“PROJECT ON E - BANKING”

T.Y.B.Com. (Banking & Insurance)

Semester -V
(2017 – 2018)

Submitted
In Partial Fulfillment of the requirements
For the award of degree of
T.Y.B.Com. (Banking & Insurance)
By
ANKITA SANDESH CHIKANE

Seat No. _______

Tolani College of Commerce

Sher – E – Punjab society,
Andheri (East),
Mumbai – 400 093.
 CERTIFICATE

This is to certify that ANKITA SANDESH CHIKANE of T.Y.B.Com. (Banking &

Insurance) Semester V (2017 – 2018) has successfully completed the project on “E -
BANKING” under the guidance of Prof. SNEHA HATHI

Project Guide: - _____________

Course Co-Ordinator: - _____________

External Examiner: - _____________

Principal: - _____________

DECLARATION
I, ANKITA SANDESH CHIKANE the student of T.Y.B.Com. (Banking &
Insurance) Semester V (2017 – 2018) hereby declare that I have completed the
project on “E - BANKING”.

The information submitted is true and original to the best of my knowledge.

References have been cited wherever necessary.

Date: - _________
Place: - Mumbai

Signature of Student
(Ankita Chikane)

ACKNOWLEDGEMENT
Preparing the project on (E - BANKING) has given me extensive practical knowledge related to
the course.

I would like to first thank our Principal Dr. Vijaya Krishna, for her valuable support in
preparing this project.

I express my deep sense of Gratitude to the Course Co-ordinator, Mr. Ishtiyaq Chiplunkar for
the valuable guidance and support during my project work.

I am thankful to my guide Prof. SNEHA HATHI for providing me the guidance throughout the
course of this project. I am also thankful to her for patiently and critically evaluating the content
of this project.

I would like to take this opportunity to express my gratitude to all the staff of the Library and the
Computer Lab for their support.

INDEX
 SR. NO. PARTICULARS
1. ABSTRACT
2. INTRODUCTION
3. WHAT IS E – BANKING
4. EVOLUTION OF E – BANKING
5. WHY IS E – BANKING IMPORTANT
6. AN OVERVIEW OF E – BANKING
7. DIFFERENT TYPES OF E – BANKING SERVICES
8. FUTURE OF E – BANKING
9. E-BANKING TECHNOLOGIES
10. ADVANTAGES OF E – BANKING
11. TYPES OF E – BANKING
12. BENEFITS/CONCERNS OF E – BANKING
13. ROLE OF RBI IN COMPUTERISATION OF BANKS
IN INDIA
14. RECOMMENDATIONS OF COMMITTEE ON
TECHNOLOGY UPGRADATION
15. RESEARCH METHODOLOGY –
 CASE STUDY ON ICICI BANK
 CASE STUDY ON SBI BANK
16. PRIMARY DATA
17. BIBLIOGRAPHY
18. ANNEXURE
ABSTRACT

Banking system occupies an important place in a nation’s economy. A banking institution is

indispensable in modern society. It plays a pivotal role in the economic development of a

country & forms the core of the money market in an advanced country. The banking system of

India should be able to meet new challenges posed by the technology & any other external and

internal factors.
Banks offers a wide range of banking products and financial services to corporate and retail

customer through a variety of delivery channels and through its specialized and affiliates in the

areas of investment banking. The study is about the customer awareness towards internet

banking services provided by various banks such as State bank of India which is a public bank

and ICICI Bank as an private bank.

Data collection method was adopted, in which questionnaire is administered by asking various

questions to banking customers to carry out project work.

E-Banking

INTRODUCTION:
The fast advancing global information infrastructure (including information technology and computer networks
such as the Internet and telecommunications systems) enable the development of electronic commerce at a global
level. The nearly universal connectivity which the Internet offers has made it an invaluable business tool. These
developments have created a new type of economy, which many call the ‘digital economy’. This fast emerging
economy is bringing with it rapidly changing technologies, increasing knowledge intensity in all areas of
business, and creating virtual supply chains and new forms of businesses and service delivery channels such as e-
banking.
As a direct consequence of the emergence of the ‘digital economy’, the balance of power seems to be shifting to
the customers. Customers are increasingly demanding more value, with goods customized to their exact needs, at
less cost, and as quickly as possible. To meet these demands, businesses need to develop innovative ways of
creating values which often require different enterprise architectures, different IT infrastructures and different
way of thinking about doing business. This transformation of business from an old company to a new agile
electronic corporation is not easy and requires a lot of innovative thinking, planning and investment. This
Book will cover many of these issues in e-banking context.
What Is E-Banking?

In its very basic form, e-banking can mean the provision of information about a bank and its services via a home
page on the World Wide Web (WWW). More sophisticated e-banking services provide customer access to
accounts, the ability to move their money between different accounts, and making payments or applying for
loans via e-Channels. The term e-banking will be used in this book to describe the latter type of provision of
services by an organization to its customers. Such customers may be either an individual or another business. To
understand the electronic distribution of goods and services, the work of Rayport and Sviokla (1994; 1995) is a
good starting point. They highlight the differences between the physical market place and the virtual market
place, which they describe as an information-defined arena. In the context of e-banking, electronic delivery of
services means a customer conducting transactions using online electronic channels such as the Internet.
Many banks and other organizations are eager to use this channel to deliver their services because of its
relatively lower delivery cost, higher sales and potential for offering greater convenience for customers. But this
medium offers many more benefits, which will be discussed in the next section. A large number of organizations
from within and outside the financial sector are currently offering e-banking which include delivering services
using Wireless Application Protocol (WAP) phones and Interactive Television (TV).
Many people see the development of e-Banking as a revolutionary development, but, broadly speaking, e-
banking could be seen as another step in banking evolution. Just like ATMs, it gives consumers another medium
for conducting their banking. The fears that this channel will completely replace existing channels may not be
realistic, and experience so far shows that the future is a mixture of “clicks(e-banking) and mortar (branches)”.
Although start up costs for an internet banking channel can be high, it can quickly become profitable once a
critical mass is achieved.

Evolution of E-Banking:

There have been significant developments in the e-financial services sector in the past30 years. According to
Devlin (1995), until the early 1970s functional demarcation was predominant with many regulatory restrictions
imposed. One main consequence of this was limited competition both domestically and internationally. As a
result there was heavy reliance on traditional branch based delivery of financial service and little pressure for
change. This changed gradually with deregulation of the in destroy during 1980s and 1990s, whilst during this
time, the increasingly important role of information and communication technologies brought stiffer competition
and pressure for a faster pace of change.
The Internet is a relatively new channel for delivering banking services. Its early form ‘online banking services’,
requiring a PC, modem and software provided by the financial services vendors, were first introduced in the
early 1980s. However, it failed to get widespread acceptance and most initiatives of this kind were discontinued.
With the rapid growth of other types of electronic services since mid 1990s, banks renewed their interest in
electronic modes of delivery using the Internet. The bursting of the Internet bubble in early 2001 caused
speculation that the opportunities for Internet services firms had vanished. The “dot.com” companies and
Internet
Players struggled for survival during that time but e-commerce recovered from that shock quickly and most of its
branches including e-banking have been steadily, and in some cases dramatically, growing in most parts of the
world. One survey conducted by the Tech Web News in 2005 (Tech Web News, 2005) found e-banking to be the
fastest growing commercial activity on the Internet. In its survey of Internet users, it found that 13 million
Americans carry out some banking activity online on a typical day, a 58 percent jump from late 2002.
The spread of online banking has coincided with the spread of high-speed broad-band connections and the
increasing maturation of the Internet user population. Another factor in e-banking growth is that banks have
discovered the benefits of e-banking and have become keener to offer it as an option to customers.

Why Is E-Banking Important?

Understanding e-banking is important for several stakeholders, not least of which is management of banking
related organizations, since it helps them to derive benefits from it. The Internet as a channel for services
delivery is fundamentally different from other channels such as branch networks, telephone banking or
Automated Teller Machines (ATMs). Therefore, it brings up unique types of challenges and requires innovative
solutions.
Many banks and other organizations have already implemented or are planning to implement e-banking because
of the numerous potential benefits associated with it. Some of these major benefits are briefly described below.

Choice and Convenience for Customers

In the fierce battle over customers, providing a unique experience is the compelling element that will retain
customers. A ‘customer first’ approach is critical for succession e-banking. Customers hold the key to success
and companies must find out what different customers want and provide it using the best available technology,
ensuring that they are acting on the latest, most up-to-date information. In modern business environments,
customers want greater choice. They want the traditional range of banking services, augmented by the
convenience of online capabilities and a stronger focus by banks on developing personal relationships with
customers. Avkiran (1999) stressed the importance of the human touch in the customer services. Politeness and
neatness, recognition in terms of greeting, willingness to provide prompt service, ability to apologies’ and
express concern for a mistake are all important for bank customer. Most of these aspects of customer service
cannot be automated. The adequacy of staff members serving customers can be expected to directly influence the
customers’ satisfaction. However, e-banking backed up by data mining technologies can help in better
understanding customers’ needs and customizing products/services according to those needs.
Offering extra service delivery channels means wider choice and convenience for customers, which itself is an
improvement in customer service. E-banking can be made available 24 hours a day throughout the year, and a
widespread availability of the Internet, even on mobile phones, means that customers can conduct many of their
financial tasks virtually anywhere and anytime. This is especially true of developed countries, but increasingly in
developing countries, the spread of wireless communications means that services such as e-banking are
becoming accessible.

Attracting High Value Customers

E-banking often attracts high profit customers with higher than average income and education levels, which
helps to increase the size of revenue streams. For a retail bank, e-banking customers are therefore of particular
interest, and such customers are likely to have a higher demand for banking products. Most of them are using
online channels regularly for a variety of purposes, and for some there is no need for regular personal contacts
with the bank’s branch network, which is an expensive channel for banks to run (Berger & Gensler, 2007). Some
research suggests that adding the Internet delivery channel to an existing portfolio of service delivery channels
results in nontrivial increases in bank profitability (Young, 2007). These extra revenues mainly come from
increases in non-interest income from service charges on deposit/current accounts. These customers also tend to
be of high income earners with greater profit potential.

Enhanced Image

E-banking helps to enhance the image of the organization as a customer focused innovative organization. This
was especially true in early days when only the most innovative organizations were implementing this channel.
Despite its common availability today, an attractive banking website with a large portfolio of innovative products
still enhances a bank’s image. This image also helps in becoming effective at e-marketing and attracting
young/professional customer base.

Increased revenues

Increased revenues as a result of offering e-channels are often reported, because of possible increases in the
number of customers, retention of existing customers, and cross selling opportunities. Whether these revenues
are enough for reason able return on investment (ROI) from these channels is an ongoing debate. It has also
allowed banks to diversify their value creation activities. E-banking has changed the traditional retail banking
business model in many ways, for example by making it possible for banks to allow the production and delivery
of financial services to be separated into different businesses. This means that banks can sell and manage
services offered by other banks (often foreign banks) to increase their revenues. This is an especially attractive
possibility for smaller banks with a limited product range. E-banking has also resulted in increased credit card
lending as it is a sort of transactional loan that is most easily deliverable over the Internet. Electronic bill
payment is also on rapid rise (Young, 2007) which suggests that electronic bill payment and other related
capabilities of e-banking have a real impact on retail banking practices and rapidly expanded revenue streams.

Easier Expansion
Traditionally, when a bank wanted to expand geographically it had to open new branches, thereby incurring high
start up and maintenance costs. E-channels, such as the Internet, have made this unnecessary in many
circumstances. Now banks with a traditional customer base in one part of the country or world can attract
customers from other parts, as most of the financial transactions do not require a physical presence near
customers living/working place. Bank based in the southern part of the UK was attracting customers from
northern England, where it had no branches. In many countries banks share their resources such as ATMs or use
post offices as their main interaction points, with customers for services such as cash and cheques deposits.

Load Reduction On Other Channels

E-Channels are largely automatic, and most of the routine activity such as account checking or bill payment may
be carried out using these channels. This usually results in load reduction on other delivery channels, such as
branches or call centers. This trend is likely to continue as more sophisticated services such as mortgages or asset
finance are offered using e-Banking channels. In some countries, routine branch transactions such as cash/cheque
deposit related activities are also being automated, further reducing the workload of branch staff, and enabling
the time to be used for providing better quality customer services.

Cost Reduction

The main economic argument of e-banking so far has been reduction of overhead costs of other channels such as
branches, which require expensive buildings and a staff presence. It also seems that the cost per transaction of e-
banking often falls more rapidly than that of traditional banks once a critical mass of customers is achieved. The
research in this area is still inconclusive, and often contradicting reports appear in different parts the world. The
general consensus is that fixed costs of e-banking are much greater than variable costs, so the larger the customer
base of a bank, the lower the cost per transaction would be. Whilst this implies that cost per transaction for
smaller banks would in most cases be greater than those of larger banks, even in small banks it is seen as likely
that the cost per transaction will be below that of other banking channels. Having said that some sources of
research in this area suggest that banks so far have made little savings from introducing e-banking (Young,
2007). It implies that, any efficiency related savings are offset by above average wages and benefits per worker
due to the need for a more skilled labor force to run the more sophisticated delivery system. Other costs such as
systems integration and extra security measures also take their toll.

Organizational Efficiency

To implement e-banking, organizations often have to re-engineer their business processes, integrate systems and
promote agile working practices. These steps, which are often pushed to the top of the agenda by the desire to
achieve e-banking, often result in greater efficiency and agility in organizations. However, radical organizational
changes are also often linked to risks such as low employee morale or the collapse of traditional services or the
customer base.
An Overview of E-Banking
MODELS FOR ELECTRONICS SERVICE DELIVERY

E-commerce is about buying and selling information, products and services via computer networks such as the
Internet and Electronic Data Interchange (EDI). E-banking is one form of e-commerce. The term commerce is
viewed rather narrowly by some as transactions conducted between business partners. However, for the purpose
of this book, a broad scope definition by Kalakota and Whinston (1997) will be used. They define e-commerce
from the following perspectives

• Communications: e-commerce is the delivery of information, products/ services, or payments over telephone
lines, computer networks, or any other electronic means.

• Business process: e-commerce is the application of technology towards the automation of business transactions
and workflow.

• Service: e-commerce is a tool that addresses the desire of firms, consumers, and management to cut service
costs while improving the quality of goods and increasing the speed of service delivery.
• Online: e-commerce provides the capability of buying and selling products and information on the Internet and
other electronic channels such as EDI.
For firms e-commerce brings:
• Different and arguably lower barriers to entry;
• Opportunities for significant cost reduction;
• The capacity to rapidly re-engineer business processes;
• Greater opportunities to sell across borders.
Each and all of these potential benefits provides for increased competition and the ability to wrest market
leadership from established players. For consumers the potential benefits are:
• More choice;
• Better value for money obtained through greater competition;
• More information;
• Better tools to manage and compare information;
• Faster service.
The revolutionary growth of network technologies and especially the Internet has enabled us to conduct business
electronically at a global level. For this reason, most of the literature in this field refers to technological issues
and is mostly application driven. There is a significant stress on the technical infrastructure that supports e-
commerce applications such as networks, multimedia contents, messaging and payments. E-commerce allows
new products to be created and/or for existing products to be customized in innovative ways. In the long term,
competitive advantage may only be achieved by providing innovative services, or services that are uniquely
bundled using web capabilities. Banks should look beyond their own industry in benchmarking other facets of
operations and examine other technologically advanced industries for innovative ideas. Successful Web-based
companies, such as eBay and Priceline.com, have established profitable business models that may include
features that banks could adapt, such as mortgage applications and transactional processes (Southerd, 2004).
Such changes may redefine organizations’ missions and the manners in which they operate.
In the service sector, e-commerce is playing a major role and has changed organizations as varied as the travel
industry and the banking industry. This covers some of the sectors, which have considerably changed as a result
of the emergence of e-commerce, and helps our understanding of e-banking from these different perspectives.

Travel And Tourism Sector

The Internet is an ideal place to plan, explore and arrange almost any trip. People can make potential savings by
buying on the Internet, eliminating travel agents and buying directly from the providers. Websites like
CheapFlights.com and lastminute.com allow customers to buy flexible fares on the Internet, where they can also
make use of last minute deals. E-services are provided by all major airlines: American Airlines, Air Portugal and
others conduct online auctions in which passengers can bid for tickets.

Broker Based services

Brokers usually work for a commission, acting as intermediaries between buyers and sellers of services. The
buyers can be an individual or a company. Some of the most notable services are travel agencies, insurance
agencies, and stock market brokerages. The agents role in an e-commerce environment is changing, and
increasingly they will need to put more emphasis on providing value added services, such as:
• Assisting in comparison shopping from multiple sources;

• Providing total quality solutions by combining services from several vendors; and

• Providing certifications and third party control and evaluation systems.

The Job Market
Thousands of employment agencies operate on the Internet, with companies advertising on their home pages.
There are sites where one can assess market wages rate by entering skills sets. Similarly, it is possible to seek
employment anywhere in the world as jobs are advertised on the Internet. Many recruitment agencies such as
www.hays.com use the Internet as their main communication channel, both with employers and job-seekers.

The Property Market

One of the booming uses of the Internet is that of buying or renting property, through websites such as Yahoo,
loot.com or Yourmove.com. Properties can be viewed on screen, sorted and organized according to customer
criteria, and previewed. In short, e-commerce is creating fundamental changes in the ways business operate, their
functions, and the way they compete. Engaging in e-commerce requires rethinking the very nature of the
buyer/seller relationship. It requires the fundamental transformation of business, because all or most human
interactions and paper-based processes within the value chain will need to be changed.
Different types of e-banking services:
Types of e-banking Description
Account Access Access online to all of one’s account information (usually checking,
Savings, and money market), which is either updated in real time or on a daily
bath basis.

Balance Transfer Transfer fund between accounts

Bill payment Pay any designated bill based on instructions one proves including
Whether to pay automatically or manually each month.

Bill presentment View billing statements as presented electronically, which allow inter-active
capabilities such as sorting, drill-down details, or advertising, in addition to on-
click payments.

Mortgage/ credit card/ Mice Search, apply, and receive approval online for various types of loans and then
lending review your statements using online bill presentment.

Business Banking Service In addition to all of the basic payment and account access services,
Merchant can manage their electronic lock box for received payment, accounts
receivable posing, as well as initiative payment via networks.

Customer Service & While the Web will eventually enable live communication, it is most optimally
Administration designed to facilitate interaction with information so that customers can more
easily service themselves. In the process, customers receive as good, if not
better, service while the bank saves money with each additional transaction as it
realizes the scale economies of its largely fixed online investment. Advanced e-
Mail systems with automated replies and intelligent routing are also helping to
improve the online customer service experience.

Cross-selling Just as visitors to a branch are being offered new products by tellers and simple
signage, so can Web bank customers. In most cases today, banks perform this
function online with standard, broadly targeted text offers or by just making their
product literature available online. In the future, banks will be able to harness the
true power of the Internet by providing targeted offers to Web customers based
on a combination of their indicated interests and financial situation. Not only will
banks be able to sell banks products, but non-financial products as well.
Personalized Content As one visits the Web branch, one is instantly recognized and content displayed
and Tools is oriented toward one’s interests including weather, investment, and hobbies.
More importantly, by using the Web, bank customers could use online financial
planning tools to better manage their finances.

Accounts Aggregation Accounts aggregation enables a consumer to be presented with all his or her
account details (current account, saving account, mortgage account etc.) on a
single page.
For access to external (to their first choice bank) financial data consumers to
provide their account passwords to the aggregator (usually a bank). The
aggregator uses the passwords to access automatically the consumer’s accounts.
The information is then provided to the consumer on a consolidated basis on a
single page so the customer has a full view of his/her financial portfolio. In most
cases funds can be transferred
from one account to another.

Electronic Funds Electronic Funds Transfer (EFT) is a system of transferring money from one
Transfer bank account directly to another without any paper money changing hands. One
of the most widely-used EFT programs is Direct Deposit; in which payroll is
deposited straight into an employee’s bank account.

FUTURE OF E-BANKING

It is notoriously difficult to predict the future, but some educated guesses can be made using past and current
experiences. In our view, the next developments in e-banking will involve new products and services that were
not feasible in traditional banking models. This could involve enabling instant payments using mobile devices, or
tools to help people manage their multi-bank financial portfolio, simultaneously. Internet only banking may also
become more viable as the functionality of e-banking systems grows, and customers adapt to the new ways of
conducting their financial activities. International banking might become a reality for ordinary consumers as
banking payments systems are increasingly harmonized across borders. For example, in Europe, new measures
are being introduced by the European Union to allow cross-border provision of e-commerce services by
providing a single payment system. Similar initiatives are due to be implemented in other parts of the world. E-
banking has the potential to be a very rich and pleasant experience, and may provide more opportunities for
banks to develop mutually satisfying, tailor made services to enrich relationship with customers. As technology
evolves, the
Opportunities to extend the relationship beyond what is possible in the physical world continue to grow and will
only be limited by a bank’s ability to innovate or commitment to e-banking.
Some companies such as IBM have expressed their vision of the future of financial services, complete with
biometrics, state-of-the-art branch offices, enterprise risk-management systems, and advanced customer
interaction (Marlin, 2005). The use of financial decision-aid tools in e-banking is also set to grow. To date, the
experiences of many e-banking users with these tools have proved unsatisfactory: with many firms do not even
offering online advice tools, people often have little idea of the benefits such tools could bring. Banks need to
promote the availability and use of these, and educate consumers about their benefits (Clarke, et al. 2008). One
good example of a bank offering useful financial management tools is UBS which in addition to the usual e-
banking functions, provides a number of such tools, for example (UBS, 2008):

 USB PAY:
This software allows entry and management of payments without connecting to the Internet. UBS Pay helps, for
example, when entering payments abroad enabling selection of the most cost-efficient order type. Payment
orders are then sent collectively to UBS via UBS e-banking in just a fraction of the time it takes to enter them
directly online. With a user-friendly graphical interface, archiving and analysis functions, all of a user’s executed
payments and beneficiaries’ details may be accessed at any time. A number of export options also simplify the
transferring of data to MS Excel and MS Money.

 UBS BESR e-list:

UBS BESR e-list is ideal for small and medium-sized enterprises or individuals who just need a simple accounts
receivable system with integrated invoicing functions. It manages the collection of receivables, within
Switzerland using banking payment slips with reference number (BESR). The new UBS BESR e-list software
replaces the old paper accounts receivable list and makes a long process automatic and quick.

 Web Calculator:
You can use the Web Calculator for stock exchange transactions to figure out quickly and easily the brokerage
fees for transactions you are planning or you have already executed. Depending on the service package, it is
available at a reduced price and includes the UBS investment advisory service, or may be purchased by
professional investors at a price not including UBS advisory. In both cases your market orders can be given
using UBS e-banking via the Internet or UBS e-banking using a mobile device.

 Pay Pen:
Reads Swiss payment slips easily and quickly. With a quick brush of the hand payment slip may be imported
into the e-banking system of the bank or payment software in seconds.

 GIROMAT 130:
With GIROMAT 130 you can process all Swiss payment slips. It can read orange payment slips with the new or
old dimensions. The special driver software means no tedious implementation of interfaces and protocols is
necessary.
Smart cards are also beginning to make their mark in the e-banking field and are expected to play greater role in
the future. A smart card is a credit card-sized plastic card with an embedded chip that provides power for
multiple uses (I.D card, SIM cards for mobile phones, credit/debit cards, benefit claim, health cards, etc.). A
Smart cards is enhanced by PIN verification and cryptography, and the size and power of the chip determine its
storage and processing capacities (M’ Chirgui & Channel, 2007).

E- BANKING TECHNOLOGIES

E-banking relies heavily on information and communication technologies (ICT) to achieve its promise of 24
hours availability, low error rates, and quicker delivery of financial services. When considering e-banking, bank
websites usually come to mind first, but e-banking requires much more than just a good website. It needs back
end applications such as account systems, support applications such as Customer Relationship Management
(CRM systems), communication technologies to link e-banking to the payment systems such as LINK, and
middleware to integrate all these often different type of systems. This chapter is an overview of most common
technologies in use to support e-banking.
E-banking may be viewed as one branch of e-commerce, so it is useful to briefly cover the interlink between the
two. E-commerce is much more than just the use of the Internet, or having a website and enabling customers to
move their money around. The Internet may be the most common and well known medium for e-commerce, but
it is not the only one. Electronic Data Interchange (EDI) and similar systems have been in use since the mid-
sixties. In a banking context, ATMs and credit cards are also classified as e-commerce.

THE INTERNET

The emergence of the Internet has posed a host of new organizational opportunities and challenges. Given the
Internet’s potential to revolutionize business operations, it is important to understand the implications of it on
businesses in general. Although other e-channels such as Interactive Television (TV) and Wireless Application
Protocol (WAP) technologies are available for services delivery, their use is still limited in the provision of
financial services. Issues related to these technologies are also very similar to those of the Internet. The Internet
is a massive global network of interconnected packet-switched computer networks. Hoffman (2002) offers three
(mutually consistent) definitions of the Internet: a network of networks based on the TCP/IP protocols; a
community of people who use and develop those networks; and a collection of resources that can be reached
from those networks. The Internet has evolved over several decades with it’s growth accelerating exponentially
during the 1990s. The most exciting commercial developments however, are occurring on that portion of the
Internet known as the World Wide Web (WWW).
The WWW is a distributed hypermedia environment within the Internet, which was originally developed by the
European Particle Physics Laboratory (CERN). Global hypermedia allows multimedia information to be located
on a network of servers around the world, which are interconnected, allowing navigation through the information
by clicking on hyperlinks. Any hyperlink (text, icon or image in a the homepages of the WWW utilize the
system of hyperlinks to simplify the task of navigating among the offerings on the Internet. These attributes
enable the Web to be an efficient channel for advertising, marketing, and even direct distribution of certain
goods and information services. A more recent development is web 2.0 which may be described as a newer
version of web-based applications (such as wikis, social-networking sites, and blogs) which aim to enhance
creativity, collaboration, and interaction between Internet users. These developments on the Internet are
expanding beyond the utilization of the Internet as a communication medium to an important view of the Internet
as a new market place. The Internet influences the future services/products distribution channel structure in two
ways. First, the costs of using it are different from those of other available distribution channels, and the service
output it provides is often different from the service output provided by traditional distribution channels. Second,
the Internet influences consumers. Many of them invest time and resources into becoming computer-literate and
in getting to know the Internet. Other consumers do not become computer-literate and do not gain familiarity
with the Internet. These two customer segments are likely to have similar needs. Therefore, the existing
distribution channel also influences changes in overall distribution channel structure. The old distribution
channels gradually give way to the new ones, but do not necessarily become redundant.

MOBILE BANKING TECHNOLOGIES

Some banks are making significant investments in mobile systems to deliver a range of types of business value,
from increased efficiency and cost reduction, to improved operational effectiveness and customer service to
provide a competitive advantage. A factor that has contributed to this development has been the extended
availability and capacity of mobile communications infrastructure around the world. The number of types of
mobile devices has been increasing rapidly and the functionality available has also improved. The shrinking
costs of data transmission and, due to the intense competition from suppliers, the reduced costs of devices have
catalysed the distribution of mobile technologies and amplified the growth of the worldwide mobile market. In
those countries where traditional telecommunication infrastructure is not well developed, mobile technologies is
transforming accessibility to the Internet based services.
Mobile banking may be described as the newest channel in electronic banking to provide a convenient way of
performing banking transaction using mobile phones or other mobile devices. The potential for mobile banking
may be far greater than typical desk-top access, as there are several times more mobile phone users than online
PC users. Increasingly “mobile life styles” may also fuel the growth of anywhere, anytime applications. There
are two main types of technologies available for use in mobile Banking: Wireless Application Protocol (WAP)
and Wireless Internet Gateway (WIG).WAP is an application environment and set of communication protocols
for wireless devices designed to enable manufacturer, vendor, and platform independent access to the Internet
and advanced telephony services. WIG is a Short Message Service (SMS)-based service, in which a menu of
available banking options is initially downloaded from the bank to the phone device (Brown et al. 2003). This
enables users to browse bank accounts and conduct other banking related tasks. Mobile banking was offered in
the UK by the banks such as The Woolwich during early 2000s, but it failed to achieve a critical mass of users.
The same story has been repeated in many other counties with mixed results. The main hurdle in development of
mobile banking is low consumer adoption due to a number of factors discussed below:
 internet connectivity costs:
Although a connection cost from mobile phones is steadily declining it is still high enough in many countries to
deter customers from using their mobiles for applications such as e-banking.

 Difficult user interface:

Human Computer Interface (HCI) issues are a key factor in mobile technology acceptance. HCI includes the use
and context of computers, human characteristics, computer systems and interface architecture, and the
development process (Perry, et al, 2001). A general rule is that the easier and more adoptable the interface, the
greater is the user acceptance. HCI issues in mobile working are different in the mobile working context than in
the traditional office environment. Kristofferson (1999) identifies three key elements that define mobile work
contexts and explain how they differ from the office setting:
1. Users’ hands are often used to manipulate physical objects, as opposed to users in the traditional office
setting, whose hands are safely and ergonomically placed on the keyboard.
2. Users may be involved in tasks (‘‘outside the computer’’) that demand a high level of visual attention (to
avoid danger as well as monitor progress), as opposed to the traditional office setting where a large
degree of visual attention is usually directed at the computer.
3. Attention span of a mobile device user is much shorter than a desktop computer user so design of mobile
systems interfaces need to be much simpler with very limited amounts of text. Systems navigation needs
to be very easy too.
4. Methods to ease the burden of input and spread the requirements of processing output over all the human
senses, while still maintaining data integrity are of importance (York & Pendharkar, 2004)
 5. Speech and handwriting recognition are two growing forms of input. The benefits of speech recognition
include minimal user attention input, direct system entry, remote microphone capabilities, and faster
speed of operation compared to other competing input methods (York & Pend-hacker, 2004). These
technologies need to be incorporated into mobile devices to improve the user interface.
• Lack of awareness amongst customers:
Many banking customers are not even aware of availability of mobile banking or associated benefits. As with
other technologies, awareness increases with time and needs considerable
promotional efforts.
• Limitations in functionality of mobile devices:
Mobile technologies are still dogged by limitations such as limited battery life, unreliable network connections,
and volatile access points, risk of data loss, portability, and location discovery. Even in the developed world,
until recently, wireless communications were very limited with regards to functionality of devices and speed of
communications. Constraints such as screen size, memory, and storage capabilities as well as data transfer rates
averaging 14.4 Kilo Bytes Per Second (KBPS), limited the amount of data that could be both displayed and
accessed. These limitations are still one of the biggest barriers to the adoption of mobile working in many
countries.
• Accessibility issues:
High speed public Internet access is offering opportunities to get and stay connected in more locations. Today,
hotels that cater to business travelers frequently offer in-room high speed Internet access. As these high speed
access networks ramp up, mobile applications are growing
in popularity (Phifer, 2004). It may take several years to reach that ‘always connected’ goal, and connectivity in
less populous areas will lag behind high tech corridors.
• Security concerns:
Mobile technology still suffers from questionable security. So it may not be suitable for transfer of highly
confidential financial information. Mobile devices are increasingly becoming a target for virus writers, hackers,
and short message service (SMS) spammers. According to Tower Group’s research, over 200 mobile phone
viruses have been identified since phones have been able to support PC-like applications such as email, instant
messaging and Web browsing, and the number is doubling every six months.
The resulting disruption of service and data theft can cause many problems for consumers, including lost
revenues and customer dissatisfaction for mobile operators. However, the greatest loss may be absorbed by
banks providing mobile access, as in almost all cases of fraud banks suffers from the losses. This factor may be
making many banks hesitant in providing mobile banking. To be successful in mobile banking the industry must
develop an ability to effectively contain the malware problems to a level that is at least on part with that of the
existing Internet channels.
• Organizational changes:
To offer mobile banking many organizations will need to change their business processes, ways in which
information is provided and accessed, working practices and work relationships, working styles and most
important of all, changes in roles, responsibilities and management structures. It may be a manageable task in
some organizations but a very difficult one in others’.
• Small number of choices (only a few banks offer mobile banking):
There are a bewildering number of options when it comes to providing mobile banking. It is possible to spend
anything from a few thousand to several millions of pounds on any combination of mobile hardware, software
and networks without realizing many real benefits. With falling prices of mobile technology one may perceive
that mobile working is cheap to implement. However, it is important to remember that technology costs are only
a small proportion of the likely total costs. As a rule of thumb, these costs account for 30% of a typical mobile
project, with the remaining 70% including items such as training, maintenance, security, management and
integration (Flood date?). This implies that the real cost of mobile working could be much greater than promised
savings (York & Pendharkar, 2004).
• Technology overload:
The proliferation of personal information devices such as home computers, mobile phones and digital organizers,
coupled with the rise of new media such as e-mail and the World Wide Web ,have forever altered the way in
which information consumers work and play. These fragmented information channels often result in inefficient
working patterns as users switch from device to device and between different media (Evans, 2004) which may
result in mobile savvy customers unable to use their devices for day to day tasks such as e-banking.
• Service reuse:
Most components of SOA can be re-used several times. To fully benefit from this feature, organizations have to
train, encourage and reward programmers to reuse existing services (Kobielus, 2005). This is the key reason
given for claims that SOA is cheaper than its alternatives. In the banking industry, services are usually coupled
within a particular process. Generally speaking, banks are unable to decouple the process, and the services held
within each process need to be rebuilt to get the same services in another channel. SOA, however, allows banks
to decouple services and make them modular so they can be reused across channels.
• Shorter development cycle:
Greater service reuse often translates into accelerated development cycles (Kobielus, 2005) which means that IT
departments have greater ability to quickly respond to dynamic business needs. The development cycle is also
shortened by the reduction in need for coding.
• Long term cost savings:
Reusability of SOA components could also result in significant cost savings. According to Kobielus (2005), the
marginal cost of building new applications will continue to drop as the reuse rate climbs. When an application
component is reused, SOA becomes more than 30 % cheaper than traditional development approaches. Kobielus
(2005) also points out that many of the SOA related savings come from its ability to consolidate silos of
redundant application functionality and data throughout organizations.
• Flexibility:
SOA offers considerably more flexibility than other architectures. Once an organization has built its systems
using SOA, it becomes easier to add or replace one part without disturbing the other parts (King, 2005). This
means than many business processes can be re-engineered or amended within a very short period of time. A
survey carried out by Information Week revealed that companies are getting or hoping to get many benefits from
SOA adoption. These benefits include (Babcock, 2005): IT platform standardisation, business processes
automation, business flexibility, operational savings, and systems integration and so on. Whilst these benefits
will persuade many businesses to implement SOA, there are barriers to its adoption.
• Large upfront investment:
In the previous section we discussed long-term cost savings. However, initially SOA will require significant
investment, which some organizations may not be able to afford. Kobielus (2005) reports that Standard Life
Group, an insurance company, maintains three SOA implementing development groups with about 500 people,
about half of whom are delivering SOA services and applications. The company also has a staff of seven which
just manages their SOA-enabling distributed application infrastructure. This type of operation is expensive, and
the Return on Investment (ROI) can take long time to materialise. This issue is less of a problem for large
organizations with large IT budgets, but for small and medium sized organizations it may be more problematic,
and can be exacerbated by service reuse opportunities which are likely to be fewer than for large organizations.
• Complexity:
Implementing SOA is not easy. Erlanger (2005) claims that SOA implementation is one of the most daunting
projects that organizations can undertake because it represents a whole new of way of thinking which will
change the way developers operate and interact with the business. This could mean that many organizations will
not have enough or right kind of human resources to succeed in adopting SOA.
• Lack of mature development tools:
Many SOA development tools are still in their early stages and it will be some time before the standards bodies
develop universal standards for describing services and service platforms, along with delivering the management
tools they will need. This could be a particular problem where an organization implements a multi-vendor
solution. These limitations create many problems for organizations in implementing SOA. According to an
InformationWeek research survey, nearly a third of companies using SOA consider that they are falling short of
expectations, a quarter have seen growing complexity in their IT systems, a third have been hit with higher-than-
expected costs, and half report difficulties in integrating legacy systems into new software-development
processes in a cost effective manner (Babcock, 2005). These findings suggest that we may be far from the SOA
benefits claimed by SOA technologies vendors. Implementing SOA is as much of management issue as a
technological one. The main management issues include:

• Governance:

As SOA is a new IT paradigm, any governance issues and ways to manage them are still in their earlier stages of
development. Knurl and Rest (2005) define governance in an SOA context as a combination of workflow rules:
who is responsible for what service, what happens when quality assurance uncovers problems, the management
of service interface definitions, and so on. .

• Security:

SOA is based on open standards, making reusability and security critical issues. The industry has, however,
agreed on a simple framework for securing XML messages, called WS-Security which is the most often used
Web service specification after SOAP and WSDL (Knurl & Rest, 2005).

• Service management:
SOA should be managed like any other network resource. According to Knorr and Rist, (2005) several vendors
offer dashboard-like solutions that monitor the health of services, maintain service levels, scale performance, set
up failovers, handle exceptions and so on. Which of these solutions should be used depends on size of the SOA
implementation budget. In summary, SOA is a relatively new area, and many of the issues discussed above need
further research. These may include an objective evaluation of benefits and drawback of SOA, or studying best
practice in adoption or implementation of SOA in order to recommend an easy to follow practical model.
Impacts of SOA on organizational structures, culture and business processes also form an interesting research
direction. In-depth research and evaluation is needed to avoid pitfalls and to maximize benefits from SOA.

WEBSITE DEVELOPMENT ISSUES

In e-banking, a bank’s website acts as a bank branch or front end. The main difference is that when customers
login they do most of the work themselves without any assistance. There fore creating a positive customer
experience is more critical in the e-banking environment. E-banking websites and other related systems, without
the benefit of human guidance, are expected to communicate effectively and enhance knowledge and
understanding of the sometimes voluminous, and often technical, information involved in financial transactions
(Tan & Teo, 2000). To create a positive experience, a great deal of planning, resources and expertise needs to be
invested in the development and ongoing maintenance of websites.

ADVANTAGES OF E-BANKING

A. 24*7 access to your account: 

 The conventional banking system will allow you to operate your personal day only on the week days and during
the banking hours. However the internet banking will give you the privilege of the 24*7 operations and access to
your account. You can perform all your banking related stuff from your own place and at your convenient time.

B. Transaction made easy:

 Sometime you may have to make some payment on the schedule dates else you have to pay the penalty for it. In
case of the traditional banking system, you have to put a reminder for all the future transaction and payments.
However in real practice it is very difficult to memories al the future transaction. The internet banking will give
you the freedom from it. The system will automatically remind you for all your future transaction. In addition to
that if you will opt for the standing instruction option, the system will take care of the future transaction.
C. Settlement of transaction in no time: 
The internet banking has been developed with an aim to make it user friendly and the attempt has succeeded
also. If you are making any financial transaction through the internet banking, the transaction will be settled in
no time and you will receive your transaction status immediately.

Disadvantages of the E- banking: 

Legal issue:
All the internet banking transactions are settled by the users only as well as the authorization also. In case of any
financial disturbance, it requires an authentication from the banking staff. In case of the internet banking the
authorization can’t be obtained from the banking personal and it will invite the legal complaints.

Lack of human touch:

 Banking is all together a service industry. A service industry always has an upper hand, when there is a
customer care with human touch.  In case of the traditional banking system the banking staff will assist you in
case of any difficulties. However the internet banking lacks this option. The user will not have a direct contact
with the customer contact personal. Though there will be an option to talk over the phone to talk to the customer
care personal, you don’t have the guarantee that you are talking to the best person available there.

The security aspects: 

All internet banking service providers are leaving no stone unturned to make their service a fool proof one. Still
there exists a threat to the internet banking. To make your internet banking account a secure one, just follow the
guidelines issued by the bank and  do not share your login details with anyone.

TYPES OF E-BANKING

INTERNET BANKING:
Internet Banking helps you manage many banking transactions online via your PC.

AUTOMATED TELLER MACHINES (ATM):

An automated teller machine or automatic teller machine (ATM) is an electronic computerized
telecommunications device that allows a financial institution's customers to directly use a secure method of
communication to access their bank accounts, order or make cash withdrawals (or cash advances using a credit
card) and check their account balances without the need for a human bank teller.

TELE BANKING:

By dialing the given Telebanking number through a landline or a mobile from anywhere, the customer can
access his account and by following the user-friendly menu, entire banking can be done through Interactive
Voice Response (IVR) system.

SMART CARD:
A smart card usually contains an embedded 8-bit microprocessor (a kind of computer chip). The microprocessor
is under a contact pad on one side of the card. Think of the microprocessor as replacing the usual magnetic stripe
present on a credit card or debit card.
The microprocessor on the smart card is there for security. The host computer and card reader actually "talk" to
the microprocessor. The microprocessor enforces access to the data on the card.
The chips in these cards are capable of many kinds of transactions.

DEBIT CARD:
Debit cards are also known as check cards. Debit cards look like credit cards or ATM (automated teller machine)
cards, but operate like cash or a personal check. Debit cards are different from credit cards. While a credit card is
a way to "pay later," a debit card is a way to "pay now." When you use a debit card, your money is quickly
deducted from your checking or savings account.

E-CHEQUE:
An e-Cheque is the electronic version or representation of paper cheque.

OTHER FORMS OF ELECTRONIC BANKING

Direct Deposit
Electronic Bill Payment
Electronic Check Conversion
Cash Value Stored, Etc.

BENEFITS/CONCERNS OF E-BANKING
BENEFITS OF E-BANKING

For Banks:
Price- In the long run a bank can save on money by not paying for tellers or for managing branches. Plus, it's
cheaper to make transactions over the Internet.
Customer Base- The Internet allows banks to reach a whole new market- and a well off one too, because there
are no geographic boundaries with the Internet. The Internet also provides a level playing field for small banks
who want to add to their customer base.
Efficiency- Banks can become more efficient than they already are by providing Internet access for their
customers. The Internet provides the bank with an almost paper less system.

Customer Service and Satisfaction- Banking on the Internet not only allow the customer to have a full range of
services available to them but it also allows them some services not offered at any of the branches. The person
does not have to go to a branch where that service may or may not be offer. A person can print of information,
forms, and applications via the Internet and be able to search for information efficiently instead of waiting in line
and asking a teller. With more better and faster options a bank will surly be able to create better customer
relations and satisfaction.
Image- A bank seems more state of the art to a customer if they offer Internet access. A person may not want to
use Internet banking but having the service available gives a person the feeling that their bank is on the cutting
image.

For Customers:
Bill Pay: Bill Pay is a service offered through Internet banking that allows the customer to set up bill payments
to just about anyone. Customer can select the person or company whom he wants to make a payment and Bill
Pay will withdraw the money from his account and send the payee a paper check or an electronic payment
Other Important Facilities: E- banking gives customer the control over nearly every aspect of managing his bank
accounts. Besides the Customers can, Buy and Sell Securities, Check Stock Market Information, Check Currency
Rates, Check Balances, See which checks are cleared, Transfer Money, View Transaction History and avoid
going to an actual bank. The best benefit is that Internet banking is free. At many banks the customer doesn't
have to maintain a required minimum balance. The second big benefit is better interest rates for the customer.

CONCERNS WITH E-BANKING

As with any new technology new problems are faced.

Customer support - banks will have to create a whole new customer relations department to help customers.

Banks have to make sure that the customers receive assistance quickly if they need help. Any major problems or

disastrous can destroy the banks reputation quickly an easily. By showing the customer that the Internet is

reliable you are able to get the customer to trust online banking more and more.

Laws - While Internet banking does not have national or state boundaries, the law does. Companies will have to

make sure that they have software in place software market, creating a monopoly.

Security: customer always worries about their protection and security or accuracy. There are always question

whether or not something took place.

Other challenges: lack of knowledge from customers end, sit changes by the banks, etc

ROLE OF RBI IN COMPUTERISATION OF BANKS IN INDIA

Computerization 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 organizations for processing different kinds of data.

However in India organized Trade Unions were against introduction of computers in Public Offices.
Computerization was restricted to major scientific research organizations and Technical Institutes and defence
organizations. Indian Railways first accepted computerization 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 organizations in India, to serve the gap, when IBM left
India, due to the directive of the then Central Government.

In the Private Sector the first major venture was TCS (Tata Consultancy Services) which started functioning
from 1968. In the year 1980 a few batch-mates of IIT Delhi pioneered the effort to start a major education centre
in India to impart training in Information Technology and their efforts resulted in the setting up of NIIT in 1981.
Aptech Computer Education was established in 1986 following the experiment of NIIT.

Before large scale computerization, computer education became popular in India and coveted by bright students,
when several Engineering Colleges and Technical Institutes introducing Post Graduate Degree courses in
Computer Engineering. The booming hardware and software industry in the West attracted Indian students and
many of them migrated for better opportunities to the U.S.A. and settled there. We have today the paradox of
India being one of the major powers possessing diverse talents in fields of software development, but at the same
time, we are still a decade back to the using computerized service extensively in the country and bringing the
facility to the realms of the common man.

Rapid development of business and industry brought manual operations of data, a saturation point. This acted as
a 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.
Low productivity pushed cost of wages high and employees realized that unless they agreed for computerization
further improvement in their wage structure was not possible.

In the year 1993, the Employees' Unions of Banks signed an agreement with Bank Managements under the
auspices of Indian Banks' Association (IBA). This agreement was a major breakthrough in the introduction of
computerized applications and development of communication networks in Banks.

The first initiatives in the area of bank computerization, however, stemmed out of the landmark report of the two
committees headed by the former Governor of the Reserve Bank of India and currently Governor of Andhra
Pradesh, His Excellency, Dr.C.Rangarajan. Both the reports had strongly recommended computerization of
banking operations at various levels and suggested appropriate architecture.

In the 'seventies, there was a four-fold increase in the number of branches, five-fold increase in advances and a
six-fold increase in deposits'. Mechanization was seen as the best solution to the "problems inherent in the
manual system of operations, their adverse impact on customer services and the grave dangers to banks in the
context of increasing incidence of frauds.

The first of these Committees, viz. the Committee on the Mechanization of the Banking Industry (1984) was set
up for the first time to suggest a model for mechanization of bank branches, regional / controlling offices and
Head Office necessitated by the explosive growth in the geographical spread of banking following
nationalization of banks in 1969.

RECOMMENDATIONS OF COMMITTEE ON TECHNOLOGY UPGRADATION

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
Narasimha 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

Encryption of Public Switching Telephone Network (PSTN) lines

Admission of electronic files as evidence

Record keeping

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

Methods by which technological upgradation 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.

The Committee realized the urgent need for training, research and development activities in the Banking
Technology area. Banks and Financial Institutions started setting up Technology based training centres and
colleges. However, a need was felt for an apex level Institute which could be a Think-tank and Brain Trust for
Banking Technology.

The committee recommended a variety of payment applications which can be implemented with appropriate
technology upgradation and development of a reliable communication network. The committee also suggested
setting up of an Information Technology Institute for the purpose of Research and Development as well as
Consultancy in the application of technology to the Banking and Financial sector of the country. As
recommended by the Committee, IDRBT was established by RBI in 1996 as an autonomous centre for
Development and Research in Banking Technology at Hyderabad.

RESEARCH METHODOLOGY

CASE STUDY - ICICI

ICICI is one of the leading private sector banks in India, which combines financial strength with a reputation for
innovation and a universal culture that embraces change. On March 31, 2002 ICICI formally merged with ICICI
bank and emerged as India's first Universal Bank. The strategy of ICICI bank after the merger with ICICI Ltd. is
that of building a diversified portfolio. The merged entity will continue to be into project finance and the focus
will be to tap the potential in retail financing.
ICICI bank offers a wide spectrum of domestic and international banking services to facilitate trade, investment,
cross border business, treasury and foreign exchange services). ICICI bank has
been quick to realize that E- banking has changed from a somewhat experimental delivery vehicle into an
increasingly mainstream one for delivery of broad spectrum of banking products and services. Basic E- banking
services are rapidly changing from competitive differentiator to competitive necessity.
The group has leveraged on a number of tie-ups to come up with its various offering. For its Internet banking
offering the ICICI bank uses Infinity from Infosys, for its credit card business its uses Vision Plus from Pay Sys,
USA, for WAP services the tie-up with cellular service providers Orange and Airtel helps reach out to these
users, while the WAP technology is being implemented by the in-house ICICI Infotech service. To leverage the
Net for its marketing initiatives ICICI bank and Satyam Info way have jointly set up a "COM" company to
promote banking products on the Net. The bank has also entered into agreements with leading corporate like
BPL, Rediff.com, Usha Martin and Tata Communications for B to C solutions in a bid to further strengthen its
Internet banking product offering and services. Also ICICI has joined hands with a consortium led by Compaq to
take the lead in offering a solution to the Indian e-commerce community. This consortium offers a B2B and B2C
ecommerce payment gateway within India.
The Bank has been offering phone banking free of charge and was first to launch an Internet Banking service in
the country named Infinity. Infinity now provides a host of online banking solutions to retail as well as corporate
customers. ICICI's constant endeavor in providing more value to the customers has resulted in Infinity being the
front-runner amongst online banking offerings in the country. Also, in keeping with the customers need for
increased security, Corporate Infinity now provides multiple levels of authentication besides user ID/ password
and includes security tokens.
ICICI also strives to be a center for leading research on financial engineering in India, particularly in the area of
valuation of securities, risk management and derivatives. By leveraging on the groups resources ICICI provides
custom tailored solution that can support even the most complex business strategy.
ICICI is now moving all its operations into the era of 'virtual integration'. Not only has this drastically reduced
costs, but it has also increased and improved its services to customers. 1488 Money 2 India offers a unique
facility by ICICI of transferring funds to India. Additional modules were added-gifting and reminders to broaden
its scope and enhance ICICI's relationship with customers.
The table below gives the SWOT analysis of ICICI.

LOOKING FORWARD
An old Chinese saying goes: If you don't know where you are going - you will never get there. Globally, the
financial sector is metamorphosing under the impact of competitive, regulatory and technological forces. The
banking sector is currently in a transition phase with re-alignment, mergers and entry of new players from
different industry is becoming common. Many countries including India are de-regulating their banking sector
and government policies no longer form an entry barrier to banks competitors. ICICI Bank, IDBI Bank, HDFC
Bank and recently Kotak Mahindra Bank are prime examples of these.
Technology has leveled the playing field: the bargaining power of consumers is increasing, switching costs are
becoming lower and consumer loyalties are harder to retain. Primary goal of the banking sector including every
Bank is mainly to make profit, which in turn is ploughed back to increase business and reach, and pay dividends
or share profits to the stakeholders. This is perfectly correct, yet generic goal. More over the product (schemes)
differentiation is very difficult for banks as most of the products sold are constrained by legal or industry
regulations. Now, if you are already thinking about Technology as a tool in Banking you could probably set
some of these goals:
Selling financial products and services
Cutting operational costs
Branding & Market recognition
Keeping profitable customers
Every day more and more people are turning to the Technology for their personal banking. It is a safe,
convenient way to shop for financial services, maintain bank accounts and conduct business 24 hours a day.
Every one of us has always enjoyed a special relationship with their neighborhood bank. Why are so many
people suddenly choosing their personal computers as the new way to view and manage their money? Quite
simple - because it is a valuable option to have. Bank customers can save time by banking online. There is no
need to stand in one more line to perform the most basic transactions when they can be done quickly from the
desktop PC anytime, day or night. But even with more complicated transactions or investment decisions, people
like having direct control over their finances themselves. They find it convenient to access all of their financial
information in one place. Ease of use is one of the most important factors. Navigation through online banking
should be simple and intuitive. Banks need to appeal to customers who may not be technologically sophisticated,
and should not require an engineering degree to get started or use the service. Customers also choose banks
whose online services are reliable. Most Banks now offers a comprehensive range of financial products and
services, including a FREE checking account and internet bill paying services. In addition, arrays of checking
accounts are available in which you may also request a FREE check card. Hence most Banks of following
Electronic Banking or Internet Banking FREE have following services:
Get your balance details, Obtain your last 3 transaction details, Request a cheque book, Stop a cheque payment,
Enquire cheque status, Request an account statement, Get Fixed Deposit details, Bill payment details for
electricity, mobile  phone and telephone  services, Convenience of setting an operative  account, Designate
a particular account linked to your customer id as the operative  account. Customer Service available 24 hours
a day, 7 days a week E-banking Benefits
Benefits for the bank should always reflect benefits for the customer of banking services.

CUTTING OPERATIONAL COSTS

Cutting transaction costs results in higher profit margin for the banks. The enclosed chart clearly indicates the
benefits of E-banking over traditional methods banking.

Banking Method used

Cost per Transaction for Bank

1. Manual, personal
Rs. 40 - 100/- depending on Bank
Higher for Foreign Banks, as salaries and overheads are higher
2. ATMs
Rs. 20-30/- only
3. Internet / PC
Rs. 8/- only
4. Telephone Banking
Rs. 15/- only
As every Bank wants to be profitable E-banking is becoming necessity for survival. Electronic banking provides
enormous benefits to consumers in terms of the ease and cost of transactions

Taking over customers from competition

Banks seeking new customers can use advantages of new distribution channels and acquire most profitable
customer from their competition. It is a fact that people using E-banking are the ones who consider time as
money and are the one with loads of money. Majority of banks see 80% of their business coming just 20% of the
client base. This 20% customer base is vulnerable if the bank does not appreciate their time.
Building stronger customer relations offering new services, results in improved customer experience and
stronger customer retention. Bigger share in customer's wallet  It is well known fact that customers tend to
keep their finances in one place. Banks holding customer accounts therefore have opportunity to cross sell
different products and services. Recent studies show that banks in the USA lost 20% of their most valuable
customers in favor of non-bank FI flexible enough to offer diversified services and products. Identifying
profitable customer’s .Customers using E-banking services have higher balances than average branch teller
customers. Investments are more than twice higher than the average.

Conclusion
From all of this, we have learnt that information technology has empowered customers and businesses with
information needed to make better investment decisions. At the same time, technology is allowing banks to offer
new products, operate more efficiently, raise productivity, expand geographically and compete globally. A more
efficient, productive banking industry is providing services of greater quality and value.
E-banking has become a necessary survival weapon and is fundamentally changing the banking industry
worldwide. Today, the click of the mouse offers customers banking services at a much lower cost and also
empowers them with unprecedented freedom in choosing vendors for their financial service needs. No country
today has a choice whether to implement E-banking or not given the global and competitive nature of the
economy. The invasion of banking by technology has created an information age and commoditization of
banking services. Banks have come to realize that survival in the new e-economy depends on delivering some or
all of their banking services on the Internet while continuing to support their traditional infrastructure.

Case study –SBI BANK

The State Bank of India (SBI), the largest and oldest bank in India, had computerized its branches in the 1990s,
but it was losing market share to private-sector banks that had implemented more modern centralized core
processing systems. • To remain competitive with its private-sector counterparts, in 2002, SBI began the largest
implementation of a centralized core system ever undertaken in the banking industry. • The State Bank of India
selected Tata Consultancy Services to customize the software, implement the new core system, and provide
ongoing operational support for its centralized information technology. • Although SBI initially planned to
convert only 3,300 of its branches, it was so successful that it expanded the project to include all of the more
than 14,600 SBI and affiliate bank branches. • The State Bank of India has achieved its goal of offering its full
range of products and services to all its branches and customers, spreading economic growth to rural areas and
providing financial inclusion for all of India's citizens.

Products and Services offered by SBI:

1. E-Ticketing:

E-Ticketing provides service to book railway, air and bus tickets online through Online SBI. Railway ticket can
be booked through irctc.co.in. Railway tickets are available in to forms. I-ticket (where the delivery of tickets
will be made at your address) or E-tickets (e-ticket is generated & can be printed at home.) Air flight tickets and
selected bus transport ticket of metro cities are also available through E-Ticket Services

2. SBI E-Tax:

This facility enables to pay TDS, Income tax, Indirect tax, Corporation tax, Wealth tax, Estate Duty and Fringe
Benefits tax online through SBI E-Tax. The online payment feature facilitates anytime, anywhere payment and
an instant E-Receipt is generated once the transaction is complete. The Indirect Tax payment facility is available
to Registered Central Excise/Service Tax Assesses who possesses the 15 digit PAN based Assesses Code.
3. E-Payment:
A simple and convenient service for viewing and paying bills online. Using the bill payment anybody can
view and Pay various bills online, directly from your SBI account. It can pay telephone, electricity,
insurance, credit cards and other bills from the comfort of your house or office, 24 hours a day, 365 days
a year. It can also set up Auto Pay instructions with an upper limit to ensure that your bills are paid
automatically whenever they are due.
4. RTGS/NEFT:
It can transfer money from State Bank account to accounts in other banks using the RTGS/NEFT
service. The RTGS system facilitates transfer of funds from accounts in one bank to another on a "real
time" and on "gross settlement" basis. This system is the fastest possible interbank money transfer facility
available through secure banking channels in India. It can transfer an amount of Rs.1 lacs and above
using RTGS system. National Electronic Funds Transfer (NEFT) facilitates transfer of funds to the credit
account with the other participating bank.
5. Fund Transfer:
The Funds Transfer facility enables to transfer funds within accounts in the same branch or other
branches. It can transfer aggregating Rs.1 lacs per day to own accounts in the same branch and other
branches. To make a funds transfer, it should be an active Internet Banking user with transaction rights.
Funds transfer to PPF account is restricted to the same branch.
6. Third Party Transfer:
It can transfer funds to trusted third party‘s account by adding them as third party accounts. The
beneficiary account should be of any SBI branch. Transfer is instant. It can do any number of
Transactions in a day for amount aggregating Rs.1lakh.
7. Demand Draft:
The Internet Banking application provides to register demand drafts requests online. You can get a
demand draft from any of your Accounts (Savings Bank, Current Account, Cash Credit or Overdraft).
Limit can be set to issue demand drafts from your accounts or use the bank specified limit for demand
drafts. A printed advice can also be obtained from the site for record purpose.
8. Cheque Book Request:
A request can be posted through internet banking account for a cheque book. Cheque book can be
requested for any Savings, Current, Cash Credit, and Over Draft accounts. It enables to opt for cheque
book with 25, 50 or 100 cheque leaves. Cheque book can be delivered to registered address or any other
address provided in request.

9. Account Opening Request:

Online SBI enables it to open a new account online. You can apply for a new account only in branches.
where you already have accounts. You should have an INB-enabled account with transaction right in the
branch. Funds in an existing account are used to open the new account. You can open Savings, Current,
Term Deposit and Recurring Deposit accounts etc.
10. Account Statement:
The Internet Banking application can generate an online, downloadable account statement for any
accounts for any date range and for any account mapped to username. The statement includes the
 transaction details, opening, closing and accumulated balance in the account. The account statement can
be viewed online, printed or downloaded as an Excel or PDF file.
11. Transaction Enquiry:
Online SBI provides features to enquire status of online transactions. It can view and verify transaction
details and the current status of transactions.
12. Demat Account Statement :
Online SBI enables it to view Demat account statement and maintain such accounts. The bank acts as
your depository participant. In the third party site, you can mark a lien on your Demat accounts and use
the funds to trade on stock using funds in your SBI savings account. It can provide Demat account details
and generate the statement of holding, statement of transactions and statement of billing.

OBJECTIVES:

To analyze the awareness & usage of internet banking by SBI customers. To identify the strength and
weaknesses of it and reasons of that. To suggest the appropriate measures to increase the use of internet banking
by customers.

SWOC Analysis in SBI BANK

STRENGTHS:

1. Greater reach to customers.

2. Quicker time to market.
3. Ability to introduce new product and services quickly and successfully.
4. Ability to understand its customers’ needs.
5. Customers are given access to information easily across any location.
6. Greater customer loyalty.
7. 24 hrs account access.

WEAKNESS:

1. Lack of awareness among the existing customer regarding internet banking.

2. Obsolesce of technology take place very soon specially in terms of security on internet.
3. Procedure for applying for id and password for using services related to internet banking takes time.
4. Lack of knowledge is found regarding internet banking in employees of SBI

OPPORTUNITIES:

1. Approximately 95% of customers are not using internet banking

2. Core competency can be achieved in term of banking if focus is made on awareness of internet banking.
3. Can become 1”virtual bank of India.
CHALLENGES

1. Maintaining business edge over competitors in the context of sameness in IT infrastructure.

2. Multiple vender support is necessary for working of highly complex technology.

3. Maintaining secured IT infrastructure for business operations.

4. Alternative must be there in case of failure of system.

Conclusions:

Internet banking is gaining popularity and it is very essential for new age customer. Use of internet banking is

very beneficial to customers as it saves lots of harassment and cost incurred on the coordination for banking

transaction. From the above analysis, I conclude that, awareness of computers, internet and internet banking

among SBI account holder is high as well as use of computer and internet for personal and official purpose is

also good. Similarly, Use of internet banking is high for searching online information but, in spite of its

advantages, use of internet banking for online transaction purpose is very limited
PRIMARY DATA 10

1. Do you use any e- banking services?

A. yes no
B.

Chart Title Answer Frequency

yes no total Yes 28

No 03

49% 46% Total 30

5%

Interpretations:

Maximum customers are using e-banking services. Minimum customers are not using e-banking services. After
the survey the most of the people are using e –banking services.

2. Do you use any of the following services of E-banking?

A. Security device
B. SMS text password
C. E- certificate
D. None of the above

Answers frequency
Chart Title
Security device 14
security device sms text pasSWord
SMS text 09 e certificate none of the above
password

E-certificate 07 23%
47%
None of the Nil
above 30%

Total 30
Interpretations:

Maximum customer are using security device, SMS text password used by average customer and fewer customers used E-
certificate.

3. Which category of the banks do you consider as most technologically advanced?

A. Public sector bank

B. Private sector bank

Chart Title
Frequency
public sector bank private sector bank

Public bank 22
27%
Private bank 08

Total 30

73%

Interpretations:

Minimum customers are using public sector bank technology. Maximum customers are using private bank technology. It
is concluded that most of the customers used private sector bank technology because their service are better than public
sector bank.
4. How important would Online Banking be in your daily banking activities?
A. Significant
B. Infrequent
Chart Title
significant infrequent

Answers Frequency
10%

significant 27

Infrequent 03

Total 30

90%

Interpretations:

Maximum customers are using significant daily activities. Fewer customers are used infrequent activities. So it is better to
use significant banking actives.

5. Which online service you think is more user friendly:

A. internet Banking
B. telephone Banking

Chart Title
ATM services Frequency
Answer internet banking telephone banking
ATM SERVICES
Internet banking 10

Telephone banking33%10 33%

ATM service 10
33%
Total 30
Interpretations:

All customers are using ATM service, Internet banking and telephone banking because of this services are more frequently
used by customers.

6. Do you think that Internet Banking is convenient?:

Chart Title A. Yes
B. No
YES NO
Answer 7% frequency

Yes 28

No 02

Total 30
93%

Interpretations:

All customer are convenient in internet banking.

7. What type of Banking would you do over the Internet?:

A. Personal Banking
Chart Title B. Business transactions

PERSONAL BANKING BUSINESS TRANS.

Answer Frequency
17%
Yes 25

No 05

Total 30
83%
Interpretations:

Maximum customers are using personal banking. Minimum customers are using business transactions.

8. Are you aware of our Telephone Banking Services?:

A. Yes
B. No
Chart Title
Answer Frequency
YES NO

Yes 28
7%

No 02

Total 30

Interpretations:
93%
All customers are aware of telephone banking services.

9. How often have you used our Telephone Banking service?:

A. Regularly
 B. Infrequently
Chart Title
REGULARLY INFREQUENTLY
Answer Frequency
13%
Regularly 26

Infrequently 04

Total 30

87%

Interpretations:

Maximum customer are used regularly telephone banking services. Minimum customers are not used regular basis
telephone banking services.

10. Do you know of our online 24hr ATM Services?:

A. Yes
B. No

Chart Title
Answer Frequency
Yes 28 YES NO
No 02 7%
Total 30

93%
Interpretations:

All customers are used 24hrs ATM services.

Conclusions

E-banking is making significant progress in terms of customers’ adoption, functionality and profitability for

banks. However it still faces a number of threats including security and privacy issues which will have to be

dealt with to ensure long term survival. It is difficult to predict the future, but some remarks can be made based

on the experience so far. In our view, the next developments in e-banking will involve new products and services

that were not feasible in traditional banking models. This could involve making instant payments (possibly using

mobile phones), or tools to help people manage their multi-bank financial portfolio. Internet only banking may

also become more viable as the functionality of e-banking grows, and customers adapt to the new ways of
conducting their financial activities. International banking might become a reality for ordinary consumers as

banking payments systems are increasingly harmonized. For example, in Europe, new measures are being

introduced by the European Union to allow cross-border provision of e-commerce services by providing a single

payment system. Some companies such as IBM have expressed their vision of the future of financial services,

complete with biometrics, state-of-the-art branch offices, enterprise risk-management systems, and advanced

customer interaction (Marlin, 2005). Some of the technologies associated with such a vision are already in use

but the feasibility of industry-wide use is still difficult to predict. Schneider (2005) predicted that in fifty years

customers will carry a translucent plastic bank card displaying a talking head with artificial intelligence. Cash

and checks will have been eliminated in favour of the new electronic currency of “credits,” which will be much

easier to transfer, maybe using mobile phones. The early signs are that it is already started to happen.

Developments in biometric technologies may help to deal with the most persistent security issues as well as

dealing with customers’ difficulties in remembering many different login keys.

Bibliography:

Book names:

1. E-banking ( Ravindra Kumar,Manish Deshande)

2. Electronic banking in India (Dr R.K.Uppal)

Websites:

 Fen.wikipedia.org/wiki/online-banking.
  www.yourarticlelibrary.com/../23498/

 www.upet.ro/../Driga-lsac.pdf

 www.ukesssays.co.uk>UKEssays>Esssays>Information Technology

 Enetbanking.blogspot.com/2010/03/hi

 www.scribd.com/../E-banking-in-India

 www.academia.edu/2635617/ELECTRONIC...

 www.investopedia.com/../banking9.asp

ANNEXURE

1. Do you use any e- banking services?

A. Yes
B. No
2. Do you use any of the following services of E-banking?
A. Security device
B. SMS text password
C. E- certificate
3. Which category of the banks do you consider as most technologically advanced?
A. Public sector bank
B. Private sector bank
4. How important would Online Banking be in your daily banking activities?
A. Significant
B. Infrequent
5. Which online service you think is more user friendly:
 A. internet Banking
B. telephone Banking
C. ATM services
6. Do you think that Internet Banking is convenient?
A. Yes
B. No
7. What type of Banking would you do over the Internet?
A. Personal Banking
B. business transactions
8. Are our aware of our Telephone Banking Services?
A. Yes
B. No
9. How often have you used our Telephone Banking service?
A. Regularly
B. Infrequently
10. Do you know of our online 24hr ATM Services?
A. Yes
B. No