E-Banking

Dr. Rana Singh

Associate Professor
www.ranasingh.org
 Agenda

 E-Banking – Concepts and advantages

 Technical Framework
 Indian Banking Scenario
 ICICI “Infinity” - A Case Study
 Imagine a Scenario
A non-resident Indian (NRI) in Paris has an easy way
to access money in this fashion capital of the world.
His Citibank account in India can be accessed through
an ATM in Paris, which in turn transmits information
to Citibank’s central hub in the US.
The Indian rupees are converted to US dollars, which
are in turn converted into French Francs at the
current exchange rate, the Indian account is debited
and the Francs made available to the NRI.
Welcome to the era of technology banking!
 Definition

E-Banking
"is an umbrella term for the process by
which a customer may perform banking
transactions electronically without visiting a
brick-and-mortar institution."
 What is E-banking?
 Online banking or Internet banking
 In simple terms it does not involve any physical
exchange of money, but it’s all done
electronically, from one account to another, using
the Internet.
 From a personal computer, you can access your
bank account information, and perform many
banking functions, like transferring money,
making a loan payment
 What is E-banking?
 Once you register yourself on a bank website, you
can view
o Your accounts, credit card & home loan balances
o Accrued interest, fees and taxes
o Transaction details of each account
o Pay bills
o Transfer funds to third party accounts which you
nominate
o Open a deposit right from the terminal you are sitting at.
 What is E-banking?
 However, till now Internet services in India only
allows for a minimum level of interactivity such as
o Answering e-mail queries
o Feedback forms
o Articles asking for readers’ opinion at the end

 An accountholder, armed with a password, can

use the Net to order a cheque book, stop payment
of a cheque and spot the balance and individual
operations in the account and transfer funds.
 Advantages
 Eliminates the use of paper and replaces it
with computer screens
 No need to stand in line at the bank,
because all you have to do is log onto the
internet & access your account
 It’s safe, hassle free, saves hours of time a
month
 Advantages
 It comes with a world of other benefits
o Interest earning checking accounts,
o Automatic bill payment
o ATM/Debit cards
o Credit Cards
o Direct Deposit
o Online Statements
o Loans
o Money market accounts
 Transaction costs

Source : Booz ,Allen and Hamilton

 Customer service

 As an online bank customer, you have a

website that is at your disposal 24/7
 You can get your online statement for
the month, week, day, or year
 You can send e-mails with questions or
concerns
 You can pay bills
E- Banking Setup
Elements of an E- Banking
System

 Hardware
o Servers
o Storage device and database
o Communication channels and lines
o Gateways and remotely located devices
(e.g., thin clients or Internet appliances)
serving as interfaces between users and
computers
 Software
Elements of an E- Banking
System

o Operating systems
o Firewalls
o Database management systems
o Security application programs.
E- Banking Setup
Areas Of Security
 Authentication
o Verifying your identity using
passwords/pass phrases and certificates
 Confidentiality
 Non Repudiation
o Method by which the sender of data is
provided with proof of delivery and the
recipient is assured of the senders identity
Areas Of Security

 Integrity
 Access Control
o Mechanisms and policies that restrict
access to computer resources
 Availability
Access Control
 Access control restricts the flow of data
traffic
 Internet Banking uses firewalls in the
area of access control.
 Internet Banking two firewalls are used
o One before the Internet Banking server
o Before the SQL database
 Access Control

 Banking uses firewall which fall into two

categories
o Packet-filtering Gateways
o Proxy services.
Data Transmission and
Confidentiality

 Public Key Encryption

 Secure Socket Layer (SSL)

Authentication
 Digital Certificate
o A digital certificate is an electronic ID, which is
verified by a third party, a certification authority
(CA)
o The CA controls the Public Key Infrastructure
(PKI).
o A security certificate ,associates an identity with a
public key. Only the owner knows the
corresponding private key that allows the owner to
"decrypt" or make a digital signature.
o Eg Barclays UK’s Digital certificate
E-Banking Scenario
 E-banking – Trends Worldwide
 Concept of E-banking is more prevalent in the
technologically developed parts of the world
such as Europe and the US
 The number of online banks in Western
Europe has mushroomed. As per Bluesky
International Marketing, a US based research
agency, the number is quoted at 1,845
in mid 1999.
 The scene is similar in the US where a recent
Dataquest survey forecasts that the number
of US households banking online will reach
24.2 million by 2004.
 Indian Banking Scenario
 33 private banks and 43 foreign banks
 27 public sector banks account for over 84%
of the total deposits and over 82% of the
total banking advances in India
 Rough estimates assuming teller at Re 1 per
transaction put ATM transaction costs at 45p,
phone banking at 35p, debit cards at 20p and
Internet banking a measly 10p.
 E-banking in India
 Marriage of technology and banking is
inevitable to keep pace with changes in the
global scenario.
 The Verma Committee recommended the
need for greater use of IT even in the weak
Public sector banks.
 Presently Net Banking facility is offered by
ICICI Bank, Citibank, HDFC Bank, Global
Trust Bank etc.
 Changing Scenario
 Jurassic banking is passé.
 The Internet is slowly converting retail
banking into a commodity where the
days of loyalty to bricks and mortar
banking are obsolete.
 Retention of customers
 Survival in competitive markets
 Reduction of transaction costs
 New Initiatives
 HDFC Bank is planning to introduce third party
payments whereby account holders will be in a
position to make payments to predetermined
parties through the Net.
 The ICICI group has also launched an Internet
payment gateway for handling Net transactions
of its clients.
 HSBC is working on a comprehensive interactive
financial services in collaboration with IBM which
would be a state-of-the-art local platform.
Relationship Banking
IT enabled Relationship
banking

 Emphasis on “Human Capital”

 Customer oriented.
 IT enabled Customer relationship
management for banking services.
 Maximisation of profitability through the use
of detailed Customer information.
 Financial portfolios tailormade to Customer’s
individual needs.
 Tools used in Relationship
banking

 Networking Techniques.
 Parallel Systems.
 Data Warehousing
 Data Mining
Advantages of Relationship
Banking

 Higher customer retention

 More cost effective marketing
 Reduced Credit risk
 Reduced Customer Acquisition costs
Customer Service
 ATMs
 Personal banking centres
 Retail delivery Channels
 Home Banking
 Telephone Banking
 Difficulties
 The picture in India, however, is a bit grey.
The RBI does not still allow inter-bank funds
transfer through the Net since the cyber laws
are still not in place. Once allowed, this could
pave the way for smooth cash management.
 Security also continues to remain a major
issue, especially in the case of corporates, as
bulk transactions are done in a day.
 Bankers are aware of the fact reliable
transaction technology as well as
management of the security perceptions of
customers are the keys to success.
 Difficulties
 The infrastructural costs of providing
such services are quite high.
 A bank not only has to automate its
front-end systems which the customer
interfaces with but also the back-end
systems so that the bank is able to
provide “robust functionality”.
ICICI’s Infinity

Internet Banking Service

As per Mr. K.V.Kamath, MD and CEO ICICI Ltd.,
“Technology today, particularly via the internet, is
creating a platform-independent, low cost
communication infrastructure permeating all sectors
of the economy and providing an affordable
medium to conduct business”.
Infinity - Internet Banking Service was launched in
December ’97 and has 15,000 customers. It offers
you convenient remote banking facility. It provides
you an easy and secure access to your accounts with
us. With just a PC connected to the Internet, you can
have your account information at your fingertips,
from anywhere in the world, anytime. So, if you don't
want brick and mortar bank timings to hassle you,
Infinity Internet banking is just the service for you.
Online Services Offered
 Account information
 Summary of all your Accounts by giving details of each account,
snapshot of balances, available credit lines, record of payments
and transfers.
 Allows transaction tracking (retrieval of transaction details
based on cheque number, transaction amount etc)
 Provides account statement and transaction reports based on
user defined criteria.
 Displays account balance message and also a warning when the
Account balance limit has been crossed.
 Allows you to view details of fixed deposits and loan installments
due.
•Funds transfer
-Transfer money between your accounts across any of the
branches
- Third party funds transfer which means you can transfer
money to any other ICICI bank holder.

•Requests and intimations

-electronically submit a request for :
-Cheque-book
-Stop Payment Instruction
-Opening a Fixed Deposit
-Opening a Recurring Deposit
•Communication with your account manager
-Mail-box facility enables you to send secure mail to your
account manager to find out the status of a request or for
any clarifications.

•Personalised Content - Infinity provides

customised content exclusively for its users.

- Personal Finance containing views of experts

- Select articles on electronic commerce, information
technology
- Lifestyle articles on various places of tourist attraction
- News updates
•Online investments
•Online real time e-shopping payments
-Online shopping payments at rediff.com, fabmart.com,
malamall.com, magiccart.com, indiainfoline.com, eindia.com,
indbazaar.com, shoppersstop.com, sify.com

•Utility bill payments

-ICICI Bank has now tied-up with Life Insurance Corporation
to accept the payment of life insurance premium over Internet
-Payment of Bills of the cellular operators
Which equipment and software do I need to
access Infinity?

If you have a PC connected to the Internet, you will be able to use

Infinity. For optimal performance and security, the recommended
browsers are :
•Microsoft Internet Explorer 4.x or later
•Netscape Navigator 4.x or later
 ICICI Bank launched a web banking service for
non-resident Indians (NRIs).
 NRIs can now open an account with the bank on-
line by visiting its NRI services section on the
web-site.
 The bank presently has over 15,000 NRI
customers, a majority of whom are in the United
States, Middle East and Europe.
Thank You