INTRODUCTION

banking is the wave of the future. It provides enormous benefits to

consumers in terms of ease and cost of transactions, either through Internet,

telephone or other electronic delivery. Electronic finance (Efinance) has

become one of the most essential technological changes in the financial

industry. E-finance as the provision of financial services and markets using

electronic communication and computation. In practice, e-finance includes

e-payment, e-trading, and e-banking.

According to the definitions from the Bank for International Settlement

(BIS-EBG, 2003b), e-payment creates considerable efficiencies and is

superior to traditional paper based solution. E-trading is referred to as a wide

variety of systems that provide electronic order routing, automated trade

execution, and electronic dissemination of pre-trade and post-trade

information. With the help of the e-trading systems, the transactions can be

executed at a remote server and information can be conveyed to a remote

location. And e-banking means the provision of retail and small value

banking products and services through electronic channels and large value

electronic payments and other wholesale banking services delivered

electronically. Although clients have enjoyed great convenience of e-

banking and bankers have improved cost efficiency of banks (Lin and Lin,

2006, 2007), e-banking may lead to unstable financial environments. In

other words, e-banking could make the financial markets less manageable by

the regulators. Internet banking refers to the deployment over the Internet of

retail and wholesale banking services. It involves individual and corporate clients, and includes bank
transfers, payments and settlements, documentary collections and credits, corporate and household
lending, card business and some others.Since its inception Internet banking has experienced strong and
sustained growth. According to Jupiter Media, Internet traffic for all United States banks which grew by
77.6 per cent between July 2000 and July 2001, compared with overall World Wide Web traffic growth
of 19.8 per cent over the same period. Another source estimated that the share of United States
households using Internet banking will increase from 20 per cent in 2001 to

33 per cent in 2005, and that by 2010 there might be 55 million users.
Internet banking operations currently represent between 5 per cent and 10 per cent of the total
volumeof retail banking transactions both in the United States and in Europe. This is less than the share
of Internet securities trading, estimated at between 20 and 25 per cent of the total, but much more
than toverall business to-consumer (B2C) e-commerce, which represent leaa then total 2 % of the
retail trade

Types Of E-Banking

The common assumption is that Internet banking is the only method of on- line banking. However, this
is not strictly the case, as several types of service

are currently available:

•PC Banking - The forerunner to Internet banking has been around since the late 1980's and is still
widely used today. Individual banks provide software which is loaded on to an SME's office computer.
The SME can then access their bank account via a modem and telephone link to the bank. Access is not
necessarily via the Internet.

• Internet Banking - Using a Web browser, a user can access their account, once the bank's application
server has validated the user's identity.

•Digital TV Banking- Using the standard digital reception equipment (set top box and remote control),
users can access their bank account. Abbey National and HSBC services are available via Digital TV
providers. One of its main selling points is that no account details are transmitted via the World Wide
Web;

Text Phone Banking - HSBC have introduced this service to allow customers with text phones to check
their balance, pay bills and transfer money.

Internet banking can be split into two distinct groups:

•Traditional banks and building societies use the Internet as an add-on service with which to give
businesses access to their accounts.

•New Internet-only banks have no bricks and mortar presence on the High Street. Therefore, they have
lower overheads and can offer higher rates of interest and lower charges.