MVP Samaj’s

KRT Arts, BH Commerce & AM

Science (K.T.H.M.) College, Nashik -2

Department of Economics
Additional Credit – 1
GR7-A - Societal Survey
(CBCS Pattern – 2019) 2023-24
TYBCOM
Under Banking & Finance – II & III
Customer Awareness about E-banking and E-
Banking Frauds

Name of the Teacher

Prof. S. V. Tile - II

Prof. S. P. Adhav -III

Name of the Student

Divya Sandeep Zope

PRN No.

1202107289

Division
E
Roll No.
712
 1. Objective of Survey

 To know about how work the Banking System.

 To understand about services which is given by banks to customer.

 To know what the E-Banking Services.

 To collect details about E-Banking services. Like-Online Banking, Mobile

Banking. NEFT, RTGS, Online Fund Transfer etc.

 To find out how the E-Banking services works.

 To collect the information about how many customers are used the E-
Banking services.

 To understand that the E-Banking services are safe or not.

 To assess the impact of service quality dimensions on customers

satisfaction in E-banking.

 To assess the impact of perceived value of e-banking service on customers

satisfaction. To identify the most widely used application of internet
banking.

 To find out the reasons for preferring internet banking.

 To judge the importance of attributes that influence customers' satisfaction

with a particular bank.

 To study the relationship between security towards the satisfaction level

of customers using E-Banking services.

 To study the relationship between convenience and satisfaction level of

the E- banking services.
 To study the effect of E-Banking on quality services and customer
satisfaction
2. Scope of the study
2.1 Designing of the Questionnaire
To understand the savings preference, bank preference, services taken,
time period since becoming customer, and to identify the information sources
influencing bank selection, a questionnaire (ANNEXURE 1) was designed and the
respondents were asked to mark their preferences on a ranking scale. The
questionnaire also contains 19 factors that affect the customers.

2.2 Duration of Study

The customer perspective survey about customer awareness about e-
banking services and awareness about E-banking frauds and cyber security. The
period of survey is 15th October 2023 to 15th October 2023. During the survey I
collected the information in the area of Bamnod . I visited the bank and customer
of the banks which is located in that area.

2.3 Bank wise Area

The survey is based on customers of private bank, public bank and Co-
operative bank collectively. During the survey i visited the various customers to
explain them about the survey and to make then understand the more about cyber
security and banking frauds.

2.4 Data Collection and Analysis

The report is based on primary data only. Primary data was collected
through the above designed Questionnaire using telephone calls, e-mails and also
personally interviewing the respondents. The respondants were aware about
banking frauds and also those who were not using e-banking was the people who
lack of e-literacy Or was illiterate to use and understand E-banking services.

2.5 Applicable Tools of E-Banking

 National Electronic Fund Transfer (NEFT)
 Real Time Gross Settlement (RTGS)
 Immediate Payment Service (ECS)
 Immediate Payment Service (IMPS)
 Phone Pay, Google Pay, PayPal, Digital Wallet, Etc. Online Banking
Services
 Credit Cards, Debit Cards, ATM Cards, Etc
3 INTRODUCTION
3.1 The Indian Banking Sector and Information Technology
After independence, the Indian banking system has progressed from
nationalisation to liberalisation. It has seen the transformation of a sluggish
corporate institution into a highly proactive and competitive organisation. This
transition has occurred. largely as a result of liberalisation and economic reforms
that allowed hanks to rather than generating sales from traditional sources,
investigate potential market prospects. Borrowing and lending streams This
financial reform, which began in the early 1970s introduced a radically new
operating environment for banks. The banks were also selling their products and
services through a variety of creative and appealing technology-based
multichannel. The method began in the 1970s with the introduction of computers
as ledger posting machines. The use of technology has been implemented in
Banking operations have a wide range of back-office and customer- facing tasks.
Early in the 1980s, The Reserve Bank of India established two committees to speed
up the modernization of the banking system. operations in the financial industry
A high- level committee were formed under the auspices of the Under the
chairmanship of Dr C. Rangarajan, a phased strategy for computerization and
automation was created. In the banking industry, there has been a lot of
automation. Banks are now using a range of innovative and attractive technology-
based multichannel to market their goods and services. With the invention of
computers as ledger posting machines in the 1970s, the system was born. Banking
operations use automation for a variety of back-office and customer-facing
activities. The Reserve Bank of India formed two committees to speed up the
restructuring of the banking system in the early 1980s. economic processes A
high-level committee was organised under the auspices of the and a phased plan
for computerization and automation was established under the chairmanship of
Dr C. Rangarajan. Banks that once relied solely on the branch to provide services
have now begun to sell their products and services across several creative and
technology-based channels. Internet Banking, Automated Teller Machines, and
other platforms are examples of these. 'ATMs,' 'Mobile Banking,' 'Phone Banking.'
TV Banking, and so on. Any of these are E-banking or online-banking is the
domain of new delivery networks. In the type of digital banking, electronic
banking has been around for a long time. Telephone transfers and automated
teller machines (ATMs). It has been more common in recent years. The internet
has changed everything - it's a digital distribution system that had enabled
banking simpler for its transactions.

3.2 WHAT IS E-BANKING?

E-banking is defined as the automated delivery of new and traditional
banking products and services directly to customers through electronic,
interactive communication E-banking includes the systems that enable financial
institution customers, individuals or businesses, to access accounts, transact
business, or obtain information on financial products and services through a
public or private network, including the Internet. Customers access e-banking
services using an intelligent electronic device, such as a personal computer (PC),
personal digital assistant (PDA), automated teller machine (ATM), kiosk, or Touch
Tone telephone. While the risks and controls are similar for the various e-banking
access channels, this booklet focuses specifically on Internet-based services due to
the Internet's widely accessible public network. Accordingly, this booklet begins
with a discussion of the two primary types of Internet websites: informational and
transactional
E-barking can be offered in two main ways. First, an existing bank with
physical offices can also establish an online site and offer e-banking services to its
customers in addition to the regular channel. For example, Citibank is a leader in
e-banking, offering walk-in, face-to-face banking at its branches throughout many
parts of the world as well as e-banking services through the World Wide Web.
Citibank customers can access their bank accounts through the Internet, and in
addition to the core e-banking services such as account balance inquiry, funds
transfer, and electronic bill payment, Citibank also provides premium services
including financial calculators, online stock quotes, brokerage services, and
insurance.
3.2.1 Types of E-Banking
The common assumption is that Internet banking is the only method of
on-line banking However, this is not strictly the case, as several types of service
are currently available:

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

Internet Banking - Using a

Web browser, a user can
access their account, once the
bank's application server has
validated the user's identity.
Digital TV Banking- Using
the standard digital
reception equipment (set top
box and remote control),
users can access their bank
account. Abbey National and
HSBC services are available via Digital TV providers. One of its main selling
points is that no account details are transmitted via the World Wide Web.
Text Phone Banking - HSBC have introduced this service to allow customers with
text phones to check their balance, pay bills and transfer money.
3.2.2 E-banking Services

a. Automated Teller Machine

An ATM is a computerised machine that provides the customer to make
a financial transaction without the help of a bank employee. For using an ATMs,
the customer has to obtain an ATM card or debit card from his bank. Using an
ATMs a customer can avail various service like withdrawal of cash, depositing
money, check the balance inquiries etc. They can withdraw money in foreign
nations. The currency will he converted at the financial institution's exchange rate.
Nowadays ATMs are considered one of the easiest modes of withdrawing money

b. Debit Cards
A debit card is a plastic card, which delivers an alternative payment
system to cash when we make purchases. Customer need not carry paper cash,
instead of using paper cash, they can use their cards to cash withdrawal and make
purchases

c. Cards Credit
A credit card is also known as plastic money which permits its customer
to buy goods and services on credit bases. The credit cards are given by the banks,
and when customers sweep the card for their purchases a line of credit is granted
by him, as he can make purchases on credit bases which are to be repaid later to
the bank. A credit card transaction is often more secure than other forms of
payment such as cush payments or cheque payments. Customers have a fear to
use credit cards because it leads to more spending than required. It also involved
a high risk of fraud if in case the card gets stolen or if the card's information is
shared unknowingly.

d. National Electronic Fund Transfer

National electronic fund transfer is a nation-wide payment system
enabling one to one fund's transfer. Under this system individuals and corporates
can electronically transfer funds from any bank branch to any individual,
corporate having an account with any other bank branch in the country
participating in the scheme. For being a part of the NEFT funds transfer network,
a bank branch has to be National electronic fund transfer enabled.

e. Real Time Gross Settlement

Real Time Gross Settlement is defined as the continuous settlement of
funds transfer separately on an order by order basis. Real-time means processing
of orders at the time they are received rather than at some later time, Gross
settlement means the settlement of funds transfer instructions take place
individually (on an instruction by instruction basis). Considering that the fund's
payment takes place in the books of the RBI, the payments are ultimate and
irrevocable. RTGS is mainly meant for large value transactions.

f. Mobile Banking
It is the act of performing banking transactions on a mobile device like
cell phones, tablet etc. mobile phones as a medium for covering banking services,
and have reached greater significance because of their pervasive nature. Banks are
allowed to offer mobile banking services through SMS, USSD or mobile banking
application after obtaining necessary permission from the department of payment
and settlement systems.

g. E-Statements
Online "electronic" statements are delivered directly to you via a secure
online portal, such as the bank's online/mobile banking, so there's no mail to be
lost or stolen. You can review transactions without having paper to fille, and you
get more timely access to your statement without having to wait for the mail.

h. Digital Wallets
In addition to letting you pay for purchases on the fly via mobile device,
digital wallets such as Samsung Pay, Google Pay or Apple Pay offer safety and
security. These electronic payment tools are safer than using a physical credit or
debit card because each transaction has a unique, one-time encryption code. That
ensures your credit or debit card is never on file at the merchant. And, a digital
wallet can free you from carrying cash or having contact with frequently touched
surfaces.

3.2.3 Features of E-Banking

 E-Banking provide exceptional rates on Savings, CDs, and IRAs.
 Checking with no monthly fee, fice bill payment and rebates on ATM
surcharges credit cards with low rates.
 Easy online applications for all accounts, including personal loans and
mortgages.
 24 hour account access.
 It provides Quality customer service with personal attention.
 It provides the quick services to their customers.
 Enables transfer of funds from one place to another (banks).
 Exchange of statistical information among banks.
 Enables foreign exchange operations.
 Inter-bank applications like settlement of funds between banks.
 Provides facilities like demat operation, ATM operation, online banking.

3.3 Bank Frauds

Bank fraud is a form of financial crime which involves the misuse of a
financial institution or its services for personal gain or to commit other criminal
activities. It can involve a variety of techniques, such as creating false accounts,
using false identities, or manipulating account records. It can also involve using
stolen credit cards, ATM cards, or other forms of unauthorised access to a
financial institution’s funds. Bank fraud is a serious crime and can result in
serious penalties, including fines, imprisonment, and even the loss of business
licenses.
Bank fraud is a major problem for financial institutions and can have a
serious impact on their customers. It can lead to the loss of customer funds or the
exposure of confidential information. Financial institutions must take steps to
protect themselves against bank fraud by implementing security measures such as
strong encryption, identity verification with two-factor authentication (2FA),
fraud detection and prevention procedures and anti-fraud monitoring systems.
Banks must take steps to protect themselves from this type of fraud by
implementing effective internal controls and monitoring systems. It is also
important for customers to be aware of the potential risks associated with
financial fraud and to take steps to protect their financial information. Have a look
at the current banking fraud trends to stay ahead of the fraudsters.

3.3.1 Types of Bank Fraud

a. Accounting fraud
Accounting fraud is when a financial institution misrepresents its
financial position by either omitting important information or deliberately
misrepresenting it. This type of fraud can involve manipulating the financial
statements of a bank to make it appear more profitable than it is. It can also
involve the misappropriation of funds from a bank’s accounts.

b. Bill discounting fraud

Bill discounting fraud occurs when a bank accepts bills that are not
backed by adequate collateral. This type of fraud can lead to losses for the bank if
the person or entity that issued the bill does not pay it back. It can also involve the
sale of a bill at a discount, which can result in the bank losing money.

c. Cheque kiting
Cheque kiting is a form of fraud which involves taking advantage of the
time gap between the writing and clearing of a cheque. A criminal will write a
cheque for an amount of money that they know is not in the account, then deposit
it into another account. Once the cheque has been accepted, the criminal will
withdraw the funds from the other account before the original cheque bounces
due to a lack of funds. This is a form of fraud which involves the use of forged or
fraudulent documents.
 d. Forged or fraudulent documents
Forged or fraudulent documents are documents which have been
created, altered, or tampered with to deceive or defraud someone. For example, a
criminal might use a forged or fraudulent document to open a bank account in
someone else’s name and deposit a cheque they know will not clear. This is a form
of cheque kiting which is illegal and can lead to criminal charges.

e. Forgery and altered cheques

Forgery and altered cheques, as well as fraudulent loan applications,
are two very serious offences. Making minor changes to a document or cheque to
defraud someone is illegal and punishable by law. Altered cheques are commonly
used in fraud, as they are easy to alter and difficult to detect. For instance, a
person can add or delete numbers, change the name of the recipient, or even
change the date and amount. Altered cheques can be used to obtain money or
goods that the perpetrator is not entitled to, and can also be used to commit
identity theft.

f. Fraudulent loan applications

Fraudulent loan applications are another form of fraud. This type of
crime involves submitting false or incomplete information on a loan application to
obtain a loan that the perpetrator is not qualified for. It can also involve creating
fake documents or providing false information about income, assets, or other
financial information.

g. Empty ATM envelope deposits

Empty ATM envelope deposits have become an interesting area of
concern when it comes to fraud. It is a process wherein criminals deposit empty
ATM envelopes into ATMs to create fake deposits to launder money. This is done
by taking advantage of the fact that many banks do not take the time to verify the
contents of an ATM deposit, and thus they can be used to hide illegal activities.

h. Identity theft or impersonation

 Identity theft or impersonation is a serious crime and a growing
problem in today’s world. It involves someone stealing another person’s personal
information such as their name, address, bank account number, Social Security
Number (USA) or National Insurance Number (UK), driver’s license number, or
credit card information and using it to commit fraud or other crimes.Identity theft
or impersonation can occur in several ways. One way is for someone to gain
access to a person’s personal information by hacking into their computer or
stealing their wallet. Another way is for someone to use the stolen information to
open new accounts or to make purchases in the victim’s name.

i. Money laundering
Money laundering is a process of concealing the sources of illegally
obtained money, involving the transfer of funds from one financial institution to
another, or the use of false identities to hide the origin of the money. Money
launderers may also attempt to disguise the movement of funds by using shell
companies, overseas bank accounts, or anonymous online wallets. This type of
fraud is often perpetrated by organised crime groups or individuals who have
access to someone else’s card information. Money laundering can lead to loss of
funds, as well as increased scrutiny from law enforcement and financial
regulators.

j. Payment card fraud

Payment card fraud is the illegal use of debit or credit cards. Making it a
global problem that affects people who use credit and debit cards. It occurs when
someone steals a cardholder’s information and uses it to make unauthorised
purchases. Payment card fraud can be perpetrated in a variety of ways, from
stealing physical cards to hacking into online accounts. Regardless of how it is
done, the result is the same – financial loss for the cardholder.

k. Phishing or Internet fraud

 Phishing or Internet fraud is a type of fraud that involves the use of
deceptive techniques, such as sending emails, texts, or pop-up messages, to obtain
sensitive personal or financial information from unsuspecting victims. The goal of
phishing is typically to steal money or data or to access private accounts, such as
bank accounts.
Criminals use fake websites, emails, or text messages to deceive victims
into providing personal information, such as credit card numbers, bank account
numbers, and passwords. The criminals then use this information to steal money
from the victims’ accounts or to commit other types of fraud.

l. Prime bank fraud

Prime bank fraud is a type of fraudulent investment scheme, in which
perpetrators create fictitious “prime banks” to lure investors into investing in non-
existent financial instruments or products. The perpetrators may also use false
documents such as fake bank statements, forged signature cards, false financial
records, fraudulent statements, false testimonials and other fabricated documents
to convince investors that their money is being invested in a legitimate venture.
The fraudsters promise high returns in a short time.

m. Rogue traders
Rogue traders are individuals or entities that engage in securities fraud
and other illegal activities to make a profit. They often use deceptive tactics to
manipulate the market and take advantage of unsuspecting investors. Rogue
traders can also brokers or investment advisers who provide false information to
their clients to generate commissions or fees.

n. Stolen cheque
Stolen cheque fraud is a type of financial fraud in which a person
illegally obtains and uses a cheque belonging to someone else. The fraudster then
attempts to cash the cheque or deposit it into their account. Common methods of
committing this type of fraud include stealing cheques from mailboxes, stealing
chequebooks from homes, and taking advantage of the elderly.
 o. Wire transfer fraud
Wire transfer fraud is a type of fraud involving the transfer of money
through wire transfer services. It generally involves a thief or fraudster using
stolen personal information to gain unauthorised access to a bank account and
initiate a wire transfer of funds from that account to another account, usually
owned by the thief or an accomplice
.
Cyber Crime in Banking secctor
In the 21st century the online technology as updated with high
performance and used widely by all users. In top five the Digital Banking Sector is
also one which makes use of online technology constantly such as NEFT,
Googlepay, Phonepe etc. Though there are more usage of Online banking but still
the cybercrime in the banking sector has been increasing over the years. As
reported 50% of cybercrime is happened related to ATM, debit card and net
banking. Banking sector is facing cyber attacks more times compared to other
sectors. This paper view the cyber attacks in the banking sector and way of
providing the cyber security to those attacks. Cyber threats are attempts to
destroy data in a computer network/system. These cyber threats are originated
from various sources like websites or computer system. The main task of Cyber
threats to target to an attempt to obtain sensitive information through online
channels from may sectors. In many sectors the Digital Banking is affected by
Cyber threats in more number. A cyber threat is any malicious act that attempts to
gain access to a Digital Banking without authorization or permission from the
Account holder. Where a security breach or customers of a major bank having
money stolen from their accounts. In the year 2021, banks from all over the world
have been hit by hackers. The main aim of cyber Security in Digital Banking is to
provide safety measures to the user’s account digital money like debit cards and
credit cards for transactions.

Threats for Cyber security in Digital Banking

 1. Unencrypted Data- It is a common threats faced in all digital banking where
the data is left unencrypted( Unhidden), and those data was easily used by
hackers or cybercriminals thereby creating severe issues in the digital
banking.
2. Malware- Peer- to – Peer user devices does digital transaction hence it must
be secured. This malware software does serious attacks in the digital banking
by hacking the sensitive data which is passed through the network.
3. Third Party Services-Many banks and financial institutions use third-party
services to serve their bank holders better. If the user shares their bank details
such as ATM pin, CVV, OTP to third party then there will be hacking of bank
details.
4. Spoofing- It is the newest forms of cyber threats faced by digital banking.
The cybercriminals will simulate the Banking website’s URL which looks like
the original Website and even functioning too. When any user enters his or
her login Window that time the Bank details are stolen by criminals and use
it later.
5. Phishing- It is the oldest and most popular cyber threats where it attempts to
get sensitive information such as ATM PIN, CVV, OTP , Credit card/ debit
card details etc through Email/ Phone call or SMS.

Cyber Security in E-Banking

1. Integrated Security- As BFSI [Breath First Search Integrated] is the best
technology highly regulated in Digital Banking to integrated security where
all components work and communicate together is more beneficial with more
security.
2. Encrypted Data- All Banking data that is stored on computers or online must
be fully encrypted that means the details of Digital banking should be hidden
or unreadable format. Hence those data cannot be stolen or use by the cyber
criminals.
3. Machine Learning and Big Data Analytics- A new generation of analytical
security where store access a huge number of real time bank data with more
security.
4. Understand the Importance of Security- Make the mindset as security as a
positive view and go through the risk of security threats and its impact must
be analyzed to know the importance of the cyber security
5. Protect Information- Now a days the data can be stored either in different
devices or in the cloud, hence those data will be protected with security.
6. Consumer Awareness- It is one of the important tool where all customers as
get the knowledge of securities measures which can be implemented in the
Digital Banking.
7. Anti-malware Applications- An anti-malware increase protection, it is the
latest application that can potentially defeat the attacks related to digital
banking.