E-BANKING CHALLENGES AND OPPORTUNITIES

VARGHEES PRABHU.S, KSR COLLEGE OF ENGINEERING, TIRUCHENGODE.

INTRODUCTION:
Now-a-days the banking is more information-based, speedy and boundary less due to the impact of erevolution. The number of visits of a customer to the bank can be minimized largely by operating the account through internet E-banking is used to access the customers bank account and to undertake the banking
transactions.

The number of individuals using the internet is increasing considerably and it can be seen with the following table

Internet Penetration in India

Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 Users 1,400,000 2,800,000 5,500,000 7,000,000 16,500,000 22,500,000 39,200,000 50,600,000 40,000,000 Population 1,094,870,677 1,094,870,677 1,094,870,677 1,094,870,677 1,094,870,677 1,094,870,677 1,094,870,677 1,112,225,812 1,112,225,812 % penetration 0.1 % 0.3 % 0.5 % 0.7 % 1.6 % 2.1 % 3.6 % 4.5 % 3.6 %

2007

42,000,000

1,129,667,528

3.7 %

Source: www.internetworldstats.com

Internet usage in Asia

TRADITIONAL BANKING AND INTERNET BANKING

In traditional banking, the customer has to visit the branch of the bank in person to perform the basic banking operations such as enquiry, funds transfer,
cash withdrawal, etc.

E-banking is called any time, any where banking because, the customer can perform the banking transactions by sitting at their homes round the clock globally through electronic media

TECHNOLOGY IN INDIAN
BANKING
1960 - Mechanized banking introduced 1970 - Introduction of computer based banking industry 1980 - Introduction of computer-linked communication based banking In 1970s, SBI installed a ledger-posting machine along with a mainframe computer at selected branches A committee on computerization and mechanization was appointed by RBI in 1983 under chairmanship of Dr. C. Rangrajan

TECHNOLOGY IN INDIAN BANKING

Technology was the rational for bank introducing ATM and POS (Point of sales) in 1970s, telephone banking in 1980s and internet banking in 1990s

INTERNET BANKING IN INDIA

Information Only System
Electronic Information Transfer System Fully Electronic Transactional System

SERVICES CAN BE OBTAINED WITH THE HELP OF E-BANKING

Bill Payment Service Fund Transfer Credit Card Customers Railway pass Investment through Internet Banking Recharging the Prepaid Phone account Shopping

BENEFITS OF E-BANKING
BENEFITS TO CONSUMERS:

Customers account is extremely accessible to an online account. Customer can withdraw the cash at any time through ATMs that are now widely available throughout the country. Besides withdrawing cash customers can also have mini banks statements, balance inquiry at the ATMs Customers can operate their accounts while sitting in their offices or homes. There is no need to go to the bank in person for such matter. E-banking helps for the payment of utility bill.

 All services that are usually available from the local bank can be found on a single website. The Growth of Credit Card usage also owes greatly to E-banking. Banking is available throughout the day without holidays. Services can be offered at a very low cost. As the chart shows results of a survey, cost per transaction through internet banking is the least among all the other modes
Cost Per Transaction In The US: Money Transfer (units in US $) Type Cost Per Transacti on Branch Cheque 1.07 0.95 Phone 0.45 ATM 0.27 PC 0.15 Internet 0.01

Source: Furst, Lang & Nolle (1998), Booz, Allen & Hamilton (Apr.1997)

TO BANKING INDUSTRY
controlling banks operating cost Increase efficiency, better time usage and enhanced control. E-banking has made banks more competitive. It has also led to the expansion of the banking industry, opening of new avenues for banking operations. Electronic banking reduce paper work, thus helping them to move the paperless environment. proper documentation of their records and transactions. The reach and delivery capabilities of computer networks like the internet are far better than any branch network.

TO GENERAL ECONOMY
E-banking gives tangible benefits in the form of reduction of cost, reduced delivery time, increased efficiency, reduced wastage E-banking electronically controlled and thoroughly monitored environment discourage many illegal and illegitimate practices E-banking has also helped in documentation of the economic activities of the masses

DISADVANTAGES OF E-BANKING
Compelled to have Computers with Internet Access. Phone bills can increase. Hackers may intercept data and defraud customers. If the bank's server is down, we can't use it. Many banks don't show us how to use online banking. Our internet connection must be working properly so that customers can have access

CONSTRAINTS IN INTERNET

BANKING
Start-up cost Training and Maintenance Lack of skilled personnel Security Legal Issues Restricted Clientele and Technical Problems

SECURITY MEASURES
Authenticity controls Accuracy control Completeness control Redundancy controls Privacy controls

Audit Trail Controls Existence controls

Efficient
Fire wall controls Encryption controls

CONCLUSION
E-Banking is becoming immensely popular globally and India is no exception to it. The declining Internet rates, falling PC prices, broad bandwidth access through cable and digital subscriber lines, accessing the NET through cable TV etc., would definitely encourage the boom in E Banking in India. In true E-banking, any inquiry or transaction is processed online without any reference to the branch (anywhere banking) at any time. E-Banking Providing a 'need to have' than a 'nice to have' services.