On-Line BankingOn-Line BankingGlobal Trends and Local ProspectsGlobal Trends and Local Prospects

RITUL SONANIARITUL SONANIA2005H1244162005H124416BITS-PilaniBITS-Pilani

44thth March 2006 March 2006

IndexIndex

Definition of Online bankingDefinition of Online bankingThe difference between PC banking and Internet Banking

The Importance of Online bankingThe Importance of Online bankingPro’s & Con’s

Past, Present & FuturePast, Present & Future Services OfferedUsage RatesFaced Problems, and problems solved

Online banking in IndiaEvolutionCurrent scenario

ConclusionConclusion

What is On-line BankingWhat is On-line BankingCONVENIENTCONVENIENT

FAST

CHEAPCHEAPINEVITABLEINEVITABLE

Why is it ImportantWhy is it Important

• For Customers:For Customers:• No need to mess up in queues.

• They need bank to be always available.

• For Banks:For Banks:• The most important reason being ECONOMICS.

• Each Internet transaction typically costs the bank one cent.

• Compare that with 27 cents for each ATM transaction.

• USD 1.07 every time user visits to a tellers window !!!

Cost per TransactionCost per Transaction

0

5

1015

20

25

3035

40

45

50

Branch PC Banking ATM Internet

PC vs. Internet BankingPC vs. Internet Banking

• PC Banking PC Banking (also known as Home Banking):(also known as Home Banking):• The use of proprietary financial software running on a

computer in the home.

• Direct dial-in into the banks servers.

• Internet Banking:Internet Banking:• Similar in functionality to PC Banking

• Allows access through a browser eliminating the need for proprietary software

• Can be accessed through a regular Internet connection, through the sites public web site.

Past, Present & FuturePast, Present & Future Past:Past:

– No automated services – Only brochureware

Present:Present:– Interactive Bank (Includes formatted email service, online calculator)– Intermediate Cyberbank (Lets customers consult accounts online)– Advanced Cyberbank (Fully transactional for transfers, payments, sales)

Future:Future:– Interfaced Services

[[a] Services Offereda] Services Offered

Past, Present & FuturePast, Present & Future

PastPast

PresentPresent

FutureFuture

Simple Simple BrochureBrochure

InterfacedInterfacedServicesServices

AdvancedAdvancedCyberbankCyberbank

IntermediateIntermediateCyberbankCyberbank

InteractiveInteractiveBankBank

AdvancedAdvancedBrochureBrochure

[[A] Services OfferedA] Services Offered

Services Presently AvailableServices Presently AvailableProduct / FunctionProduct / FunctionProduct / FunctionProduct / Function Standard ServicesStandard ServicesStandard ServicesStandard Services

ATMsATMs

CheckingChecking

Credit CardsCredit Cards

Customer ServicesCustomer Services

Home Equity LoansHome Equity Loans

ATM locator with addresses

Balance & transaction history Download to OFX enabled software

Available credit & Tn. History

FAQs and Emails/contacts

Rates & pay. Calculators Balance & Trans. History

InvestmentsInvestments Yields, Prospectus & Sign-up Forms

Services of the FutureServices of the Future

•PUSHPUSH services -services -alerts, emails, webcasting, outbound alerts, emails, webcasting, outbound

messagingmessaging

– Cellular Financial ProcessorsCellular Financial Processors LinkingLinking Banking Banking

with GSMwith GSM

– Privacy ProtectionPrivacy Protection

&& Fraud-prevention servicesFraud-prevention services

Past, Present & FuturePast, Present & Future[b][b] On-line Banking Penetration in U.S HouseholdsOn-line Banking Penetration in U.S Households

5 MM5 MM

199719979 MM9 MM

19981998

15 MM15 MM

19991999

22 MM22 MM

20002000

28 MM28 MM

20012001

Online banking ProblemsOnline banking Problems

On-line bankers need & want the following 5 features:

• A sophisticated security systemA sophisticated security system

• Low feesLow fees

• Real-time information & detailed account info.Real-time information & detailed account info.

• 24 Hour customer service features 24 Hour customer service features

• Wide array of productsWide array of products

Indian ScenarioIndian Scenario• Started ATM service in mid 90’s.Started ATM service in mid 90’s.

• Banking masters, ICICI & Citibank were on top in 2001.Banking masters, ICICI & Citibank were on top in 2001.

• By 2002, 50% major private sector banks were online By 2002, 50% major private sector banks were online (partially).(partially).

• By 2003, SBI started Internet Banking (on lower level).By 2003, SBI started Internet Banking (on lower level).

• By 2005 all major banks are providing full Internet Banking.By 2005 all major banks are providing full Internet Banking.

• There is no Internet-only bank in India.There is no Internet-only bank in India.

• Presently less than 2% of all Indian customers are using this.Presently less than 2% of all Indian customers are using this.

On-Line Banking is the kind of On-Line Banking is the kind of breakthrough service, like ATMs, that breakthrough service, like ATMs, that will change the defition of banking but will change the defition of banking but

most certainly traditional banking most certainly traditional banking survives in India.survives in India.

ConclusionConclusion