Internal Assessment Project Report For the Subject

Financial Market and Services

On

“ONLINE BANKING”

Submitted to

Faculty of Management Studies, MARWADI UNIVERSITY

Under the Guidance of

Mr. Sudhansu Shekhar Panda

In partial Fulfilment of the requirement of the award of marks in the internal

assessment of the paper Financial Market and Services in the degree of

Master of Business Administration (MBA)

Offered by

Gujarat Technological University

Ahmedabad

Prepared & submitted by

RUDRESH DILIPBHAI TRIVEDI

217340592090

MBA (Semester III)

January 2023
 STUDENT DECLARATION

I hereby declare that the Internal Assessment Project Report titled in

“ONLINE BANKING” is a result of my own work and my indebtedness to other
work publications, references, if any, have been duly acknowledged. If I am found
guilty of copying from any other report or published information and showing as
my original work, or extending plagiarism limit, I understand that i shall be liable
and punishable by the guide, which may include No Marks in the Internal
Assessment.

NAME Enrolment No. Signature

RUDRESH DILIPBHAI 217340592090
TRIVEDI

Place: Rajkot Date:

 CERTIFICATE OF EXAMINER

This is to certify that the project work embodied in this report entitled was carried
out by Rudresh Dilipbhai Trivedi and enrolment number is 217340592090 of
MARWADI UNIVERSITY.

The report is approved / not approved.

Marks Given by Examiner:

This report is for the partial fulfilment of the requirement of the award of the degree
of master of Business Administration offered by Gujarat Technological University.

Examiner’s Sign

Name of examiner

Date:

Place:
 “ONLINE BANKING”

 What is Online Banking?

 Online banking allows a user to conduct financial transactions via the Internet.
Online banking is also known as Internet banking or web banking.
 Online banking offers customers almost every service traditionally available
through a local branch including deposits, transfers, and online bill payments.
Virtually every banking institution has some form of online banking available
both on desktop versions and through mobile apps.
 Some banks operate exclusively online, with no physical branch. These banks
handle customer service by phone, email, or online chat. Online banking is
frequently performed on mobile devices now that Wi-Fi and 5G networks are
widely available. It can also be done on a desktop computer.
 These banks may not provide direct automatic teller machine (ATM) access but
will make provisions for consumers to use ATMs at other banks and retail
stores. They may reimburse consumers for some of the ATM fees charged by
other financial institutions. Reduced overhead costs associated with not having
physical branches typically allow online banks to offer consumers significant
savings on banking fees. They also offer higher interest rates on accounts.
 Various Scams in Financial Markets:
1) How does phishing works?
 Fraudsters create a phishing website that appears to be a legitimate website, such
as a bank's website, an e-commerce website, a search engine, and so on.
Fraudsters distribute links to these websites by SMS, social media, email, and
Instant Messenger, among other methods.
 Many clients click on the link without first checking the Uniform Resource
Locator (URL) and enter security credentials such as a Personal Identification
Number (PIN), One Time Password (OTP), Password, and so on, which are
collected and utilised by fraudsters.
2) How does vishing work?
 Imposters acting as bankers, firm executives, insurance agents, government
officials, and others call or approach customers over the phone or over social
media. Imposters disclose a few consumer facts, such as the customer's name or
date of birth, to win trust.
 Imposters may pressure or trick customers into sharing confidential information
such as passwords, OTPs, PINs, and Card Verification Values (CVVs) by citing
an urgency / emergency such as the need to block an unauthorised transaction,
payment required to avoid a penalty, or an attractive discount, among other
things. Customers are then defrauded using these credentials.
3) Frauds using online sales platforms
 On online sales platforms, fraudsters pose as purchasers and express an
interest in the seller's product(s). several fraudsters pose as defence
personnel stationed in remote regions to gain trust.
 Instead of paying the seller, they use the Unified Payments Interface (UPI) app's
"request money" option and demand that the seller authorises the request by
entering the UPI PIN. Money is transferred to the fraudster's account whenever
the seller inputs the PIN.
4) Frauds due to the use of unknown mobile apps
 According to RBI, fraudsters circulate through SMS, email, social media, Instant
Messenger, etc., certain app links, masked to appear similar to the existing apps
of authorised entities. Fraudsters trick the customer to click on such links which
results in downloading of unknown / unverified apps on the customer’s mobile,
laptop, desktop, etc.
 Once the malicious application is downloaded, the fraudster gains complete
access to the customer’s device. These include confidential details stored on the
device and messages / OTPs received before / after installation of such apps.
5) ATM card skimming
 Skimming devices are installed in ATM machines by fraudsters who take data
from the customer's card. According to the RBI release, “Fraudsters may also
install a dummy keypad or a small / pinhole camera, well-hidden from plain sight
to capture ATM PIN. Sometimes, fraudsters pretending to be other customer
standing near-by gain access to the PIN when the customer enters it in an ATM
machine. This data is then used to create a duplicate card and withdraw money
from the customer’s account.”
6) Frauds using screen sharing app/remote access
 RBI warns customers stating the procedure that “Fraudsters trick the customer to
download a screen-sharing app. Using such an app, the fraudsters can
watch/control the customer’s mobile / laptop and gain access to the financial
credentials of the customer. Fraudsters use this information to carry out
unauthorised transfer of funds or make payments using the customer’s Internet
banking/payment apps.”
7) SIM swape or SIM cloning
 In cases like SIM swap or SIM cloning, “Fraudsters may obtain a duplicate
Subscriber Identity Module (SIM) card (including electronic-SIM) for the
registered mobile number linked to the customer's bank account by gaining
access to the customer's Subscriber Identity Module (SIM) card,” states RBI.
 Fraudsters use the OTP received on such duplicate SIM to carry out unauthorised
transactions. Fraudsters generally collect the personal / identity details from the
customer by posing as a telephone / mobile network staff and request the
customer details in the name of offers such as - to provide free upgrade of SIM
card from 3G to 4G or to provide additional benefits on the SIM card.
8) Scam through QR code scan
 RBI explained how scam through QR code works, “Fraudsters often contact
customers under various pretexts and trick them into scanning Quick Response
(QR) codes using the apps on the customers’ phone. By scanning such QR codes,
customers may unknowingly authorise the fraudsters to withdraw money from
their account”.
9) Impersonation on social media
 With lots of people spending time on social media and updating their details has
made fraudsters easy to get details to dupe the people. As per the RBI booklet,
“Fraudsters create fake accounts using details of the users of social media
platforms such as Facebook, Instagram, Twitter, etc. Fraudsters then send a
request to the users’ friends asking for money for urgent medical purposes,
payments, etc. Fraudsters, using fake details, also contact users and gain users’
trust over a period of time.
 Case study of the Indian banking and financial services industry
using strategic tools:
 Becoming world class in their practices and dealing with crises
• Now, the BFSI sector in India is in a position where it can compete with its
peers abroad and elsewhere mainly due to the pioneering efforts of the first
wave of post liberalization banks such as HDFC and ICICI. No wonder that
the Indian BFSI sector has become a dream job destination for millions of
graduates in the technical and managerial institutes.
• Having said that, at present, the BFSI sector in India is in crisis due to its
profligate lending practices during the boom years of the first decade of the
21st century. Indeed, concomitant with the growth of the Indian Economy and
the blistering pace of capacity addition as well as booming industries, the
banks and financial institutions threw caution to the winds and engaged in
indiscriminate lending without doing their due diligence.
• Having said that, some experts believe that what they did was to merely “kick
the can down the road” without solving the problem and this in turn led to the
ballooning of the NPAs or the Non-Performing Assets to such an extent that
at the moment, absent massive recapitalization, the Indian BFSI sector would
be in major trouble soon.
 PESTLE analysis:
1) Political
• In India, like in most developing countries, politics is inseparable from
business and hence, the Indian BFSI Sector is indeed impacted heavily by the
policies and the regulations that are passed by the ruling dispensations at the
center. Moreover, given the high incidence of governmental and public sector
ownership of the so-called State Run Banks, political interference is natural
and a major input into the decision-making process at the banks.
• While experts have repeatedly called for lesser political interference in the
running of the banks, most people agree that it is routine for lenders in the
public sector and even the private sector to pay heed to requests from
politicians as far as lending and other aspects are concerned. Moreover, the
political masters appoint the chairpersons of the banks and financial
institutions and this gives them a major say I the day to business practices at
these entities.
2) Economic
• Economic forces determine the workings of the BFSI sector and it is but
natural that the economic environment plays a major role in the fortunes of
the sector.
• Whether it is liberalization or the GFC or the Demonetization measure, banks
and financial institutions are heavily impacted by the macro and the micro
economic forces. Indeed, both of them are important unlike in the West where
the macro is often the main driver of performance of banks. The reason for
this is that the Indian Economy has not yet matured to an extent where micro
trends are insignificant.
3) Social
• The changing socio-cultural profiles and the demographic shifts underway
among the Indian consumers does impact the Indian BFSI sector to a great
extent. For instance, with the increase in the population of the youth, banks
and financial institutions are offering ever more lucrative investment options
to this segment.
4) Technological
• It would be an understatement to say that there is a paradox at the heart of the
Indian BFSI sector as far as impacts of technological advances are concerned.
For instance, while banking is as old as the Indian Republic, it was only
recently that the Indian BFSI sector took to technology in a big way. Once
having done so, it ensured that its tech offerings were as good as those of the
advanced countries with the added advantage of the Indian IT (Information
Technology) industry being at the forefront of the adoption of technology in
banking and finance.
5) Legal
• Given the fact that the Indian Legal System is cumbersome and long winding,
it is natural for banks and financial institutions in India to take the consumers
for granted including trying out unconventional and often, legally dubious
methods of loan recovery as well as selling of financial products.
6) Environmental
• This aspect does not have much of an impact on the Indian BFSI sector since
Green Lending and CSR or Corporate Social Responsibility business
practices are yet to take off among the banks and financial institutions.
Indeed, it is only recently that the banks and financial institutions started a
separate department for these aspects and hence, the sector has a long way to
go before it catches up in this regard.
  SWOT analysis:

1) Strength
• The main strength of the Indian BFSI sector lies in its ability to deliver
volumes since India being a large and diverse country, offers the benefits of a
humungous customer base. In addition, the Indian BFSI sector also relies on
high-net-worth individuals who are a sizable segment of the population
considering the number of Millionaires and Billionaires in the country. Apart
from this, the Indian BFSI sector is also heavily driven by corporates who use
it for their domestic and international operations.
2) Weakness
• Having said that, the most notable weakness of the Indian BFSI sector is its
informal and unstructured lending and banking processes. Indeed, despite
attempts by the RBI and the Finance Ministry, they have been unable to rein
in the dubious practices followed by the banks and NBFCs.
• For instance, the recent scandals involving well connected businesspersons
and the allegations of misconduct that has been leveled indicates that crony
capitalism is very much the case as far as the Indian BFSI sector is concerned.
This in turn, raises serious questions about its ability to mature into a world
class sector which does not bode well for the country’s aspiration to be a
global player and a key pillar of the global economy.
3) Opportunities
• On the other hand, there are humungous opportunities for the Indian BFSI
Sector since the majority of the population is unbanked and especially in the
rural areas where banks and formal financial sector firms do not have a
presence.
• Indeed, banking for the unbanked offers an unprecedented opportunity for
the Indian BFSI sector as can be seen from the success of emerging banks
such as Bandhan Bank.
4) Threats
• However, there are dark clouds on the horizon for the Indian BFSI sector
especially in terms of the rising bad loans and the NPAs (Non-Performing
Assets) which can bring down the banking sector if they are not managed in a
structured manner. Indeed, it can be said that the Indian BFSI sector is facing
an existential crisis as far as the problem of NPAs are concerned. added to
this, someday or the other, the sector has to grow beyond its dubious and wink
and nudge informal and personal collusion crony capitalist practices if it has
to well and truly emerge as a global player.
 The Reserve Bank of India and Demonetization:
• No discussion on the Indian BFSI sector is complete without examining the
role of the RBI, the country’s mandated regulator. Starting in its pre
independence and post independences periods of regulating the Indian BFSI
sector to the privatization wave where it was tasked with maintaining
monetary policy and its preeminent role in safeguarding the Indian Economy
from external shocks such as the GFC of 2008, the RBI has indeed done a
stellar job of stewarding the Indian BFSI sector.
• Having said that, its neutrality and independence have been questioned in
recent years especially with the Demonetization measure, and this has
worrying trends for the future of the Indian BFSI sector.
• Indeed, Demonetization could be counted as the most radical measure as far
as the Indian Economy in the post-independence era is concerned.
• It would not be an understatement to say that with this measure, the BFSI
sector received such a jolt and a shock that the after effects would continue to
be felt for years to come.
.
 Advantages of Online Banking:
1) Higher Rate
Rates at online banks are often higher than at traditional banks. Internet banks are
able to provide the best interest rates for checking and savings accounts because
they don't have to spend money on maintaining physical premises.
2) Lower Fees
The fact that online banks often charge minimal or no fees is another benefit of not
having to bother about branch maintenance. This implies that you will be less likely
to incur monthly service costs, overdraft fees, or fees related to using a debit card or
check as a form of payment, to mention a few. Comparatively, major physical banks
sometimes charge monthly service fees for accounts, but they could eliminate them
if you satisfy certain criteria, such as maintaining a required minimum balance.
3) Environmentally Preferable
Online banking greatly minimises the usage of paper because you receive all
banking correspondence via email or text. A USB stick makes data storage and
management simple, as does virtually storing data in the "cloud.
4) Accessibility
While traditional banking hours aren't always convenient, online banking allows you
to access your accounts and bank services whenever you need them on a computer
or mobile device, anywhere there is an internet connection. Customer care is also
accessible by phone, frequently around-the-clock, seven days a week.
5) Simple and Quick Transaction
In terms of speedy money transfers and deposits, online banks do better than
traditional banks. You may deposit cheques using an application and transfer funds
from another checking account to your online bank without having to search for and
visit an ATM.
  Disadvantages of Online Banking:
1) No Actual Branches
The workers at your local branch may be spoken with directly when you use a
traditional bank. If and when you require extra financial services, such as a loan, or
when you must modify your banking arrangements, that can be a benefit. In
addition, many conventional banks offer current clients special deals on credit cards,
vehicle loans, and mortgages.
2) Tech-related Service Disruption
We are dependent on the reliability and effectiveness of the system whenever we
utilise computers or an internet connection. If your internet service is delayed or
unavailable for a while, it will obviously limit your ability to access accounts online.
3) Faster is not always more convenient
Even while it can just take a few seconds to deposit a check using a bank's mobile
app, you still have to wait before your money is available. Online banking is
convenient in that it saves time on travel and line waiting at branches, but depending
on the amount placed, it might take up to three business days for all deposits to be
reviewed and monies to be made available for access.
4) No relationship with personal banker
You might be able to take care of your everyday banking requirements on your own
for the most part. However, it could be more challenging to address concerns if you
don't have personal contact with a banker when problems emerge. While customer
service departments are available on online banking sites, you frequently have to
navigate a phone tree and wait on hold before interacting with someone who is
unfamiliar with your requirements or financial history. Local banker, on the other
hand, is driven to help their clients and develop their personal ties.
5) Possibility of overspending
Some people could exceed their checking account limitations as a result of being
able to check account balances on the spur of the moment. The account balance
might not accurately reflect your true available funds unless you carefully review
your chequebook or a list of debit transactions that were not cleared. If you don't
keep a close eye on all of your transactions, overdrafts and fees may happen.

 Conclusion:
• Mobile banking offers a plethora of benefits, one of which is the potential
annual savings of up to 26 hours. In addition, a number of large banks, like
Wells Fargo, have provided financial guidance to their customers via their
mobile applications, allowing them to save more time and hand off the entire
task to the computer. There is no calculating or paper clutter because
everything you require is just a click or two away.
• Considering everything, adopting mobile banking is a huge step forward for
everyone who deals with money on a regular basis, from casual grocery
shoppers to stock dealers. Mobile banking does really include security flaws
and vulnerabilities. However, the concept has potential, and thousands of
individuals throughout the globe have used it effectively.