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ALBITOS, Mark Christian ESPERANZA, Marc GARCIA, Carlos Jr. MALOLOS, Patrick Gabrielle MARANAN, Adelbert S13
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DE LA SALLE UNIVERSITY – MANILA
1. Abstract E-banking nowadays is the common trend here in our country. No more falling in line in banks, no more waiting tons of hours in the bank, no more days and weeks of waiting. All can be done with one card, one gadget. It’s easy, it works, and most importantly, people like it. But still, some people are having a hard time using this kind of technology mostly people who are used to do things the old traditional way. With the use of advertising, people are now motivated to use E-banking because again, it eliminates the hassle encountered when using the old process of banking. In this paper, the group will cover security issues and different impacts regarding the traditional banking method. The group is concerned about the issues presented because the group thinks that these issues are very important and relevant today, a lot of people save money and really trust banks with their money. In addition, the group wants this research paper to be read by many students who are in no knowledge about certain issues about banking. Lastly, the group will provide and recommend different solutions about the issues regarding E-Banking. 2. Introduction Figure 1. Mobile Banking The advancement of electronic banking or commonly known as e-banking, began with the use of automatic teller machines (ATMs) and has included telephone banking, direct bill payment, electronic fund transfer, online banking and other electronic transactions. For many people, they believe that the e-banking will go to the direction of mobile banking. Also, some people believe that online banking will be the most popular method in the future. In order for users/customers to use their banks online services, they need to have a personal computer and an Internet connection. Also, their personal computers will be their assistant who will assist them in their transactions and services. Examples of those transactions are paying bills, attaining information about accounts and loans, and etc. In addition, those transactions offered by different banks are continuously changing and are being improved because of some banks wants to attain competitive advantage with other banks. The banking industry should always adapt to the new technology today and basically make the necessary adjustments to gain competitive advantage with other competing banks. 3. Electronic Banking in the Philippines Electronic banking is sometimes defined as the provision of retail and small value banking products and services through electronic channels either through mobile devices, Automated Teller Machines, or even the internet. It is also often used to describe processes in which customers can perform banking transactions without visiting a physical institution. In the Philippines, e-banking made an auspicious debut when automated teller machines (ATMs) were introduced in the 1980s revolutionizing how we viewed the usual, brick-and-mortar bank structure. Today, ATMs have become a common customer delivery channel that is mainly in urban centers and sometimes even in the countryside. Aside from ATMs, other innovations have taken place such as phone and internet banking which again provide customers the ability to access banking services from various locations and at a 24-hour by 7- days basis. With these developments, customers are able to enjoy the many conveniences and lower costs that are offered by the said innovations. However, it can be seen that the poor and low-income segment is still underserved or do not fully enjoy the benefits of such innovations. For example, ATMs have a nationwide presence but there is a concentration in urban areas, which are not easily accessible to those residing in the countryside. In addition, ATMs would require that you have a bank issued ATM card. The banks that typically issue ATM cards are the larger banks with which poor and low income individuals do not transact. The smaller banks like rural banks do not yet have the vast ATM networks as the bigger banks. Another example is internet banking services, which has significantly increased convenience for clients, as they are able to perform certain transactions without leaving their home or workplace.
However, this service is available only to those who have internet connection or are, at the very least, computer literate. In the same manner as ATM services, the poor and low-income clients will not be able to fully enjoy the benefits of this service. 3.1. Issues in E-banking in Rural Areas The e-banking system in rural areas also brings new issues and challenges, such as the imbalance between the capacity and workload. For instance, rural bank of Biñan currently has about 750 customers who signed up for the E-banking services with about 1200 total accounts. While the online services save customers time and effort, the bank discovered that offering E-banking services is very labor concentrated on the administrative end. That is, though the inputs from traditional teller services are cut in a big way, the transactions must still be processed right along from the teller stations. Another challenge is about how to keep its traditional high quality services into its new Ebanking system. Being in the service industry forces the bank to compete using higher quality and greater levels of customer service. The quality of bank services is highly dependent on the training and actions of each employee, due to the fact that most banking services offered from bank to bank are very similar, with only the customer service and employees differentiating them. As knowledgeable employees with accurate transaction skills are the key to the success of the bank, Rural Bank of Biñan has worked closely with its outsourced online service provider to provide high quality E-banking services. Currently, providing E-banking services has not been viewed as a really high priority to the management of Rural Bank of Biñan, as the bank believes that its ebanking now is costing more than savings, so far has not significantly contributed to the banks success in the marketplace. On another hand, while the bank has been satisfied with its current e-banking services, suggestions and recommendations have been made to improve and streamline the system: other issues that are within E-banking in rural areas were, the bank has asked for its main page to be updated more timely and formatted in a manner of more user friendly; A more persuasive promotion of the E-banking should be conducted more regularly; A company-wide training and customer service for E-banking initiatives should be implemented; The bank should integrate more services into E-banking operations and search the areas where E-banking operations could further cut its daily operating cost; The bank should provide more useful links on its e-banking website to its business partners; The large ‘dead space’ of its current website should be used to add more eye-catching pictures to make it more appealing to consumers surfing the net; Finally, the bank should consider to take over its website from its current online service provider and running it ‘in-house’, so that the bank could have total control of its website and be able to make necessary changes more quickly and effectively.
One of the issues currently being addressed is the impact of e-banking on traditional banking players. If there are advantages in venturing to E-banking, there are also disadvantages. Even the pioneers of E-banking are not sure of what this technology can bring in the future. Here are some of the issues/arguments: E-banking is much cheaper than the traditional way. This could be a great competitive advantage especially in our country. It does require physical branches for their transactions. E-banks are easy to set up so lots of new entrants will arrive.
So with this issue, companies especially the Telecom Networks have the greater advantage because it’s much closer to the people. Having a cellular phone is very essential nowadays, and it is currently the trend. Companies use this as a way to attract consumers. According to Rogelio Encinas, 43% of Filipinos (36 million) use mobile Phones. He also said that he estimates that 90% of rural bank clients have access to mobile phones.
Traditional banks will find it difficult to evolve.
With this issue, it’s very simple, even though the concept of E-banking is about doing transactions with ease, trying to evolve into one is difficult. It really requires study, and analyzing competitors and using advertising as a main weapon to attract consumers.
E-banking is just banking offered via a new delivery channel. It simply gives consumers another service.
E-banking is still the same banking, the only thing that changed is the process that’s why is much faster and more responsive than the old way.
The start-up costs of an e-bank are high.
Starting this kind of technology requires a large amount; this covers the advertising expenditure, and the purchasing of the said technology.
4. Impact of e-banking on traditional services
E-banks have already found that retail banking only becomes profitable once a large critical mass is achieved.
So with this issue, every company that has E-banking really focuses on what the consumers’ need, so they spend a lot of money on advertising, just to attract consumers to use their technology. 5. Security Issues Security is one of the most talked about issue in e-banking because basically e-banking increases security risks, risky environments and also because of the fact that security issues are the biggest concern in e-banking. Security breaches fall into three categories, first is the breaches with serious criminal intent, which are frauds, theft of commercially sensitive or financial information. The second category is the breaches by casual hackers which are defacement of web sites or denial of service. The third one is the flaws in systems design and/or set up leading to security breaches which are genuine users seeing and being able to transact on the other users' account. All of these threats mentioned above have severe implications whether it is financial, legal or by reputation. A lot of banks nowadays are searching for errors in their systems a hundred times a day to lessen the breaches mentioned above. The most sensitive and highly built computer systems such as those computer systems that are used for storing tons of confidential information tend to be the most comprehensively secured and it is also highly designed to prevent breaches in the system. Some banks have a tendency to have reasonable perimeter security, there is not enough segregation between internal systems and poor internal security. And with this, some people can easily breach the lighter or the poor internal security. It is very easy to point out the security risks in ebanking, also it must be put into consideration that the Internet could remove some errors launched by manual processing. This lessens the risks to the integrity of transaction data. As the e-banking advances there could be large security gains if the banks would focus their attention on security risks. Some banks needs to have or needs to apply strategic tactics to information security, promoting best practice security controls into systems and network as they are developed, rigorous testing of security system controls, awareness on new threats that would harm the system, placing sufficient staffs with expertise on security and lastly to actively use system based security management and monitoring tools to lessen security breaches. 6. Conclusion
As the group's final conclusion, e-banking has its own advantages and disadvantages. The main advantage of implementing e-banking is an increase in customer satisfaction. This is because customers do not have to go to the branches in order to access their accounts, make withdrawals and deposits. They can also check it anytime of the day, a feature that physical branches do not offer thus creating a good relationship with the bank and the customer. E-banking is also advantageous not only for customer but also for the bank because it reduces costs in setting up a branch and the resources to process transactions. They can also service more people than ever before. All these benefits are the reasons why many banks are already investing in e-banking. The main disadvantage of e-banking is the security problems that surround it. It's a fact that making transactions online poses a much bigger risk compared to making transactions in a physical branch. This is due to the hacking problems and identity theft. Addition to these risks, technical difficulties could also arise. Sometimes the bank's website goes down, and if this happens it will be a hassle for the customer because he/she has to go to a branch or make phone calls- which is usually busy due to other customers also making a call. Another case that has happened was an unpredicted rise in customer that the servers of the bank were not able to cope with. A customer may also run into a bad service. Sometimes you might wait a while for your checks to clear and you certainly can't do anything about it if it is online. 7. References
Regulating Mobile Banking: The Philippines Perspective Retrieved March 10, 2009 from http://portal.asobancaria.com/portal/page/po rtal/Portal_Eventos_Asobancaria/Memorias %20Seminario%20Internacional%20acceso %20mercados/Rogelio%20Encinas.ppt Electronic Banking: Delivering Microfinance Services to the Poor in the Philippines. Retrieved March 10,2009 from http://www.bwtp.org/pdfs/arcm/Jimenez.pdf Consumer protection in electronic banking (e-banking), e-commerce. Retrieved March 10,2009 from http://jlplaw.com/blog/consumer-protection-inelectronic-e-banking-commerce/ E-Banking - Impact, Risks, Security. Retrieved March 10,2009 from http://steconomice.uoradea.ro/anale/volume/ 2008/v4-management-marketing/280.pdf Banking / Loans. Retrieved March 10,2009 from
E-Banking Risks. Retrieved March 10,2009 from http://www.ffiec.gov/ffiecinfobase/booklets/ e_banking/ebanking_01_risks.html Mobile Banking avidly used by Youth. Retrieved March 10,2009 from
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