STUDYON E-BANKING SERVICE FROM

CUSTOMER PERSPECTIVE.

Contents
Chapter

Page No

INTRODUCTION

3-21

REVIEW OF LITERATURE

22-24

RESEARCH METHODOLOGY

25-29

ROLE OF RBI IN COMPUTRISATION OF

BANKS (PROFILES OF VARIOUS BANKS)30-44

E-BANKING SERVICES

45-55

PROMISES OF INTERNET BANKING

56-64

Chapter 1

Introduction

Earlier people would be tired standing in long queue waiting for a passbook to
be updated or they would wait for a next day for the demand draft to be
prepared but now internet technology has invaded the portals of our banking
institution and as the clich goes everything will just be a click away. No doubt
innovations like tele banking and automated teller machines (ATM) have
considerably put customers at ease on the recent past. But with net banking
the customer will be able to transact with the help of a mouse and his visits to
the neighborhood bank will become a thing of the past.
E-banking simply means the automated delivery of new and traditional
banking products and services directly to customers through electronic,
interactive communication channels. E-banking includes the systems that
enable financial institution customers, individuals or businesses, to access
accounts, transact business, or obtain information on financial products and
services through a public or private network, including the internet.
In the age of electronic technology the regular application of computing,
wireless communication, networking etc in the banking field has brought
revolutionary change in the traditional ways banks do business .today your
bank can serve you at home, or allow you to serve yourself from anywhere.
You can draw your money from ATMs, you can check your account through
internet and you can phone. The bank to send you representative. Not only
have that, your physical banked that is still around suddenly seems to be
doing a lot more things than just banking. It is technology that is making all
this possible.
Internet banking has gained wide acceptance internationally and seems to be
fast catching up in India with more and more banks entering the fray. That is
why, most, most modern banks instead of merely dealing with financial
deposits and loan apply promote, and distribute the want-satisfying products.

Technology- the governing factor:

It is the technology that is making easy operation of banks. Even 10 yrs back,
banks would have found it impossible to provide even basic banking services
to millions of small and medium customers with all their branches. At the back
end technology is freeing bank employees to concentrate on value added
work rather than just mundane necessities. Today technology offers options
where banks can almost literally address a market of a market of one with a
customized product or services. Though a modest start has been made in
India, net banking has still a long way to go. This development has been
acknowledged by the latest online banking report which features a listing for
ICICI Bank. Some others have also endeavored to make real time banking a
reality before this century closes. Reasons why new private and multinational
banks have been able o survive, thrive, and adapt in an increasingly
competitive space.
These banks were able to leverage on low cost channels such as ATMs and
Net Banking to the optimum levels contributing to reduced operating costs.
The cost of transactions over channels like ATMs and the Internet are lower
than doing it through the branches-Banks have realized that shifting
customers access to lower cost channels can help bring down operating
costs. These channels are used not only to improve customer service but also
to divert traffic from the branches.
Customers using ATMs, phones and the internet not only allow banking
transaction but also cross selling of other financial products and services. For
e.g. if a cost of a branch banking transaction is taken as Rs 100/-, the cost of
an ATM transaction would be around Rs 30/-, phone banking around Rs 20/-,
and internet banking is around Rs 5/- . but this does not mean that branch
banking is obsolete. Rather, banks are reinventing their business models to
offers new financial services through its branches. At the back end,

technology is freeing bank employees to concentrate on value added work

rather than just mundane necessities

New horizons
The important factor that is causing the shift in the industry is that of
conveniences for the consumer. People need timely access to banking
services and have less time to spend at banks. And prefer the convenience of
long distance banking.
People were accustomed to associating convenience with doing business in
their neighborhood and not traveling to bank across town.Now however
society has a different definition of bank convenience.Also we should mention
it directly due to mergers that banks are able to offer more full service
branches and ATM machines. This is more convenient to customer and create
bank loyalty.
Increased used in ATMs, the growing use of home and office computers, fax
machines, and point of sale terminals allowing consumers to make
transaction electronically is now considered convenient. Thus branch location
is no longer a priority from the consumers view.
In contrast, Indian banks have an insignificant internet banking record. ICICI
bank kicked off online banking way in 1996 and a host of other banks soon
followed suit
Today banks are looking at newer ways to make a customer banking
experience more convenient, efficient and effective. They are using new
technology tools and techniques to identify customer needs and are offering
tailor- made products to match them. Earlier bank would decide when and
where they wanted customer interfaces, now customers decide when and
where they will access banking channels. The services which can be availed
of as of date, centralized operations and process automation using core-

banking application and IP based networks improves efficiency and

productively levels tremendously. Core banking applications help a bank to
shift from Branch Banking to Bank Banking.

DRIVERS OF CHANGE
Advantages previously held by large financial institutions have shrunk
considerably. The Internet has leveled the playing field and afforded open
access to customers in the global marketplace. Internet banking is a costeffective delivery channel for financial institutions. Consumers are embracing
the many benefits of Internet banking. Access to one's accounts at anytime
and from any location via the World Wide Web is a convenience unknown a
short time ago. Thus, a bank's Internet presence transforms from
'brouchreware' status to 'Internet banking' status once the bank goes through
a technology integration effort to enable the customer to access information
about his or her specific account relationship. The six primary drivers of
Internet banking includes, in order of primacy are:
Improve customer access
Facilitate the offering of more services
Increase customer loyalty
Attract new customers
Provide services offered by competitors
Reduce customer attrition

INDIAN BANKS ON WEB

The banking industry in India is facing unprecedented competition from nontraditional banking institutions, which now offer banking and financial services
over the Internet. The deregulation of the banking industry coupled with the

emergence of new technologies, are enabling new competitors to enter the

financial services market quickly and efficiently.
Indian banks are going for the retail banking in a big way. However, much is
still to be achieved. This study which was conducted by students of IIML
shows some interesting facts:
Throughout the country, the Internet Banking is in the nascent stage of
development (only 50 banks are offering varied kind of Internet banking
services).
In general, these Internet sites offer only the most basic services. 55% are
so called 'entry level' sites, offering little more than company information and
basic marketing materials. Only 8% offer 'advanced transactions' such as
online funds transfer, transactions & cash management

services.

Foreign & Private banks are much advanced in terms of the number of sites
& their level of development.

EMERGING CHALLENGES
Information technology analyst firm, the Meta Group, recently reported that
"financial institutions who don't offer home banking by the year 2000 will
become marginalized." By the year of 2002, a large sophisticated and highly
competitive Internet Banking Market will develop which will be driven by
Demand side pressure due to increasing access to low cost electronic
services.
Emergence of open standards for banking functionality.
Growing customer awareness and need of transparency.
Global players in the fray
Close integration of bank services with web based E-commerce or even
disintermediation of services through direct electronic payments (E- Cash).
More convenient international transactions due to the fact that the Internet
along with general deregulation trends eliminates geographic boundaries.

 Move from one stop shopping to 'Banking Portfolio' i.e. unbundled product
purchases.
Certainly some existing brick and mortar banks will go out of business. But
that's because they fail to respond to the challenge of the Internet. The
Internet and its underlying technologies will change and transform not just
banking, but all aspects of finance and commerce. It represents much more
than a new distribution opportunity. It will enable nimble players to leverage
their brick and mortar presence to improve customer satisfaction and gain
share. It will force lethargic players who are struck with legacy cost basis, out
of business-since they are unable to bring to play in the new context.

MAIN CONCERNS IN INTERNET BANKING

In a survey conducted by the Online Banking Association, member institutions
rated security as the most important issue of online banking. There is a dual
requirement to protect customers' privacy and protect against fraud.

Banking Securely: Online Banking via the World Wide Web provides an
overview of Internet commerce and how one company handles secure
banking for its financial institution clients and their customers. Some basic
information on the transmission of confidential data is presented in Security
and Encryption on the Web. PC Magazine Online also offers a primer: How
Encryption Works. A multi-layered security architecture comprising firewalls,
filtering routers, encryption and digital certification ensures that your account
information is protected from unauthorised access:
Firewalls and filtering routers ensure that only the legitimate Internet users
are allowed to access the system.
Encryption techniques used by the bank (including the sophisticated public
key encryption) would ensure that privacy of data flowing between the
browser and the Infinity system is protected.

Digital certification procedures provide the assurance that the data you
receive is from the Infinity system.

Concept of E-Banking
DEFINITION

OF E-BANKING

E-banking is defined as the automated delivery of new and traditional

banking products and services directly to customers through electronic,
interactive communication channels. E-banking includes the systems that
enable financial institution customers, individuals or businesses, to access
accounts, transact business, or obtain information on financial products and
services through a public or private network, including the Internet.
Customers access e-banking services using an intelligent electronic device,
such as a personal computer (PC), personal digital assistant (PDA),
automated teller machine (ATM), kiosk, or Touch Tone telephone. While the
risks and controls are similar for the various e-banking access channels, this
booklet focuses specifically on Internet-based services due to the Internets
widely accessible public network. With technology having played a significant
role in the development of newer modes of payment and settlement, many
banks have introduced innovative products such as e-banking and epayments. Simply put, e-banking is the process of conduct of banking with the
use of electronic tools and facilities. The service-based areas of activity of
banks have perhaps been the largest beneficiary of e-banking. Internet
banking has been the predominant mode of e-banking in India with the
Internet offering itself as a new delivery mechanism for the banks in reaching
the customer.
Commencing with simple transactions such as enquiry facilities, today
messages sent through the internet to banks perform tasks such as funds
transfer and account opening. Internet banking, however, necessitates that
banks have a secure web server and a centralised data base of their
customers to facilitate information flow from customers to the bank and vice
9

versa. While some banks already have systems to meet this requirement,
others are at various stages of implementation.
Effecting payments through electronic means constitute e-payments. Various
forms of e-payment are in existence such as E-cheque, card based payments
(credit, debit and smart cards) and EFT. All these are available in the country
and the large scale usage of these are dependent on the levels of technology
at banks and their ready acceptance by the constituents of banks.

10

Table : Common E-Banking Services

Retail Services

Wholesale Services

Account management

Account management

Bill payment and

presentment
New account opening

Cash management
Small business loan
applications, approvals, or

Consumer wire transfers advances

Investment/Brokerage
services

E-BANKING

Commercial wire transfers

COMPONENTS

E-banking systems can vary significantly in their configuration depending on a

number of factors. Financial institutions should choose their e-banking system
configuration, including outsourcing relationships, based on four factors:
Strategic objectives for e-banking
Scope, scale, and complexity of equipment, systems, and activities
Expertise
Security and internal control requirements

Financial institutions may choose to support their e-banking services

internally. Alternatively, financial institutions can outsource any aspect
of their e-banking systems to third parties. The following entities

11

could provide or host (i.e., allow applications to reside on their servers)

e-banking-related services for financial institutions:
Another financial institution
Internet service provider
Internet banking software vendor or processor
Core banking vendor or processor,
Managed security service provider
Bill payment provider
Credit bureau,

E-banking systems rely on a number of common components or processes.

The following list includes many of the potential components and processes
seen in a typical institution:
Website design and hosting
Firewall configuration and management
Intrusion detection system or IDS (network and host-based),
Network administration
Security management
Internet banking server
E-commerce applications (e.g., bill payment, lending, brokerage

12

 Internal network servers

Core processing system
Programming support
Automated decision support systems
These components work together to deliver e-banking services. Each
component represents a control point to consider.

The Dos of Net Banking

RELATIONSHIP: Banks and other financial institutions in India
cannot go completely virtual, physical branches help forge a
relationship with the customer that a virtual bank cannot. Most
customers in India prefer direct and personal contact with their
bankers.
PERSONALIZATION:

Banking

Solutions

become

truly

personalized when they are able to respond to the changing customer

needs. For Example, Software that might tell you which credit card
balance to pay off first, or alert you in advance when your Cheque will
bounce. This level of personalization is still lacking in the banking
solutions offered by Indian banks.
INTEGRATION: Another importance aspect is integrating customer
service interface and channels, so that the customer deals with a
single channel that caters to diverse needs such as kiosks, ATMs,
Web TV, mobile phones, pagers and branch counters. Banks need to
be one stop shops for an entire range of personal finance products
from loans and insurance to mutual funds and even tax-savings
instruments. This is being done by account aggregators such as
13

Yodlee, Corillian, eBalance and VerticalOne that lets you log into the
website and track information as diverse as bank and credit card
balances, value of investments, and frequent-flier miles from several
sites, each of which has its own username and password.
INNOVATION: Nowadays, banks need to depend on product
innovation, expanding their range of their products and service
offerings. Apart from just online accounts, e-banks would need to tailor
specific products for the Internet, like online bill presentment or credit
card with instant online approval. Many Internet Banks like Egg have
taken the lead in offering innovative products like Egg card a credit
card that features an introductory zero percent interest rates.

Levels/Scope of E-banking business

Basic information e-banking/web sites that just disseminate information
on banking products and services offered to bank customers and the
general public;
Simple transactional e-banking/web sites that allow bank customers to
submit applications for different services, make queries on their
account balances, and submit instructions to the bank, but do no
permit any account transfers;
Advanced transactional e-banking/web sites that allow bank customers
to electronically transfer funds to/from their accounts pay bills, and
conduct other banking transaction online.
Usually, e-banking refers to types II and III.

Risk Management of E-Banking

E-BANKING

STRATEGY

Financial institution management should choose the level of e-banking

services provided to various customer segments based on customer needs

14

and the institutions risk assessment considerations. Institutions should reach

this decision through a board-approved, e-banking strategy that considers
factors such as customer demand, competition, expertise, implementation
expense, maintenance costs, and capital support. Some institutions may
choose not to provide e-banking services or to limit e-banking services to an
informational website. Financial institutions should periodically re-evaluate
this decision to ensure it remains appropriate for the institutions overall
business strategy. Institutions may define success in many ways including
growth in market share, expanding customer relationships, expense
reduction, or new revenue generation. If the financial institution determines
that a transactional website is appropriate, the next decision is the range of
products and services to make available electronically to its customers.

COST-BENEFIT ANALYSIS AND RISK ASSESSMENT

Financial institutions should base any decision to implement e-banking
products and services on a thorough analysis of the costs and benefits
associated with such action. Some of the reasons institutions offer e-banking
services include:
Lower operating costs,
Greater geographic diversification
Improved or sustained competitive position
Increased customer demand for services, and
New revenue opportunities.
The individuals conducting the cost-benefit analysis should clearly understand
the risks associated with e-banking so that cost considerations fully
incorporate appropriate risk mitigation controls. Without such expertise, the
cost-benefit analysis will most likely underestimate the time and resources

15

needed to properly oversee e-banking activities, particularly the level of

technical expertise needed to provide competent oversight of in-house or
outsourced activities. In addition to the obvious costs for personnel, hardware,
software, and communications, the analysis should also consider:
Changes to the institutions policies, procedures, and practices;
The impact on processing controls for legacy systems
The appropriate networking architecture, security expertise, and
software tools to maintain system availability and to protect and
respond to unauthorized access attempts
The skilled staff necessary to support and market e-banking services
during expanded hours and over a wider geographic area, including
possible expanded market and cross-border activity
The additional expertise and MIS needed to oversee e-banking
vendors or technology service providers
The higher level of legal, compliance, and audit expertise needed to
support technology-dependent services
Expanded MIS to monitor e-banking security, usage, and profitability
and to measure the success of the institutions e-banking strategy
Cost of insurance coverage for e-banking activities
Potential revenues under different pricing scenarios
Potential losses due to fraud; and
Opportunity costs associated with allocating capital to e-banking efforts

16

MONITORING

AND

ACCOUNTABILITY

Once an institution implements its e-banking strategy, the board and

management should periodically evaluate the strategys effectiveness. A key
aspect of such an evaluation is the comparison of actual e-banking
acceptance and performance to the institutions goals and expectations.
Some items that the institution might use to monitor the success and cost
effectiveness of its e-banking strategy include:
Revenue generated
Website availability percentages,
Customer service volumes
Number of customers actively using e-banking services
Percentage of accounts signed up for e-banking services, and
The number and cost per item of bill payments generated
Without clearly defined and measurable goals, management will be unable to
determine if e-banking services are meeting the customers needs as well as
the institutions growth and profitability expectations.
In evaluating the effectiveness of the institutions e-banking strategy, the
board should also consider whether appropriate policies and procedures are
in effect and whether risks are properly controlled. Unless the initial strategy
establishes clear accountability for the development of policies and controls,
the board will be unable to determine where and why breakdowns in the risk
control process occurred.

AUDIT
An important component of monitoring is an appropriate independent audit
function. Financial institutions offering e-banking products and services

17

should expand their audit coverage commensurate with the increased

complexity and risks inherent in e-banking activities. Financial institutions
offering e-banking services should ensure the audit program expands to
include:
Scope and coverage, including the entire e-banking process as applicable
(i.e., network configuration and security, interfaces to legacy systems,
regulatory compliance, internal controls, and support activities performed by
third-party providers);
Personnel with sufficient technical expertise to evaluate security threats and
controls in an open network (i.e., the Internet)
Independent individuals or companies conducting the audits without
conflicting e-banking or network security roles.

INFORMATION SECURITY PROGRAM

SECURITY

GUIDELINES

Financial institutions must comply with the Guidelines Establishing Standards

for Safeguarding Customer Information (guidelines) as issued pursuant to
the GrammLeachBliley Act of 1999 (GLBA).

When financial institutions

introduce e-banking or related support services, management must re-assess

the impact to customer information under the GLBA. The guidelines require
financial institutions to:
Ensure the security and confidentiality of customer information;
Protect against any anticipated threats or hazards to the security or
integrity of such information; and
Protect against unauthorized access to or use of such information that
could result in substantial harm or inconvenience to any customer

18

 The guidelines outline specific measures institutions should consider in

implementing a security program. These measures include:
Identifying and assessing the risks that may threaten consumer
information
Developing a written plan containing policies and procedures to
manage and control these risks
Implementing and testing the plan; and
Adjusting the plan on a continuing basis to account for changes in
technology, the sensitivity of customer information, and internal or
external threats to information security

AUTHENTICATING

E-BANKING CUSTOMERS

E-banking introduces the customer as a direct user of the institutions

technology. Customers have to log on and use the institutions systems.
Accordingly, the financial institution must control their access and educate
them in their security responsibilities. While authentication controls play a
significant role in the internal security of an organization, this section of the
booklet discusses authentication only as it relates to the e-banking customer

Authenticating New Customers

verifying a customers identity, especially that of a new customer, is an
integral part of all financial services. Consistent with the USA PATRIOT Act,
federal regulations require that by October 1, 2003, each financial institution
must develop and implement a customer identification program (CIP) that is
appropriate given the institutions size, location and type of business.

The

CIP must be written, incorporated into the institutions Bank Secrecy Act/AntiMoney Laundering program, and approved by the institutions board of
directors. The CIP must include risk-based procedures to verify the identity of
customers (generally persons opening new accounts). Procedures in the

19

program should describe how the bank will verify the identity of the customer
using documents, non documentary methods, or a combination of both. The
procedures should reflect the institutions account opening processes
whether face-to-face or remotely as part of the institutions

e-banking

services.
As part of its non documentary verification methods, a financial institutions
may rely on third parties to verify the identity of an applicant or assist in the
verification. The financial institution is responsible for ensuring that the third
party uses the appropriate level of verification procedures to confirm the
customers identity. New account applications submitted on-line increase the
difficulty of verifying the application information. Many institutions choose to
require the customer to come into an office or branch to complete the account
opening process.
Institutions conducting the entire account opening process through the mail or
on-line should consider using third-party databases to provide:
Positive verification to ensure that material information provided by an
applicant matches information available from third-party sources
Logical verification to ensure that information provided is logically
consistent, and
Negative verification to ensure that information provided has not
previously been associated with fraudulent activity (e.g., an address
previously associated with a fraudulent application ).

Authenticating Existing

Customers

In addition to the initial verification of customer identities, the financial

institution must also authenticate its customers identities each time they
attempt to access their confidential on-line information. The authentication
method a financial institution chooses to use in a specific e-banking

20

application should be appropriate and commercially reasonable in light of

the risks in that application.

CUSTOMER PRIVACY AND

CONFIDENTIALITY

maintaining the privacy of a customers information is one of the cornerstones

upon which trust in the U.S. banking system is based. Misuse or unauthorized
disclosure of confidential customer data may expose a financial institution to
customer litigation or action by regulatory agencies. To meet expectations
regarding the privacy of customer information, financial institutions should
ensure that their privacy policies and standards comply with applicable
privacy

laws

and

regulations,

particularly

the

privacy

requirements

established by GLBA. The regulation implementing GLBAs requirements also

describes standards on electronic disclosures that apply if an institution elects
to display its privacy policy on its website

TRANSACTION

MONITORING

AND

CONSUMER

DISCLOSURES
The general requirements and controls that apply to paper-based transactions
also apply to electronic financial services. Consumer financial services
regulations generally require that institutions send, provide, or deliver
disclosures to consumers as opposed to merely making the disclosures
available. Financial institutions are permitted to provide such disclosures
electronically if they obtain consumers consent in a manner consistent with
the requirements of the federal Electronic Signatures in Global and National
Commerce Act (the E-Sign Act). The Federal Reserve Board has issued
interim rules providing guidance on how the E-Sign Act applies to the
consumer financial services and fair lending laws

and regulations

21

administered by the Board.

However mandatory compliance with the interim

rules was not required at the time of this booklets publication

Chapter 2 Review of Literature

There have already been a number of studies related to Internet banking
covering a range of research dimensions.

Pyun et al. (2002) assessed the status of Internet banking in the U.S.,
Japan and Europe, Guar (2001) investigated Internet banking in Romania,
and Waite and Harrison (2002) explored factors contributing to customer
satisfaction and dissatisfaction with the online information provided by retail
banks. Research on the adoption of Internet banking has been also active in
the past few years. A significant part of this work has also focused on the
process by which adoption occurs or the demand aspect of diffusion (Brown,
1981; Roger, 1995). In a study on the adoption of Internet banking in
Australia, Sathye (1999) reported that security concerns and the lack of
awareness stand out as the main reasons for the failure to adopt Internet
banking by customers. Polatoglu and Ekin (2001) undertook a similar study
on the acceptance of Internet banking services in Turkey while Balachandher
et al (2000) examined the factors that affect the adoption of Internet banking
in Malaysia.

Jun and Cai (2001) attempted to identify key quality attributes of the
Internet banking products and services by analyzing Internet banking
customers comments on their banking experiences. Finally, Howcroft et al
(2002) explored consumers existing financial services behaviour and

22

assessed their attitudes towards home-based services, i.e., telephone and

Internet banking. Howcroft et al (2002) concluded that branch networks are
still the most popular delivery channel in the acquisition of current accounts,
credit-based and investment-based services.

Liao et al (1999) the theory of planned behaviour (Benham & Raymond,

1996) was applied to study the adoption of virtual banking. This theory
assumes that behaviour is determined by intention to perform the behaviour
and in turn intention is determined by three factors: namely, attitude,
subjective norms and perceived behavioural control. Each of these factors in
turn is generated by a number of beliefs and associated evaluations.

Koedrabruen et. Al. (2002) investigated, designed and developed an

internet based retail banking prototypethat meets the requirements of Thai
customers. It found that more than half of the sample Internet users in
Thailand are very interested in using Internet services. The main features
needed are balance inquiry, bill payement, fund transfer, business
information, and payement for goods purchased. The prototype was then
developed and validated. The survey from the executives of four Thai banks
revealed that there was a potential growth for retail Internet Banking in
Thailand.

Unnithan t. al.(2001) studied the drivers for change in the evolution of

banking sector and the move towards electronic banking by focusing on two
economies Australia and India. The paper found that Australia is the country
with internet ready infrastructure as far as telecommunication, secure
protocols PC penetration and computer literacy is concerned. India by
comparison is weak infrastructure, low PC penetration, developing security

23

protocols and consumer reluctance in rural sector. Although many banks have
started internet banking services the slow pace will continue until the critical
mass is achieved for PC, inherent connections and telephones. The economy
is classically trying to develop and catch up with leading economies.

Bajpai, G.N. Banking, Insurance and Financial Sector: A vision

of the future says that the opportunity zone in financial markets are
contracting somewhere and at sometime expanding elsewhere. Both change
and the pace of change in financial markets would be different tomorrow.
Continuous exploration of scopes and of values would demand a billion offer
on emerging opportunities, building competence, strategies for leadership
positions in opportunity zone and principles centered business practices.

Rao et. Al.(2003) provide a theoretical analysis of internet banking in India

and found that as compared to banks abroad India banks offering online
services still have a long way to go. For online banking to reach a critical
mass, there has to be sufficient number of users and the sufficient
infrastructure in place. The purpose of this study is to find the problem of
customer regarding net banking. There are series of papers that observe that
internet banking has revolutionized the banking industry and it is under
pressure to offer new products and services. However to succeed in today
electronic markets a strategic and focus approach is required.

Sajid Khan, Survey of critical success factors in e-banking:

The organizational factors, which are critical to the success of e-banking, are
investigated. Different pieces of literature report different factors as key to
success and generally based on subjective, perceptual data. A synthesis of
existing literature is a basis for survey questions. The data was collected from
UK based financial sector organisations who are offering their services on
electronic channels, using postal questionnaires. The top factors found to be
most

critical

for

the

success

in

e-banking

are:

quick

responsive

products/services, organizational flexibility, services expansion, systems

24

integration and enhanced customer service. An important lesson from this

research is that organisations need to view the e-banking initiative as a
business critical area rather that just a technical issue. They need to give
attention to internal integration, which may include channels, technology and
business process integration, and improving the overall services to their
customers.

25

Chapter 3
Research Methodology
Objectives Of Study
To access the present scenario of the services of E-Banking.
To study the scope of E-Banking in future.
To study the problem faced by the consumers in availing the Banking
Services.
To check the satisfaction level of customers for using Net Banking
Services.
To get feedback from customers regarding usage improvement of Net
Banking.

Research Methodology
Research inculcates scientific and inductive thinking and it promotes the
development of logical habits of thinking and organization. The role of
research in several fields of applied economics, whether related to business
or to economy as a whole has generally increased in modern times. Research
in common parlance refers to a search for knowledge. It can also be defined
as scientific and systematic search for pertinent information on specific topic.
It is a way to systematically solve research problem. It may be understood as
a science of studying how research is done scientifically. In it we study the
various steps that are generally adopted by researcher in studying his
research problem along with the logic behind them. The research frame for
the study is detailed below. It is necessary to explain the methodology for the
research work done. The aim of research is to find out the truth which is
hidden or which has not been discovered as yet. While conducting this
research I have used primary and secondary source of data.

26

The main purpose of this chapter is to present the method and procedure
used in execution and conduction of study. In order to facilitate the chapter is
divided into following sections.

Selection of Method:
The present study is not subjected to experimentation. A survey was adopted
to carry out research.

Preparing the Research Design:

The nature of the research is descriptive. A flexible research design which
provides opportunity for considering many different aspects of a problem is
considered appropriate if the purpose of research study is that if exploration.

Determining sample design:

Universe:
All the items under consideration in any field of inquiry constitute a Universe
or Population. The relevant universe in this case consists of four banks
where a comparative study of public, private and foreign banks in relation to
customer satisfaction in Net Banking was conducted and interferences were
drawn as to which particular concern offer better internet than the other.

Sample size:
A random sample size of 50 respondents has been drawn.

Sample unit:
Individuals having bank account and is using Internet Banking.

Sampling Technique:
For the purpose of the study a non probability sampling technique i.e
convinces sampling is undertaken.

27

STATISTICAL TOOLS USED

Different statistical tools have been used in this study.
Mean or Average
Average is an attempt to find one single figure to describe whole of figures.
An average is sometimes describes as a number which is typical of the whole
group. The formula for calculating mean is :
Mean (X) = fX / f
Where f = Frequency,

X = Variable in question

Standard deviation
Standard deviation is positive square root of mean of the squares of
deviations of variable from their arithmetic mean and is denote by:
(Standard deviation) = (X-X)
N
Where n is number of observations and X = mean.

For discrete series it is given by :

(Standard deviation)

= f(X -X)

28

Z- Test
If sample size is greater than 30 then it will be considered as large sample.
While testing the significance of statistic, the concept of standard error is
used.

(Standard deviation)

= f(X - X)
f

Steps:

Parametric Test

N>30, therefore Z test is applied.

S.E (Standard error) =

N

Two Tailed

Level of significance

Ho : Xs = Xp

H : Xs Xp

Z =

Xs - Xp
S.E

29

5) LIMITATIONS:

The study is based only on 50 respondents of Chandigarh and Mohali.

Study is not exhaustive and has a scope of further research.

The behavior and satisfaction level of the customers cant be studied in

detail due to time factor.

The result is based on primary and secondary data that has its own
limitations.

The respondents were not at all serious while answering the questions.

Personal bias involved in respondents answers becomes the major

hurdle in obtaining the true information.

30

Chapter 4
Role of RBI in Computerisation of Banks in India
Computerisation became popular in the western countries right from the
Sixties. Main Frames were extensively used both by the Public Institutions
and Major Private Organizations. In the Seventies Mini Computer became
popular and Personal Computers in early Eighties, followed by introduction of
several software products in high level language and simultaneous
advancement in networking technology. This enabled the use of personal
computers extensively in offices & commercial organisations for processing
different kinds of data.
However in India organised Trade Unions were against introduction of
computers in Public Offices. Computerisation was restricted to major scientific
research organizations and Technical Institutes and defense organizations.
Indian Railways first accepted computerisation for operational efficiency.
The Electronics Corporation of India Ltd. was set up in 1967 with the objective
of research & development in the fields of Electronic Communication, Control,
instrumentation, automation and Information Technology. CMC Ltd (Computer
Maintenance Corporation of India Ltd.) was established in 1976 to look after
maintenance operations of Main Frame Computers installed in several
organisations in India, to serve the gap, when IBM left India, due to the
directive of the then Central Government. Rapid development of business and
industry brought manual operations of data, a saturation point. This acted as
an overload on the growing banking operations. Government owned banks in
general found the "house-keeping" unmanageable. Several heads of
accounts in particular inter-bank clearing and inter-branch reconciliation of
accounts went totally out of control.

31

Low productivity pushed cost of wages high and employees realized that
unless they agreed for computerisation further improvement in their wage
structure was not possible.
Against this backdrop, the Committee on Computerisation in Banks was set
up once again under Dr.Rangarajan's Chairmanship to draw up a perspective
plan for computerisation in banks. In its report submitted in 1989, the
Committee acknowledged the gains of the initial efforts and sought to move
away from the stand-alone dedicated systems to an on-line transaction
processing environment in branch banking. It recommended that the thrust of
bank computerisation for the following 5 years should be to fully
computerization the operations at both the front and back offices of large
branches then numbering around 2500.

Recommendations of Committee on Technology Up gradation

The Reserve Bank continued to be involved in shaping the technology vision
of the banking system. Following the recommendations of the Committee on
Financial Sector Reforms, (which is popularly known as the second
Narasimham committee), a Committee on Technology Up gradation was set
up by the RBI for the Banking Sector in 1994. This committee has
representation from banks, Government, technical institutions and the RBI.
Among other things, this committee looked into issues relating to
i.

Encryption of Public Switching Telephone Network (PSTN) lines

ii.

Admission of electronic files as evidence

iii.

Record keeping

iv.

Modalities for a satellite based WAN for banks and financial institutions
with the necessary security systems by banks and other financial
institutions, to ultimately develop a sound and an efficient payments
system

32

v.

Methods by which technological up gradation in banks and financial

institutions could be effected and in the context study the feasibility of
establishment of standards, designing payments system backbone and
standards relating to security levels, messages and smart cards.

Internet Banking in India - Guidelines Issued by RBI

Reserve Bank of India had set up a 'Working Group on Internet Banking' to
examine different aspects of Internet Banking (I-banking). The Group had
focused on three major areas of I-banking, i.e.
i.

technology and security issues,

ii.

legal issues and

iii.

Regulatory and supervisory issues.

RBI has accepted the recommendations of the Group to be implemented in a

phased manner. Accordingly, the following guidelines are issued for
implementation by banks. Banks are also advised that they may be guided by
the original report, for a detailed guidance on different issues.

Technology and Security Standards

a. Banks should designate a network and database administrator with
clearly defined roles as indicated in the Group's report
b. Banks should have a security policy duly approved by the Board of
Directors. There should be a segregation of duty of Security Officer /
Group dealing exclusively with information systems security and
Information

Technology

Division

which

actually

implements

the

computer systems. Further, Information Systems Auditor will audit the

information systems.
c. Banks should introduce logical access controls to data, systems,
application software, utilities, telecommunication lines, libraries, system

33

software, etc. Logical access control techniques may include user-ids,

passwords, smart cards or other biometric technologies.
d. At the minimum, banks should use the proxy server type of firewall so
that there is no direct connection between the Internet and the bank's
system. It facilitates a high level of control and in-depth monitoring using
logging and auditing tools. For sensitive systems, a stateful inspection
firewall is recommended which thoroughly inspects all packets of
information, and past and present transactions are compared. These
generally include a real time security alert.
e. All the systems supporting dial up services through modem on the same
LAN as the application server should be isolated to prevent intrusions
into the network as this may bypass the proxy server.
f. The information security officer and the information system auditor
should undertake periodic penetration tests of the system, which should
include:
i.

Attempting to guess passwords using password-cracking tools.

ii.

Search for back door traps in the programs.

iii.

Attempt to overload the system using DDoS (Distributed Denial of

Service) & DoS (Denial of Service) attacks.

Legal Issues
a. Considering the legal position prevalent, there is an obligation on the
part of banks not only to establish the identity but also to make
enquiries about integrity and reputation of the prospective customer.
Therefore even though request for opening account can be accepted
over Internet, accounts should be opened only after proper introduction
and physical verification of the identity of the customer.
b. From a legal perspective, security procedure adopted by banks for
authenticating users needs to be recognized by law as a substitute for
signature. In India, the Information Technology Act, 2000, in Section
3(2) provides for a particular technology (viz., the asymmetric crypto

34

system and hash function) as a means of authenticating electronic

record. Any other method used by banks for authentication should be
recognized as a source of legal risk.
c. Under the present regime there is an obligation on banks to maintain
secrecy and confidentiality of customers' accounts. In the Internet
banking scenario, the risk of banks not meeting the above obligation is
high on account of several factors. Despite all reasonable precautions,
banks may be exposed to enhanced risk of liability to customers on
account of breach of secrecy, denial of service etc., because of
hacking/ other technological failures. The banks should, therefore,
institute adequate risk control measures to manage such risks

Profiles of Various Banks

Evolution

of

SBI

The origin of the State Bank of India goes back to the first decade of the
nineteenth century with the establishment of the Bank of Calcutta in
Calcutta on 2 June 1806. Three years later the bank received its charter
and was re-designed as the Bank of Bengal (2 January 1809). A unique
institution, it was the first joint-stock bank of British India sponsored by the
Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank
of Madras (1 July 1843) followed the Bank of Bengal. These three banks
remained at the apex of modern banking in India till their amalgamation as
the Imperial Bank of India

on

27

January

1921.

Primarily Anglo-Indian creations, the three presidency banks came into

existence either as a result of the compulsions of imperial finance or by
the felt needs of local European commerce and were not imposed from
outside in an arbitrary manner to modernise India's economy. Their
evolution

was,

however,

shaped

by

ideas

culled

from

similar

developments in Europe and England, and was influenced by changes

occurring in the structure of both the local trading environment and those

35

in the relations of the Indian economy to the economy of Europe and the
global economic framework.

Bank

of

Bengal

The establishment of the Bank of Bengal marked the advent of limited

liability, joint-stock banking in India. So was the associated innovation in
banking, viz. the decision to allow the Bank of Bengal to issue notes,
which would be accepted for payment of public revenues within a
restricted geographical area. This right of note issue was very valuable not
only for the Bank of Bengal but also its two siblings, the Banks of Bombay
and Madras. It meant an accretion to the capital of the banks, a capital on
which the proprietors did not have to pay any interest.
The three banks were governed by royal charters, which were revised
from time to time. Each charter provided for a share capital, four-fifth of
which were privately subscribed and the rest owned by the provincial
government. The members of the board of directors, which managed the
affairs of each bank, were mostly proprietary directors representing the
large European managing agency houses in India. The rest were
government nominees, invariably civil servants, one of whom was elected
as

Bank

the

of

president

of

the

board.

Bombay

The presidency Banks of Bengal, Bombay and Madras with their 70

branches were merged in 1921 to form the Imperial Bank of India. The
triad had been transformed into a monolith and a giant among Indian
commercial banks had emerged. The new bank took on the triple role of a
commercial bank, a banker's bank and a banker to the government.
But this creation was preceded by years of deliberations on the need for a
'State Bank of India'. What eventually emerged was a 'half-way house'
combining the functions of a commercial bank and a quasi-central bank.

36

Imperial

Bank

of

India

When India attained freedom, the Imperial Bank had a capital base
(including reserves) of Rs.11.85 crores, deposits and advances of
Rs.275.14 crores and Rs.72.94 crores respectively and a network of 172
branches and more than 200 sub offices extending all over the country.
In 1951, when the First Five Year Plan was launched, the development of
rural India was given the highest priority. The commercial banks of the
country including the Imperial An act was accordingly passed in
Parliament in May 1955 and the State Bank of India was constituted on 1
July 1955. More than a quarter of the resources of the Indian banking
system thus passed under the direct control of the State.

TECHNOLOGY

UPGRADATION HIGHLIGHTS

A. SBIs Information Technology Programme aims at

achieving efficiency in operations, meeting customer and market
expectations and facing competition. Our achievements are
summarized below

FULL BRANCH COMPUTERISATION (FCBs): All the branches

of the Bank are now fully computerized. This strategy has contributed to
improvement

in

customer

service.

ATM SERVICES: There are 4633 ATMs on the ATM Network including
3181 ATMs of SBI and 1452 from the 7 Associate Banks and Subsidiaries.
These ATMs are located in 1521 centers spread across the length and
breadth of the country, thereby creating a truly national network of ATMs
with an unparalleled reach. Value added services like ATM locator,
payment of fees for college students, multilingual screens, voice over and
drawl of cash advance by SBI credit card holders have been introduced.

INTERNET BANKING (INB): This on-line channel enables customers

to access their account information and initiate transactions on a 24x7,

37

boundary less basis. 1994 branches, covering 555 centers, are extending
INB service to their customers. All functionalities other than Cash and
Clearing have been extended to individual retail customers. A separate
Internet Banking Module for Corporate customers has been launched and
available at 1305 branches. Bulk upload of data for Corporate, Interbranch funds transfer for Retail customers,
Online payment of Customs duty and Govt. tax, Electronic Bill Payment,
SMS Alerts, E-Poll, IIT GATE Fee Collection, Off-line Customer
Registration Process and Railway Ticket Booking are
features

the

new

deployed.

GOVT. BUSINESS: Software has been developed and rolled out at

7785 fully computerised branches. Electronic generation of all reports for
reporting, settlement and reconciliation of

Govt. funds,

is

available.
STEPS: Under STEPS, the banks electronic funds transfer system, the
Products offered are eTransfer (ET), eRealisation (ER), eDebit (CMP) and
ATM reconciliation. STEPS handles payment messages and reconciliation
simultaneously..

Core Banking : The Core Banking Solution provides the state-of-the-art

anywhere anytime banking for our customers. The facility is available at
574

branches.

Trade Finance: The solution has been implemented, providing

efficiency in handling Trade Finance transactions with Internet access to
customers and greatly enhances the banks services to Corporates and
Commercial Network branches. This new Trade Finance solution,
EXIMBILLS, will be implemented at all domestic branches as well as at
Foreign offices engaged in trade finance business during the year.

38

B.

PROFILE OF

HDFC

BANK

The Housing Development Finance Corporation Limited (HDFC) was

amongst the first to receive an 'in-principle' approval from the Reserve
Bank of India (RBI) to set up a bank in the private sector, as part of the
RBI's liberalisation of the Indian Banking Industry in 1994. The bank was
incorporated in August 1994 in the name of 'HDFC Bank Limited', with its
registered office in Mumbai, India. HDFC Bank commenced operations as
a Scheduled Commercial

Bank in

January

1995.

Promoter
HDFC is India's premier housing finance company and enjoys an impeccable
track record in India as well as in international markets. Since its inception in
1977, the Corporation has maintained a consistent and healthy growth in its
operations to remain a market leader in mortgages. Its outstanding loan
portfolio covers well over a million dwelling units. HDFC has developed
significant expertise in retail mortgage loans to different market segments and
also has a large corporate client base for its housing related credit facilities.
With its experience in the financial markets, a strong market reputation, large
shareholder base and unique consumer franchise, HDFC was ideally
positioned to promote a bank in the Indian environment.

Business

Focus

HDFC Bank's mission is to be a World-Class Indian Bank. The Bank's aim

is to build sound customer franchises across distinct businesses so as to
be the preferred provider of banking services in the segments that the
bank operates in and to achieve healthy growth in profitability, consistent
with the bank's risk appetite. The bank is committed to maintain the
highest level of ethical standards professional integrity and regulatory
compliance.

39

 HDFC Bank's business philosophy is based on four

core values:
Operational Excellence,
Customer Focus,
Product Leadership
People.
Capital Structure
ATM

Network

Technology
HDFC Bank operates in a highly automated environment in terms
of information technology and communication systems. All the
bank's branches have connectivity which enables the bank to offer
speedy funds transfer facilities to its customers. Multi-branch
access is also provided to retail customers through the branch
network and Automated Teller Machines (ATMs).
The Bank has made substantial efforts and investments in
acquiring the best technology available internationally to build the
infrastructure for a world-class bank. In terms of software, the
Corporate Banking business is supported by Flexcube, while the
Retail Banking business by Finware, both from i-flex Solutions Ltd.
The systems are open, scaleable and web-enabled.
The Bank has prioritized its engagement in technology and the
internet as one of its key goals and has already made significant
progress in web-enabling its core businesses. In each of its
businesses, the Bank has succeeded in leveraging its market
position, expertise and technology to create a competitive
advantage and build market share.

Business

Profile
40

HDFC Bank caters to a wide range of banking services covering

commercial and investment banking on the wholesale side and
transactional / branch banking on the retail side. The bank has
three

key

a) Wholesale

business

areas :-

Banking

Services

The Bank's target market is primarily large, blue-chip manufacturing

companies in the Indian corporate sector and to a lesser extent,
emerging mid-sized corporates. For these corporates, the Bank
provides a wide range of commercial and transactional banking
services, including working capital finance, trade services,
transactional services, cash management, etc. The bank is also a
leading provider of structured solutions which combine cash
management services with vendor and distributor finance for
facilitating superior supply chain management for its corporate
customers. Based on its superior product delivery / service levels
and strong customer orientation, the Bank has made significant
inroads into the banking consortia of a number of leading Indian
corporates including multinationals, companies from the domestic
business houses and prime Public Sector companies. It is
recognised as a leading provider of cash management and
transactional banking solutions to corporate customers, mutual
funds, stock exchange members

b) Retail

Banking

banks.

Services

The objective of the Retail Bank is to provide its target market

customers a full range of financial products and banking services,
giving the customer a one-stop window for all his/her banking
requirements. The products are backed by world-class service and
delivered to the customers through the growing branch network, as
well as through alternative delivery channels like ATMs, Phone
Banking, Net Banking and

Mobile

Banking.

The HDFC Bank preferred program for high net worth individuals,
41

the HDFC Bank Plus and the Investment Advisory Services

programs have been designed keeping in mind needs of customers
who seek distinct financial solutions, information and advice on
various investment avenues. The Bank also has a wide array of
retail loan products including Auto Loans, Loans against marketable
securities, Personal Loans and Loans for Two-wheelers. It is also a
leading provider of Depository Services to retail customers, offering
customers the facility to hold their investments in electronic form.
HDFC Bank was the first bank in India to launch an International
Debit Card in association with VISA (VISA Electron) and issues the
Master card Maestro debit card as well. The debit card allows the
user to directly debit his account at the point of purchase at a
merchant establishment, in India and overseas. The Bank launched
its credit card in association with VISA in November 2001.
Acceptance at merchant establishments

c)

Treasury Operations

Within this business, the bank has three main product areas - Foreign
Exchange and Derivatives, Local Currency Money Market & Debt Securities,
and Equities. With the liberalisation of the financial markets in India,
corporates need more sophisticated risk management information, advice and
product structures. These and fine pricing on various treasury products are
provided through the bank's Treasury team. To comply with statutory reserve
requirements, the bank is required to hold 25% of its deposits in government
securities. The Treasury business is responsible for managing the returns and
market risk on this investment

portfolio.

Demat Account: The customer can conduct hassle-free transactions on

his/her shares. The customer can also access his/her Demat Account on the
Internet.
Innovative

services

for

your

convenience...

Phone Banking: 24-hour automated banking services with 39 Phone

42

Banking

numbers

available.

ATM 24-hour banking: Apart from routine transactions, the customer can
also pay his/her utility bills and transfer funds, at any of the banks ATMs
across

the

country

all

year

round.

Inter-city/Inter-branch Banking: The customer can access his/her account

from any of the banks 451

branches

in

205

cities.

Net Banking: The customer can access his/her bank account from
anywhere in the world, at anytime, at his/her own convenience. The customer
can also view his/her Demat Account through Net

Banking.

International Debit Card: With an ATM card the customer can shop with
all over the country and in over 140 countries with. The customer can spend
in

any

currency,

and

pay

in

Rupees.

Mobile Banking: The customer can access his/her account on his/her

mobile phone screen at no airtime cost. The customer can use SMS
technology to conduct his/her banking transactions

from

his/her

cellphone.

Bill Pay: The customer can pay his/her telephone, electricity and mobile
phone bills through the banks
or
Loans

mobile
for

ATMs,

Internet,

phone

phone.
every need

Now, the banks loans come to the customers easy-to-pay monthly

installments, and are available with easy documentation and quick delivery.

NRI Services: A comprehensive range, backed by unmatched features and

world-class service, ensures NRIs all the banking support they need.

Forex Facilities: The customer can avail foreign currency, travellers

cheques, foreign exchange demand drafts, to meet his/her travel needs.
Insurance: HDFC Bank now brings its customers Life Insurance and Pension
Solutions like Risk Cover Scheme, Savings Scheme, Childrens Plan and
Personal Plan from HDFC Standard Life Insurance Co. Ltd.

43

PROFILE OF

ICICI BANK

ICICI Bank is India's second-largest bank with total assets of about

Rs.146,214 crore at December 31, 2004 and profit after tax of Rs. 1,391 crore
in the nine months ended December 31, 2004 (Rs. 1,637 crore in fiscal 2004).
ICICI Bank has a network of about 505 branches and extension counters and
about 1,850 ATMs. ICICI Bank offers a wide range of banking products and
financial services to corporate and retail customers through a variety of
delivery channels and through its specialized subsidiaries and affiliates in the
areas of investment banking, life and non-life insurance, venture capital and
asset management. ICICI
Bank set up its international banking group in fiscal 2002 to cater to the crossborder needs of clients and leverage on its domestic banking strengths to
offer products internationally. ICICI Bank currently has subsidiaries in the
United Kingdom and Canada, branches in Singapore and Bahrain and
representative offices in the United States, China, United Arab Emirates and
Bangladesh.*
ICICI Bank's equity shares are listed in India on the Stock Exchange, Mumbai
and the National Stock Exchange of India Limited and its American
Depositary Receipts (ADRs) are listed on the New York Stock Exchange
(NYSE).
As required by the stock exchanges, ICICI Bank has formulated a Code of
Business

Conduct

and

Ethics

for

its

directors

and

employees.

At October 31, 2004, ICICI Bank, with free float market capitalization* of
about Rs. 220.00 billion (US$ 5.00 billion) ranked third amongst all the
companies

listed

on

the

Indian

stock

exchanges.

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian

financial institution, and was its wholly-owned subsidiary. ICICI's shareholding
in ICICI Bank was reduced to 46% through a public offering of shares in India
in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in
fiscal 2000, ICICI Bank's acquisition of Bank of Matura Limited in an all-stock

44

amalgamation in fiscal 2001, and secondary market sales by ICICI to

institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955
at the initiative of the World Bank, the Government of India and
representatives of Indian industry. The principal objective was to create a
development financial institution for providing medium-term and long-term
project financing to Indian businesses. In the 1990s, ICICI transformed its
business from a development financial institution offering only project finance
to a diversified financial services group offering a wide variety of products and
services, both directly and through a number of subsidiaries and affiliates like
ICICI Bank.

45

Chapter 5
E-BANKING

SUPPORT

SERVICES

In addition to traditional banking products and services, financial institutions

can provide a variety of services that have been designed or adapted to
support e-commerce. Management should understand these services and the
risks they pose to the institution. This section discusses some of the most
common support services: web linking, account aggregation, electronic
authentication, website hosting, payments for e-commerce, and wireless
banking activities.

ACCOUNT

AGGREGATION

Account aggregation is a service that gathers information from many

websites, presents that information to the customer in a consolidated format,
and, in some cases, may allow the customer to initiate activity on the
aggregated accounts. The information gathered or aggregated can range
from publicly available information to personal account information (e.g.,
credit card, brokerage, and banking data

Protection of customer passwords and user IDs both those

used to access the institutions aggregation services and those the
aggregator uses to retrieve customer information from aggregated third
parties to assure the confidentiality of customer information and to prevent
unauthorized activity
Disclosure of potential customer liability if customers share
their authentication information (i.e., IDs and passwords) with third
parties
Assurance

of the accuracy and completeness of

information retrieved from the aggregated parties sites, including

required disclosures

46

 Additional information regarding management of risks in aggregation

services
ELECTRONIC

AUTHENTICATION

Verifying the identities of customers and authorizing e-banking

activities are integral parts of e-banking financial services. Since
traditional paper-based and in-person identity authentication methods
reduce the speed and efficiency of electronic transactions,
Risk issues examiners should consider when reviewing website hosting
services include damage to reputation, loss of customers, or potential liability
resulting from:
Downtime (i.e., times when website is not available) or inability to meet
service levels specified in the contract
Inaccurate website content (e.g., products, pricing) resulting from
actions of the institutions staff or unauthorized changes by third parties
(e.g., hackers),
Unauthorized disclosure of confidential information stemming from
security breaches
Damage to computer systems of website visitors due to malicious code
(e.g., virus, worm, active content) spread through institution-hosted
sites

PAYMENTS

FOR E-COMMERCE

Many businesses accept various forms of electronic payments for their

products and services. Financial institutions play an important role in
electronic payment systems by creating and distributing a variety of electronic
payment instruments, accepting a similar variety of instruments, processing

47

those payments, and participating in clearing and settlement systems.

However, increasingly, financial institutions are competing with third parties to
provide support services for e-commerce payment systems

Most financial institutions permit intrabank transfers between a customers

accounts as part of their basic transactional e-banking services. However,
third-party transfers with their heightened risk for fraud often require
additional security safeguards in the form of additional authentication and
payment confirmation. .

Person-to-Person

Payments

Electronic person-to-person payments, also known as e-mail money, permit

consumers to send money to any person or business with an e-mail
address. Under this scenario, a consumer electronically instructs the personto-person payment service to transfer funds to another individual. The
payment service then sends an e-mail notifying the individual that the funds
are available and informs him or her of the methods available to access the
funds including requesting a check, transferring the funds to an account at an
insured financial institution, or retransmitting the funds to someone else.
Person-to-person payments are typically funded by credit card charges or by
an ACH transfer from the consumers account at a financial institution. Since
neither the payee nor the payer in the transaction has to have an account with
the payment service,

Internet Banking Services provided by STATE BANK OF

INDIA:
1. BILL PAYMENT
About Bill Payment
SBI e-PAY - A simple and convenient service for receiving and paying the
customers bills online

48

 No more late payments

No more queues

Online Pay: Using SBI e-PAY the customer can 'see and pay' his/her various
bills online, directly from his/her SBI Account. The customer can pay
telephone, electricity, insurance, credit card and other bills - from the comfort
of his/her house or office, 24 hours a day, 365 days a year! He/she will simply
have to logon to http://www.onlinesbi.com/ to 'see and pay' their bills. The
customer can also get an electronic acknowledgment for every bill paid by
him/her using e-PAY.
Auto Pay: The customer can also set up Auto Pay instructions with an upper
limit to ensure that his/her bills are paid automatically whenever they are due.
The upper limit ensures that only bills within the specified limit are paid
automatically, thereby providing the customer complete control over these
payments.

2. SMS ALERTS
SMS Alerts are the fashionable way to keep track of critical activity on ones
accounts. In a significant step towards enabling anytime-anywhere banking,
OnlineSBI.com now enables its customers to receive alerts on his/her mobile
phone. The customer can ask to be alerted when the balance on his/her
account goes above or below a particular amount; or when a transaction of
greater than a specified amount hits the customers account; or when an
interest is applied on the customers accounts more.Receiving alerts on your
mobile phone is a two-step process.
1. Set your mobile number. Be sure to correctly select the country the mobile
number belongs to.
2. Define your alert criteria; be it balance alert or a transaction alert or an
interest alert.
The bank will now do the hard work of alerting when these events happen to
his/her account.

49

3. ONLINE

BOOKING OF

RAILWAY TICKETS

The customer should follow under noted process for booking of railway
tickets.
Logon to the site of IRCTC www.irctc.co.in
Register yourself on the site (if first time user) or log on with Username and
Password (meant for IRCTC site).
Provide the requisite information i.e. stations (departure & arrival), date and
class of the journey under option of "Plan My Travel and Book
Ticket"
Select your train from the list of trains displayed by IRCTC and click on
"Book Ticket"
Provide passenger details and confirm your address for getting delivery of
tickets. The amount of ticket will be displayed for payment.
Choose payment option "State Bank of India". You will be taken to our site
online SBI.

4.

MUTUAL FUNDS

SBI Mutual Fund has grown tremendously in terms of corpus as well as

number of investors. Today it is one of the largest Bank sponsored Mutual
Fund in the country. The bank has launched 35 Schemes, of which 15 have
been redeemed, yielding handsome returns to investors. The fund has over
Rs. 5,500 Crores as assets under management.
SBI is also the first Bank sponsored Mutual Fund to launch an offshore fund,
the India Magnum Fund, with a corpus of around Rs. 225 Crores.
Today the Fund has an investor base of over 8 lacks spread over 18
schemes. With a large network over 35 collection branches, 26 Investor
Service Centers, 19 Investor Service Desks and 21 District Organizers; the
SBI is constantly endeavoring to get closer to the banks growing family of
investors.

50

INTERNET BANKING SERVICES PROVIDED BY ICICI BANK

1.

BILL PAYMENT

ICICI Bank Internet Banking is the most convenient channel to manage and
pay the bills anytime, anywhere. No more hassles of personally visiting the
Biller to pay the bills. Its free for all the Customers. The bank has enabled the
billers

in

following

two

modes:

Presentment Type Billers: For these billers, the bill amount and due date will
be presented to them online on http://www.icicibank.com/ and a reminder will
be sent to their on Email.
Payment Type Billers: For these billers the customers can register and pay
any amount immediately

2.

ONLINE

SHOPPING

ICICI Bank has tied up with more than 75 organizations to facilitate online
shopping for all its Internet Banking Customers. The customers Have to
choose their products online and pay conveniently through ICICI Bank
Internet

Banking

Service.

ICICI Bank brings Insurance products to the customers door-step. The

customers can buy Insurance products from ICICI Lombard General
Insurance and pay through the banks Internet Banking.

Details...

The

ticket

customers

can

book

their

railway

through

http://www.icicibank.com/pfsuser/icicibank/online/shopping/online_shopping.h
tm# using ICICI Bank Internet Banking. IRCTC will deliver ticket to delivery
address mentioned by the customer.

Details...

The customers can pay their Reliance Info COM bills through Internet
Banking. The customers can visit Reliance Infocomm, view their bill details
and make instantaneous payments.

3.

TICKET

BOOKING

The customers can now book their Railways and Air Tickets Online
The customers can now buy their tickets online and pay using the banks

51

Internet Banking Facility. ICICI Bank has tied up with IRCTC (for Railway
Ticket Booking) and Air Deccan (for Air Ticket booking).
The
1.

salient
All

features

internet

banking

of

the
customers

facility

are

as

under:

can

use

the

facility.

2. For booking tickets, please visit www.irctc.co.in (for railway tickets) and
http://www.airdeccan.net/ (for air tickets). Select your journey date and other
details.
3. On payment option, select ICICI Bank for making the payment. The
customer will be redirected to secured login page of ICICI Bank. After logging
on to the site the customer can see his/her displayed payment amount, and
Payee

4.

Details.

ICICI

BANKS

ONLINE

SHARE

TRADING.

ICICI ban
k also provides the service of online share trading to its customers through
www.icicidirect.com.

INTERNET BANKING SERVICES PROVIDED BY HDFC BANK

NETBANKING
1.Credit

FEATURES*

card Payment

Customers can pay their HDFC Bank Credit card dues through this option.
2.

Statement

Download

the customers can download their account statement onto their PC for the
period of 5 months from
3.

Change

the

Customer

given date.
profile

The customers can update their mailing address and all their communication
from bank will go to this new address.

5. Funds Transfer
The customers cant transfer funds between their accounts, even if they are in
different branches/cities. The customer can also transfer funds to any person
having an HDFC Bank account anytime, anywhere, using our Third Party Funds

52

Transfer option. To avail of TPT facility, customer will have to sign the declaration
form, which is available on the Net or at any of the banks branches.

6.

New Fixed

Deposit

Request

The customer can open a Fixed Deposit Account on the Internet. He will just
have to give details regarding the account from which he/she wants to transfer
funds, the amount and terms for the Fixed Deposit, the branch and the relevant
maturity instructions.

7.

Fixed

Deposit

Inquiry

The customers can access details of their Fixed Deposit Account such as
Principal Balance, Term of Deposit, Rate of Interest, Maturity Date, Maturity
Amount and Instructions for Payment.

8.

Demand

Draft*

Request

The customers can issue a DD from their account at special rates. They will just
have to select the account to be debited from and give the bank details of the
amount, location and beneficiary. The bank will even have the Demand Draft
couriered to the customers mailing address. (DDs will be issued only where the
bank has a branch or has an arrangement with a local bank).

9. Demand Draft Request at Beneficiary's

address

Net Banking offers a new facility to all its customers. The customer can issue a
Demand Draft on the Beneficiary's name and address of his/her choice. He/she
will just have to just select the account to be debited from and give the bank the
details of the amount and beneficiary's name & address where the customer
want the Demand Draft to be delivered. The Demand Drafts would only be
delivered within India. (DDs will be issued only where the Bank has a branch or
has an arrangement with

a local

Bank).

Note: 1) This facility is only open to users who have registered for Third Party
Transfer (TPT)..

53

INTERNET BANKING SERVICES PROVIDED BY HDFC BANK

INCLUDES THE FOLLOWING
1.

ATM FACILITY

ATM

in India

SERVICES:

for 24 Hour Banking

Now, the customers money is accessible to him/her 24 hours a day, 7 days a

week, 365 days a year from any of the banks over 1054 ATM across India.

2.

BILL PAYMENT

Bill Pay - Bill

PaymentsService

Now, the customer can have the luxury of paying his/her telephone, electricity
and mobile phone bills at your convenience. Through the Internet, ATMs, his/her
mobile phone and telephone. LIC insurance premiums can also be paid through
this facility. The customer can also renew your VSNL Internet Account and even
register for a New VSNL Internet Account using Bill Pay, a comprehensive bill
payments solution.

DEBIT

CARD

Easy

Shop Gold Debit Card

HDFC Bank proudly presents the Easy Shop Gold Debit Card. The Easy Shop
Gold Debit Card is the first Gold Debit Card in India. Not only does it replace the
customers ATM card, it also revolutionizes the way he/she spends through a
Debit Card and the customer also gets the benefits that as a Gold Debit Card
Customer.
Cash back*
for every Rs. 100 that the customer will spend, he/she will receive Re. 1 as cash
back. This cash back is valid on all purchases made through the card, at all times
of the year!!!
Zero surcharges at Petrol Pumps
The customer can now use his/her Debit Card at the Petrol Pumps. As a Gold
Card holder, no surcharge would be levied on the customer at the petrol pumps.
Special Offers at Premium Outlets, Hotels and Restaurants*
54

the bank has arranged for special offers for its customers, the details of which
are available in the Merchant Booklet.
Insurance covers*
The following are included in the insurance covers
o Death Cover by Air / Road - Sum assured Rs. 5,00,000
o Fire & Burglary for the items purchased under Debit Card (upto 6 months) Sum assured Rs. 50,000
Loss of Baggage Insurance - Sum assured Rs. 20,000

4.

INTERNATIONAL

Easy shop

DEBIT

CARD

International Debit Card

Easy shop International Debit Card lets the customer shop and do much more
than he/she could do with his/her ATM Card. It replaces cash, so when one goes
shopping, the customer no longer need to carry cash with him/her. This card can
be used in India and abroad at merchant locations such as shops and
restaurants and to withdraw cash from a widespread network of ATMs. The value
of the payment made or cash withdrawn is instantly debited from his/her account.
What's more, while all purchases and cash withdrawals of the customer are in
the currency of the country he/she is in, his/her account is

debited

in

Rupees!
HDFC Bank offers the following Debit Card programmer in India:
1. Visa in association with Visa International
2. Maestro in association with MasterCard International

5. ONLINE SHOPPING
Net Safe is a unique online payment solution that offers the customers
complete security while shopping on the Internet. With Net Safe, they can
now shop online without revealing their HDFC Bank Credit Card number.
They can now use their HDFC Bank Debit Card also for online purchases.
The customers will have to follow a simple 3-step process to register for Net
Safe using either his/her HDFC Bank Visa Credit or Debit Card. Once
55

registered, the customer will have to choose the amount and account he/she
wishes to debit and create as many Net Safe cards as he/she wants. And
after the transaction or a max of 48 hours, the card will cease to exist. All this
comes FREE with the customers HDFC Bank Credit / Debit Card.

6. DIRECT PAY FACILITY

HDFC Bank's Direct Pay facility is an e-Age Banking Channel where the
purchases are debited directly to the customers account and credited to the
account of the establishment (or the website where the purchases were
made). If the customer is an account holder with HDFC Bank, all he/she will
have to do is to register for the Net Banking facility to use this option.
However, shopping is not the only option that the customer has. If the
customer is a resident of Hyderabad or Secunderabad, it gets even better.
Thanks to the bank's tie-up with Eseva, a unique integrated service launched
by the government of Andhra Pradesh, you can now pay your electricity,
water bills and municipal taxes (telephones to be introduced shortly) using the
Direct Pay option. The most important aspect of this service is that the
payments made are updated in the database of the utility companies on an
online and real-time basis.
What's more, both the Direct Pay and Net Banking facilities are available
FREE of cost.
HDFC Bank offers the highest level of security available today - 128-bit SSL
(Secure Socket Layer) encryption.

56

Chapter 6
PROMISES OF INTERNET BANKING
As the potential that the internet held to transform different aspects of our
lives manifested itself, it was forecast that its impact on financial services
such as stock-broking and banking would be especially profound. Banking
transactions could be conducted entirely in a virtual context with no physical
exchange necessary. Also transactions are to a large extent standard with
little, apart from price, difference between banks. For both these reasons
banking was especially well suited to use the Internet.*

1. No physical change
Historically, as the means of payment substituted gold by paper currency and
paper currency by plastic and finally plastic by direct debits, the information
intensity kept increasing. In the case of buying physical goods online, a large
portion of the value to the customer is derived only after the goods are
physically delivered. The internet brings supplemental value by aiding the
search process, making comparisons efficient and automating order
placement and billing. On the other hand, in determining which bank to place
a deposit with, not only can the search be done online but the actual product
delivery (deposit booking) can also be affected online. Since there is high
information intensity and no physical exchange, the internet as a delivery
channel is responsible for delivering a large portion of the value for a
customer. More importantly, the end-to-end process can be completed
entirely online.

2. Reduced transaction costs

additionally various studies showed that as a delivery or distribution channel,
the Internet could bring substantial cost advantages for banks.

57

3. Double-edged Sword
Reduced delivery costs and the absence of physical exchange is indicative of
why the Internet held so much promise to turn banking upside down. In
theory, physical branches were not required and the transaction costs over
the Internet were much lower. It was almost obvious that from a banks
perspective this was the way to go. However, the promise of the Internet was
a double-edged sword.

4. Perfect Information
one of the things that the Internet does extremely well is make perfect
information available to all market participants by bringing about efficiencies
in the search process. For buyers of banking services, there are sites that
aggregate information on product offerings from different providers at a single
location
Perfect information would be available to the banks as well. The Internet
makes it
less likely that, for example, an individual could hide a bad credit history from
prospective providers and beat the system by switching providers frequently.
To that extent this superior information-set would enable banks to move away
from portfolio-pricing, where good credits subsidies the bad ones, to a pricing
structure that is based on the customers credit history.

5. Reduced role for intermediaries

one of the most successful companies on the Internet is eBay. It offers visitors
the ability to participate in online auctions hawking everything from a used car
to a perfume bottle collection. An eBay online auction model applied to
banking services could have a potentially devastating effect on banks. On the
corporate baking side, the Internet could replace expensive teams of bankers
whose job is to link the companies in need of capital with the providers of
capital (and, in the process slice-off banking fees). By creating competition
among the providers of capital, the Internet could help companies raise
money at much finer spreads. Investment banks using the Internet such as

58

WR Hambrecht have pioneered the use of online auctions to determine prices

for initial public offerings (IPOs).

Benefits and Impacts on delivery of Banking Products

BENEFITS OF INTERNET BANKING TO BANKS
1.Cost Savings
Orr (1999) states that electronic processing dramatically reduces the cost per
transaction. According to Dido (1998), the average transaction cost at a full
service bank is about$1.07. It reduces to $0.27 at an ATM and falls to about a
penny if the same transaction is conducted on the web. Also, there are
opportunities for banks to present customer bills electronically. The cost of
delivering bills electronically is substantially lower than if the bill was in paper
form delivered through the mail. Irvine (1999) states that electronic bill
presentment costs 40% less than paper delivery. These cost savings can offer
customers and banks alike reduced cost of banking and still provide efficient
and varied services.

2. Loyal Customers
In a recent study conducted by Forrester Research, 61% of respondents
claimed that if their banks offered the financial services they wanted, they
would prefer to utilize the banks service (Dixon, 1999). With this knowledge
of consumer interest in mind, banks are moving to offer a hub of financial
services including bill presentment and payment, financial planning, estate
planning, insurance, loans, and brokerage services. The Internet allows for
this convergence of financial services in one previously unavailable central
location. Web sites that offer financial convergence for the customer will
create a more involved banking customer who will more frequently patronize
the banking site and more likely use the services offered. The idea is that by
creating a more loyal customer who depends on a bank for many financial

59

services, more bundling can occur and higher revenue per customer can be
generated.

3. Offer Additional Services

As mentioned above, many banks are moving towards offering clients a
financial portal. This portal concept offers banks a new role in the business of
serving clients. Simply having
A capability to clients an Internet presence does not provide banks a revenue
stream. However, by offering a wide array of products and services, banks
can benefit from Internet integration. By creating financial portals where
consumers can manage a broad range of financial activities such as stocks
and mortgages, banks can from offering Internet
Internet Profit Generation
E-commerce, when properly integrated into existing banking operations, can
lead to substantial substantial cost savings and higher profitability. Cost
savings occur by virtue of automating
Customer transactions such as funds transfers, payments, account balance
inquiries, etc. Strategic alliances with insurance companies, mortgage
companies, and stock brokerage
can lead to additional business opportunities that otherwise will go unrealized.
Furthermore, banks are able to retain customers more effectively when
offering services that
are value-added. This has been clearly demonstrated in the case of Wells
Fargo bank. When customers moved online with Wells Fargo, the percentage
of customers taking their business elsewhere dropped 50 percent. As a result
of these positive experiences with online banking, one in six of the banks
new customers are referrals from existing customers
and, thus, did not cost the bank anything to acquire them

60

4. High-Profit Customers
Some studies suggest that the demographics of Internet banking customers
are enticing. At Wells Fargo bank, online customers have an annual average
income of $75,000 with
Education levels higher than the average Wells Fargo customer (Hoffman,
1999a). Also, this group of customers is more profitable than the bricks-andmortar counterparts.

BENEFITS OF INTERNET BANKING TO CONSUMERS

1. Cost Savings
Cyberspace is cheaper to operate in than bricks-and-mortar structure and this
cost benefit is often passed along to consumers. The Internet banking cost
structure allows
Consumers to receive cost savings and/or financial benefits for banking
online. A comparison of Wingspan.com (an e-bank) with Bank One
(Wingspan.coms parent bank
a bricks-and-mortar bank) offers an illustration of this point. For checking
accounts, Wingspan offers an interest rate of 4.5% interest compared to Bank
Ones 1%. Also, Wingspan.com offers more choices in the mortgage and
insurance fields, with 60 lending companies and 15 insurance vendors.
Wingspan.com also offers customers an advantage over its parent in the area
of electronic bill payment, offering the service for no extra cost, while Bank
One charges $4.95 per month

2. Access to Additional Services

Basic transactional web sites allow customers to review account balances,
holdings and recent banking statements. Systems that allow customers to
initiate transactions online,

61

Such as transferring money between accounts or making payments, provide

additional advantages to the customer. These enhanced web sites enable
customers to pay bills,
Apply for and review loans and mortgages, and check credit card bills. The
financial institutions that offer expanded services online are well positioned to
be market leaders
By offering this large umbrella of service from one trusted banking institution,
these will be able to garner a greater share of a customers financial
Business. Customers will benefit by having a wider selection of services
available from one trusted institution.

3. Convenient One-stop Shopping

Banks are adding real-time loan applications, the ability to make IRA
investments, and the opportunity to trade stocks through their web sites. The
trend towards convergence
Banking is predicted to shape the future of Internet banking. This concept of
one-step shopping is convenient and leads to more satisfied customers

CONCERNS WITH INTERNET BANKING

1. Security and Privacy
Security of Internet transactions is of paramount concern to most customers
particularly where financial information is involved (Hedberg and Taylor, 2001;
Stafford, 2001). Banks must convince their customers that their web sites are
secure and sufficient safeguards have been taken to assure security at the
transaction level. Also, safeguarding the privacy of customers financial
information and profile are imperative if the public is to embrace Internet
banking

2. Users Discontinue Service

A recent study found that almost a third of the 9.4 million people who signed
up for online banking (including through the Internet and dial-up accounts)

62

discontinued their service for a variety of reasons online banking was too time
consuming(27%); unhappy with customer service (25%); no need or interest
in the service(20%); too costly (11%), and concern for
Privacy (5%). This study also noted that only35% of those who discontinued
the service said that they would try online banking again in the future Such
negative endings about online banking contrast greatly with studies dealing
with online trading. Among online traders, only 3% discontinued the service
and 85% were satisfied with online trading.

3. Access to Paper Money

Even with the best the Internet has to offer in banking services, consumers
still need to visit an ATM or a bank branch to withdraw cash. Customers also
have to deposit checks by mail, through an ATM or by visiting a bank branch.
These limitations of Internet banking bring out some issues that e-banks need
to address. ATMs are currently the most convenient means of acquiring
paper money from an Internet bank. And most ATM transactions are
assessed a fee. To overcome this problem, many ebanks reimburse
customers for a limited number of ATM transactions each month. In the future,
electronic cash could provide a possible solution. But so far, electronic/digital
cash has not been well received by the public

IMPACT OF INTERNET ON DELIVERY OF BANKING

PRODUCTS:
1. Credit cards:Nextcard
2. Consumer Loan Origination-loan
3. Corporate Treasury:. Fxall
1Credit cards: Nextcard
Winning a customer in a heartbeat - Launched in 1998 in United States, Next
Card exemplifies the potential of the internet to force a paradigm shift in the
distribution of financial products. Existing processes for approval (or declines)
63

of credit cards take up to three weeks time. Next Card announced its arrival
rather dramatically by granting approvals (or declines) for its online credit card
applications in less than 30 seconds. Approved customers could even start
shopping online the same day and need not wait for the physical card to
arrive. By the second quarter of 2001, Next Card crossed the one-million
milestones and established itself as one of the leaders in the online credit
card market.

Market Segment of One

The internet has allowed Next Card to customize its card offering to each
customer as if they were a segment on their own. Importantly, it has afforded
this without adversely impacting the cost base. Next Cards computers search
from among an array of thousands of options and provide the customer with
combinations that best suit her credit profile and requirements. For example,
a customer who is willing to transfer a higher balance may be enticed to do so
by being offered a better rate.
This automated methodology of providing alternate credit card pricing terms
based on balance transfers from other credit cards in real time over the
Internet is now patented. Significantly, the algorithm is able to sniff out those
applicants who are prone to moving their balances at the prospect of a better
teaser rate elsewhere.

E-service
Next Card uses the Internet to provide superior service that is also
customized for each customer such as putting a picture of the customers kids
as wallpaper for the card. This creates affinity and, as a JP Morgan analyst
noted, this makes it less likely that the customer will cut up her card and send
it back.

64

2. Customer Loan Origination: E-loan

empowering the customer
E-loan is online lender that burst onto the scene in 1997 with a promise of
offering the customers the best loans at the lowest cost. Founded by Chris
Larsen and Janina Pawlowski who met while working at a mortgage
brokerage in Palo Alto, California, their vision was to transform the inefficient
mortgage industry and create an information resource that would put up the
customer

Trends in online mortgage

In the United States, it is estimated that in year 2000, about 1% of the total
mortgages were originated online. Predictions by Tower Group and Forrester
Research vary, but broadly, online mortgages are expected to reach 10% of
the total mortgage value over the next few years.
Trends in searching and applying for a mortgage online are fuelled by growth
in use of the Internet in the process of buying or selling a home. Consultants,
Gomez Advisors conducted a survey of about 4000 real-estate agents and
17000 adult Internet users. More than two-thirds of the respondents believe
that the Internet will alter the way homes are bought and sold; that it will make
the process quicker and there will also be likely declines in the standard 6%
commission rate currently payable to agents. Using the Internet to search and
apply for a mortgage is a natural extension of searching foe homes online.

3. Corporate Treasury: FXall

Even though global foreign exchange markets are the largest and the most
liquid, tracing on the market by corporate customers has remained untouched
by technology. According to the Bank for International Settlements (BIS), the
average daily turnover on foreign exchange markets was estimated to be
USD 1200 billion in April 2001. This trading volume is almost six times higher
than the combined global debt and equity markets. Of the total turnover, fourfifths, is comprised of interbank transactions b/w banks and their customers.

65