Session II
 “Internet banking” refers to systems that enable bank
customers to access accounts and general information on
bank products and services through a personal computer
(PC) or other intelligent device.
 Compared with traditional channels of offering banking
services through physical branches, e-banking uses the
Internet to deliver traditional banking services to their
 Internet banking may mirror products and services offered
through other bank delivery channels.
 In recent time E-banking has spread rapidly all over the
globe. All Banks are making greater use of E-banking
facilities to provide batter service and to excel in
 Internet banking products and services can include
wholesale products for corporate customers as well
as retail products for consumers.
 Some examples of wholesale products and services
 Cash management.
 Wire transfer.
 Automated clearinghouse (ACH) transactions.
 Bill presentment and payment.
 Examples of retail and products and services
 Balance inquiry.
 Funds transfer.
 Downloading transaction information.
 Bill presentment and payment.
 Loan applications.
 Investment activity.
 Other value-added services
 To Enable Online Payment of Bills
 To View Transactions.
 Transfer Money Between Accounts
 Online Protection
 24*7 Service.
 Reduce Manpower
 Reduction in Cost
 Facilitate Online Shopping
 Ease & Convenience
 Currently, the following three basic kinds of Internet
banking are being employed in the marketplace:

1. Informational
2. Communicative
3. Transactional
Informational —The bank has marketing information
about the bank’s products and services on a stand-
alone server. The risk is relatively low, as
informational systems typically have no path
between the server and the bank’s internal network.
This level of Internet banking can be provided by the
bank or outsourced. While the risk to a bank is
relatively low, the server or Web site may be
vulnerable to alteration. Appropriate controls
therefore must be in place to prevent unauthorized
alterations to the bank’s server or Web site.
Communicative — This type of Internet banking system
allows some interaction between the bank’s systems
and the customer. The interaction may be limited to
electronic mail, account inquiry, loan applications, or
updates like name and address changes. These
servers may have a path to the bank’s internal
networks, the risk is higher than informational
systems. Appropriate controls need to be in place to
prevent, monitor, and alert management of any
unauthorized attempt to access the bank’s internal
networks and computer systems.
Transactional — This level of Internet banking allows
customers to execute transactions. Since a path typically
exists between the server and the bank’s or outsourcer’s
internal network, this is the highest risk architecture and
must have the strongest controls. Customer transactions
can include accessing accounts, paying bills, transferring
funds, etc.
The Reserve Bank of India constituted a working group on
Internet Banking. The group divided the internet banking
products in India into 3 types based on the levels of
access granted. They are:
i) Information Only System.
ii) Electronic Information Transfer System.
iii) Fully Electronic Transactional System.

 Credit Cards/Debit Cards: The Credit Card holder can
spend with his Credit Card within the limits fixed by his
bank. Credit Card is a post paid card. Debit Card, on the
other hand, is a prepaid card with some stored value.
Every time a person uses this card, the Internet Banking
house gets money transferred to its account from the
bank of the buyer. The buyers account is debited with the
exact amount of purchases. An individual has to open an
account with the issuing bank which gives debit card with
a Personal Identification Number (PIN).
 How Credit/Debit Cards Works:
When customers makes a purchase, he enters his PIN
on shops PIN pad. When the card is slurped through the
electronic terminal, it dials the acquiring bank system -
either Master Card or VISA that validates the PIN and
finds out from the issuing bank whether to accept or
decline the transactions. The customer can never
overspend because the system rejects any transaction
which exceeds the balance in his account or the credit
limit fixed by the bank.
 ATM - Automated Teller Machine is designed to perform
the most important function of bank. It is operated by
plastic card with its special features. The plastic card is
replacing cheque, personal attendance of the customer,
banking hours restrictions and paper based verification.
 The on-line ATM enables the customer to avail banking
facilities from anywhere. In off-line the facilities are
confined to that particular ATM assigned.
 Smart Cards : Banks are adding chips to their current
magnetic stripe cards to enhance security and offer new
service, called Smart Cards. Smart Cards allow thousands
of times of information storable on magnetic stripe cards. In
addition, these cards are highly secure, more reliable and
perform multiple functions. They hold a large amount of
personal information, from medical and health history to
personal banking and personal preferences.
 EFT: Electronic Fund Transfer - An ATM is an Electronic
Fund Transfer terminal capable of handling cash deposits,
transfer between accounts, balance enquiries, cash
withdrawals and pay bills. Any customer possessing ATM
card issued by the Shared Payment Network System can
go to any ATM linked to Shared Payment Networks and
perform his transactions.
 The spread of E-banking has also greatly benefited the
ordinary customer in general and corporate world in
 There are many advantages of online banking. It is
convenient, it isn't bound by operational timings, there are
no geographical barriers and the services can be offered at
a low cost.
• Customer can withdraw money at any time and can also
have mini banks statements through ATMs that are now
widely available throughout the country.
• Through Internet Banking customer can operate his account
while sitting in his office or home. There is no need to go to
the bank in person for such matter.
• E banking has also greatly helped in payment of utility bill.
Now there is no need to stand in long queues outside banks
for his purpose.

• All services that are usually available from the local bank
can be found on a single website.
• The Growth of credit card usage also owes greatly to E-
banking. Now a customer can shop world wide without
any need of carrying paper money with him.
• Banks are available 24 hours a day, seven days a week
and they are only a mouse click away.
• Customer’s account is extremely accesses able with an
online account.
• The growth of E-banking has greatly helped the banks in
controlling their over heads and operating cost
• Many repetitive and tedious tasks have now been fully
automated resulting in greater efficiency, better time usage
and enhanced control.
• The rise of E-banking has made banks more competitive.

• Electronic banking has greatly helped the banking industry to
reduce paper work, thus helping them to move the paper
less environment.
• Electronic banking has also helped bank in proper
documentation of their records and transactions.
• The reach and delivery capabilities of computer networks,
such as the Internet, are far better than any branch network.

 E-Banking has resulted in creation of a better
enabling environment that supports growth,
productivity and prosperity.
 E-Banking’s electronically controlled and thoroughly
monitored environment discouraged many illegal
and illegitimate practices associated with banking
industry like money laundering, frauds and
 E-banking has helped banks in better monitoring of
their customer base.
 E-banking has also helped in documentation of the
economic activity of the masses.
1. E-banking promotes lack of socialising/social contacts
2. Hackers may intercept data and defraud customers
3. Phone bills can increase
4. Customers will be more vulnerable to phishing.
5. Customers are compelled to have computers at home,
Internet access and computers skills
6. Easier for customers to mismanage their accounts due to
the 24-hour service that will be available

Thank You