control of their travel expenses. Hotel chains that assist corporate travel departments in this
effort, through direct connections, can benefit. Prospects for group sales remain in the future,
because the design of GDS and internet software does not yet capture the many complications of
room-block and meeting room purchases. Meeting planners can, however, find meeting-related
information on the internet. Among other shortcomings of the internet are the overwhelming
volume of information available and concerns about the security of data transmission and
storage. Perhaps the greatest challenge of electronic distribution is achieving some form of
competitive advantage from GDSs and web sites—since so much of today's technology is easily
copied. Finally, no precise formula exists for how a particular hotel operation should allocate its
resources for electronic commerce. That determination stems from the hotel's overall marketing
strategy.
1.2 The Internet-A distribution channel
The internet has become an extension of hotel chains' global distribution systems (GDSs). It
offers three particular strategic possibilities:
(1) To drive revenues by extending the company's reach to broader, more global markets.
(2) To reduce costs by bypassing traditional distribution channels (e.g., airline GDSs), avoiding
commissions, and lowering transaction fees.
(3) To enhance customer service by providing more and better information with multimedia.
The potential of the market for guests' booking their own rooms is considerable, and electronic
bookings are generally less expensive to complete than those from other channels, notably toll-
free telephone lines. The technology is new enough that many difficulties remain, however. Of
the top-ten sites maintained by luxury hotel operators, for instance, none provided for real-time,
online reservations. Midscale and economy operators have been able to make better progress in
online reservations, in part because their rooms are more uniform than those of luxury operators.
Purchasers of corporate travel are able to use electronic booking to monitor and gain better
control of their travel expenses. Hotel chains that assist corporate travel departments in this
effort, through direct connections, can benefit. Prospects for group sales remain in the future,
because the design of GDS and internet software does not yet capture the many complications of
room-block and meeting room purchases. Meeting planners can, however, find meeting-related
information on the internet. Among other shortcomings of the internet are the overwhelming
volume of information available and concerns about the security of data transmission and
storage. Perhaps the greatest challenge of electronic distribution is achieving some form of
competitive advantage from GDSs and web sites—since so much of today's technology is easily
copied. Finally, no precise formula exists for how a particular hotel operation should allocate its
resources for electronic commerce. That determination stems from the hotel's overall marketing
strategy.
6
1.3 The Global E-Banking Scenario
The banking industry is expected to be a leading player in e-business. While the banks in
developed countries are working primarily via Internet as non-branch banks, banks in the
developing countries use the Internet as an information delivery tool to improve relationship with
customers.
In early 2001, approximately 60 percent of e-business in the UK was concentrated in the
financial services sector, and with the expected 10-fold increase of the British e-business market
by 2004, the share of the financial services will further increase. Around one fifth of Finish and
Swedish bank customers are banking online, while in the US, according to UNCTAD, online
banking is growing at an annual rate of 60 percent and the numbers of online accounts are
expected to reach 15 million by 2003.
Banks have established an Internet presence with various objectives. Most of them are using the
Internet as a new distribution channel. Financial services, with the use of Internet, may be
offered in an equivalent quantity with lower costs to the more potential customers. There may be
contacts from each corner of the world at any time of day or night. This means that banks may
enlarge their market without opening new branches.The banks in the US are using the Web to
reach opportunities in three different categories: to market information, to deliver banking
products and services, and to improve customer relationship.
In Asia, the major factor restricting growth of e-banking is security, in spite of several countries
being well connected via Internet. Access to high-quality e-banking products is an issue as well.
Majority of banks in Asia are just offering basic services compared with those of developed
countries. Still, e-banking seems to have a future in Asia. According to McKinsey survey, e-
banking will succeed if the basic features, especially bill payment,are handled well. Bill payment
was the most popular feature, cited by 40 percent of respondents of the survey. However,
providing this service would be difficult for banks in Asia because it requires a high level of
security and involves arranging transactions with a variety of players.
1.3 The Global E-Banking Scenario
The banking industry is expected to be a leading player in e-business. While the banks in
developed countries are working primarily via Internet as non-branch banks, banks in the
developing countries use the Internet as an information delivery tool to improve relationship with
customers.
In early 2001, approximately 60 percent of e-business in the UK was concentrated in the
financial services sector, and with the expected 10-fold increase of the British e-business market
by 2004, the share of the financial services will further increase. Around one fifth of Finish and
Swedish bank customers are banking online, while in the US, according to UNCTAD, online
banking is growing at an annual rate of 60 percent and the numbers of online accounts are
expected to reach 15 million by 2003.
Banks have established an Internet presence with various objectives. Most of them are using the
Internet as a new distribution channel. Financial services, with the use of Internet, may be
offered in an equivalent quantity with lower costs to the more potential customers. There may be
contacts from each corner of the world at any time of day or night. This means that banks may
enlarge their market without opening new branches.The banks in the US are using the Web to
reach opportunities in three different categories: to market information, to deliver banking
products and services, and to improve customer relationship.
In Asia, the major factor restricting growth of e-banking is security, in spite of several countries
being well connected via Internet. Access to high-quality e-banking products is an issue as well.
Majority of banks in Asia are just offering basic services compared with those of developed
countries. Still, e-banking seems to have a future in Asia. According to McKinsey survey, e-
banking will succeed if the basic features, especially bill payment,are handled well. Bill payment
was the most popular feature, cited by 40 percent of respondents of the survey. However,
providing this service would be difficult for banks in Asia because it requires a high level of
security and involves arranging transactions with a variety of players.
7
In India, approximately one percent of high and middle-income group banking customers
conducted banking on the Internet in 2000 compared to 5 to 6 percent in Singapore and South
Korea. In 2001, a Reserve Bank of India survey revealed that more than 20 major banks were
either offering e-banking services at various levels or planned to do so in the near future. Some
of the private banks included ICICI Bank, HDFC Bank,IndusInd Bank, IDBI Bank, Citibank,
Global Trust Bank, Bank of Punjab and UTI Bank.In the same year, out of an estimated 0.9
million Internet user base, approximately 17 percent were reported to be banking on the Internet.
The above statistics reveal that India does have a high growth potential for e-banking. The banks
have already started focusing on increasing and improving their e-banking services. As a part of
this, the banks have begun to collaborate with various utility companies to enable the customers
to perform various functions online.
In 2001, over 50 percent of the banks in the US were offering e-banking services.However, large
banks appeared to have a clear advantage over small banks in the range of services they offered.
Some banks in the US were targeting their Internet strategies towards business customers. Apart
from affecting the way customers received banking services; e-banking was expected to
influence the banking industry structure. The economics of e-banking was expected to favor
large banks because of economies of scale and scope, and the ability to advertise heavily.
Moreover, e-banking offered entry and expansion opportunities that small banks traditionally
lacked.
In Europe, the Internet is accelerating the reconfiguration of the banking industry into three
separate businesses: production, distribution and advice. This reconfiguration is being further
driven by the Internet, due to the combined impact of:
The emergence of new, more focused business models.
New technological capabilities that reduces banking relationship and transaction costs.
High degree of uncertainty over the impact that new entrants will have on current
business models.
Though e-banking in the Europe is still in the evolutionary stage, it is very clear that it is having
a significant impact on traditional banking activities. Unlike in the US, though large banks in the
Europe have a competitive edge due to their ability to invest heavily in new technologies, they
are still not ready to embrace banking.
In India, approximately one percent of high and middle-income group banking customers
conducted banking on the Internet in 2000 compared to 5 to 6 percent in Singapore and South
Korea. In 2001, a Reserve Bank of India survey revealed that more than 20 major banks were
either offering e-banking services at various levels or planned to do so in the near future. Some
of the private banks included ICICI Bank, HDFC Bank,IndusInd Bank, IDBI Bank, Citibank,
Global Trust Bank, Bank of Punjab and UTI Bank.In the same year, out of an estimated 0.9
million Internet user base, approximately 17 percent were reported to be banking on the Internet.
The above statistics reveal that India does have a high growth potential for e-banking. The banks
have already started focusing on increasing and improving their e-banking services. As a part of
this, the banks have begun to collaborate with various utility companies to enable the customers
to perform various functions online.
In 2001, over 50 percent of the banks in the US were offering e-banking services.However, large
banks appeared to have a clear advantage over small banks in the range of services they offered.
Some banks in the US were targeting their Internet strategies towards business customers. Apart
from affecting the way customers received banking services; e-banking was expected to
influence the banking industry structure. The economics of e-banking was expected to favor
large banks because of economies of scale and scope, and the ability to advertise heavily.
Moreover, e-banking offered entry and expansion opportunities that small banks traditionally
lacked.
In Europe, the Internet is accelerating the reconfiguration of the banking industry into three
separate businesses: production, distribution and advice. This reconfiguration is being further
driven by the Internet, due to the combined impact of:
The emergence of new, more focused business models.
New technological capabilities that reduces banking relationship and transaction costs.
High degree of uncertainty over the impact that new entrants will have on current
business models.
Though e-banking in the Europe is still in the evolutionary stage, it is very clear that it is having
a significant impact on traditional banking activities. Unlike in the US, though large banks in the
Europe have a competitive edge due to their ability to invest heavily in new technologies, they
are still not ready to embrace banking.
8
1.4Indian E-banking Scenario
As per the international report the banking transactions on a brick and mortar banking costs
around $ 1.1. While through ATM it costs around $ 0.27 and just 1 percent of over the counter
banking in case of Internet banking. Statistics such as these have woken the Indian Banking
Industry. Thus, the Indian banking system is seeing a fabulous change in the quality of service
provided by them. Technology is the root of this change, which is implemented by the banks‘ to
win more business from customers.
Almost all the private sector banks are moving towards e-enabling their existing products. HDFC
Bank and ICICI Bank have taken a lead in introducing e-banking in India.
Internet banking starts from migrating existing products to the net. This started initially with
simple functions such as getting information about interest rates, checking account balances and
computing loan eligibility. Then the services were extended to online bill payment, transfer of
funds between accounts and cash management services for corporates. Recently, banks started
setting up payment gateways for B2B and B2Ctransactions. This is to facilitate payment for e-
commerce transactions by directly debiting bank accounts or through credit cards. Banks can
earn a commission based income, on the transaction or sale value resulting in higher other
income. This could be more than the revenues they can generate from credit card transactions.
Private sector banks have leveraged the Internet effectively in taking away the customers from
public sector banks and significantly increased their revenue potential. Internet banking is just
one manifestation of these banks‘ technological capabilities. They have a complete automation,
an electronic customer database, real time transaction processing capabilities and the latest
technological platforms. Management of these banks is very focused in using technology as a
key competitive tool. The capability of the management is also visible in terms of their
profitability. Among the private sector banks HDFC Bank and ICICI Bank have excellent returns
on equity compared to their peers in the industry.
1.4Indian E-banking Scenario
As per the international report the banking transactions on a brick and mortar banking costs
around $ 1.1. While through ATM it costs around $ 0.27 and just 1 percent of over the counter
banking in case of Internet banking. Statistics such as these have woken the Indian Banking
Industry. Thus, the Indian banking system is seeing a fabulous change in the quality of service
provided by them. Technology is the root of this change, which is implemented by the banks‘ to
win more business from customers.
Almost all the private sector banks are moving towards e-enabling their existing products. HDFC
Bank and ICICI Bank have taken a lead in introducing e-banking in India.
Internet banking starts from migrating existing products to the net. This started initially with
simple functions such as getting information about interest rates, checking account balances and
computing loan eligibility. Then the services were extended to online bill payment, transfer of
funds between accounts and cash management services for corporates. Recently, banks started
setting up payment gateways for B2B and B2Ctransactions. This is to facilitate payment for e-
commerce transactions by directly debiting bank accounts or through credit cards. Banks can
earn a commission based income, on the transaction or sale value resulting in higher other
income. This could be more than the revenues they can generate from credit card transactions.
Private sector banks have leveraged the Internet effectively in taking away the customers from
public sector banks and significantly increased their revenue potential. Internet banking is just
one manifestation of these banks‘ technological capabilities. They have a complete automation,
an electronic customer database, real time transaction processing capabilities and the latest
technological platforms. Management of these banks is very focused in using technology as a
key competitive tool. The capability of the management is also visible in terms of their
profitability. Among the private sector banks HDFC Bank and ICICI Bank have excellent returns
on equity compared to their peers in the industry.
9
These banks commenced operations few years and have negligible excess in terms of branches
and employees. Therefore unlike most other banks around the world, e-banking is not an added
cost for them. In fact it is expected to contribute significantly to their revenues and profits in
years to come.
The distribution of banking business in India is highly skewed both geographically and in terms
of customer segment. Geographically the top 100 centres account for around 70 percent of the
loans disbursed. This are expected to account for mostly early Internet users. In terms of
customer segment, key focus on the asset side is the corporate sector.This segment accounts for a
high share of profits of banks and is likely to be an early adapter to the Internet. On the liability
side Internet banking is expected to boost customer acquisition and profitability significantly in
the top corporate segment and in the urban high/middle income retail segments.
Apart from e-banking, future prospects of e-commerce is also strong as it is set for explosive
growth rates. According to the NASSCOM‘s survey, e-business transactions in India are
expected to reach to Rs 12 billion by 2000-01 from Rs 4.5 billion in the previous year. For e-
commerce to take off there is a need for real time financial intermediation and there are very few
banks offering this in India. The right combination of customer relationship and technological
competency is required to dominate the financial intermediation of e-commerce. Who else than
private sector banks can provide such services? They are all set to lead the segment with a
marginal competition from foreign banks. Going forward, as the share of e-commerce in the
economy increases,these banks should be able to move up their market share apart from
generating higher fee based income.
But one does wonder what difference e-banking make with only 22 percent of the Internet uses
globally utilizing e-banking services. In India also the penetration is less than 1 percent. It is not
all win-win case for Internet banking in India. A number of uncertainties surround e-banking and
These banks commenced operations few years and have negligible excess in terms of branches
and employees. Therefore unlike most other banks around the world, e-banking is not an added
cost for them. In fact it is expected to contribute significantly to their revenues and profits in
years to come.
The distribution of banking business in India is highly skewed both geographically and in terms
of customer segment. Geographically the top 100 centres account for around 70 percent of the
loans disbursed. This are expected to account for mostly early Internet users. In terms of
customer segment, key focus on the asset side is the corporate sector.This segment accounts for a
high share of profits of banks and is likely to be an early adapter to the Internet. On the liability
side Internet banking is expected to boost customer acquisition and profitability significantly in
the top corporate segment and in the urban high/middle income retail segments.
Apart from e-banking, future prospects of e-commerce is also strong as it is set for explosive
growth rates. According to the NASSCOM‘s survey, e-business transactions in India are
expected to reach to Rs 12 billion by 2000-01 from Rs 4.5 billion in the previous year. For e-
commerce to take off there is a need for real time financial intermediation and there are very few
banks offering this in India. The right combination of customer relationship and technological
competency is required to dominate the financial intermediation of e-commerce. Who else than
private sector banks can provide such services? They are all set to lead the segment with a
marginal competition from foreign banks. Going forward, as the share of e-commerce in the
economy increases,these banks should be able to move up their market share apart from
generating higher fee based income.
But one does wonder what difference e-banking make with only 22 percent of the Internet uses
globally utilizing e-banking services. In India also the penetration is less than 1 percent. It is not
all win-win case for Internet banking in India. A number of uncertainties surround e-banking and
10
e-commerce ventures. Among the others, hurdles like low Internet penetration, security issues,
tax considerations and credit issues continue to depress the growth of the segment. Even if the
government has passed the cyber laws,still there is a lack of clarity about legislative aspects
governing the sector and the effectiveness of the administration to track & punish cyber crimes.
It all depends on the ability of banks to enter these businesses successfully.Those banks which
have already started e-banking will have to continuously update their services to retain the
potential customers since any customer is just a click away from a competitor elsewhere. Also,
one cannot afford to depend only on Internet banking; brick and mortar will continue to play an
important role. For those, which are yet to begin, are ignoring the potential customers by
remaining away from the latest technology.
e-commerce ventures. Among the others, hurdles like low Internet penetration, security issues,
tax considerations and credit issues continue to depress the growth of the segment. Even if the
government has passed the cyber laws,still there is a lack of clarity about legislative aspects
governing the sector and the effectiveness of the administration to track & punish cyber crimes.
It all depends on the ability of banks to enter these businesses successfully.Those banks which
have already started e-banking will have to continuously update their services to retain the
potential customers since any customer is just a click away from a competitor elsewhere. Also,
one cannot afford to depend only on Internet banking; brick and mortar will continue to play an
important role. For those, which are yet to begin, are ignoring the potential customers by
remaining away from the latest technology.
11
1.5 TYPES OF INTERNET BANKING OR E-BANKING
Understanding the various types of Internet banking will help examiners assess the risks
involved. Currently, the following three basic kinds of Internet banking are being employed in
the marketplace.
Informational
This is the basic level of Internet banking. Typically, the bank has marketing information about
the bank‘s products and services on a stand-alone server. The risk is relatively low, as
informational systems typically have no path between the server and the bank‘s internal network.
This level of Internet banking can be provided by the banks or outsourced. While the risk to a
bank is relatively low, the server or web site may be vulnerable to alteration.Appropriate controls
therefore must be in place to prevent unauthorized alterations to the bank‘s server or web site.
Communicative
This type of Internet banking systems and the customer. The interaction between the bank‘s
system and the customer. The interaction maybe limited to electronic mail, account enquiry, loan
applications, or static file updates (name and address change). Because these servers may have a
path to the bank‘s internal networks, the risk is higher with this configuration than with
informational systems. Appropriate controls need to be in the place to prevent, monitor, and alert
management of any unauthorized attempt to access the bank‘s internal networks and computer
systems. Virus controls also become much more critical in this environment.
Transactional
This level of Internet banking allows customers to execute transactions. Since a path typically
exists between the server and the bank or outsourcer‘s internal network, this is the highest risk
architecture and must have the strongest controls. Customer transactions can include accessing
accounts, paying bills, transferring funds etc.
1.5 TYPES OF INTERNET BANKING OR E-BANKING
Understanding the various types of Internet banking will help examiners assess the risks
involved. Currently, the following three basic kinds of Internet banking are being employed in
the marketplace.
Informational
This is the basic level of Internet banking. Typically, the bank has marketing information about
the bank‘s products and services on a stand-alone server. The risk is relatively low, as
informational systems typically have no path between the server and the bank‘s internal network.
This level of Internet banking can be provided by the banks or outsourced. While the risk to a
bank is relatively low, the server or web site may be vulnerable to alteration.Appropriate controls
therefore must be in place to prevent unauthorized alterations to the bank‘s server or web site.
Communicative
This type of Internet banking systems and the customer. The interaction between the bank‘s
system and the customer. The interaction maybe limited to electronic mail, account enquiry, loan
applications, or static file updates (name and address change). Because these servers may have a
path to the bank‘s internal networks, the risk is higher with this configuration than with
informational systems. Appropriate controls need to be in the place to prevent, monitor, and alert
management of any unauthorized attempt to access the bank‘s internal networks and computer
systems. Virus controls also become much more critical in this environment.
Transactional
This level of Internet banking allows customers to execute transactions. Since a path typically
exists between the server and the bank or outsourcer‘s internal network, this is the highest risk
architecture and must have the strongest controls. Customer transactions can include accessing
accounts, paying bills, transferring funds etc.
12
1.6 FEATURES OF E-BANKING
Transactional:(e.g. performing a financial transaction such as an account to account transfer,
paying a bill or applications like applying for a loan, new account, etc.)
Electronic Bill Presentment and Payment (EBPP)
Funds transfer between customers own checking and savings accounts, or to another
customers account.
Investment purchase or sale.
Loan application and transactions such as repayments.
Non-transactional:
(e.g. online statements, Check links, Chat, Co-browsing etc.)
Financial Institution Administration- features allowing financial institutions to manage the online
experience of their end users.ASP/ Hosting Administration – features allowing the hosting
company to administer the solution across financial institution.
1.6 FEATURES OF E-BANKING
Transactional:(e.g. performing a financial transaction such as an account to account transfer,
paying a bill or applications like applying for a loan, new account, etc.)
Electronic Bill Presentment and Payment (EBPP)
Funds transfer between customers own checking and savings accounts, or to another
customers account.
Investment purchase or sale.
Loan application and transactions such as repayments.
Non-transactional:
(e.g. online statements, Check links, Chat, Co-browsing etc.)
Financial Institution Administration- features allowing financial institutions to manage the online
experience of their end users.ASP/ Hosting Administration – features allowing the hosting
company to administer the solution across financial institution.
13
1.7Advantages & Dis-advantages of E-Banking
We find that there are many advantages of E-banking like:
Online banking gives more interest rates than any other form of banking and also saves
lot of expenses.
We can carry out all banking transactions at our own convenience and do not have
to depend on normal bank timings.
Lot of precious time is saved because of e- banking, as transactions are carried out in
seconds and we can see the updates immediately.
Since everything is computerized, we save all the paper work and we save the trouble of
maintaining physical records. There is nothing manual hence the records are perfect and
accurate.
Banks also provide balance alerts if our balance reduces and alerts the customer in case
of due dates of our bill occurs.
There are no extra charges and these e-banking services are absolutely free. Previously
banks used to charge heavily for all their services.
There is improvement in customer access, since the bank can access more customers
within a short time through the internet.
The customers can be offered more services through online banking.
1.7Advantages & Dis-advantages of E-Banking
We find that there are many advantages of E-banking like:
Online banking gives more interest rates than any other form of banking and also saves
lot of expenses.
We can carry out all banking transactions at our own convenience and do not have
to depend on normal bank timings.
Lot of precious time is saved because of e- banking, as transactions are carried out in
seconds and we can see the updates immediately.
Since everything is computerized, we save all the paper work and we save the trouble of
maintaining physical records. There is nothing manual hence the records are perfect and
accurate.
Banks also provide balance alerts if our balance reduces and alerts the customer in case
of due dates of our bill occurs.
There are no extra charges and these e-banking services are absolutely free. Previously
banks used to charge heavily for all their services.
There is improvement in customer access, since the bank can access more customers
within a short time through the internet.
The customers can be offered more services through online banking.
14
There are also some disadvantages of online banking which restricts people to
use this service, like:
E-banking has reduced the bank to customer personal interaction, since all the
transactions are handled by the customer from the internet account there is no
personalized banking service which reduces customer to bank interaction.
When you are entering e-banking instructions there is always a chance that the
information may be leaked or your account can be hacked and all your confidential
information is leaked. There are many banks that have good security systems to guard
such thefts.
You can access your online banking account by entering your personal identification and
your password. This password can be used by anyone to access your account and transfer
funds or cause financial problems. Whereas when you are visit the bank personally your
account is handled by the bank staff and therefore your confidential information cannot
be viewed by anyone. Also all your instructions are given in writing with your signature,
therefore there are less chances of fraud and information leak.
When you are using internet banking the internet security is a big problem faced by many
banks. So the customer must be aware of the security issues and protect their identity and
other personal details from hackers.
There are also some disadvantages of online banking which restricts people to
use this service, like:
E-banking has reduced the bank to customer personal interaction, since all the
transactions are handled by the customer from the internet account there is no
personalized banking service which reduces customer to bank interaction.
When you are entering e-banking instructions there is always a chance that the
information may be leaked or your account can be hacked and all your confidential
information is leaked. There are many banks that have good security systems to guard
such thefts.
You can access your online banking account by entering your personal identification and
your password. This password can be used by anyone to access your account and transfer
funds or cause financial problems. Whereas when you are visit the bank personally your
account is handled by the bank staff and therefore your confidential information cannot
be viewed by anyone. Also all your instructions are given in writing with your signature,
therefore there are less chances of fraud and information leak.
When you are using internet banking the internet security is a big problem faced by many
banks. So the customer must be aware of the security issues and protect their identity and
other personal details from hackers.
15
To make online banking a safe and secure banking experience you need to
follow these steps:
Avoid accessing your account from a cyber café or a shared computer. If you are happen
to do so then change your password as soon as you finish your banking transaction.
Every time you finish using your online banking session then sign out from the site rather
then just closing the browser.
Change your internet banking password after your first login and thereafter regularly.
Use complex and difficult password and make it difficult for others to guess.
Use different id and password for different internet accounts.
Never share your passwords or login details with anybody.
View your account daily and check it with your transactions, if there is any thing which
does not tally with your instructions then inform your bank immediately.
The advantages of online banking outnumber its disadvantages and therefore this form of
banking has become very popular with the customers. In this modern age of banking,
online banking or net banking has made things easier for people and saves lot of time .
Though internet banking is the need of every customer, some banks are still not having
advance features like transferring money to any bank across the country or easy
registration for net banking, this is because some banks are situated in the rural areas
where the use of computers is not common. All customers of all banks can be linked by
net banking only if technology reaches even the most remote areas of the country.
To make online banking a safe and secure banking experience you need to
follow these steps:
Avoid accessing your account from a cyber café or a shared computer. If you are happen
to do so then change your password as soon as you finish your banking transaction.
Every time you finish using your online banking session then sign out from the site rather
then just closing the browser.
Change your internet banking password after your first login and thereafter regularly.
Use complex and difficult password and make it difficult for others to guess.
Use different id and password for different internet accounts.
Never share your passwords or login details with anybody.
View your account daily and check it with your transactions, if there is any thing which
does not tally with your instructions then inform your bank immediately.
The advantages of online banking outnumber its disadvantages and therefore this form of
banking has become very popular with the customers. In this modern age of banking,
online banking or net banking has made things easier for people and saves lot of time .
Though internet banking is the need of every customer, some banks are still not having
advance features like transferring money to any bank across the country or easy
registration for net banking, this is because some banks are situated in the rural areas
where the use of computers is not common. All customers of all banks can be linked by
net banking only if technology reaches even the most remote areas of the country.
16
1.8Mediums of E-banking
Various products and services
Electronic banking, also known electronic fund transfer (EFT), uses computer and electronic
technology as a substitute for checks and other paper transactions. EFTsare initiated through
devices like cards or codes that let you, or those you authorize,access your account. Many
financial institutions use ATM or debit cards and Personal Identification Numbers (PINs) for this
purpose. Some use other forms of debit cards and personal Identification Numbers (PINs) for
this purpose. Some use other forms of debit cards such as those that require, at the most, your
signature or a scan. The federal Electronic Fund Transfer Act (EFT Act) covers some electronic
consumer transactions.
Following are the electronic medium by which services are generally provided by the banks as a
part of e-banking services.
Internet Banking
ATM (Automatic Teller Machine)
Phone Banking
Mobile Banking
Payment Cards (Debits/Credit Card)
All the above mediums provide services, which can be, also know as ―any time anywhere
banking‖. This facilitates the customer of the bank to operate their account from any corner of
the world, without visiting local or any subsidiary branch of their banks.Efforts are made by the
bank not only to provide the facility to the customer, but also to reduce the operational cost of
the bank by providing e-banking services. So with this, banks have to employ less staff and still
would be able to deliver service to the customer ,round the corner.
1.8Mediums of E-banking
Various products and services
Electronic banking, also known electronic fund transfer (EFT), uses computer and electronic
technology as a substitute for checks and other paper transactions. EFTsare initiated through
devices like cards or codes that let you, or those you authorize,access your account. Many
financial institutions use ATM or debit cards and Personal Identification Numbers (PINs) for this
purpose. Some use other forms of debit cards and personal Identification Numbers (PINs) for
this purpose. Some use other forms of debit cards such as those that require, at the most, your
signature or a scan. The federal Electronic Fund Transfer Act (EFT Act) covers some electronic
consumer transactions.
Following are the electronic medium by which services are generally provided by the banks as a
part of e-banking services.
Internet Banking
ATM (Automatic Teller Machine)
Phone Banking
Mobile Banking
Payment Cards (Debits/Credit Card)
All the above mediums provide services, which can be, also know as ―any time anywhere
banking‖. This facilitates the customer of the bank to operate their account from any corner of
the world, without visiting local or any subsidiary branch of their banks.Efforts are made by the
bank not only to provide the facility to the customer, but also to reduce the operational cost of
the bank by providing e-banking services. So with this, banks have to employ less staff and still
would be able to deliver service to the customer ,round the corner.
17
Internet Banking
Net banking is a web-based service that enables the banks authorized customers to access their
account information. It allows the customers to log on to the banks website with the help of
bank‘s issued identification and personal identification number (PIN). The banking system
verifies the user and provides access to the requested services, the rage of products and service
offered by each bank on the internet differs widely in there content.Most banks offer net banking
as a value-added service. Net banking has also led to the emergent of new banks, which operate
only through the internet and do not exists physically, Such banks are called ―virtual‖ banks or
―Internet Only‖ banks.
A couple of years ago, there was a belief even among bankers that customers opening new
accounts wanted the online banking facility, just to ‗feel good‘ and very few of them actually
used that services. Today, bankers believe that the trend from ‗nice to have‘ is changing to ‗need
to have‘ .after all it depends on how busy a person is.
Services provided through Internet Banking
1) account information
2) E-cheques (Online Fund Transfer)
3) Bill Payment Service
4) Requests And Intimations
5) Demat Account share trading
Internet Banking
Net banking is a web-based service that enables the banks authorized customers to access their
account information. It allows the customers to log on to the banks website with the help of
bank‘s issued identification and personal identification number (PIN). The banking system
verifies the user and provides access to the requested services, the rage of products and service
offered by each bank on the internet differs widely in there content.Most banks offer net banking
as a value-added service. Net banking has also led to the emergent of new banks, which operate
only through the internet and do not exists physically, Such banks are called ―virtual‖ banks or
―Internet Only‖ banks.
A couple of years ago, there was a belief even among bankers that customers opening new
accounts wanted the online banking facility, just to ‗feel good‘ and very few of them actually
used that services. Today, bankers believe that the trend from ‗nice to have‘ is changing to ‗need
to have‘ .after all it depends on how busy a person is.
Services provided through Internet Banking
1) account information
2) E-cheques (Online Fund Transfer)
3) Bill Payment Service
4) Requests And Intimations
5) Demat Account share trading
18
Account information
Provides summary of all bank accounts.Allow transaction tracking which enables retrieval of
transaction details based on cheque number, transaction amount, and date.Provide account
statement and transaction reports used on user-defined criteria. Customers can even download
and print the statement of accounts.
E-Cheques ( Online Fund Transfer)
Customer can transfer funds:Transfer funds between accounts, even if they are in different
branches‘ cities Customer can also transfer funds to any person having an account with the same
bank anytime, anywhere, using third party funds transfer option.
Bill Payment Service
Banks Bill Pay is the easiest way to manage bills. A/c holder can pay their regular monthly bills
i.e. telephone, electricity, mobile phone, insurance etc. at anytime, anywhere for free.Saves time
and effort. Make bill payments at customer‘s convenience form their home or office.Lets a/c
holders check their hill amount before it is debited form their account. No debits to account
without their knowledge. No more missed deadlines, no more loss of interest – a/c holder can
schedule their bills in advance, avoid missing the bill deadlines as well as earn extra interest on
their money.Track payment history – all payments to a biller are stored automatically for future
reference. No queuing up at collection centers or writing cheque any more! Just a few clicks and
customers account will be debited for the exact amount they ask.
Account information
Provides summary of all bank accounts.Allow transaction tracking which enables retrieval of
transaction details based on cheque number, transaction amount, and date.Provide account
statement and transaction reports used on user-defined criteria. Customers can even download
and print the statement of accounts.
E-Cheques ( Online Fund Transfer)
Customer can transfer funds:Transfer funds between accounts, even if they are in different
branches‘ cities Customer can also transfer funds to any person having an account with the same
bank anytime, anywhere, using third party funds transfer option.
Bill Payment Service
Banks Bill Pay is the easiest way to manage bills. A/c holder can pay their regular monthly bills
i.e. telephone, electricity, mobile phone, insurance etc. at anytime, anywhere for free.Saves time
and effort. Make bill payments at customer‘s convenience form their home or office.Lets a/c
holders check their hill amount before it is debited form their account. No debits to account
without their knowledge. No more missed deadlines, no more loss of interest – a/c holder can
schedule their bills in advance, avoid missing the bill deadlines as well as earn extra interest on
their money.Track payment history – all payments to a biller are stored automatically for future
reference. No queuing up at collection centers or writing cheque any more! Just a few clicks and
customers account will be debited for the exact amount they ask.
19
Requests And Intimations
Can electronically submit a request for:
Cheque-book
Stop payment instructions
Opening a fixed deposit
Opening a recurring deposit
Intimate for the loss of ATM card
Register online for phone and mobile banking
Cheque status Online application for debit card
Issue a DD or a Banker‘s cheque form account at special rates. Just select the account
to be debited form and give details of the amount, location and beneficiary. The demand
draft will be couriered to a/c holder at their mailing address.
Customers can get their applications for issuance of Letters of Credit and Bank
Guarantees processed online.
Book your Railways Ticket Online.
Requests And Intimations
Can electronically submit a request for:
Cheque-book
Stop payment instructions
Opening a fixed deposit
Opening a recurring deposit
Intimate for the loss of ATM card
Register online for phone and mobile banking
Cheque status Online application for debit card
Issue a DD or a Banker‘s cheque form account at special rates. Just select the account
to be debited form and give details of the amount, location and beneficiary. The demand
draft will be couriered to a/c holder at their mailing address.
Customers can get their applications for issuance of Letters of Credit and Bank
Guarantees processed online.
Book your Railways Ticket Online.
20
Demat Account and Share Trading
Demat Account
Demat is commonly used abbreviation of ‗Dematerialisation‘, which is a process where by
securities like share, debentures are converted from the ‗material‘ (paper documents)unto
electronic data and stored in the computer of an electronic Depository.
A depository is a security ‗banks,‘ where dematerialized physical securities are held in custody,
and form where they can be traded. This facilitates faster, risk-free and low cost settlement.
Share Trading
In share trading a customer can buy and sell securities online without stepping into a broker‘s
office. Once the share are dematerialized then the trading can be done from home or office. As
demat a/c are directly linked to the customer‘s bank a/c, so there is no need to write cheque for
the payments or to fill up the slips to deposit the cheque.Amount for the purchase and sale of
securities is automatically debited or credited to their bank a/c. it also brings the same
convenience while investing in Mutual funds also Hassle free and Paperless.
Demat Account and Share Trading
Demat Account
Demat is commonly used abbreviation of ‗Dematerialisation‘, which is a process where by
securities like share, debentures are converted from the ‗material‘ (paper documents)unto
electronic data and stored in the computer of an electronic Depository.
A depository is a security ‗banks,‘ where dematerialized physical securities are held in custody,
and form where they can be traded. This facilitates faster, risk-free and low cost settlement.
Share Trading
In share trading a customer can buy and sell securities online without stepping into a broker‘s
office. Once the share are dematerialized then the trading can be done from home or office. As
demat a/c are directly linked to the customer‘s bank a/c, so there is no need to write cheque for
the payments or to fill up the slips to deposit the cheque.Amount for the purchase and sale of
securities is automatically debited or credited to their bank a/c. it also brings the same
convenience while investing in Mutual funds also Hassle free and Paperless.
21
ATMs
Automated Teller Machines or 24-hour Tellers are electronic terminals that let you bank almost
anytime. To withdraw cash, make deposits, or transfer funds between accounts,you generally
insert an ATM card and enter your PIN. Some financial institution and ATM owners charge a
fee, particularly to consumers who don‘t have accounts with the moron transactions at remote
locations. Generally, ATMs must tell you they charge a fee and its amount on or at the terminal
screen before you complete the transaction. Check the rules of our institution and ATMs you use
to find out when or whether a fee is charged.
It won‘t be just if I start explaining what an ATM is. ATMs and cash dispensers are by far the
largest investment ever made in electronic self-service by financial institutions.Over US$ 40
billion has been invested in simply buying these machines and many times that in running them.
There are now over 1.1 million machines operating in over 140countries worldwide.
The banks are losing the cashiers checks, check cashing and even cash dispensing to the-stores
and grocery stores. They are asleep at the switch and watching more transactions walk away to
convenience stores and supermarkets that provide 24 hour access and integrated transactions.
ATMs do provide a larger set of functions, such as check cashing, ticket sales or money orders.
We already know that cash dispensing as a dedicated function is a sustainable applications, the
question is whether that application can be incorporated successfully into a more complex
consumer product that offers multiple applications.It is worth noting that, due to market
saturation, overall ATM usage is increasing while transaction volume on a per-ATM basis is
now in decline.
ATMs
Automated Teller Machines or 24-hour Tellers are electronic terminals that let you bank almost
anytime. To withdraw cash, make deposits, or transfer funds between accounts,you generally
insert an ATM card and enter your PIN. Some financial institution and ATM owners charge a
fee, particularly to consumers who don‘t have accounts with the moron transactions at remote
locations. Generally, ATMs must tell you they charge a fee and its amount on or at the terminal
screen before you complete the transaction. Check the rules of our institution and ATMs you use
to find out when or whether a fee is charged.
It won‘t be just if I start explaining what an ATM is. ATMs and cash dispensers are by far the
largest investment ever made in electronic self-service by financial institutions.Over US$ 40
billion has been invested in simply buying these machines and many times that in running them.
There are now over 1.1 million machines operating in over 140countries worldwide.
The banks are losing the cashiers checks, check cashing and even cash dispensing to the-stores
and grocery stores. They are asleep at the switch and watching more transactions walk away to
convenience stores and supermarkets that provide 24 hour access and integrated transactions.
ATMs do provide a larger set of functions, such as check cashing, ticket sales or money orders.
We already know that cash dispensing as a dedicated function is a sustainable applications, the
question is whether that application can be incorporated successfully into a more complex
consumer product that offers multiple applications.It is worth noting that, due to market
saturation, overall ATM usage is increasing while transaction volume on a per-ATM basis is
now in decline.
22
Cash withdrawal
Withdraw upto Rs.15,000/- per day from your account. Fast cash options provides the facility of
withdrawing prefixed amounts. Ultra Fast Cash option allows you to withdraw Rs.3000/- in one
shot.
Balance Enquiry
Know your ledger balance and available balance
Mini Statement
Get a printout of your last 8 transactions and your current balance.
Deposit Cash / Cheques
Available at all full function ATMs. Customers can deposit both cash and cheques. Cash
deposited in ATMs will be credited to the account on the same day (provided cash is deposited
before the clearing) and cheques are sent for clearing on the next working day.
Funds Transfer:
Transfer funds from one account to another linked account in the same branch.
PIN Changes
Change the Personal Identification Number (PIN) of ATM or Debit card.
Cash withdrawal
Withdraw upto Rs.15,000/- per day from your account. Fast cash options provides the facility of
withdrawing prefixed amounts. Ultra Fast Cash option allows you to withdraw Rs.3000/- in one
shot.
Balance Enquiry
Know your ledger balance and available balance
Mini Statement
Get a printout of your last 8 transactions and your current balance.
Deposit Cash / Cheques
Available at all full function ATMs. Customers can deposit both cash and cheques. Cash
deposited in ATMs will be credited to the account on the same day (provided cash is deposited
before the clearing) and cheques are sent for clearing on the next working day.
Funds Transfer:
Transfer funds from one account to another linked account in the same branch.
PIN Changes
Change the Personal Identification Number (PIN) of ATM or Debit card.
23
Payments
The latest feature of our ATMs, this functionality can be used for payment of bills, making
donations to temples / trusts, buying internet packs, airtime recharges for prepaid mobile phones
and much more.
Others
Request for a checkbook from our ATMs and our concerned branch will dispatch it such that it
reaches you within 10 working days.
ATM Advantages
24-hour access to cash
You can withdraw up to Rs. 10,000/- per day on your ATM Card. The fast cash option saves your
time by providing the cash in denominations of Rs. 500/-
Balance inquiry
Your updated balance will appear on the screen and will also be printed on the transaction slip.
Mini-statement request
Get details of the last 9 transactions on your account with the mini-statement, along with your
balance.
Cheque book request
Send us a request for a cheque book or account statement it will arrive at your doorstep.
Funds transfer
Transfer money from one of your accounts to another. It‘s easy, select the account from which
you want to transfer, then indicate the amount and the account to which your want it transferred.
Both accounts must be linked to your ATM card and customer ID. A maximum of 5 saving and 5
Current accounts can be linked.
PIN change
Your can conveniently charge your (PIN) given at the time of opening your account)whenever
you wish. Stay totally in control and ensure complete security for your ATM Card.
Bill Pay
Pay your cellular, telephone and electricity bills using your ATM Card.
Payments
The latest feature of our ATMs, this functionality can be used for payment of bills, making
donations to temples / trusts, buying internet packs, airtime recharges for prepaid mobile phones
and much more.
Others
Request for a checkbook from our ATMs and our concerned branch will dispatch it such that it
reaches you within 10 working days.
ATM Advantages
24-hour access to cash
You can withdraw up to Rs. 10,000/- per day on your ATM Card. The fast cash option saves your
time by providing the cash in denominations of Rs. 500/-
Balance inquiry
Your updated balance will appear on the screen and will also be printed on the transaction slip.
Mini-statement request
Get details of the last 9 transactions on your account with the mini-statement, along with your
balance.
Cheque book request
Send us a request for a cheque book or account statement it will arrive at your doorstep.
Funds transfer
Transfer money from one of your accounts to another. It‘s easy, select the account from which
you want to transfer, then indicate the amount and the account to which your want it transferred.
Both accounts must be linked to your ATM card and customer ID. A maximum of 5 saving and 5
Current accounts can be linked.
PIN change
Your can conveniently charge your (PIN) given at the time of opening your account)whenever
you wish. Stay totally in control and ensure complete security for your ATM Card.
Bill Pay
Pay your cellular, telephone and electricity bills using your ATM Card.
24
Tele banking or Phone Banking:
Telephone banking is relatively new Electronic Banking Product. However it is fastly becoming
one of the most popular products.Customer can perform a number of transactions from the
convenience of their own home or office; in fact from anywhere they have access to phone.
Customers can do following:-
Check balances and statement information
Transfer funds from one account to another
Pay certain bills
Order statements or cheque books
Demand draft request.
This facility is available with the help of Voice Response System (VRS). This system basically,
accepts only TONE dialed input. Like the ATM customer has to follow particular process,
initially account number and telephone PIN are fed for the process to start. Also the VRS system
provides the users within additional facilities such as changing existing password with the new
desired, information about new products,current interest rates etc.
Tele banking or Phone Banking:
Telephone banking is relatively new Electronic Banking Product. However it is fastly becoming
one of the most popular products.Customer can perform a number of transactions from the
convenience of their own home or office; in fact from anywhere they have access to phone.
Customers can do following:-
Check balances and statement information
Transfer funds from one account to another
Pay certain bills
Order statements or cheque books
Demand draft request.
This facility is available with the help of Voice Response System (VRS). This system basically,
accepts only TONE dialed input. Like the ATM customer has to follow particular process,
initially account number and telephone PIN are fed for the process to start. Also the VRS system
provides the users within additional facilities such as changing existing password with the new
desired, information about new products,current interest rates etc.
25
Mobile Banking:
Mobile banking comes in as a part of the banks initiative to offer multiple channels banking
providing convenience for its customer. A versatile multifunctional, free service that is
accessible and viewable on the monitor of mobile phone. Mobile phones are playing great role in
Indian banking- both directly and indirectly. They are being used both as banking and other
channels.
Mobile Banking refers to provision and availment of banking- and financial services with the
help of mobile telecommunication devices.The scope of offered services may include facilities to
conduct bank and stock market transactions, to administer accounts and to access customised
information."
According to this model Mobile Banking can be said to consist of three inter-related concepts:
Mobile Accounting
Mobile Brokerage
Mobile Financial Information Services
Most services in the categories designated Accounting and Brokerage are transaction-based. The
non-transaction-based services of an informational nature are however essential for conducting
transactions - for instance, balance inquiries might be needed before committing a money
remittance. The accounting and brokerage services are therefore offered invariably in
combination with information services. Information services, on the other hand, may be offered
as an independent module.
Mobile phone banking may also be used to help in business situations as well as financial.
Mobile Banking:
Mobile banking comes in as a part of the banks initiative to offer multiple channels banking
providing convenience for its customer. A versatile multifunctional, free service that is
accessible and viewable on the monitor of mobile phone. Mobile phones are playing great role in
Indian banking- both directly and indirectly. They are being used both as banking and other
channels.
Mobile Banking refers to provision and availment of banking- and financial services with the
help of mobile telecommunication devices.The scope of offered services may include facilities to
conduct bank and stock market transactions, to administer accounts and to access customised
information."
According to this model Mobile Banking can be said to consist of three inter-related concepts:
Mobile Accounting
Mobile Brokerage
Mobile Financial Information Services
Most services in the categories designated Accounting and Brokerage are transaction-based. The
non-transaction-based services of an informational nature are however essential for conducting
transactions - for instance, balance inquiries might be needed before committing a money
remittance. The accounting and brokerage services are therefore offered invariably in
combination with information services. Information services, on the other hand, may be offered
as an independent module.
Mobile phone banking may also be used to help in business situations as well as financial.
26
Payment Cards (Debits/Credit Card)
The card industry, which is growing at the rate of 20% per annum, is flooded with cards ranging
from gold, silver, global, smart to secure the list is endless. From just two players in early 80s,
the industry now houses over 10 major players vying for a major chunk of the card pie.
Currently four major bishops are ruling the card empire – Citibank, Standard Chartered Bank.
HSBC and State Bank of India (SBI). The industry, which is catering to over 3.8 million card
users, is expected to double by the fiscal 2003. Accordingly to a study conducted by State bank
of India, Citibank is the dominant player, having issued 1.5 million cards so far. Stanch art
follows way behind with 0.67 million,while Hong Kong Bank has 0.3 million credit card
customers. Among the nationalized banks, SBI tops the list with 0.28 million cards, followed by
Blanks of Baroda at 0.22 million.
The credit card market in India, which started out in 1981, is on the verge of an unprecedented
boom. Between 1987 and 2000, the market has virtually grown to over 3.8 million cards with
almost 25-30% growth in new cardholders.
The latest innovation in credit cards is the introduction of a magnetic slip in the card for use in
withdrawing cash at the automatic teller machine (ATM), of which abut 60000 are already in
existence in the world. In India also ATMs have made late appearance, but now spreading very
rapidly. As per statistics published by RBI there are 895 ATMs in India as at the end of the year
2001 but it is also regularly increasing.
Advantages of Credit Card
The following are the advantages of credit cards:
1. The credit card holders need not to carry either traveler‘s cheques or cash with them and they
are free from the security of cash.
2. Traveling facilities are available in hotels, restaurants and airways to the cardholders.
3. Each card holder gets insurance facility which is up to one lakh on ordinary insurance.
Payment Cards (Debits/Credit Card)
The card industry, which is growing at the rate of 20% per annum, is flooded with cards ranging
from gold, silver, global, smart to secure the list is endless. From just two players in early 80s,
the industry now houses over 10 major players vying for a major chunk of the card pie.
Currently four major bishops are ruling the card empire – Citibank, Standard Chartered Bank.
HSBC and State Bank of India (SBI). The industry, which is catering to over 3.8 million card
users, is expected to double by the fiscal 2003. Accordingly to a study conducted by State bank
of India, Citibank is the dominant player, having issued 1.5 million cards so far. Stanch art
follows way behind with 0.67 million,while Hong Kong Bank has 0.3 million credit card
customers. Among the nationalized banks, SBI tops the list with 0.28 million cards, followed by
Blanks of Baroda at 0.22 million.
The credit card market in India, which started out in 1981, is on the verge of an unprecedented
boom. Between 1987 and 2000, the market has virtually grown to over 3.8 million cards with
almost 25-30% growth in new cardholders.
The latest innovation in credit cards is the introduction of a magnetic slip in the card for use in
withdrawing cash at the automatic teller machine (ATM), of which abut 60000 are already in
existence in the world. In India also ATMs have made late appearance, but now spreading very
rapidly. As per statistics published by RBI there are 895 ATMs in India as at the end of the year
2001 but it is also regularly increasing.
Advantages of Credit Card
The following are the advantages of credit cards:
1. The credit card holders need not to carry either traveler‘s cheques or cash with them and they
are free from the security of cash.
2. Traveling facilities are available in hotels, restaurants and airways to the cardholders.
3. Each card holder gets insurance facility which is up to one lakh on ordinary insurance.
27
4. It has become a status symbol. Railway tickets are available on special windows.Extra charges
are made by the railway and the cancellation of tickets is also allowed and the amount is directly
credited in the bank account of the card holder.
5. The business of the card holder individuals or institution has been because the businessmen
are assured for the payment as the transactions have been finalized on the basis of credit cards.
6. Credit cards enhance the credit of banks and the credit of new customers and consumers is
enhanced.
7. Deposits in saving and current accounts increase.
8. Service charges on credit card increase the profitability of banks.
Disadvantages of Credit cards its own Disadvantages as discussed below:
1. Credit card is a contact in advance and if the card holder does not make payment,the recovery
by bank becomes difficult.
2. Card holders spend in excess of their incomes and it poses the problem of recovery form them.
3. Bank‘s profitability is adversely affected due to increase in overdraft of cardholders and
difficulties in repayment by them.
Future of Credit Cards
In India this facility has increased the business activities; middle and upper middle classes are
availing this facility. It has become popular and status symbol in our country hence the prospects
of credit cards are bright.
Smart Cards
A smartcard resembles a credit card except that it has a microchip embedded within it, which
allows the smartcard to store information and sometimes to even perform simple calculations.
Common smartcard chips typically holds about 8,000 bytes(characters) of information, which
enables the smartcard to perform a variety of functions such as identification , storing bank
account information an holding digital cash.
A number of smartcards are on the market today, and these are used in a wide range of
applications. Mondex has received a lot of recognition in the financial press, and several banks
4. It has become a status symbol. Railway tickets are available on special windows.Extra charges
are made by the railway and the cancellation of tickets is also allowed and the amount is directly
credited in the bank account of the card holder.
5. The business of the card holder individuals or institution has been because the businessmen
are assured for the payment as the transactions have been finalized on the basis of credit cards.
6. Credit cards enhance the credit of banks and the credit of new customers and consumers is
enhanced.
7. Deposits in saving and current accounts increase.
8. Service charges on credit card increase the profitability of banks.
Disadvantages of Credit cards its own Disadvantages as discussed below:
1. Credit card is a contact in advance and if the card holder does not make payment,the recovery
by bank becomes difficult.
2. Card holders spend in excess of their incomes and it poses the problem of recovery form them.
3. Bank‘s profitability is adversely affected due to increase in overdraft of cardholders and
difficulties in repayment by them.
Future of Credit Cards
In India this facility has increased the business activities; middle and upper middle classes are
availing this facility. It has become popular and status symbol in our country hence the prospects
of credit cards are bright.
Smart Cards
A smartcard resembles a credit card except that it has a microchip embedded within it, which
allows the smartcard to store information and sometimes to even perform simple calculations.
Common smartcard chips typically holds about 8,000 bytes(characters) of information, which
enables the smartcard to perform a variety of functions such as identification , storing bank
account information an holding digital cash.
A number of smartcards are on the market today, and these are used in a wide range of
applications. Mondex has received a lot of recognition in the financial press, and several banks
28
have already conducted trials with its smartcard. Wells Fargo & Co., a major California bank
based in San Francisco, will issue Mondex smartcards to all of its online banking customers in
2998, a number which could reach into the hundreds of thousands. Because MasterCard
International holds a 51% stake in Mondex, it could become the defacto international standard
for bank-issued smartcards.
Smart Cards – The new Innovation
A smart card is a miniaturized personal computer (PC), which can be used for a dazzling array of
applications, and also as ‗digital‘ cash. It contains a micro processor,memory and tailored
software. The software security system used for these cards is almost as fool proof as those used
by nuclear establishments and leading international banks! Smart cards can manage security
procedures using passwords and state-of-the-art encryption techniques. Further, identity traits
such as digitized photos, signatures and fingerprints being placed on the card make it fraud-
proof.
have already conducted trials with its smartcard. Wells Fargo & Co., a major California bank
based in San Francisco, will issue Mondex smartcards to all of its online banking customers in
2998, a number which could reach into the hundreds of thousands. Because MasterCard
International holds a 51% stake in Mondex, it could become the defacto international standard
for bank-issued smartcards.
Smart Cards – The new Innovation
A smart card is a miniaturized personal computer (PC), which can be used for a dazzling array of
applications, and also as ‗digital‘ cash. It contains a micro processor,memory and tailored
software. The software security system used for these cards is almost as fool proof as those used
by nuclear establishments and leading international banks! Smart cards can manage security
procedures using passwords and state-of-the-art encryption techniques. Further, identity traits
such as digitized photos, signatures and fingerprints being placed on the card make it fraud-
proof.
29
1.9 HISTORY OF E- BANKING
The precursor for the modern home online banking services were the distance banking services
over electronic media from the early '80s. The term online became popular in the late '80s and
refers to the use of a terminal, keyboard and TV (or monitor) to access the banking system using
a phone line. ‗Home banking‘ can also refer to the use of a numeric keypad to send tones down a
phone line with instructions to the bank. Online services started in New York in 1981 when four
of the city‘s major banks (Citibank, Chase Manhattan, Chemical and Manufacturers Hanover)
offered home banking services
using the videotex system. Because of the commercial failure of videotex these banking services
never became popular except in France where the use of videotex (Minitel) was subsidised by
the telecom provider and the UK, where the Prestel system was used.
The UK‘s first home online banking services were set up by the Nottingham Building Society
(NBS) in 1983 ("History of the Nottingham" Retrieved on 2007-12-14.). The system used was
based on the UK's Prestel system and used a computer, such as the BBC Micro, or keyboard
(Tandata Td1400) connected to the telephone system and television set. The system (known as
'Homelink') allowed on-line viewing of statements, bank transfers and bill payments. In order to
make bank transfers and bill payments, a written instruction giving details of the intended
recipient had to be sent to the NBS who set the details up on the Homelink system. Typical
recipients were gas, electricity and telephone companies and accounts with other banks. Details
of payments to be made were input into the NBS system by the account holder via Prestel. A
cheque was then sent by NBS to the payee and an advice giving details of the payment was sent
to the account holder. BACS was later used to transfer the payment directly. Stanford Federal
Credit Union was the first financial institution to offer online internet banking services to all of
its members in Oct, 1994.
1.9 HISTORY OF E- BANKING
The precursor for the modern home online banking services were the distance banking services
over electronic media from the early '80s. The term online became popular in the late '80s and
refers to the use of a terminal, keyboard and TV (or monitor) to access the banking system using
a phone line. ‗Home banking‘ can also refer to the use of a numeric keypad to send tones down a
phone line with instructions to the bank. Online services started in New York in 1981 when four
of the city‘s major banks (Citibank, Chase Manhattan, Chemical and Manufacturers Hanover)
offered home banking services
using the videotex system. Because of the commercial failure of videotex these banking services
never became popular except in France where the use of videotex (Minitel) was subsidised by
the telecom provider and the UK, where the Prestel system was used.
The UK‘s first home online banking services were set up by the Nottingham Building Society
(NBS) in 1983 ("History of the Nottingham" Retrieved on 2007-12-14.). The system used was
based on the UK's Prestel system and used a computer, such as the BBC Micro, or keyboard
(Tandata Td1400) connected to the telephone system and television set. The system (known as
'Homelink') allowed on-line viewing of statements, bank transfers and bill payments. In order to
make bank transfers and bill payments, a written instruction giving details of the intended
recipient had to be sent to the NBS who set the details up on the Homelink system. Typical
recipients were gas, electricity and telephone companies and accounts with other banks. Details
of payments to be made were input into the NBS system by the account holder via Prestel. A
cheque was then sent by NBS to the payee and an advice giving details of the payment was sent
to the account holder. BACS was later used to transfer the payment directly. Stanford Federal
Credit Union was the first financial institution to offer online internet banking services to all of
its members in Oct, 1994.
30
1.10 USAGE OF E-BANKING
The rise in the e-commerce and the use of internet in its facilitation along with the enhanced
online security of transactions and sensitive information has been the core reason for the
penetration of online banking in everyday life. According to the latest official figures from the
office of National Statistics ( ONS 2007) indicate that subscriptions to the internet has grown
more than 50% from 25 million in 2005 to 45million in 2007 in India. It has also been estimated
that 60% of the population in India use internet in their daily lives. The fundamental shift
towards the involvement of the customer in the financial service provision with the help of the
technology especially internet has helped to reduce the costs of financial institutions as well as
helped client to use the service at anytime and from virtually anywhere with access to an internet
connection. The use of electronic banking has removed personnel that facilitate the transactions
and has placed additional responsibilities on the customers to transact with the service. The
computerization of the banking operations has made maximum impact on:-
1)Internal Accounting System
2)Customer service
3)Diversification of system
1.10 USAGE OF E-BANKING
The rise in the e-commerce and the use of internet in its facilitation along with the enhanced
online security of transactions and sensitive information has been the core reason for the
penetration of online banking in everyday life. According to the latest official figures from the
office of National Statistics ( ONS 2007) indicate that subscriptions to the internet has grown
more than 50% from 25 million in 2005 to 45million in 2007 in India. It has also been estimated
that 60% of the population in India use internet in their daily lives. The fundamental shift
towards the involvement of the customer in the financial service provision with the help of the
technology especially internet has helped to reduce the costs of financial institutions as well as
helped client to use the service at anytime and from virtually anywhere with access to an internet
connection. The use of electronic banking has removed personnel that facilitate the transactions
and has placed additional responsibilities on the customers to transact with the service. The
computerization of the banking operations has made maximum impact on:-
1)Internal Accounting System
2)Customer service
3)Diversification of system
31
1.11 INTERNET BANKING VERSUS TRADITIONAL BANKING
In spite of so many facilities that Internet banking offers us, we still seem to trust our traditional
method of banking and is reluctant to use online banking. But here are few cases where Internet
banking will turn out to be a better option in terms of saving your money.
'Stop payment' done through Internet banking will not cost any extra fees but when done through
the branch, the bank may charge you Rs 50 per cheque plus the service tax.
Through Internet banking, you can check your transactions at any time of the day, and as many
times as you want to. On the other hand, in a traditional method, you get quarterly statements
from the bank and if you request for a statement at your required time, it may turn out to be an
expensive affair. The branch may charge you Rs 25 per page, which includes only 30
transactions. Moreover, the bank branch would take eight days to deliver it at your doorstep.
If the fund transfer has to be made outstation, where the bank does not have a branch,the bank
would demand outstation charges. Whereas with the help of online banking,it will be absolutely
free for you. As per the Internet and Mobile Association of India's report on online banking
2006, "There are many advantages of online banking.It is convenient, it isn't bound by
operational timings, there are no geographical barriers and the services can be offered at a
miniscule cost."
1.11 INTERNET BANKING VERSUS TRADITIONAL BANKING
In spite of so many facilities that Internet banking offers us, we still seem to trust our traditional
method of banking and is reluctant to use online banking. But here are few cases where Internet
banking will turn out to be a better option in terms of saving your money.
'Stop payment' done through Internet banking will not cost any extra fees but when done through
the branch, the bank may charge you Rs 50 per cheque plus the service tax.
Through Internet banking, you can check your transactions at any time of the day, and as many
times as you want to. On the other hand, in a traditional method, you get quarterly statements
from the bank and if you request for a statement at your required time, it may turn out to be an
expensive affair. The branch may charge you Rs 25 per page, which includes only 30
transactions. Moreover, the bank branch would take eight days to deliver it at your doorstep.
If the fund transfer has to be made outstation, where the bank does not have a branch,the bank
would demand outstation charges. Whereas with the help of online banking,it will be absolutely
free for you. As per the Internet and Mobile Association of India's report on online banking
2006, "There are many advantages of online banking.It is convenient, it isn't bound by
operational timings, there are no geographical barriers and the services can be offered at a
miniscule cost."
32
1.12Challenges and indicators of e-banking
Infrastructural barriers are one of the challenges for implementation and development of
e-banking.
Knowledge barriers are one of the challenges for implementation and development of e-
banking.
Legal and security issues are one of the challenges for implementation and development
of e-banking.
Social and cultural barriers are one of the challenges for implementation and
development of e-banking.
Economic factors are one of the challenges for implementation and development of e-
banking.
Management and banking issues are one of the challenges for implementation and
development of e-banking.
1.12Challenges and indicators of e-banking
Infrastructural barriers are one of the challenges for implementation and development of
e-banking.
Knowledge barriers are one of the challenges for implementation and development of e-
banking.
Legal and security issues are one of the challenges for implementation and development
of e-banking.
Social and cultural barriers are one of the challenges for implementation and
development of e-banking.
Economic factors are one of the challenges for implementation and development of e-
banking.
Management and banking issues are one of the challenges for implementation and
development of e-banking.
33
1.13E-Banking Transactions
Informational website
Informational websites provide customers access to general information about the financial
institution and its products or services. Risk issues examiners should consider when reviewing
informational websites include:-
Potential liability and consumer violations for inaccurate or incomplete information about
products, services, and pricing presented on the
Potential access to confidential financial institution or customer information if the
website is not properly isolated from the financial institution‘s internal network;
Potential liability for spreading viruses and other malicious code to computers
communicating with the institution‘s website; and
Negative public perception if the institution‘s on-line services are disrupted or if its
website is defaced or otherwise presents inappropriate or offensive material.
1.13E-Banking Transactions
Informational website
Informational websites provide customers access to general information about the financial
institution and its products or services. Risk issues examiners should consider when reviewing
informational websites include:-
Potential liability and consumer violations for inaccurate or incomplete information about
products, services, and pricing presented on the
Potential access to confidential financial institution or customer information if the
website is not properly isolated from the financial institution‘s internal network;
Potential liability for spreading viruses and other malicious code to computers
communicating with the institution‘s website; and
Negative public perception if the institution‘s on-line services are disrupted or if its
website is defaced or otherwise presents inappropriate or offensive material.
34
Translational Website
Transactional websites provide customers with the ability to conduct transactions through the
financial institution‘s website by initiating banking transactions or buying products and services.
Banking transactions can range from something as basic as a retail account balance inquiry to a
large business-to-business funds transfer. E-banking services, like those delivered through other
delivery channels, are typically classified based on the type of customer they support.
Since transactional websites typically enable the electronic exchange of confidential customer
information and the transfer of funds, services provided through these websites expose a
financial institution to higher risk than basic informational websites. Wholesale e-banking
systems typically expose financial institutions to the highest risk per transaction, since
commercial transactions usually involve larger dollar amounts. In addition to the risk issues
associated with informational websites, examiners reviewing transactional e-banking services
should consider the following issues:
Security controls for safeguarding customer information;
Authentication processes necessary to initially verify the identity of new customers
and authenticate existing customers who access e-banking services;
Liability for unauthorized transactions;
Losses from fraud if the institution fails to verify the identity of individuals or businesses
applying for new accounts or credit on-line;
Possible violations of laws or regulations pertaining to consumer privacy, anti-money
laundering, anti-terrorism, or the content, timing, or delivery of required consumer
disclosures; and
Negative public perception, customer dissatisfaction, and potential liability resulting
from failure to process third-party payments as directed or within specified time frames,
lack of availability of on-line services, or unauthorized access to confidential customer
information during transmission or storage.
Translational Website
Transactional websites provide customers with the ability to conduct transactions through the
financial institution‘s website by initiating banking transactions or buying products and services.
Banking transactions can range from something as basic as a retail account balance inquiry to a
large business-to-business funds transfer. E-banking services, like those delivered through other
delivery channels, are typically classified based on the type of customer they support.
Since transactional websites typically enable the electronic exchange of confidential customer
information and the transfer of funds, services provided through these websites expose a
financial institution to higher risk than basic informational websites. Wholesale e-banking
systems typically expose financial institutions to the highest risk per transaction, since
commercial transactions usually involve larger dollar amounts. In addition to the risk issues
associated with informational websites, examiners reviewing transactional e-banking services
should consider the following issues:
Security controls for safeguarding customer information;
Authentication processes necessary to initially verify the identity of new customers
and authenticate existing customers who access e-banking services;
Liability for unauthorized transactions;
Losses from fraud if the institution fails to verify the identity of individuals or businesses
applying for new accounts or credit on-line;
Possible violations of laws or regulations pertaining to consumer privacy, anti-money
laundering, anti-terrorism, or the content, timing, or delivery of required consumer
disclosures; and
Negative public perception, customer dissatisfaction, and potential liability resulting
from failure to process third-party payments as directed or within specified time frames,
lack of availability of on-line services, or unauthorized access to confidential customer
information during transmission or storage.
35
1.14Technology in Banking
The introduction of new technologies has radically transformed banking transactions. In the past,
customers had to come physically into the bank branch to do banking transactions including
transfers, deposits and withdrawals. Banks had to employ several tellers to physically make all
those transactions. Automatic Teller Machines (ATMs)were then introduced which allowed
people to do their banking on their own, practically anytime and anywhere. This helped the
banks cut down on the number of tellers and focus on managing money. The Internet then
brought another venue with which customers could do banking, reducing the need for ATMs.
Online banking allowed customers to do financial transactions from their PCs at home via
Internet. Now, with the emergence of Wireless Application Protocol (WAP) technology, banks
can use the infrastructure and applications developed for the Internet and move it to mobile
phones. Now people no longer have to be tied to a desktop PC to do their banking. The
WAPinterface is much faster and convenient than the Internet, allowing customers to see account
details, transaction details, make bill payments, and even check credit card balance.
The cost of the average payment transaction on the Internet is minimum. Several studies found
that the estimated transaction cost through mobile phone is16 cents, a fully computerized bank
using its own software is 26 cents, a telephone bank is 54 cents, a bank branch, $1.27, an ATM,
27 cents, and on the Internet it costs just 13 cents. As a result, the use of the Internet for
commercial transactions started to gain momentum in1995. More than 2,000 banks in the world
now have transactional websites and the growth of online lending solutions is making them more
cost efficient. Recent developments are now encouraging banks to target small businesses as a
separate lending category online.
Banks are increasingly building payment infrastructure with various security mechanisms(SSL,
SET) because there is tremendous potential for profit, as more and more payments will pass
through the Internet. However, the challenge for banks is to offer a payments back-bone system
that will be open enough to support multiple payment instruments (credit cards, debit cards,
direct debit to accounts, e-checks, digital money etc.) and scalable enough to allow for a stable
service regardless of the workload.
1.14Technology in Banking
The introduction of new technologies has radically transformed banking transactions. In the past,
customers had to come physically into the bank branch to do banking transactions including
transfers, deposits and withdrawals. Banks had to employ several tellers to physically make all
those transactions. Automatic Teller Machines (ATMs)were then introduced which allowed
people to do their banking on their own, practically anytime and anywhere. This helped the
banks cut down on the number of tellers and focus on managing money. The Internet then
brought another venue with which customers could do banking, reducing the need for ATMs.
Online banking allowed customers to do financial transactions from their PCs at home via
Internet. Now, with the emergence of Wireless Application Protocol (WAP) technology, banks
can use the infrastructure and applications developed for the Internet and move it to mobile
phones. Now people no longer have to be tied to a desktop PC to do their banking. The
WAPinterface is much faster and convenient than the Internet, allowing customers to see account
details, transaction details, make bill payments, and even check credit card balance.
The cost of the average payment transaction on the Internet is minimum. Several studies found
that the estimated transaction cost through mobile phone is16 cents, a fully computerized bank
using its own software is 26 cents, a telephone bank is 54 cents, a bank branch, $1.27, an ATM,
27 cents, and on the Internet it costs just 13 cents. As a result, the use of the Internet for
commercial transactions started to gain momentum in1995. More than 2,000 banks in the world
now have transactional websites and the growth of online lending solutions is making them more
cost efficient. Recent developments are now encouraging banks to target small businesses as a
separate lending category online.
Banks are increasingly building payment infrastructure with various security mechanisms(SSL,
SET) because there is tremendous potential for profit, as more and more payments will pass
through the Internet. However, the challenge for banks is to offer a payments back-bone system
that will be open enough to support multiple payment instruments (credit cards, debit cards,
direct debit to accounts, e-checks, digital money etc.) and scalable enough to allow for a stable
service regardless of the workload.
36
The market for Electronic Bill Presentment and Payment (EBPP) is growing. According to a
study, 18 million households in the US are expected to pay their bills online by 2003compared to
2 million households in 2001. As more number of bill payers are getting online, several banks
are making efforts to find ways to meet the growing needs of EBPP.Established banks can
emerge as key online integrators of customer bills and can capitalize on this high potential
market. Growing with the popularity of EBPP is also the paying of multiple bills at a single site
known as bill aggregation. Offering online bill payment and aggregation will increase the
competitiveness and attractiveness of e- banking services and will allow banks to generate
service-fee income from the billers.
In the B2B segment, the customer value proposition for online bill payment is more compelling.
B2B e-commerce is expected to grow from $406 bn in 2000 to $2.7 tn by2004, and more than
half of all transactions will be routed through online B2Bmarketplaces. There is a need for
automated payment systems to reduce cost and human error, and enhance cash-flow
management. To meet this need, a group of banks and non-financial institutions led by Citibank
and Wells Fargo have formed a company called Financial Settlements Matrix (FSMx). It
provides business buyers and sellers with access to secure payment processing, invoicing and
other services that participating financial services firms offer.
A B2B marketplace would provide minimum value to its customers if it just matches buyers and
sellers, leaving the financial aspects of transactions to be handled through traditional non-
Internet channels. This new form of collaboration between partners with complementary core
competencies may prove to be an effective business model for e-business.
The market for Electronic Bill Presentment and Payment (EBPP) is growing. According to a
study, 18 million households in the US are expected to pay their bills online by 2003compared to
2 million households in 2001. As more number of bill payers are getting online, several banks
are making efforts to find ways to meet the growing needs of EBPP.Established banks can
emerge as key online integrators of customer bills and can capitalize on this high potential
market. Growing with the popularity of EBPP is also the paying of multiple bills at a single site
known as bill aggregation. Offering online bill payment and aggregation will increase the
competitiveness and attractiveness of e- banking services and will allow banks to generate
service-fee income from the billers.
In the B2B segment, the customer value proposition for online bill payment is more compelling.
B2B e-commerce is expected to grow from $406 bn in 2000 to $2.7 tn by2004, and more than
half of all transactions will be routed through online B2Bmarketplaces. There is a need for
automated payment systems to reduce cost and human error, and enhance cash-flow
management. To meet this need, a group of banks and non-financial institutions led by Citibank
and Wells Fargo have formed a company called Financial Settlements Matrix (FSMx). It
provides business buyers and sellers with access to secure payment processing, invoicing and
other services that participating financial services firms offer.
A B2B marketplace would provide minimum value to its customers if it just matches buyers and
sellers, leaving the financial aspects of transactions to be handled through traditional non-
Internet channels. This new form of collaboration between partners with complementary core
competencies may prove to be an effective business model for e-business.
37
1.15 The E-Banking Strategies
Though e-banking offers vast opportunities, yet even less than one in three banks have ane-
banking strategy in place. According to a study, less than 15 percent of banks with transactional
websites will realize profits directly attributable to those sites. Hence, banks must recognize the
seriousness of the challenge ahead and develop a strategy that will enable them to leverage the
opportunities presented by the Internet.
No single e-banking strategy is right for every banking company. But whether they adopt an
offensive or a defensive posture, they must constantly re-evaluate their strategy. In the fast-paced
e-economy, banks have to keep up with the constantly evolving business models and technology
innovations of the Internet space. Early e-business adopter like Wells Fargo not only entered the
e-banking industry first but also showed flexibility to change as the market developed. Not many
banks have been as e-business-savvy. But the pressure is now building for all banks to develop
sound e-business strategies that will attract and retain increasingly discriminating customers.
The major problem with the banks, which have already invested huge amounts in their online
initiatives, is that their online offerings remain unprofitable. Though banks have enrolled some
existing customers in their online programs, they are not getting customers in large numbers.
This has made banks wonder whether there is any value in the online channel. Just enrolling
customers for online banking may not be sufficient until and unless they use the site actively.
Banks must make efforts to increase their site usage by customers and effectively co-ordinate the
online channel with branches and call centers.Then only they will be able to derive maximum
value that includes cost reduction, cross-selling opportunities, and higher customer retention.
Customers have some rational reasons for staying offline. Some of these reasons include
usability features of the site, concerns about security and frequent complaints that signing up is
complicated and time-consuming. Banks can solve these problems by refocusing investment on
improving the site's basic functionality and user-friendliness, and avoiding advanced features
that most customers neither understand nor value. Banks must make efforts to familiarize
customers with their sites and show them how easy and efficient the online channel is to use.
1.15 The E-Banking Strategies
Though e-banking offers vast opportunities, yet even less than one in three banks have ane-
banking strategy in place. According to a study, less than 15 percent of banks with transactional
websites will realize profits directly attributable to those sites. Hence, banks must recognize the
seriousness of the challenge ahead and develop a strategy that will enable them to leverage the
opportunities presented by the Internet.
No single e-banking strategy is right for every banking company. But whether they adopt an
offensive or a defensive posture, they must constantly re-evaluate their strategy. In the fast-paced
e-economy, banks have to keep up with the constantly evolving business models and technology
innovations of the Internet space. Early e-business adopter like Wells Fargo not only entered the
e-banking industry first but also showed flexibility to change as the market developed. Not many
banks have been as e-business-savvy. But the pressure is now building for all banks to develop
sound e-business strategies that will attract and retain increasingly discriminating customers.
The major problem with the banks, which have already invested huge amounts in their online
initiatives, is that their online offerings remain unprofitable. Though banks have enrolled some
existing customers in their online programs, they are not getting customers in large numbers.
This has made banks wonder whether there is any value in the online channel. Just enrolling
customers for online banking may not be sufficient until and unless they use the site actively.
Banks must make efforts to increase their site usage by customers and effectively co-ordinate the
online channel with branches and call centers.Then only they will be able to derive maximum
value that includes cost reduction, cross-selling opportunities, and higher customer retention.
Customers have some rational reasons for staying offline. Some of these reasons include
usability features of the site, concerns about security and frequent complaints that signing up is
complicated and time-consuming. Banks can solve these problems by refocusing investment on
improving the site's basic functionality and user-friendliness, and avoiding advanced features
that most customers neither understand nor value. Banks must make efforts to familiarize
customers with their sites and show them how easy and efficient the online channel is to use.
38
Integrating the online channel with the rest of the bank is another important issue that banks must
focus upon. This is important because nearly all the value of the online channel is realized offline
_ in cross sales completed in other channels and in cost reductions. An actively used online
channel should also serve as a medium to sell banking services for the branch staff, the call
center, and the relationship manager.Integrated channels working together are far more effective
than a group of channels working without any coordination.
To facilitate this integration, banks must formulate paths that people in various
customer segments are likely to take among the channels. The interactions in each channel can
then be worked around these paths. For example, a call center representative must work out
which channels the customer used before coming to her, and which channels the customer is
likely to visit next. Each channel must have entry and exit points that must welcome customers
and then send to other channels. Hence, the overall goal of banks is to create a seamless
multichannel experience.
On the other hand, those banks that are planning to build their online businesses will have to
understand several strategic issues like do they have the right business model for e- banking?
How should they price their e-banking products and services? Bankers planning to move into e-
banking have to explore different options, make investments and have to develop a variety of
partnerships. They have to put their time and efforts to identify the best opportunities. In the case
of traditional banks, if they are too aggressive in using price incentives to build their e-business,
they risk the profitability of their traditional business. However, if they do not offer sufficient
price incentives for customers to bank online, their efforts to build a sound e-banking business
may not fructify.
Banks have to be creative in rethinking organizational structures and management processes.
Traditional banks that are conservative in nature may find it difficult to attract and retain online
talent. Moreover, getting people in the traditional business to help build an e-enterprise would
not be an easy task. To make all this happen, requires a major revision of incentive systems,
planning and budgeting processes, and management roles.Banks can exploit the opportunities
Integrating the online channel with the rest of the bank is another important issue that banks must
focus upon. This is important because nearly all the value of the online channel is realized offline
_ in cross sales completed in other channels and in cost reductions. An actively used online
channel should also serve as a medium to sell banking services for the branch staff, the call
center, and the relationship manager.Integrated channels working together are far more effective
than a group of channels working without any coordination.
To facilitate this integration, banks must formulate paths that people in various
customer segments are likely to take among the channels. The interactions in each channel can
then be worked around these paths. For example, a call center representative must work out
which channels the customer used before coming to her, and which channels the customer is
likely to visit next. Each channel must have entry and exit points that must welcome customers
and then send to other channels. Hence, the overall goal of banks is to create a seamless
multichannel experience.
On the other hand, those banks that are planning to build their online businesses will have to
understand several strategic issues like do they have the right business model for e- banking?
How should they price their e-banking products and services? Bankers planning to move into e-
banking have to explore different options, make investments and have to develop a variety of
partnerships. They have to put their time and efforts to identify the best opportunities. In the case
of traditional banks, if they are too aggressive in using price incentives to build their e-business,
they risk the profitability of their traditional business. However, if they do not offer sufficient
price incentives for customers to bank online, their efforts to build a sound e-banking business
may not fructify.
Banks have to be creative in rethinking organizational structures and management processes.
Traditional banks that are conservative in nature may find it difficult to attract and retain online
talent. Moreover, getting people in the traditional business to help build an e-enterprise would
not be an easy task. To make all this happen, requires a major revision of incentive systems,
planning and budgeting processes, and management roles.Banks can exploit the opportunities
39
provided by the Internet if they demonstrate courage,use their imagination, and take decisive
action.
While most of the banks have started focusing on e-banking activities, a new challenge in the
form of mobile banking has emerged. M-Banking is both an additional opportunity for banks to
offer their online services and an additional channel from which to access new customers and
cross-sell to existing customers. Rapidly changing lifestyles of customers and their demand for
more speed and convenience has subdued the role of branch banking to a certain extent. With
the proliferation of new technologies, disintermediation of traditional channels is being
witnessed. Banks can go beyond their traditional role as a channel for banking/financial services
and can become providers of personalized information. They can successfully leverage m-
banking to:
Provide personalized products and services to specific customers and thus increase
customer loyalty.
Exploit additional sources of revenue from subscriptions, transactions and third- party
referrals.
M-Banking gives banks the opportunity to significantly expand their customer relationships
provided they position themselves effectively. To leverage these opportunities, they must form
structured alliances with service affiliates, and acquire competitive advantage in collecting,
processing and deploying customer information.
provided by the Internet if they demonstrate courage,use their imagination, and take decisive
action.
While most of the banks have started focusing on e-banking activities, a new challenge in the
form of mobile banking has emerged. M-Banking is both an additional opportunity for banks to
offer their online services and an additional channel from which to access new customers and
cross-sell to existing customers. Rapidly changing lifestyles of customers and their demand for
more speed and convenience has subdued the role of branch banking to a certain extent. With
the proliferation of new technologies, disintermediation of traditional channels is being
witnessed. Banks can go beyond their traditional role as a channel for banking/financial services
and can become providers of personalized information. They can successfully leverage m-
banking to:
Provide personalized products and services to specific customers and thus increase
customer loyalty.
Exploit additional sources of revenue from subscriptions, transactions and third- party
referrals.
M-Banking gives banks the opportunity to significantly expand their customer relationships
provided they position themselves effectively. To leverage these opportunities, they must form
structured alliances with service affiliates, and acquire competitive advantage in collecting,
processing and deploying customer information.
40
Company Profile
2.1 STATE BANK OF INDIA(SBI)
SBI Internet Banking service has made it completely easy for the customers to carry out a
number of activities with their bank account. Today, you can check your account balance, get
account statement, make third party transfer or keep track of your transactions with the help of
SBI Bank Internet banking facility. Gone are the days when you have to go to your nearest
branch just to update your passbook or make balance enquiry. SBI Bank online banking service
allows the customers to enjoy a number of online products and services that include;
E-Ticketing
SBI E-Tax
Bill Payment
E-Payment
Fund Transfer
Third Party Transfer
Demand Draft
Cheque Book Request
Account Opening Request
Demat Account Statement
Donation
OnlineSBI is the SBI Internet Banking website and it offers online access to bank
accounts of retail and corporate customers from anywhere and at anytime. This banking
site is developed by highly talented professionals using the most advanced technologies
and tools. OnlineSBI supports unified and safe access to bank accounts with over 11,000
branches of the bank across the country. The site is certified by Verisign, which is the
leading Internet certification authority in the world. With the help of this website, the
bank offers a number of corporate and retail banking products and value added services
without any hassle.
Company Profile
2.1 STATE BANK OF INDIA(SBI)
SBI Internet Banking service has made it completely easy for the customers to carry out a
number of activities with their bank account. Today, you can check your account balance, get
account statement, make third party transfer or keep track of your transactions with the help of
SBI Bank Internet banking facility. Gone are the days when you have to go to your nearest
branch just to update your passbook or make balance enquiry. SBI Bank online banking service
allows the customers to enjoy a number of online products and services that include;
E-Ticketing
SBI E-Tax
Bill Payment
E-Payment
Fund Transfer
Third Party Transfer
Demand Draft
Cheque Book Request
Account Opening Request
Demat Account Statement
Donation
OnlineSBI is the SBI Internet Banking website and it offers online access to bank
accounts of retail and corporate customers from anywhere and at anytime. This banking
site is developed by highly talented professionals using the most advanced technologies
and tools. OnlineSBI supports unified and safe access to bank accounts with over 11,000
branches of the bank across the country. The site is certified by Verisign, which is the
leading Internet certification authority in the world. With the help of this website, the
bank offers a number of corporate and retail banking products and value added services
without any hassle.
41
In order to enjoy the online banking services offered by SBI, you are first required to
have a bank account with the bank. Then only you can apply for internet banking facility.
SBI Internet banking application form is easily available at any branch of the bank. In
this application form, you will have to enter your account details, personal details and the
address where you would like your internet banking kit to be posted. If the net banking
kit is available with the bank branch at the time of your application then the bank will
offer it immediately. This kit contains your initial Internet banking User ID and Password
through which you can login to your account.
SBI Net Banking activation takes 24 hours and you are required to make your login with
the user ID and password after 24 hours from when you get the internet banking kit from
the bank. You can also search for several internet banking branches of SBI Bank with the
help of OnlineSBI. It is recommended that you change your username and password as
soon as you login with the details provided in the Internet banking kit.
In order to enjoy the online banking services offered by SBI, you are first required to
have a bank account with the bank. Then only you can apply for internet banking facility.
SBI Internet banking application form is easily available at any branch of the bank. In
this application form, you will have to enter your account details, personal details and the
address where you would like your internet banking kit to be posted. If the net banking
kit is available with the bank branch at the time of your application then the bank will
offer it immediately. This kit contains your initial Internet banking User ID and Password
through which you can login to your account.
SBI Net Banking activation takes 24 hours and you are required to make your login with
the user ID and password after 24 hours from when you get the internet banking kit from
the bank. You can also search for several internet banking branches of SBI Bank with the
help of OnlineSBI. It is recommended that you change your username and password as
soon as you login with the details provided in the Internet banking kit.
42
2.2 General Information:
You should register for OnlineSBI with the branch where you maintain the account.
If you maintain accounts at more than one branch, you need to register at each branch
separately.
Normally OnlineSBI services will be open to the customer only after he/she
acknowledges the receipt of password.
We invite you to visit your account on the site frequently for transacting business or
viewing account balances. If you believe that any information relating to your account
has a discrepancy, please bring it to the notice of the branch by e-mail or letter.
In a joint account, all account holders are entitled to register, as users of OnlineSBI, but
transactions would be permitted based on the account operation rights recorded at the
branch. (To begin with the services will be extended only to single or Joint E or S
accounts only).
All accounts at the branch whether or not listed in the registration form, will be available
on the OnlineSBI. However the applicant has the option to selectively view the accounts
on the OnlineSBI.
2.2 General Information:
You should register for OnlineSBI with the branch where you maintain the account.
If you maintain accounts at more than one branch, you need to register at each branch
separately.
Normally OnlineSBI services will be open to the customer only after he/she
acknowledges the receipt of password.
We invite you to visit your account on the site frequently for transacting business or
viewing account balances. If you believe that any information relating to your account
has a discrepancy, please bring it to the notice of the branch by e-mail or letter.
In a joint account, all account holders are entitled to register, as users of OnlineSBI, but
transactions would be permitted based on the account operation rights recorded at the
branch. (To begin with the services will be extended only to single or Joint E or S
accounts only).
All accounts at the branch whether or not listed in the registration form, will be available
on the OnlineSBI. However the applicant has the option to selectively view the accounts
on the OnlineSBI.
43
2.3 Security:
The Branch where the customer maintains his/her account will assign:
1. User-id &
2. Password
The User-id and Password given by the branch must be replaced by User Name and
Password of customer's choice at the time of first log-on. This is mandatory.
Bank will make reasonable use of available technology to ensure security and to prevent
unauthorised access to any of these services. The OnlineSBI service is VERISIGN
certified which guarantees, that it is a secure site.It means that
1. You are dealing with SBI at that moment.
2. The two-way communication is secured with 256-bit SSL encryption technology,
which ensures the confidentiality of the data during transmission.
These together with access control methods designed on the site would afford a high level
of security to the transactions you conduct.SBI will soon be implementing PKI/Digital
Signature.
You are welcome to access OnlineSBI from anywhere anytime. However, as a matter of
precaution, customers may avoid using PCs with public access.
There is no way to retrieve a password from the system. Therefore if a customer forgets
his/her password, he/she must approach the branch for re-registration.
2.3 Security:
The Branch where the customer maintains his/her account will assign:
1. User-id &
2. Password
The User-id and Password given by the branch must be replaced by User Name and
Password of customer's choice at the time of first log-on. This is mandatory.
Bank will make reasonable use of available technology to ensure security and to prevent
unauthorised access to any of these services. The OnlineSBI service is VERISIGN
certified which guarantees, that it is a secure site.It means that
1. You are dealing with SBI at that moment.
2. The two-way communication is secured with 256-bit SSL encryption technology,
which ensures the confidentiality of the data during transmission.
These together with access control methods designed on the site would afford a high level
of security to the transactions you conduct.SBI will soon be implementing PKI/Digital
Signature.
You are welcome to access OnlineSBI from anywhere anytime. However, as a matter of
precaution, customers may avoid using PCs with public access.
There is no way to retrieve a password from the system. Therefore if a customer forgets
his/her password, he/she must approach the branch for re-registration.
44
2.4 Bank's terms:
1. All requests received from customers are logged for backend fulfillment and are effective
from the time they are recorded at the branch.
2. Rules and regulations applicable to normal banking transactions in India will be
applicable mutatis mutandis for the transactions executed through this site.
3. The OnlineSBI service cannot be claimed as a right. The bank may also convert this into
a discretionary service anytime.
4. Dispute between the customer and the Bank in this service is subject to the jurisdiction of
the courts in the Republic of India and governed by the laws prevailing in India.
5. The Bank reserves the right to modify the services offered or the Terms of service of
OnlineSBI. The changes will be notified to the customers through a notification on the
Site.
2.5 Customer's obligations:
1. The customer has an obligation to maintain secrecy in regard to Username & Password
registered with the Bank. The bank presupposes that login using valid Username and
Password is a valid session initiated by none other than the customer.
2. Transaction executed through a valid session will be construed by SBI to have emanated
from the registered customer and will be binding on him / her.
3. The customer will not attempt or permit others to attempt accessing the OnlineSBI
through any unlawful means.
2.4 Bank's terms:
1. All requests received from customers are logged for backend fulfillment and are effective
from the time they are recorded at the branch.
2. Rules and regulations applicable to normal banking transactions in India will be
applicable mutatis mutandis for the transactions executed through this site.
3. The OnlineSBI service cannot be claimed as a right. The bank may also convert this into
a discretionary service anytime.
4. Dispute between the customer and the Bank in this service is subject to the jurisdiction of
the courts in the Republic of India and governed by the laws prevailing in India.
5. The Bank reserves the right to modify the services offered or the Terms of service of
OnlineSBI. The changes will be notified to the customers through a notification on the
Site.
2.5 Customer's obligations:
1. The customer has an obligation to maintain secrecy in regard to Username & Password
registered with the Bank. The bank presupposes that login using valid Username and
Password is a valid session initiated by none other than the customer.
2. Transaction executed through a valid session will be construed by SBI to have emanated
from the registered customer and will be binding on him / her.
3. The customer will not attempt or permit others to attempt accessing the OnlineSBI
through any unlawful means.
45
2.6 Do's & Don'ts:
The customer should keep his/her ID and password strictly confidential and should not
divulge the same to any other person. Any loss sustained by the customer due to non-
compliance of this condition will be at his/her own risk and responsibility and the Bank
will not be liable for the same in any manner.
The customer is free to choose a password of his/her own for OnlineSBI services. As a
precaution a password that is generic in nature, guessable or inferable personal data such
as name, address, telephone number, driving license, date of birth, etc. is best avoided.
Similarly it is a good practice to commit the password to memory rather than writing it
down somewhere.
It may not be safe to leave the computer unattended during a valid session. This might
give access to your account information to others.
2.6 Do's & Don'ts:
The customer should keep his/her ID and password strictly confidential and should not
divulge the same to any other person. Any loss sustained by the customer due to non-
compliance of this condition will be at his/her own risk and responsibility and the Bank
will not be liable for the same in any manner.
The customer is free to choose a password of his/her own for OnlineSBI services. As a
precaution a password that is generic in nature, guessable or inferable personal data such
as name, address, telephone number, driving license, date of birth, etc. is best avoided.
Similarly it is a good practice to commit the password to memory rather than writing it
down somewhere.
It may not be safe to leave the computer unattended during a valid session. This might
give access to your account information to others.
46
2.7 SWOT Analysis (SBI Bank)
Strengths
Brand name
Market Leader
Wide Distribution Network
Government Owned
Diversified Portfolio
2.7 SWOT Analysis (SBI Bank)
Strengths
Brand name
Market Leader
Wide Distribution Network
Government Owned
Diversified Portfolio
47
Weaknesses
Minor hindrances
Hierarchical management
Lags modernisation
Opportunities
Merger of associate banks with SBI
Opportunities for public sector banks
New Branches and ATM's
Expansion on Foregin soil
Threats
Advent of MNC banks
CRM
Private banks venturing into the rural
Employee Strike
Weaknesses
Minor hindrances
Hierarchical management
Lags modernisation
Opportunities
Merger of associate banks with SBI
Opportunities for public sector banks
New Branches and ATM's
Expansion on Foregin soil
Threats
Advent of MNC banks
CRM
Private banks venturing into the rural
Employee Strike
48
Q1)Do you have knowledge on E-banking?
YES
NO
Yes 90
No 10
Q1)Do you have knowledge on E-banking?
YES
NO
Yes 90
No 10
49
Q2)Do you use E-Banking?
Yes 75
No 25
YES
NO
Q2)Do you use E-Banking?
Yes 75
No 25
YES
NO
50
Q3)How oftenly do you use E-banking?
Daily 25
Weekly 20
Monthly 35
Never 20
0
5
10
15
20
25
DAILY WEEKLY MONTHLY NEVER
Q3)How oftenly do you use E-banking?
Daily 25
Weekly 20
Monthly 35
Never 20
0
5
10
15
20
25
DAILY WEEKLY MONTHLY NEVER
51
Q4)Which bank you prefer?
SBI 35
ICICI 25
HDFC 20
AXIS 10
OTHER 10
0
5
10
15
20
25
30
35
SBI ICICI HDFC AXIS OTHER
Q4)Which bank you prefer?
SBI 35
ICICI 25
HDFC 20
AXIS 10
OTHER 10
0
5
10
15
20
25
30
35
SBI ICICI HDFC AXIS OTHER
52
Q5)Which of the following E-Banking service you are aware of?
Internet Banking 33
Mobile Banking 19
Phone Banking 20
Debit Cards 28
0
5
10
15
20
25
30
35
Internet
Banking
Mobile BankingPhone BankingDebit Cards
Q5)Which of the following E-Banking service you are aware of?
Internet Banking 33
Mobile Banking 19
Phone Banking 20
Debit Cards 28
0
5
10
15
20
25
30
35
Internet
Banking
Mobile BankingPhone BankingDebit Cards
53
Q6)Do you feel E-banking System of the bank is customer friendly?
YES 75
NO 25
YES
NO
Q6)Do you feel E-banking System of the bank is customer friendly?
YES 75
NO 25
YES
NO
54
Q7)Do you think it saves time?
YES 90
NO 10
YES
NO
Q7)Do you think it saves time?
YES 90
NO 10
YES
NO
55
Q8)Do you think E-banking is safe?
Yes 80
No 20
Yes
No
Q8)Do you think E-banking is safe?
Yes 80
No 20
Yes
No
56
Q9)How banks provide E-banking details to you?
Via SMS 34
E-Mail 30
Brouchers 16
Others 20
0
5
10
15
20
25
30
35
Via SMS E-Mail Brouchers Others
Q9)How banks provide E-banking details to you?
Via SMS 34
E-Mail 30
Brouchers 16
Others 20
0
5
10
15
20
25
30
35
Via SMS E-Mail Brouchers Others
57
Q10)Do you trust the security of online banking service?
YES 70
NO 30
YES
NO
Q10)Do you trust the security of online banking service?
YES 70
NO 30
YES
NO
58
Q11) Do you think human contact is important for banking relation?
YES 55
NO 45
YES
NO
Q11) Do you think human contact is important for banking relation?
YES 55
NO 45
YES
NO
59
Q12)What are the main disadvantage of visiting bank branch?
WAITING 32
DISTANCE 43
Opening Times 15
Quality of Service 10
0
5
10
15
20
25
30
35
40
45
WAITING DISTANCEOPENING TIMESQUALITY OF
SERVICE
Q12)What are the main disadvantage of visiting bank branch?
WAITING 32
DISTANCE 43
Opening Times 15
Quality of Service 10
0
5
10
15
20
25
30
35
40
45
WAITING DISTANCEOPENING TIMESQUALITY OF
SERVICE
60
Q13)Have you ever visited your bank branch since you started using online
banking?
Yes 40
No 60
YES
NO
Q13)Have you ever visited your bank branch since you started using online
banking?
Yes 40
No 60
YES
NO
61
Q14)Are you satisfied with using E-banking?
YES
NO
Yes 77
No 23
Q14)Are you satisfied with using E-banking?
YES
NO
Yes 77
No 23
62
3.1 Data Collection
Data collection is the process of gathering and measuring information on variables of interest, in
an established systematic fashion that enables one to answer stated research questions, test
hypotheses, and evaluate outcomes. The data collection component of research is common to all
fields of study including physical and social sciences, humanities, business, etc. While methods
vary by discipline, the emphasis on ensuring accurate and honest collection remains the same.
The importance of ensuring accurate & appropriate data collection
Regardless of the field of study or preference for defining data (quantitative, qualitative),
accurate data collection is essential to maintaining the integrity of research. Both the selection of
appropriate data collection instruments (existing, modified, or newly developed) and clearly
delineated instructions for their correct use reduce the likelihood of errors occurring.
Consequences from improperly collected data include
inability to answer research questions accurately
inability to repeat and validate the study
distorted findings resulting in wasted resources
misleading other researchers to pursue fruitless avenues of investigation
compromising decisions for public policy
causing harm to human participants and animal subjects
While the degree of impact from faulty data collection may vary by discipline and the nature of
investigation, there is the potential to cause disproportionate harm when these research results
are used to support public policy recommendations.
3.1 Data Collection
Data collection is the process of gathering and measuring information on variables of interest, in
an established systematic fashion that enables one to answer stated research questions, test
hypotheses, and evaluate outcomes. The data collection component of research is common to all
fields of study including physical and social sciences, humanities, business, etc. While methods
vary by discipline, the emphasis on ensuring accurate and honest collection remains the same.
The importance of ensuring accurate & appropriate data collection
Regardless of the field of study or preference for defining data (quantitative, qualitative),
accurate data collection is essential to maintaining the integrity of research. Both the selection of
appropriate data collection instruments (existing, modified, or newly developed) and clearly
delineated instructions for their correct use reduce the likelihood of errors occurring.
Consequences from improperly collected data include
inability to answer research questions accurately
inability to repeat and validate the study
distorted findings resulting in wasted resources
misleading other researchers to pursue fruitless avenues of investigation
compromising decisions for public policy
causing harm to human participants and animal subjects
While the degree of impact from faulty data collection may vary by discipline and the nature of
investigation, there is the potential to cause disproportionate harm when these research results
are used to support public policy recommendations.
63
3.2DATA ANALYSIS
Keeping in view the nature of requirements of the study to collect all the relevant information
regarding the extent of awareness of the customers using E-banking facilities offered by bank,
direct personal interview method with structured questionnaire was adopted for the collection of
primary data. Secondary data has been collected through the various internet sites by surfing on
Internet and from the records available with the bank.
SECONDARY DATA:
Articles on E-Banking taken from journals, magazines published from time to time.
Through internet.
PRIMARY DATA
Questionnaire was used to collect primary data from respondents. The questionnaire was
structured type and contained questions relating to different dimensions of e-banking preferences
among service class such as level of usage, factors influencing the usage of e-banking services,
benefits accruing to the users of e-banking services,problems encountered. An attempt was also
made to elicit reasons for its non-usage.The questions included in the questionnaire were open-
ended and offering multiple choices.
SAMPLING SIZE
It indicates the numbers of people to be surveyed. Though large samples give more reliable
results than small samples but due to constraint of time and money, the sample size was
restricted to 100 respondents. The respondents belong to different peoples.
Area:-Vasant Leela,Thane(W) Date:-8/8/2012-10/8/2012
Approached:-120 Respond:-100 Rejection:-Nil
3.2DATA ANALYSIS
Keeping in view the nature of requirements of the study to collect all the relevant information
regarding the extent of awareness of the customers using E-banking facilities offered by bank,
direct personal interview method with structured questionnaire was adopted for the collection of
primary data. Secondary data has been collected through the various internet sites by surfing on
Internet and from the records available with the bank.
SECONDARY DATA:
Articles on E-Banking taken from journals, magazines published from time to time.
Through internet.
PRIMARY DATA
Questionnaire was used to collect primary data from respondents. The questionnaire was
structured type and contained questions relating to different dimensions of e-banking preferences
among service class such as level of usage, factors influencing the usage of e-banking services,
benefits accruing to the users of e-banking services,problems encountered. An attempt was also
made to elicit reasons for its non-usage.The questions included in the questionnaire were open-
ended and offering multiple choices.
SAMPLING SIZE
It indicates the numbers of people to be surveyed. Though large samples give more reliable
results than small samples but due to constraint of time and money, the sample size was
restricted to 100 respondents. The respondents belong to different peoples.
Area:-Vasant Leela,Thane(W) Date:-8/8/2012-10/8/2012
Approached:-120 Respond:-100 Rejection:-Nil
64
4.1Conclusion
This study attempted to identify key quality attributes of internet banking services by analyzing
internet banking customers & their comments on banking experience. The findings of this study
show that despite of many advantages of online banking. People still consider it as an alternative
for analyzing their bank records. Although every bank today provides the facility of online
banking but most of people use it only once a month. This reason is that in case of internet
banking interpersonal interaction with customers is seldom possible. Identification &
measurement of customer‘s expectations of the internet banking services provide a frame of
reference & their related quality dimension.
The main factors which persuade people to use onlinebanking are comfort & convenience & the
facility which attracts them most is quality& quantity of information. Therefore the
implementation of quality initiatives should begin with defining customer‘s need & preferences
& their related quality dimensionsThere is still a lot needed for the banking system to make
reforms and train theircustomers for using internet for their banking account. Going through the
survey themain problem lies that still customer have a fear of hacking of accounts and thus donot
go on for internet banking. Banks are trying their level best by providing the best security
options to the customers but then to there is lot of factors which betrays a customer from opening
an internet bank account.
Banks are providing free internet banking services also so that the customers can be attracted. By
asking the bank employs we came to know that maximum numbers of internet bank account
holders are youth and business man. E-Banking is an innovative tool that is fast becoming a
necessity. It is a successful strategic weapon for banks to remain profitable in a volatile and
competitive market place of today. If proper training should be given to customer by the bank
employs to open an account will be beneficial secondly the website should be made friendlier
from where the first time customers can directly make and access their accounts. In future, the
availability of technology to ensure safety and privacy of e-transactions and the RBI guidelines
on various aspects of internet banking will definitely help in rapid growth of internet banking in
India.
4.1Conclusion
This study attempted to identify key quality attributes of internet banking services by analyzing
internet banking customers & their comments on banking experience. The findings of this study
show that despite of many advantages of online banking. People still consider it as an alternative
for analyzing their bank records. Although every bank today provides the facility of online
banking but most of people use it only once a month. This reason is that in case of internet
banking interpersonal interaction with customers is seldom possible. Identification &
measurement of customer‘s expectations of the internet banking services provide a frame of
reference & their related quality dimension.
The main factors which persuade people to use onlinebanking are comfort & convenience & the
facility which attracts them most is quality& quantity of information. Therefore the
implementation of quality initiatives should begin with defining customer‘s need & preferences
& their related quality dimensionsThere is still a lot needed for the banking system to make
reforms and train theircustomers for using internet for their banking account. Going through the
survey themain problem lies that still customer have a fear of hacking of accounts and thus donot
go on for internet banking. Banks are trying their level best by providing the best security
options to the customers but then to there is lot of factors which betrays a customer from opening
an internet bank account.
Banks are providing free internet banking services also so that the customers can be attracted. By
asking the bank employs we came to know that maximum numbers of internet bank account
holders are youth and business man. E-Banking is an innovative tool that is fast becoming a
necessity. It is a successful strategic weapon for banks to remain profitable in a volatile and
competitive market place of today. If proper training should be given to customer by the bank
employs to open an account will be beneficial secondly the website should be made friendlier
from where the first time customers can directly make and access their accounts. In future, the
availability of technology to ensure safety and privacy of e-transactions and the RBI guidelines
on various aspects of internet banking will definitely help in rapid growth of internet banking in
India.
65
4.2Suggestion
We can see the time is changing and we the passage of time people are acceptingtechnology
there is still a lot of perceptual blocking which hampers the growth it‘s thenormal tendency of a
human not to have changes work on the old track, that‘s alsoone of the reason for the slow
acceptance of internet banking accounts.
Banks should obey the RBI norms and provide facilities as per the norms, whichare not
being followed by the banks. While the customer must be given theprompt services and
the bank officer should not have any fear on mind to providethe facilities as per RBI
norms to the units going sick.
Internet banking facility must be made available in all branches of these twoBanks.
Each section of these Banks should be computerized even in rural areas also.
Personalized banking should be given a thrust as more and more banks areachieving in
usual services.
Covering up the towns in rural areas with ATMs so that the people in those areascan also
avail better services.
Prompt dealing with permanent customers and speedy transactions withoutharassing the
customers.
Fair dealing with the customers. More contributions from the employees of thebank. The
staff should be co-operative, friendly and must be capable of understanding the problems
of the customers.
4.2Suggestion
We can see the time is changing and we the passage of time people are acceptingtechnology
there is still a lot of perceptual blocking which hampers the growth it‘s thenormal tendency of a
human not to have changes work on the old track, that‘s alsoone of the reason for the slow
acceptance of internet banking accounts.
Banks should obey the RBI norms and provide facilities as per the norms, whichare not
being followed by the banks. While the customer must be given theprompt services and
the bank officer should not have any fear on mind to providethe facilities as per RBI
norms to the units going sick.
Internet banking facility must be made available in all branches of these twoBanks.
Each section of these Banks should be computerized even in rural areas also.
Personalized banking should be given a thrust as more and more banks areachieving in
usual services.
Covering up the towns in rural areas with ATMs so that the people in those areascan also
avail better services.
Prompt dealing with permanent customers and speedy transactions withoutharassing the
customers.
Fair dealing with the customers. More contributions from the employees of thebank. The
staff should be co-operative, friendly and must be capable of understanding the problems
of the customers.
66
Give proper training to customers for using i-banking
Create a trust in mind of customers towards security of their accounts
Provide a platform from where the customers can access different accounts atsingle time
without extra charge.
Make their sites more users friendly. Customers should be motivated to use I-banking
facilities more.
Give proper training to customers for using i-banking
Create a trust in mind of customers towards security of their accounts
Provide a platform from where the customers can access different accounts atsingle time
without extra charge.
Make their sites more users friendly. Customers should be motivated to use I-banking
facilities more.
67
ANNEXURE
Questionnaire
Name of Participant:- Age:- Occupation:-
Address:-
Contact No:- E-Mail:-
Q1)Do you have a knowledge on E-banking?
□ Yes
□ No
Q2)Do you use E-banking?
□ Yes
□ No
Q3)How oftenly do you use E-banking?
□ Daily
□ Weekly
□ Monthly
□ Never
Q4)Which bank you prefer?
□ SBI
□ ICICI
□ HDFC
□ AXIS
□ Other
ANNEXURE
Questionnaire
Name of Participant:- Age:- Occupation:-
Address:-
Contact No:- E-Mail:-
Q1)Do you have a knowledge on E-banking?
□ Yes
□ No
Q2)Do you use E-banking?
□ Yes
□ No
Q3)How oftenly do you use E-banking?
□ Daily
□ Weekly
□ Monthly
□ Never
Q4)Which bank you prefer?
□ SBI
□ ICICI
□ HDFC
□ AXIS
□ Other
68
Q5)Why this bank?
□ Service is good
□ They provide security
□ Cheaper service Fees
Q6)Which of the following E-Banking service you are aware of?
□ Internet Banking
□ Mobile Banking
□ Phone Banking
□ Debit Cards
Q7)Do you feel E-Banking system of the bank is customer friendly?
□ Yes
□ No
Q8)Do you think it Saves time?
□ Yes
□ No
Q9)Do you think E-Banking is safe?
□ Yes
□ No
Q10)Any particular safety measure that your bank use?
Q5)Why this bank?
□ Service is good
□ They provide security
□ Cheaper service Fees
Q6)Which of the following E-Banking service you are aware of?
□ Internet Banking
□ Mobile Banking
□ Phone Banking
□ Debit Cards
Q7)Do you feel E-Banking system of the bank is customer friendly?
□ Yes
□ No
Q8)Do you think it Saves time?
□ Yes
□ No
Q9)Do you think E-Banking is safe?
□ Yes
□ No
Q10)Any particular safety measure that your bank use?
69
Q11)How banks provide E-Banking Details to you?
□ Via SMS
□ E-Mail
□ Brouchers
□ Others
Q12)Do you trust the security of online banking service?
□ Yes
□ No
Q13)Do you think human contact is important for banking relation?
□ Yes
□ No
Q14)What are the main disadvantage of visiting bank branch?
□ Waiting
□ Distance
□ Opening Times
□ Quality of Service
Q15)Have you ever visited your bank branch since you started using online
banking?
□ Yes
□ No
Q16)Are you satisfied with using E-Banking?
□ Yes
□ No
Q11)How banks provide E-Banking Details to you?
□ Via SMS
□ Brouchers
□ Others
Q12)Do you trust the security of online banking service?
□ Yes
□ No
Q13)Do you think human contact is important for banking relation?
□ Yes
□ No
Q14)What are the main disadvantage of visiting bank branch?
□ Waiting
□ Distance
□ Opening Times
□ Quality of Service
Q15)Have you ever visited your bank branch since you started using online
banking?
□ Yes
□ No
Q16)Are you satisfied with using E-Banking?
□ Yes
□ No
70
Bibliography
Websites Reffered
www.E-Banking.com
www.onlinesbi.com
www.bankersonline.com
Books Refferd
E-Banking global prespective
(Author-Vivek Gupta)
Bibliography
Websites Reffered
www.E-Banking.com
www.onlinesbi.com
www.bankersonline.com
Books Refferd
E-Banking global prespective
(Author-Vivek Gupta)
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