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The following terms all refer to one form or another of electronic banking:

Ñ personal computer (PC) banking?

Ñ Internet banking?
Ñ virtual banking?
Ñ online banking?
Ñ home banking?
Ñ remote electronic banking ?
Ñ phone banking?

PC banking and Internet or online banking are 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.

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is a form of online banking that enables customers to execute bank transactions
from a PC via a modem. In most PC banking ventures, the bank offers the customer a
proprietary financial software program that allows the customer to perform financial
transactions from his or her home computer. The customer then dials into the bank with his or
her modem, downloads data, and runs the programs that are resident on the customer¶s
computer. Currently, many banks offer PC banking systems that allow customers to obtain
account balances and credit card statements, pay bills, and transfer funds between
accounts.




, sometimes called online banking, is an outgrowth of PC banking. Internet
banking uses the Internet as the delivery channel by which to conduct banking activity, for
example, transferring funds, paying bills, viewing checking and savings account balances,
paying mortgages, and purchasing financial instruments and certificates of deposit. An
Internet banking customer accesses his or her accounts from a browser² software that runs
Internet banking programs resident on the bank¶s World Wide Web server, not on the user¶s
PC. NetBanker defines a ³ true Internet bank´ as one that provides account balances and
some transactional capabilities to retail customers over the World Wide Web. Internet banks
are also known as virtual, cyber, net, interactive, or web banks.

Although Internet banks offer many of the same services as do traditional brick-and-mortar
Banks, analysts view Internet banking as a means of retaining increasingly sophisticated
 customers, of developing a new customer base, and of capturing a greater share of depositor
assets. A typical Internet bank site specifies the types of transactions offered and provides
information about account security.

Because Internet banks generally have lower operational and transactional costs than do
traditional brick-and-mortar banks, they are often able to offer low-cost checking and high-
yield Certificates of deposit. Internet banking is not limited to a physical site; some Internet
banks exist without physical branches, for example, Telebank (Arlington, Virginia) and
Banknet (UK). Further, in some cases, web banks are not restricted to conducting
transactions within national borders and have the ability to make transactions involving large
amounts of assets instantaneously. According to industry analysts, electronic banking
provides a variety of attractive possibilities for remote account access, including:

Ñ Availability of inquiry and transaction services around the clock;

Ñ Worldwide connectivity;
Ñ Easy access to transaction data, both recent and historical; and
Ñ ³ Direct customer control of international movement of funds without intermediation of
financial institutions in customer¶s jurisdiction.´

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There are several ways to open and fund an electronic banking account. Customers who have
existing accounts at brick-and-mortar banks and want to begin using electronic banking services
may simply ask their institution for the software needed for PC banking or obtain a password for
Internet banking. Either approach requires minimal paperwork. Once they have joined the
system, customers have electronic access to all of their accounts at the bank. New customers
can establish an account either by completing a PC banking application form and mailing it to an
institution offering such a service or by accessing a bank¶s web site and applying online for
Internet banking. In either instance, the customer can fund the new online account with a check,
wire transfer, or other form of remittance. No physical interface between the customer and the
institution is required.
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Computer has eased human life. Every day new dimensions of its utility are emerging.E-Banking is one of the gifts to
human beings by computer technology. Use of computers have automated banking process and thus has given birth
to e-Banking.
E-Banking is a fast spreading service that allows customers to use computer to access account-specific information
and possibly conduct transactions from a remote location - such as at home or at the workplace.
Use of internet has made everything available at your finger tip. Lot of websites are ready to serve you, just at your
mouse click.

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E-banking is basically offered in a two tier structure:
Ñ A basic tier of internet banking products includes customer account inquiry, funds
transfer and electronic bill payment.
 Ñ A second or premium tier includes basic services plus one or more additional services
like brokerage, cash-management, credit applications, credit and debit cards, customer
correspondence, demat holdings, financial advice, foreign exchange trading, insurance,
online trading, opening accounts, requests and intimations, tax services, e-shopping,
standing instructions, investments etc.

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Ñ Internet population currently is 38.5 million and expected to grow 120 million by the end
of 2011
Ñ At present 4.6 million of these use internet banking. This figure is estimated to grow 20
million by the end of 2011
Ñ Only 59% of the adult population have an access to a bank account. This implies that
41% of the adult population is still unbanked.
Ñ About 40%of the transactions on net take place during non-banking hours i.e. between 6
pm and 8 am.

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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:

   
*


 General purpose information like interest rates, branch location,
bank products and their features, loan and deposit calculations are provided in the banks website. There
exist facilities for downloading various types of application forms. The communication is normally done
through e-mail. There is no interaction between the customer and bank's application system. No
identification of the customer is done. In this system, there is no possibility of any unauthorized person
getting into production systems of the bank through internet.




  
   



 The system provides customer- specific
information in the form of account balances, transaction details, and statement of accounts. The
information is still largely of the 'read only' format. Identification and authentication of the customer is
through password. The information is fetched from the bank's application system either in batch mode or
off-line. The application systems cannot directly access through the internet.


˜




  
  


 This system allows bi-directional
capabilities. Transactions can be submitted by the customer for online update. This system requires high
degree of security and control. In this environment, web server and application systems are linked over
secure infrastructure. It comprises technology covering computerization, networking and security, inter-
bank payment gateway and legal infrastructure.
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You can facilitate payment of electricity and telephone bills, mobile phone, credit card and insurance
premium bills as each bank has tie-ups with various utility companies, service providers and insurance
companies, across the country. To pay your bills, all you need to do is complete a simple one-time
registration for each biller. You can also set up standing instructions online to pay your recurring bills,
automatically. Generally, the bank does not charge customers for online bill payment.

˜


You can transfer any amount from one account to another of the same or any another bank.
Customers can send money anywhere in India. Once you login to your account, you need to mention the
payees's account number, his bank and the branch. 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.




 


With Internet banking, customers can not only pay their credit card bills online but also get a loan on
their cards. If you lose your credit card, you can report lost card online.
r


This is something that would interest all the aamjanta. Indian Railways has tied up with ICICI bank
and you can now make your railway pass for local trains online. The pass will be delivered to you at your
doorstep. But the facility is limited to Mumbai, Thane, Nashik, Surat and Pune.


 
 




You can now open an FD online through funds transfer.Now investors with interlinked demat
account and bank account can easily trade in the stock market and the amount will be automatically
debited from their respective bank accounts and the shares will be credited in their demat account.
Moreover, some banks even give you the facility to purchase mutual funds directly from the online
banking system.
Nowadays, most leading banks offer both online banking and demat account. However if you have your
demat account with independent share brokers, then you need to sign a special form, which will link your
two accounts.

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Now just top-up your prepaid mobile cards by logging in to Internet banking. By just selecting your
operator's name, entering your mobile number and the amount for recharge, your phone is again back in
action within few minutes.

 

With a range of all kind of products, you can shop online and the payment is also
made conveniently through your account. You can also buy railway and air tickets through Internet
banking.
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ATM is designed to perform the most important function of bank. It is operated by plastic card with its
special features. The plastic card is replacing cheque, personal attendance of the customer, banking
hours restrictions and paper based verification. There are debit cards. ATMs used as spring board for
Electronic Fund Transfer. ATM itself can provide information about customers account and also receive
instructions from customers - ATM cardholders. An ATM is an Electronic Fund Transfer terminal capable
of handling cash deposits, transfer between accounts, balance enquiries, cash withdrawals and pay bills.






The Credit Card holder is empowered to spend wherever and whenever he wants with his Credit Card
within the limits fixed by his bank. Credit Card is a postpaid card. Debit Card, on the other hand, is a
prepaid card with some stored value. An individual has to open an account with the issuing bank which
gives debit card with a Personal Identification Number (PIN). When he makes a purchase, he enters his
PIN on shops PIN pad. When the card is slurped through the electronic terminal, it dials the acquiring
bank system - either Master Card or VISA that validates the PIN and finds out from the issuing bank
whether to accept or decline the transactions. The customer can never overspend because the system
rejects any transaction which exceeds the balance in his account. The bank never faces a default
because the amount spent is debited immediately from the customer¶s account.



Banks are adding chips to their current magnetic stripe cards to enhance security and offer new service,
called Smart Cards. Smart Cards allow thousands of times of information storable on magnetic stripe
cards. In addition, these cards are highly secure, more reliable and perform multiple functions. They hold
a large amount of personal information, from medical and health history to personal banking and personal
preferences.

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Banking around the clock is no longer a remote possibility. But the banks don't have to keep
their branches open 24 hours a day to provide this service. This is one of the biggest
advantages of Internet banking. One doesn't have to go to the bank's branch to request a
financial statement. You can download it from your online bank account, which shows you up-
to-the-minute updated figures. Another
advantage of Internet banking is that it is cost-effective. Thousands of customers can be dealt
with at once. There is no need to have too many clerks and cashiers. The administrative work
gets reduced drastically with Internet banking. Expenditures on paper slips, forms and even
bank stationery have gone down, which helps raise the profit margin of the bank by a
surprisingly large number. As far as customers are
concerned, their account information is available round the clock, regardless of their location.
They can reschedule their future payments from their bank account while sitting thousands of
miles away. They can electronically transfer money from their bank accounts or receive money
in their bank accounts within seconds. You can apply for a loan without
visiting the local bank branch and get one easily. You can buy or sell stocks and other securities
by using your bank accounts. Even new accounts can be opened; old accounts can be closed
without doing tedious paperwork. Especially with the increasing acceptability of digital
signatures around the world, Internet banking has made life much easier and banking much
faster and more pleasant, for customers as well as bankers.

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1. Very low set up cost
2. Capability to cater to a very large customer base
3. Saves a lot of operational costs. Adds to the baseline
4. Banks can offer a lot of personalized services to their customers
5. Reduction of burden on branch banking

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1. It is convenient
2. It isn¶t bound by operational timings
3. There are no geographical barriers
4. Services can be offered at a miniscule cost
5. Check ur transactions at any time of the day, and as many times as
you want to
6. Getting quarterly statements from the bank, transferring funds to
outstation, and other such activities can be done free of charge
through online banking.

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The reason that not many people have started using Internet banking is because they do not
trust the services of the bank through the net. Some human beings prefer to trust others like
them and may have some difficulty in trusting a machine, especially in the matters of money.
They may always have a doubt about whether their money is safe, while being processed
through Internet banking.

In addition to this, a few cases of forgery have been reported in online banking. There are some
fraud or proxy websites, which can hack information (user name and password) entered by a
person for some transaction, and later misuse it. In such cases, people lose their money without
knowing and by the time, they get the bill, huge loses may have been incurred.

Another disadvantage of Internet banking is that it may take some time, to get the Internet
account started, as it requires a lot of paper work. Some people avoid using Internet banking
services because they find it difficult to understand how it works. Also, the fact that a wrong click
can cause monetary losses may be a deterrent. Internet banking can also pose a problem, if the
network is down in one's area. This may cause difficulty, if the person has to do an important
transaction.

One very common disadvantage of online banking is when a person has some problem or
query. In a normal bank, if one faces some problem, one can go to some employee of the bank
to solve it. However, in the case of Internet banking, one will find oneself making endless calls
to the customer service department. There have been cases, where the person is put on hold or
has been passed around from one person to another.

*%(??
1. Need an account with an internet service provider
2. Security concerns, like hackers accessing ur bank accounts
3. E-banking promotes lack of socializing.
4. Switching banks can be more cumbersome online than in person
5. Must have basic computer skills and internet knowledge
6. Must be comfortable using a computer

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Risk involved in internet banking is now getting its due share of publicity. It is being discussed in the
media, in seminars and even in street corner gatherings cc!" seems to be the buzz
word these days.Latest in the internet banking frauds is the website that fakes the website of a bank. let
us focus on this single issue for the time being.In any deal the two parties involvedshould be identified
uniquely. Banking is no exception. Under conventional banking the procedure is fool proof. Customer
identifies the bank by its location and its familiar officers. The bank has photos, signature and the past
history to identify the customer. So no problem there.Come to internet banking and think of the
identifications. The customer has no land marks to go by. No building, no physical assets to show him the
way. This probably is the biggest problem internet banking is facing right now.Think of the identification
process at the bank. No face or signature. But yes the banker has the password and the history. So that
is the crux of the matter. Banker is in a better position than the customer. So the solution in its simplest
form is that the bank should take the full responsibility of identification. In conventional banking customer
was equally responsible . In internet banking the bank should take over the customer¶s share of
identification responsibility.

1. To start with the bank should satisfy itself that it is dealing on line with a known customer.
The easiest way is to check the history. When anyone logs in tell him that he logged in last
at so and so time and logged out at so and so time. A genuine customer can cross check
and quit in case of errors.
2. A few banks and many equity trading websites are using this. This should be made
compulsory for all transactions.
3. If the history is not available the bank should simply not permit transaction. Customer
should not proceed to transact unless his history appears on the screen. So no one
without a history can transact any business over the internet.
4. But then how does a customer get a history. Create the history when the customer is
allowed internet banking facilities for the first time. Make the customer log in for the first
time from the bank premises itself. Final confirmation of the internet facility should be
given by the official of the branch where from the customer has logged in for the first time.
5. Of course every branch which authorises internet banking should have an internet
enabled computer for the use of the customer. Private and foreign banks who deal only in
virtual space can outsource this function to any earth based bank.
6. But history is not the only feature which can be used by the internet banker to identify his
customer. Photo is another option. Bank can send back the photo to the customer who
should click a transaction only if his photo correctly appears on the transaction screen. But
this is a complex procedure and may not be affordable at the current level of technology.
7. So let us revisit the fake website, let us assume that the internet banker has now
implemented the history verification precaution. A customer logs in to the website which
fakes the genuine website very skilfully. But he gets back no history as he is logging into
this website for the first time. so the customer should quit the website immediately.

So what we have seen is that impersonation in internet net banking can be prevented almost completely
by the following steps

Ñ Make the customer login for the first time from a bank computer.

Ñ Enable internet banking only after this.

Ñ Send back the last login details during every login thereafter .

Ñ Customer should do no transaction if last login details are not proper.

 Ñ Bank should not allow transaction if the last login details
( or photo if the photo option is implemented ) is not confirmed

 

 







 

   



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When it comes to the future of banking, there is an assortment of predictions. The majority of individuals
envision consumers with imbedded chip implants. The customer simply walks into the store, swipes and
views his balance instantaneously.

Several individuals believe the paper dollar and coin will become extinct. Everything is expected to be
electronic in a society without paper. E-banking allows bank customers to simply access banking
information via the access of the Internet. Whether home or in the workplace, customers can access the
banking information 24 hours a day, seven days a week.

Executed between two parties, such as business to business or business to consumer, e-commerce is an
electronic financial business activity. E-banking, which is bank to business or bank to consumer, has
actually been around since the 1990s. The popular features of e-banking are funds transfers, automatic
payment options, electronic bill pay, view account balances, account history accessibility and schedule
future transfers.

Virtual banking is another alternative to traditional banking. Virtual account customers do not have to
endure the inconvenience of stepping foot into a building or an actual financial institution. Customers
have the option of mailing their deposits or even setting up direct deposit. E-bank customers enjoy the
advantages, such as 24-hour, seven days a week access to their bank accounts. The passé method of
standing in line and filling out tedious paperwork seems like forever for many bank institutes. Bankers do
not have to concern themselves with the thankless task of speaking on telephones to a customer service
representative to find out banking history, wait for a bank statement in the mail that could easily get lost
and wind up in the possession of a prying neighbor. A secure site is accessible to the online banking
consumer.

As in everything in life, there are disadvantages. It can be arduous to navigate and learn online banking,
although many companies try very hard to utilize navigation around their site user friendly. In addition,
many consumers are also concerned about viruses and privacy issues that can cause glitches in the e-
banking system, which can cause delays and mass confusion. Nevertheless, there are constant
improvements in online banking, such as the bill pay option. This allows customers to set up accounts
online as they schedule their bills to be paid at various times to different companies such as telephone
companies, cable television, insurance and mortgage payments. The funds come directly out of the bank
account and allocated to the company of choice.

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Ñ reduction in branch banking.?
Ñ gradual evolution of virtual banking.?
Ñ people will want to process more transactions on the internet.?
Ñ geography will not be an inhibitor any more.?
Ñ the future of banking would be in terms of integration.?

á  ?
E-banking creates issues for banks and regulators alike. For our part we will continue our work, both
national and international, to identify and remove any unnecessary barriers to e-banking.

For their part, banks should:

Have a clear and widely disseminated strategy that is driven from the top and takes into account the
effects of e-banking, together with an effective process for measuring performance against it.Take into
account the effect that e-provision will have upon their business risk exposures and manage these
accordingly.

Undertake market research, adopt systems with adequate capacity and scalability, undertake proportional
advertising campaigns and ensure that they have adequate staff coverage and a suitable business
continuity plan.Ensure they have adequate management information in a clear and comprehensible
format.

Take a strategic and proactive approach to information security, maintaining adequate staff expertise,
building in best practice controls and testing and updating these as the market develops. Make active use
of system based security management and monitoring tools.Ensure that crisis management processes
are able to cope with Internet related incidents.