Presentation of e Banking

04/08/23 1CREATED BY:HAROON RASHEED

Contents What is E-Banking ? Development of E-Banking Types of Banking is Varied by Diagram Types of E-Banking E-Banking Products Benefits of E-Banking Disadvantages and Risk of E-banking Scope of E-Banking in Pakistan


What is E-Banking ?

E -banking is defined as:

Banking is a combination of two, Electronic technology and Banking.

Electronic Banking is a process by which a customer performs banking Transactions electronically without visiting a brick-and-mortar institutions

Electronic banking is also called Cyber banking , virtual banking and online banking .

In short, Electronic banking is the delivery of banking services to the customers through the use of electronic communication primarily the

internet

Electronic banking is one of the truly widespread avatars of E-commerce the world over.Various authors define E-Banking differently but the most definition depicting the meaning and features of E-Banking are as follows:


Information technology

BANK

Customer


Development of E-Banking

1980s :- Rapid development of the Internet

- TCP/IP system (communication system)

- E-commerce

Early 1980s :- Access to their accounts with the

computer of the bank

E-Banking made its debut in UK and USA during 1920s. It became prominently popular during 1960s through electronic funds transfers and credit cards. The concept of Web-based banking came into existence, in Europe and USA in the beginning of 1980s. It has been estimated that 40 percent of banking transactions would be done through net at present. Today, a wide range of services are being rendered by banks using the electronic media. Since many years, banks have been operating inter-city transfer of money through demand drafts, mail transfers and telephonic transfers from one city to other or even within the same city and also from bank to bank through telephones. It facilitates availability of funds the next day itself. It is a matter of great satisfaction that the e-Commerce is greatly assisted by the e-Banking through electronic cash cheques and smart cards. It is one of the trend setting paperless mode of effecting payment by two kinds; I) Electronic Credit Clearing, and II) Electronic Debt Clearing. The followings are other delivery channels of banking.

History



May 1995 : Wells Fargo - the first bank in the

world to offer customer access to their

accounts over the internet .

Allows customer to see their accounts online



Hong Kong (September 1999 ):

Bank of East Asia - first launched Internetbanking Mortgage applications personal loans stock trading


TYPES OF BANKNG IS VARIED

This is a direct banking because the customer get any services on the spot.

This is a online banking because the customer get services from many distance

This is a wireless or PDA(personal digital assistance) banking because in this type no any wire is connected and customer get services at any where. when he want.


Types of E-Banking

Automated Teller Machine (ATM) Tele banking or Phone Banking Mobile Banking Pc Banking & Digital TV banking Internet Banking Wireless or PDA Banking

MAIN TYPES OF E-BANKING SYSTEM


e-Banking CSFs

Bank A Bank B

Clearing

Settlement

e-Banking

e-Trade

e-Business e-Business

Bank Server


Automated Teller Machine (ATM)

Types of E-Banking

First electronic channel introduced

Accepting deposits and dispenses cash

Convenient in handling accounts

AUTOMATIC TELLER MACHINE (ATM): This system is known as "Any Time Money" because it allows customers who have an ATM card to withdraw money at any time from the bank without interacting with human teller. Since the ATM machine can be installed anywhere like petrol bunks, markets, railway stations etc, and can well be linked to the main computer. It allows customers to transact with the bank 24 hours a day and 365 days a year. They allow the customers to transfer money to and from accounts to view account information, to deposit cheques or cash, to order cheques, to receive cash etc. 04/08/23 16CREATED BY:HAROON RASHEED

Automated Teller Machine (ATM)

Types of E-Banking

Some of the advantages of ATM to customers are:-

Ability to draw cash after normal banking hours

Quicker than normal cashier service

Complete security as only the card holder knows the PIN

Does not just operate as a medium of obtaining cash.

Customer can sometimes use the services of other bank ATM.

Using an ATM, customers can access their bank accounts in order to make cash withdrawals (or credit card cash advances) and check their account balances. Many ATMs also allow people to deposit cash or checks, transfer money between their bank accounts, pay bills, or purchase goods and services.ATMs are known by various casual terms including cash machine, hole-in-the-wall, cash point or Banc mat (in Europe and Russia).


Tele banking or Phone Banking

Types of E-Banking

It came into operation in the 1970s in the developed countries like the US. It is accessible for corporate customers that have large volumes of payments to effect and dispose of a fully automated accounting system. They can establish a Computer to Computer link with their bank and in this way exchange truly paperless credit transfers which are handled all the way from the originator to the beneficiary's account without any paper involved.

HISTORY

This facility is available with the help of Voice Response System (VRS or IVR). 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.

How Its Work


Automatic balance voice out for the default account.

Balance inquiry and transaction inquiry in all

Inquiry of all term deposit account

Statement of account by Fax, e-mail or ordinary mail.

Cheque book request

Stop payment which is on-line and instantaneous

Transfer of funds with CBS which is automatic and instantaneous

Utility Bill Payments

Renewal of term deposit which is automatic and instantaneous

Voice out of last five transactions.

Types of E-Banking

Some of the advantages of TELE-BANKING are:-

Tele banking or Phone Banking


Types of E-Banking

Mobile banking comes in as a part of the banks initiative to offer multiple channel 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 banking- both directly and indirectly. They are being used both as banking and other channels.

Mobile Banking

Its most commonly used type is SMS Banking

SMS-bankingThe Short Message Service (SMS) is a GSM service to exchange text messages up to 140 byte (or 160 characters of 7 bit). The transmission of mobile-originated short messages is carried out by the short message service center (SMSC) of the particular network operator. The SMSC is receiving the message from the mobile device and routing it to the destination device. For generating mobile-terminated short messages, it is possible that a company or a special service provider runs an own SMSC. Thus, a bank could generate SMS from bank data like account balance or account movements and send it to the mobile device of the customer. This technique is used at SMS-banking: The customer sends an SMS with a request to the bank, and getsthe desired data as an answer. 04/08/23 20CREATED BY:HAROON RASHEED

Types of E-Banking

PC Banking - The forerunner to Internet banking has been around since the late 1980's and is still widely used today. Individual banks provide software which is loaded on to an SME's office computer. The SME can then access their bank account via a modem and telephone link to the bank. Access is not necessarily via the Internet.

PC & Digital TV Banking

PC Banking

Digital TV Banking- Using the standard digital reception equipment (set top box and remote control), users can access their bank account. Abbey National and HSBC services are available via Digital TV providers. One of its main selling points is that no account details are transmitted via the World Wide Web.

Digital TV Banking


Inter Net or Online Banking

Types of E-Banking

The advent of the Internet and the popularity of personal computers presented both an opportunity and a challenge for the banking industry. For years, financial institutions have used powerful computer networks to automate million of daily transactions; today, often the only paper record is the customer’s receipt at the point of sale. Now that their customers are connected to the Internet via personal computers, banks envision similar advantages by adopting those same internal electronic processes to home use. Banks view online banking as a powerful “value added” tool to attract and retain new customers while helping to eliminate costly paper handling and teller interactions in an increasingly competitive banking environment

Internet Banking lets you handle many banking transactions via your personal computer. For instance, you may use your computer to view your account balance, request transfers between accounts, and pay bills electronically. Internet banking system and method in which a personal computer is connected by a network service provider directly to a host computer system of a bank such that customer service requests can be processed automatically without need for intervention by customer service representatives. The system is capable of distinguishing between those customer service requests which are capable of automated fulfillment and those requests which require handling by a customer service representative. The system is integrated with the host computer system of the bank so that the remote banking customer can access other automated services of the bank. The method of the invention includes the steps of inputting a customer banking request from among a menu of banking requests at a remote personnel computer; transmitting the banking requests to a host computer over a network; receiving the request at the host computer; identifying the type of customer banking request received; automatic logging of the service request, comparing the received request to a stored table of request types, each of the request types having an attribute to indicate whether the request type is capable of being fulfilled by a customer service representative or by an automated system; and, depending upon the attribute, directing the request either to a queue for handling by a customer service representative or to a queue for processing by an automated system.

InterNe t

BANKINg


Three Types of Inter net Banking

This type of Internet banking systems and the customer. The interaction between the bank’s system and the customer. The interaction may be 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.

This is the basic level of Internet or E-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.

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.

Informational

Communicative

Transactional

Types of E-Banking


ADVANTAGES OF INTERNET BANKING

Convenience

Ubiquity

Transaction speed

Efficiency

Effectiveness

Types of E-Banking

Unlike your corner bank, online banking sites never close; they’re available 24 hours a day, seven days a week, and they’re only a mouse click away.

If you’re out of state or even out of the country when a money problem arises, you can log on instantly to your online bank and take care of business, 24\7.

Online bank sites generally execute and confirm transactions at or quicker than ATM processing speeds.You can access and

manage all of your bank accounts, even securities, from one secure site.

Many online banking sites now offer sophisticated tools, including account aggregation, stock quotes, rate alert and portfolio managing program to help you manage all of your assets more effectively. Most are also compatible with money managing programs such as quicken and Microsoft money


Types of E-Banking

Wireless banking is gaining popularity. With a phone number and a special PIN number a customer has

access to his account balance from his cellular device. Allows user to pay bills, transfer funds between accounts and

check accounts from anywhere. Net bank ,td bank offers wireless banking. Security is an important issue in Wireless Banking. Newsbytes reports that wireless banking users will number over

7 million in the US by 2005.

Wireless or PDA Banking


WAP-bankingThe most widespread solution for mobile banking is based on micro-websites following the WAP standard (Wireless Application Protocol). The function of WAP banking is in many ways similar to the function of Electronic banking using http. The client sends a request and gets a response with page content which is stored on or dynamically generated by a standard web server. The main difference is in the usage of a WAP gateway for the conversion of the protocols. At banks must be considered that very sensitive data is processed. While a normal content provider doesn’t has to observe special security precautions, and in some cases can even use the services of extern providers, has to secure its web server and WAP Gateway especially against unauthorized access. This is especially necessary because of the fact that inside the WAP Gateway the encryption protocol is converted from SSL/TLS to WTLS with the effect that data is not encrypted while it is processed. While authentication is assured via a PIN (personal identification number) of the user, authorization for transactions is realized via transaction numbers (TAN). This concept, known from the electronic banking, forces the user to carry a TAN list with him in order to make transactions

Wireless Application Protocol

Types of E-Banking


E-Banking Products

Bill payment service Fund transfer Credit card Debit Card Investing through Internet banking Railway pass Recharging your prepaid phone Shopping at your fingertips E-Cheque Smart Card

E-Banking Services


Bill payment service Each bank has tie-ups with various utility companies, service providers and insurance companies, across the country. It facilitates the payment of electricity and telephone bills, mobile phone, credit card and insurance premium bills. To pay bills, a simple one-time registration for each biller is to be completed. Standing instructions can be set, online to pay recurring bills, automatically. One-time standing instruction will ensure that bill payments do not get delayed due to lack of time. Most interestingly, the bank does not charge customers for online bill payment.

Bill payment service

Fund transfer Any amount can be transferred from one account to another of the same or any another bank. Customers can send money anywhere in India. Payee’s account number, his bank and the branch is needed to be mentioned after logging in the account. The transfer will take place in a day or so, whereas in a traditional method, it takes about three working days. ICICI Bank says that online bill payment service and fund transfer facility have been their most popular online services.

Fund transfer

Debit Card Debit Card is an identity card issued by a bank to a customer, which the customer can use to buy goods. The price of the goods is charged to customer's bank account.

Debit Card

E-Banking Services


Shopping at your fingertips Leading banks have tie ups with various shopping websites. With a range of all kind of products, one can shop online and the payment is also made conveniently through the account. One can also buy railway and air tickets through Internet banking.

Shopping at your fingertips

E-Banking Services


E-Banking Services


Benefits of E-Banking

Benefits for Banks

Benefits for Small to Medium Businesses

Benefits for Customers



Larger customer coverage

Reducing the costs of operations

Promoting their services and products internationally

Increasing the customer satisfaction and providing a personalized relationship with customers

Benefits for Banks


To run its operations more effectively

Lower cost than traditional financialmanagement mechanisms

Benefits for Small to Medium Businesses




Communication

- communicate easily

Environmental

- Abolishing the uses of paper

Others

- Offering one-stop-shop solutions

Benefits for Customers


Disadvantages on E-banking

A need for customer skill to deal with computers and browsers.

E.g. Elderly, Housewives → Inconvenient

Site change it will make the customer have some confusion or delay. Security Risk


Security Risk of E-Banking

Increasing number of fraud net bank websitesFake emails purporting to be sent from banksUse of Trojan Horse programs to capture user IDs and passwords


Scope of E-Banking In Pakistan

The State Bank Of Pakistan and other commercial banks are quite aware of the Changing needs of customers in Pakistan. The SBP has promulgated Electronic Transaction Ordinancein2002.which provides legal recognition for electronic settlement of transaction in banking sector. At the present the 40% of the commercial bank branches have been automated .The online banking which is the wave of future is now on the move in Pakistan and is progressing is satisfactorily

E-Banking in Pakistan Opportunities & Challenges

Generally speaking three factors

Quickness

Easiness

cheapness

Generally speaking, three factors, quickness, easiness and cheapness have become the catchwords for the competitiveness and usefulness of all the business operations. Particularly it is commonplace today to say that banking is undergoing a radical transformation. The symptoms are new products, new players, new channels etc. This transformation is taking place across all sectors of the banking industry. That is why banks urgently need to improve their ability, to think strategically about IT investments. Only those banks that use their technology resources effectively have the opportunity to secure real competitive advantage in this fast-changing industry through real product or service differentiation.

Firstly




liberalization, privatization and globalization have been recognized as the key elements propelling the world towards the present era, characterized by rapid changes and increased challenges in various fields. In order to meet the challenges of competition unleashed in the global arena, it has become an imperative on the part of captains of various segments of the economy to open up to harvest the advantages that are forthcoming from such global challenges. It is in this context, the most vibrant and important sector, the banking sector, started gearing up to face the challenges of such ground realities. Accordingly, several measures were initiated and implemented for improving and strengthening the competitive position of the banking industry vis-à-vis the foreign banks. Such measures include e-Banking entry into mutual funds and insurance sector business

Secondly




banking is service-oriented industry, which has peculiarity to implement various social as well as commercial objectives. It is an instrument for the development of the economy of the country. Banks have two roles to play. They create a runway for the free flow of capital necessary for the growth of the economy. At the same time it must attend to lending and deposit mobilization in order to make profit for its survival and growth. Banking, though, is now not a high profit service industry in most countries. In many countries banks are affected by loan losses and this has a great impact on the health of the banks. This has resulted in the poor quality of service. Complaints of deterioration in service are viewed in several quarters. Getting customer patronage and goodwill are becoming a great task and a challenge for banks.

Thirdly


Comparison

Comparison E-banking system of Pakistan with E-Banking system of South Africa

ALLPAY

•Biometrically enabled

•Human assistance

•Expansion to include other banking services

MOBILE ATM’s

•Reaching the under-banked

•Flexible reach

•Migrating transaction behavior


Presentation of e Banking

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