E-Banking

Agenda
Technology Commencement in Banking

Product Based Banking

Customer Based Banking
Data Warehouse
CRM
Alternative Delivery Channels
Banks Position in the New Economy

Technology Commencement
in Banking
In 70s, banks started to establish centralized data
processing centers.
Essentially the roles of these data processing centers
are:
collect the handwritten documents from branches
compile the documents
manual data entry by the operators
generate reports for the bank staff and the central
bank
execute some banking transactions

Branch Automation
In 80s, banks started technology investments
for the branches.
The first step is offline branches.
Terminals connected to local branch computer
Second step is online branches connected
centrally. Most of the transactions started to be
performed in the central mainframe.

Product Based Banking

In the mid-1980s, banks accepted product based banking
and competed with their products.
Banks developed new products for their customers.
Credit card
Credit deposit account (Super Account)
Debit cards
Beside branch, banks brought new channels to give better
service to their customers.
ATM
POS
IVR

Plastic Cards
The plastic card usage grown enormously in last 2
decade.
Plastic card became the main media for bank
customers.
Number of credit card in Turkey:

Credit Card Type National Cards International Cards

Total
Visa
1.200.704
7.043.834
8.244.538
MasterCard
488.881
4.820.965
5.309.846
Other
13.599
36.884
50.483
total
1.703.184
11.901.683
13.604.867

data collected from BKM

Plastic Cards
Number of debit card in Turkey:
Debit Card Type
Electron (Visa)
Plus (Visa)
Electron ve Plus
(Visa)
C irrus ve Maestro
(MasterC ard)
Private Label card

Total

Debit card
6.230.782
68.304
2.881.126
14.225.245
6.893.479

30.298.936

data collected from BKM

ATM
In the mid-1980s, that cash dispensers truly became a
worldwide phenomenon.
It took 16 years for the first 100,000 cash dispensers
to be installed, but only four years more for the next
100,000.
Now,ATM became the electronic face of banking for
most customers.
Beside cash withdrawal, there exist various transaction
options from transfer to fund buying/selling.
Now there are 12.174 ATM installed in Turkey (Ref:
BKM)

Point Of Sale
New habits in shopping
Increased the use of plastic cards
Now there are 313.140 POS installed in
Turkey (Ref: BKM)

ATM and POS Application Architecture

Debit Card
Authorization

Switch System

Credit Card
Authorization

IVR
Interactive Voice Response (IVR) is a software application
that accepts a combination of voice telephone input and
touch-tone keypad selection and provides appropriate
responses in the form of voice
IVR has come into our life at the beginnings of 90s.
First step in Telephone Banking
Peak transaction volume in salary payment days for
balance inquiry
Integrated with ATM system

Customer Based Banking

Product Based
Customer introduction
on different systems
Difficulty in creating
new products
Different user
interfaces for different
environments
Product based
Customer - Bank
relation

Customer Based
One customer information
file
Product factory
Standard graphical user
interface
Consolidated customer
data

Banking Application Architecture

Relationship Management

Product Factory

Delivery Services

ATM

Portfolio
Management

POS

Deposit
(TD,DD)

FBS

Securities

Promissory
Notes

FX
Import / Export

Teletel

Loans&Credits

NBS

EFT

Cheques

Merchant

Telerom

Sales Support
System

CMS

Treasury

Payments

YKB HR

Teller (Branch)

I
N
F
O
C
E
N
T
E
R

Corporate Tables
DAL

Internet Banking

GL / Accounting
Settlement

Phone Banking

Reporting

Batch Operations

Internet Shopping
PCM

Campaign
Management

Credit Risk
Management

Management & Control

Productivity

Information Delivery

CIF

Data Warehouse
Electronic repositories of summarized historical data
The main idea behind data warehouse is get all
company data working together so users can see
more,learn more, and make the organization work
better
Data Warehouse helps users to identify trends, find
answers to business questions and derive meaning
from historical and operational data.
Data access is easier and less costly
Decision support solutions run faster and are more
accurate.

Data Warehouse Process

Life Cycle

Partial
Solutions

Design
Transaction
Data
Extraction

Data
Mapping

Complete
Integrated
Solution

Transform

Extract

Data
Scrubbing and
Cleansing

Data
Replication

Load,
index and
Aggregate

Data Histories
and
Summaries

Deliver

Publish
and
Subscribe

Data
Access
Tools

Integrated Data Warehouse Infrastructure

CRM
CRM is an integrated sales, marketing and service
strategy
CRM goals are :
Use existing relationships to grow revenue
Use integrated information for excellent service
Introduce more repeatable sales processes and
procedures
Create new value and loyalty
Implement a more proactive solution strategy

The Three Phases of CRM

Acquire
New
Customer
Differentiation
Innovation
Convenience

Enhance The Bundling

Profitability Reduce Cost
of Existing
Customer service
Customer

Adaptibility
Listening
New products

Retain
Profitable
Customer

Integrated CRM
Applications
Life Cycle

Partial
Functional
Solutions

Complete
Integrated
Solution

Acquire
Direct
Marketing
Sales Force
Automation

Enhance
Cross Sell
and Up Sell

Retain
Proactive
Service

Customer Support

Integrated CRM Applications

Alternative Delivery
Channels
Anytime, anywhere banking

Telephone Banking
Internet Banking
Mobile Banking
Television banking
Next ???

Telephone Banking
7x24 banking through the phone
Main components
Switch
IVR
CTI(Computer Telephony Integration)
Manage each call using the computer
Pop up the user information while transferring the
call
Agent Desktop Application
Win32,ActiveX, HTML
Host Application

Telephone Banking
Infrastructure

Telecom

IVR

CTI

HOST

Internet Banking
More and more banks are coming to realize that internet is a part of banks'
alternative delivery channel strategies activities concentrated in the business-toconsumer 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 banking
application.

Sample Internet Banking Architecture

Mobile Banking
Current Mobile Banking Applications:
SMS Banking
WAP Banking
STK (Sim Toolkit) Banking

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

GSM
Network

GSM Operator
Application
Server

GSM
Operator
SMS DB

Leased line

Bank SMS
Gateway

Bank
SMS
DB

Bank Host

WAP Banking
Wireless application protocol (WAP) is an application
environment and set of communication protocols for
wireless devices designed to enable manufacturer-,
vendor-, and technology-independent access to the
Internet and advanced telephony services.
WAP is a global standard and is not controlled by
any single company
Various banking transactions offered in WAP
environment by banks.
Similar architecture with SMS banking

SIM Toolkit
SIM card enables to keep and load different applications.
SIM Application Toolkit has been agreed as a GSM standard
SIM Application Toolkit is independent of phone
manufacturers and designs.
SIM Application Toolkit allows the flexibility to update the SIM to alter
the services and download new services over the air
SIM Application Toolkit is designed as a client-server
application. On the server side, SimCard platform and the
client side, phone that supports the SIM Application Toolkit
In the near future, banks will start to offer banking transactions in
this platform.

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:

Superior image resolution (detail) for a given bandwidth
Smaller bandwidth for a given image resolution
Compatibility with computers and the Internet
Interactivity
Superior audio quality
Consistency of reception over varying distances

Banks offer their banking transaction in this new environment

T-commerce in the near future.

What is the Next channel

Microwave
Banking
???

Channel Costs
2

1,5

0,5

0
Web

ATM

Call Center

Branch

Channel Integration Evolution

Channel Integration evolution

Reuse
Efficiencies of Scale

Reduction of Redundancies

The Role of Banks in the New Economy

Internet and mobile devices have brought new rules
to economy and shaped the way to do business
Banks has also evolved according to the new
economy and took their places in this new world to
add value to their customer
The new ways to do business are :

e-commerce (B2C)
m-commerce
B2B

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

M-commerce
Mobile commerce applications involve using a
mobile phone to carry out financial transactionsthis usually means making a payment for goods
or transferring funds electronically.
As content delivery over wireless devices
becomes faster, more secure, and scalable, there
is wide speculation that m-commerce will surpass
wireline e-commerce as the method of choice for
digital commerce transactions.

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
Different payment types(credit card, deposit account, loan)
Information after payment

E-Security

To improve the e-business, all the users should feel secure to

perform the transaction this environment
The main concepts in e-security are:

PKI (public key infrastructure) enables users of a basically unsecure

public network such as the Internet to securely and privately exchange
data and money through the use of a public and a private
cryptographic key pair that is obtained and shared through a trusted
authority.

Public key is a value provided by some designated authority as a key

that, combined with a private key derived from the public key, can be
used to effectively encryption messages and digital signature.

Private or secret key is an encryption/decryption key known only to the

party or parties that exchange secret messages. Public key is used
together with a private key

E-Security - continued

Digital certificate is an electronic "credit card" that establishes your

credentials when doing business or other transactions on the Web. It is
issued by a certification authority (CA).

CA (certificate authority) is an authority in a network that issues and

manages security credentials and public key for message encryption.
As part of a public key infrastructure, a CA checks with a registration
authority to verify information provided by the requestor of a digital
certificate

An RA (registration authority) is an authority in a network that verifies

user requests for a digital certificate and tells the certificate authority
to issue it.

Smart Cards

About the size of a credit card, a smart card is a plastic card with an embedded
microchip that can be loaded with data, used for telephone calling, electronic cash
payments, and other applications, and then periodically "recharged" for additional
use.

smart card contains more information than a magnetic stripe card and it can be
programmed for different applications. Some cards can contain programming and
data to support multiple applications and some can be updated to add new
applications after they are issued

Benefit of smart cards:

enhanced security
off line transaction
programmable card
loyalty
customer information

Related Links

www.ykb.com
www.teleweb.com.tr
www.bkm.com.tr
www.visa.com
www.europay.com
www.banktech.com
www.bai.org
www.mobilesimtoolkit.com
www.itworld.com