E-Banking

(EM-TECH Research Paper)

ALBITOS, Mark Christian

ESPERANZA, Marc
GARCIA, Carlos Jr.
MALOLOS, Patrick Gabrielle
MARANAN, Adelbert
S13

mark_albitos@yahoo.com
mac_esperanza@yahoo.com
botong09@yahoo.com
patrickmalolos@yahoo.com
adel_maranan@yahoo.com

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
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.
Figure 1. Mobile Banking
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 One of the issues currently being addressed is the
literate. In the same manner as ATM services, the poor and impact of e-banking on traditional banking players. If there
low-income clients will not be able to fully enjoy the are advantages in venturing to E-banking, there are also
benefits of this service. disadvantages. Even the pioneers of E-banking are not sure
of what this technology can bring in the future.
3.1. Issues in E-banking in Rural Areas
Here are some of the issues/arguments:
The e-banking system in rural areas also brings - E-banking is much cheaper than the
new issues and challenges, such as the imbalance between traditional way.
the capacity and workload. For instance, rural bank of
Biñan currently has about 750 customers who signed up for This could be a great competitive advantage
the E-banking services with about 1200 total accounts. especially in our country. It does require physical
While the online services save customers time and effort,
the bank discovered that offering E-banking services is branches for their transactions.
very labor concentrated on the administrative end. That is,
though the inputs from traditional teller services are cut in a - E-banks are easy to set up so lots of new
big way, the transactions must still be processed right along entrants will arrive.
from the teller stations. Another challenge is about how to
keep its traditional high quality services into its new E- So with this issue, companies especially the Telecom
banking system. Being in the service industry forces the Networks have the greater advantage because it’s
bank to compete using higher quality and greater levels of much closer to the people. Having a cellular phone is
customer service. The quality of bank services is highly
very essential nowadays, and it is currently the trend.
dependent on the training and actions of each employee,
due to the fact that most banking services offered from Companies use this as a way to attract consumers.
bank to bank are very similar, with only the customer According to Rogelio Encinas, 43% of Filipinos (36
service and employees differentiating them. As million) use mobile Phones. He also said that he
knowledgeable employees with accurate transaction skills estimates that 90% of rural bank clients have access to
are the key to the success of the bank, Rural Bank of Biñan mobile phones.
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
- Traditional banks will find it difficult to
Rural Bank of Biñan, as the bank believes that its e-
banking now is costing more than savings, so far has not evolve.
significantly contributed to the banks success in the
marketplace. On another hand, while the bank has been With this issue, it’s very simple, even though the
satisfied with its current e-banking services, suggestions concept of E-banking is about doing transactions with
and recommendations have been made to improve and ease, trying to evolve into one is difficult. It really
streamline the system: requires study, and analyzing competitors and using
advertising as a main weapon to attract consumers.
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
- E-banking is just banking offered via a new
conducted more regularly; A company-wide training and
customer service for E-banking initiatives should be delivery channel. It simply gives consumers
implemented; The bank should integrate more services into another service.
E-banking operations and search the areas where E-banking
operations could further cut its daily operating cost; The E-banking is still the same banking, the only thing
bank should provide more useful links on its e-banking that changed is the process that’s why is much faster
website to its business partners; The large ‘dead space’ of and more responsive than the old way.
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
- The start-up costs of an e-bank are high.
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. 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 e-
banking, 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
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Microfinance Services to the Poor in the
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from
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7. Mobile Banking avidly used by Youth.

Retrieved March 10,2009 from