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ELECTRONIC BANKING
³delivery of bank¶s services to a customer at
his office or home by using electronictechnology.´
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What is E-banking?
� E-banking: ³This is an umbrella term for theprocess by which a customer may perform banking
transactions electronically without visiting a brick
institution.´
� E-banking is the use of electronic means to deliver
banking services, mainly through the Internet. The
term is also used to refer to ATMs, telephonebanking, use of plastic money, mobile phone
banking.
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Development of E-banking
in world
Development of E-banking May 1995
Finland was the first country in the world to have
taken in E-banking.
� 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
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Development of e-banking
in india� ICICI was the first bank to initiate the
Internet banking revolution in India as
early as 1997 under the brand name
'Infinity'.
� 1996 to 1998 marked the adoption phase,
while usage increased only in 1999-due tolower online charges, increased PC
penetration and a tech-friendly atmosphere
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Impacts in India� ICICI µs profit to equity holders registered a
growth of 21% percent in 2001.
� Citibank says that its project Suvidha,
which started off in Bangalore in early in
1998, has encouraged customers to interact
with electronically, using telephones, theInternet, and ATMs.
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THE IMPACT OF E-BANKING
SYSTEM IN INDIA
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Impacts in India� The Vice President of Global Trust Bank, P.C.
Narayan says,
³An electronic transaction costs as much as65% less than a physical one. ATMs have
definitely emerged as the new business model for
the banks and the way banking has been
conducted. I think it is one of the remarkable
things that has happened to Indian Banking
Industry´.
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Measures taken by RBI� A Reserve Bank of India (RBI) committee
has come out with the road map for
electronic banking and has sought
legislation on EFT systems to facilitate
multiple payment systems for banks and
financial institutions.� The RBI has been gearing up to upgrading
itself as a regulator and supervisor of the
technologically dominated financial system
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Initiatives taken by RBI� Several initiatives taken by the Government of
India as well as the RBI have facilitated the
development of E-banking in India. The Govt.of India enacted the IT Act, 2000 with effect
from Oct.17,2000, which provides recognition
to electronic transactions and other means of
electronic commerce.
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RBI & E-Banking :
� RBI & E-Banking The Reserve Bank of India
constituted a working group on Internet Banking.
The group divided the internet banking products in
India into 3 types based on the levels of access
granted. They are:-
� i) Information Only System:
� ii) Electronic Information Transfer System:� iii) Fully Electronic Transactional System
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Information Only System� General purpose information like interest rates, branch
location, bank products and their features, loan anddeposit calculations are provided in the banks website.
� There exist facilities for downloading various types of application forms.
� No identification of the customer is done.
� In this system, there is no possibility of anyunauthorized person getting into production systemsof the bank through internet.
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Electronic Information Transfer System
� The system provides customer- specific
information in the form of account balances,
transaction details, and statement of
accounts
� Identification and authentication of the
customer is through password.
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Fully Electronic Transactional System
� This system allows regular bi-directionalcapabilities
� Transactions can be submitted by the customer for online update
� This system requires high degree of security andcontrol
� In this environment, web server and applicationsystems are linked over secure infrastructure
� It comprises technology coveringcomputerization, networking and security.
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Features of e-banking products
± Transact wherever and whenever it suits you - 24/7
� Access your account information and transactions.
� Make electronic funds transfers.
� View, download and print statements.
� View CBA¶s up-to-date daily exchange rates.� Transfer funds between your personal accounts
� Easy set-up.
� User-friendly and secure: The system uses PIN and phone
number combinations to ensure maximum security.
� 24-hour access ± no more space and time constraints.� User support from highly trained and experienced customer
service teams.
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Why the drive towards e-banking?
� Rapidly changing customers¶ needs and preferences
� Competitive forces and product differentiation strategies
� Enhancement of Customer Relationship Management
� Pressure to reduce transactional and operation costs and
pass the benefits to customers.
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Factors Affecting the Adoption of E-
Banking in IndiaEase of use
Level of Security
The cost of adopting the technologyPreference for personalized services
Reluctance to adopt new technology
Haste of banks to adopt new technology
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Constraints for growth of e-banking
� Security: Majority of the customer stay away from E-Banking services
due to security concerns.
� Human face: According some analysts, customers still value
personalized and responsive services from their bankers.� Ignorance: ³on average 30% of bank customers do not even know
whether their banks provide online services.´ (BBC News).
� Computer illiteracy among majority of the population is still significantly
high.
� Poor and/or lack of technological infrastructure and reliable power supply.
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SERVICE PROVIDED BY SBI� Self-account funds transfer
across India.
� Third party transfers in thesame branch
� New account opening
� Demand Draft requests
� New Cheque-book request
� Railway tickets booking
� Utility bill payments� LIC and other insurance
premium payments
� LIC and other insurancepremium payments
� SBI Mutual fundsInvestments
� Credit card dues payments
� Deposit your taxes
� Donations
� Setting up SMS alerts for transaction information.
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SERVICE PROVIDED BY ICICI
� BILL PAYMENT
� FUND TRANSFER
� ACCOUNT INFORMATION
� SMART MONEY OR DER
�SERVICE REQ
UEST
� PREPAID MOBILE RECHARGE
� ACCOUNT TRANSFER
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Shared Payment Network System (SPNS)
or SWADHAN
Under the initiative of Indian Bank Association (IBA) in
Mumbai, a pilot project to link up 165 ATMs of 31 member
banks has come up in the form of ³SWADHAN´ a shared
payment network system which has a card base of 1, 00,000with 30,000 transactions per month.
The objective is to provide anytime and anywhere electronic
banking services to the customers in the city of Mumbai,
Vashi and Thane.
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Advantages of E-banking
� Benefits for Banks
� Benefits for Small to Medium Businesses
� Benefits for Customers
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BENEFITS TO THE BANK � Competitive advantage
� Unlimited network and Larger
customer coverage� Lesser work load
� Marketing tool
�Reducing the costs of operations
� Better customer relationship
� Promoting their services and
products internationally
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Benefits for Small to Medium Businesses
� To run its operations more effectively
� Lower cost than traditional financial
management mechanisms
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BENEFITS OF E-BANKING� Any time banking
� Any where banking
� Reduction in Cost of transaction� Easy to make utility payments
� Environmental Abolishing the uses of
paper � Others - Offering one-stop-shop
solutions
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Customer Benefits Supplier Benefits
Convenience Lower cost per transaction
Tailored products and services Increased customer knowledge
Ease of access to product
information
Ability to tailor products and
services
Ease of shopping around for
best price
Ability to access a large market
Increased customer relationships
Low cost. Reduced errors, time, and
overhead costs
The Benefits of Electronic banking
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E- Banking Risks
� Same inherent risk and issues as Internet
Banking, primary risks affected
± Strategic
± Transaction
± Reputation
± Compliance
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Security R isk
� Increasing number of fraudulent bank
websites
� Fake emails purporting to be sent from
banks
� Use of Trojan Horse programs to capture
user IDs and passwords
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Fake e-mails
� Email send from Fraudulent bank
� Verify the personal information
� Guide customer enter the fraud link
� Disclosing their ATM card numbers and
their passwords
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Fraudulent Bank Websites
� A suspicious bank
website:www.sbionline.com
� Original bank website
www.onlinesbi.com
� These website are believed to aim to trick
persons into disclosing their sensitive
personal information
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Viruses and Worms-Trojan Horse
Program� When we open some suspicious
websites or email
� Trojan Horse Program will install
our computer secretly
� Hidden in the computer
� When you access bank websites,
capture our account and the
password
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Bank Best Practices� Secure architecture
� Training and awareness
�Regular testing, reporting, improving
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Persecutions
For Customers
� Should not disclose their customer IDs (e.g.,account numbers) or
passwords to anyone else.� Periodically change their
passwords
� Should promptly log out from the service
� Should regularly check their account balances and statements to identif yunusual transactions.
� Do not access Corporate Cyber banking through
public terminals.� To safeguard your computer from anyother hacker attack ,install anti-virus and
software on your computer and update it regularly.
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What¶s Next - We Need
to Focus On� Security
� Authentication and Verification
� Proper Due Diligence and Complete
Understanding of the Issues
� Prepare now for what is ahead
� New Entrants into the Marketplace� International Perspective in the New World
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Case From Newspaper
� Don¶t use the hyperlink to login
to the website of banks
� Should deeply check the
postscript of the website� Observe that is it have the
encryption and compare the
login account of encryption cert
is equal to the bank.
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What are the forms of e-banking?
± Common embodiments of e-banking include the
following:� Mobile/SMS Banking
� Telephone Banking
� Electronic funds transfers
� Self Service (PC) Banking
� POS Banking (Credit , Debit cards and Smart Cards)
� ATMs
� Interactive TV
� Intranet
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Different Delivery Channels in E-Banking
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ATM and POS Application Architecture
Credit Card
Authorization
Debit Card
Authorization
Switch System
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Telephone Banking Infrastructure
Telecom
IVR CTI HOST
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Internet Banking
Sample Internet Banking Architecture
� More and more banks are coming to realize that internet is a part of banks'
alternative delivery channel strategies activities concentrated in the business-to-
consumer segment, focused on retaining clients
� In Internet banking, security is a primary concern. Security concerns have been
addressed from every angle within the architecture of the Internet bankingapplication.
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SMS Banking� Basic banking inquiry transactions(balance inquiry, funds, exchange
rate inquiry«) are performed by the cooperation of bank and the GSM
operator
� Security is the main problem
Bank SMS
Gateway
Bank
SMS
DB
Leased lineGSM Operator
Application
Server
GSM
Operator
SMS DB
GSM
Network
Bank Host
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Delivery Platforms for Electronic Banking
Type of Service Description
PC banking
Internet banking
Managed network
TV based banking
Telephone banking
ATM
EFTPOS
Smart cards
Electronic Funds Transfer (EFT)
Electronic Data Interchange (EDI)
Electronic Clearing System (ECS)
Shared Payment Network System
(SPNS)
Uses special software distributed by the bank , which is installed in the
users¶ PC. Customers access banks via modem linked directly to the
bank .
Customers access their bank account via Internet
The bank makes use of an online service provided by another party such
as AOL
Use of satellite or cable to deliver account information to TV screens of
customers
Customers can access their bank via regular phones or mobile phones
using SMS or WAP services
ATMs provide cash accessibility and account information and in some
cases enable to transfer f unds
Electronic f unds transfer at point of sale (EFTPOS) is essentially a
payment system for purchases through debit cards within the store itself .
Microchip based cards can be used between individuals to exchange
electronic cash or can interf ace with ATMs, telephones and retailers.Uses computer and electronic technology as a substitute for checks and
other paper transactions.
Transmit financial information and payments in electronic form.
Paperless mode of effecting payment for handling bulk and repetitive
payment transactions.
A large network of ATMs, Cash Dispensers belonging to different banks
to provide anytime and anywhere banking service.
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Television Banking� Digital television (DTV) is the transmission of television signals using
digital rather than conventional analog methods.
� Advantages of DTV over analog TV include:
y Superior image resolution (detail) for a given bandwidth
y Smaller bandwidth for a given image resolution
y Compatibility with computers and the Internet
y Interactivity
y Superior audio qualityy Consistency of reception over varying distances
y Banks offer their banking transaction in this new environment
y T-commerce in the near future.
i f f i i
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Delivery Platforms for Electronic Banking
Type of Service Description
PC banking
Internet banking
Managed network
TV based banking
Telephone banking
ATM
EFTPOS
Smart cards
Electronic Funds Transfer (EFT)
Electronic Data Interchange
(EDI)
Electronic Clearing System
(ECS)
Shared Payment Network System
(SPNS)
Uses special software distributed by the bank, which is installed in
the users¶ PC. Customers access banks via modem linked directly to
the bank.
Customers access their bank account via Internet
The bank makes use of an online service provided by another party
such as AOL
Use of satellite or cable to deliver account information to TV screens
of customers
Customers can access their bank via regular phones or mobile
phones using SMS or WAP services
ATMs provide cash accessibility and account information and insome cases enable to transfer funds
Electronic funds transfer at point of sale (EFTPOS) is essentially a
payment system for purchases through debit cards within the store
itself.
Microchip based cards can be used between individuals to exchange
electronic cash or can interface with ATMs, telephones and retailers.
Uses computer and electronic technology as a substitute for checks
and other paper transactions.
Transmit financial information and payments in electronic form.
Paperless mode of effecting payment for handling bulk and
repetitive payment transactions.
A large network of ATMs, Cash Dispensers belonging to different
banks to provide anytime and anywhere banking service.
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E-COMMERCE
WHERE SOCIETY MEETS
TECHNOLOGY«
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Commerce as we know it
Bank A Bank B
Business BusinessTrade
Banking
Buyer Supplier
Clearing
Settlement
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E-Commerce� Doing business online
� Buying products and services online
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E-Commerce Participants
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Brief History1970s:Electronic Funds Transfer (EFT)
� Used by the banking industry to exchange account
information over secured networks
Late 1970s and early 1980s:Electronic Data Interchange
(EDI) for e-commerce within companies
� Used by businesses to transmit data from one business to
another
1990s:the world wide web on the internet provides easy to
use technology for information publishing and dissemination
� Cheaper to do business (economies of scale)
� Enable diverse business activities (economies of scope)
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Features of e-commerce
� Online business
� Covers vast amount of B2B and B2C
� Advertisement� Anytime and anywhere service
� Direct contact between buyer and seller
� Reduction of cost
� Medium of interaction� Promptness in surveys
� Expand the business
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B2B, B2C and C2C e-Commerce
e-Business
le rin
ettlement
e-Tr de
Business
B nk A B nk B
onsumer
B2B
B2
e-B nkin
e-Business
Business
onsumer
B nk erv
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B2B
� A housands of companies that sell products to other companies have
discovered that the Web provides not only a 24-hour-a-day showcase
for their products but a quick way to reach the right people in a
company for more information.
� In the B2B, the bank role is to provide a reliable payment
infrastructure that add value to corporate business
� This infrastructure should cover:
± Bill presentment
± Bill payment
± D
ifferent payment types(credit card, deposit account, loan)± Information after payment
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E-commerce - B2C� E-commerce is the buying and selling of goods and services on the
Internet.
� Main feature of e-commerce
± 24-hour availability
± a global reach
± the ability to interact
± provide custom information and ordering
± and multimedia prospects,� The Web is rapidly becoming a multibillion dollar source of revenue
for the world's businesses.
� Banks provide secure payments infrastructure - virtual POS
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Scope of e-commerce
� E-PAYMENT-It does not involve physical
exchange of currency. Its convenient to
make payment via network.
� E-BANK ING- It means anywhere any time
banking.
� E-MARKETING- The growth of internethas created opportunities for consumer and
firms to participate in online global market
place.
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ADVANTAGES OF
ELECTRONIC COMMERCE� Cost effective
� Customers are self created
� Middlemen disappear
� Better customer service
� Online payments
� Increased sales
� Decreased costs
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DISADVANTAGES OF E-
COMMERCE� Loss of ability to inspect products from
remote locations
� Lack of training programmers
� Competition among sellers
� Change in technology
� Costly
E C P bl
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E-Commerce Problems
Snooper
UnreliableMerchant
Unknown
customer
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E-Commerce risks
Customer's risks� ±Stolen password
� ± Dishonest merchant
� ± Disputes over transaction
� ± Inappropriate use of transaction details
Merchant¶s risk
� ± Disputed charges
�± Insufficient funds in customer¶s account
Main issue: Secure payment scheme
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CONCLUSION
� Thus, we come to the conclusion that e-
commerce has great advantage for
industrialization which has laid torevolutionalization. Thus, increasing the
growth of our country in terms of economy.
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What is the Next channel
Microwave
Banking
???
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