copy of ebanking

8/14/2019 Copy of Ebanking

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Chapter 1: - E-Banking

1.1 Introduction of E-Banking

1.2 Meaning of E-Banking

1.3 Functions of E-Banking

1.4 Types of E-Banking

1.5 Advantages of E-Banking

1.6 Limitations of E-Banking

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1.1 Introduction of E-Banking: -

The acceleration in technology has produced an extraordinary effect

upon our economy in general has had a particularly profound impact in

expanding the scope and utility of financial products over the last ten

years. Information technology has made possible the creation,

valuation, and exchange of complex financial products on a global

basis and even that just in recent years. Derivatives are obviously the

most evident of the many products that technology has inspired, but the

substantial increase in our calculation has permitted a variety of other

products and, most beneficially, new ways to unbundled risk.

What is really quite extraordinary is that there is no sign that

this process of acceleration in financial technology is approaching an

end. We are moving at an exceptionally rapid pace, fueled not only by

the enhanced mathematical applications produced by our ever rising

computing capabilities but also by our expanding telecommunications

capabilities and the associated substantial broadening of our markets.

All the new financial products that have been created in recent years

contribute economic value by unbundling risks and reallocating themin a highly calibrated manner. The rising share of finance in the

business output of India and other countries is a measure of the

economic value added by the ability of these new instruments and

techniques to enhance the process of wealth creation. The reason of

course, is that information is critical to the evaluation of risk. The less

that is known about the current state of a market or a venture, the less

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the ability to project future outcomes and, hence, the more those

potential outcomes will be discontinued.

1.2 Meaning of E-Banking: -

E-bank is the electronic bank that provides the financial service for the

individual client by means of Internet.

1.3 Functions of E-Banking: -

At present, the personal e-bank system provides the following services:

-

1. Inquiry about the information of account: -

The client inquires about the details of his own account information

such as the cards / accounts balance and the detailed historical

records of the account and downloads the report list.

2. Card accounts transfer: -

The client can achieve the fund to another persons Credit

Card in the same city.

3. Bank-securities accounts transfer: -

The client can achieve the fund transfer between his own

bank savings accounts of his own Credit Card account and his own

capital account in the securities company. Moreover, the client can

inquire about the present balance at real time.

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4. The transaction of foreign exchange: -

The client can trade the foreign exchange, cancel orders

and inquire about the information of the transaction of foreign

exchange according to the exchange rate given by our bank on net.

5. The B2C disbursement on net: -

The client can do the real-time transfer and get the

feedback information about payment from our bank when the client

does shopping in the appointed web-site.

6. Client service: -

The client can modify the login password, information of

the Credit Card and the client information in e-bank on net.

7. Account management: -

The client can modify his own limits of right and state of

the registered account in the personal e-bank, such as modifying his

own login password, freezing or deleting some cards and so on.

8. Reporting the loss if the account: -

The client can report the loss in the local area (not

nationwide) when the clients Credit Card or passbook is missing or

stolen.

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1.4 Types of E-Banking: -

1. Deposits, withdrawals, inter-account transfer and payment of

linked accounts at an ATM;

2. Buying and paying for goods and services using debit cards or

smart cards without having to carry cash or a cheques book;

3. Using a telephone to perform direct banking- make a balance

enquiry, inter-account transfers and pay linked accounts;

4. Using a computer to perform direct banking- make a balance

enquiry, inter-account transfers and pay linked

1.5 Advantages of E-Banking: -

1. Account Information: Real time balance information and

summary of days transaction.

2. Fund Transfer: Manage your Supply-Chain network, effectively

by using our online hand transfer mechanism. We can effect

fund transfer on a real time basis across the bank locations.

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3. Request: Make a banking request online.

4. Account information: The complete database that the banks has

about our company is available to us at our terminal. It provides

us:

Current balance in our account on real-time basis.

Days transactions in the account.

Details of cash credit limit, drawing power, amount

utilized, etc.

5. Downloading of account statements as an excel file or text file.

The statements can be integrated with your ERP systems for

auto-reconciliation.

6. Fund Transfers: Manage our Supply-Chain network, effectively

by using our online fund transfer mechanism. We can effect fund

transfer on a real time basis across the bank locations. The

product facilities.

(a) One-to-one fund transfer between two linkedaccount.

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(b)Bulk fund transfers; In bulk fund transfers, we

upload a flat file containing payment / collection

information. Our systems take care of processing

the entire file and once the file is processed file to

our ERP for auto reconciliation.

7. The real life situation of user-wise limits and multilevel

signatories can be mapped in the net-based fund transfer module

too. We can specify user-wise cap for fund transfer and the

number of approvals needed for each fund transfer. The fund

transfer will not take place unless the required number of

signatories has approved it.

8. With a power of Attorney from our dealers, we can link the

dealers accounts to our account in order to have an online fund

transfer, saving us time and money involved with cheques

collections systems. Alternatively, the dealer can credit our

account through this channel. Similarly, we could also effect

vendor and other payments online.

9. Customers can also submit the following requests online:

Registration for account statements by e-mail daily / weekly /

fortnightly / monthly basis.

(1)Stop payment or cheques

(2)Cheque book replenishment

(3) Demand Draft / Pay-order

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(4) Opening of fixed deposit account

(5)Opening of Letter of credit

10.The company does not have to spend anything extra to avail

such facilities. All it requires is an Internet connectivity. The

product enables the company to pro-actively manage its cash

flows, ease reconciliation efforts as all the MIS is available at

the click of the mouse.

11.Customers can Integrate the System with his own ERP: The

customer can download the account statements either as a text

file or as an excel file. The bank can help him in integrating the

account statements and bulk payments files with his ERP

system. The bank may charge a nominal fee depending upon the

nature of work involved.

12.Bill Payment through Electronic Banking: Internet has thus

ushered the concept of anytime and anywhere banking. To the

individual the onerous task of visiting several places to settle his

service bills like telephone, water, electricity, etc., can beovercome through the electronic Bill Pay service provided by

the bank. He can pay his regular monthly bills (telephone,

electricity, mobile phone, insurance, etc.) right from his desktop.

No more missed deadlines, no more loss of interest. He can

schedule his bills in advance, and thus avoid missing the bill

deadlines as well as earn extra interest on his money.

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13.The Electronic Shopping Mall: The customer can also make his

shopping payment through the Banks secure website-so that he

can shop online without any security worries, as the bank can

provide online real time shopping mail services through partner

shopping sites.

14.Effecting Personal Investments through Electronic Banking: The

banks website can also allow the customer to invest in shares,

mutual funds and other financial products.

15.Investing in Mutual funds: Electronic banking also brings the

customer the same convenience while investing in Mutual funds-

Hassle free and Paperless Investing. He can invest in mutual

funds without the hassles of filling application forms or any

other paperwork. He needs to provide no signatures or proof of

identify for investing. Once he places a request for investing in a

particular fund, there are no manual processes involved. His

bank funds are automatically debited or credited whilesimultaneously crediting or debiting his unit holdings.

16.Initial Public Offers Online: The customer could also invest in

initial public offers online without going through the hassles of

filling ANY application form / paperwork. Get in-depth analyses

of new initial public offers issues, which are about to hit the

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market and analysis on these. Initial public offer calendar, recent

initial public offers listings, prospectus / offer documents, and

initial public offer analysis are few of the features, which help a

customer to keep on top of the initial public offers markets.

17.Other benefits: The e-banking provides some other benefits also.

They are:

(1)Convenience.

(2) Speed of concluding transactions.

(3) Safety-banking from own home.

(4) Economy- banking without visiting your bank.

(5)Cheaper service fees.

(6)Seamless Integration with existing environment (IDM-

Intelligent Data Module).

(7)Highly Scaleable.

(8)Easy Customization.

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(9) Lower Costs of both Installation and Maintenance.

(10)Platform Independence.

(11)Round-the-Clock and Cross-Border Availability.

(12)Remote Authorization.

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1.6 Limitation of E-Banking: -

1. Safety situations around ATMs.

2. Abuse of bank cards by fraudsters at ATMs.

3. Danger of giving your card number when buying on-line.

The modern technology has influenced the financial sector to a large

extent. It increases the competitive efficiency of the firms and provides

sophistication to the end users. It makes everyone fittest to survive.

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Chapter 2: - Internet Banking

2.1 Internet Banking

a) Introduction

b) Banking service though Internet

c) The Indian Scenario

d) Product & Service offered

e) The future scenario

2.2 Risk & Rewards

a) Operational Risk

b) Security Risk

c) System architecture & design

d) Reputational Risk

e) Legal Risk

f) Money Laundering Risk

g) Cross Border Risks

h) Strategic Risk

i) Other Risk

j) Risk of unfair competion

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2.1 Internet Banking:-

a) Introduction: -

The delivery channels include direct dialup connections, private

networks, public networks, etc. with the popularity of computers, easy

access to Internet and World Wide Web (WWW), Internet is

increasingly used by banks as a channel for receiving instructions anddelivering their products and services to their customers. This form of

banking is generally referred to as Internet Banking, although the range

of products and services offered by different banks vary widely both in

their content and sophistication.

b) Banking Services through Internet: -

i. The Basic Level Service is the banks web sites which

disseminate information on different products and services

offered to customers and members of public in general. It may

receive and reply to customers queries through e-mail,

ii. In the next level are Simple Transactional Web sites which

allows customers to submit their instructions, applications for

different services, queries in their account balances, etc. but do

not permit any fund-based transactions on their accounts,

iii. The third level of Internet banking service are offered by Fully

Transactional Web sites which allow the customers to operate

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on their accounts for transfer of funds, payment of different

bills, subscribing to other products of the bank and to transact

purchase and sale of securities, etc. The above forms of Internet

banking service the customer or by new banks, who deliver

banking service primarily through Internet or other electronic

delivery channels as the value added services. Some of these

banks are known as Virtual banks or Internet only banks and

may not have physical presence in a country despite offering

different banking services.

c) The Indian Scenario: -

The entry of India banks into Net Banking

Internet banking, both as a medium of delivery of banking

services and as a strategic tool for business development.

At present, the total internet users in the country are estimated at

9 lakh. However, this is expected to grow exponentially to 90

lakh by 2003. only about 1 percent of Internet users did banking

online in 1998. This is increased to 16.7 percent in March 2000

(India Research, May 29, 2000, Kotak Securities).

Cost of banking service through the Internet from a fraction of

costs through conventional methods. Rough estimates assume

teller cost at Re.1 per transaction, ATM transaction cost at 45

paise, phone banking at 35 paise, debit cards at 20 paise and

Internet banking at 10 paise per transaction.

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d) Product and Services Offered: -

Banks in India are at different stages of the web-enabled banking

cycle. Initially, a bank, which is not having a web site, allows its

customer to communicate with it through an e-mail address

communication is limited to a small number of branches and

offices which have access to this e-mail count.

With gradual adoption of Information Technology, the bank puts

up a web site that provides general information on deposits

products, application forms for downloading and e-mail option

for enquiries and feedback.

Vijaya Bank provides information on its website about its NRI

and other services. Customers are required to fill in applications

on the Net and can later receive loans or other products

requested for at their local branch.

A few banks provide the customer to enquire into his demat

account (security/shares) holding details, transaction details and

status of instructions given by him. These web sites still do not

allow online transactions for their customers.

Some of the banks permit customers to interact with them and

transact electronically with them. Such services include request

for opening of accounts, requisition for cheque books, stop

payment of cheques, viewing and printing statements of

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accounts, movement of funds between accounts within the same

bank, querying on status or requests, instructions for opening of

Letter of Credit and Bank Guarantees, etc.

These services are being initiated by banks like ICICI Bank Ltd.,

Citibank, Global Trust Bank Ltd., UTI Bank Ltd., Bank of

Citibank Bank of Madura Ltd., Federal Bank Ltd., etc.

Some of the more aggressive players in this area such as ICICI

Bank Ltd., HDFC Bank Ltd., UTI Bank Ltd., Citibank, Global

Trust Bank Ltd., and Bank of Punjab Ltd., offer the facility of

receipt, review and payment of bills online.

The Infinity service of ICICI Bank Ltd. Also allows online real

time shopping all payments to be made by customers.

HDFC Bank Ltd. Has made e-shopping online and real time

with the launch of its payment gateway.

Banks providing internet banking services have been entering

into agreements with their customers setting out the terms and

conditions of the services.

The terms and conditions include information on the access

through user-ID and secret password, minimum balance and

charges, authority to the bank for carrying out transactions

performed through the service, liability of the user and the bank,

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disclosure of personal information for statistical analysis and

credit scoring also, non-transferability of the facility, notices and

termination, etc.

e) The Future Scenario: -

o Compared to banks abroad, India banks offering online services

still have a long way to go. For online banking to reach a criticalmass, there has to be sufficient number of users and the

sufficient infrastructure in place.

o Various security options like line encryption, branch connection

encryption, firewalls, digital certificates, automatic sign-offs,

random pop-ups and disaster recovery sites are is in place or arebeing looked at, there is as yet no Certification Authority in

India offering Public Key Infrastructure, which is absolutely

necessary for online banking.

o The communication bandwidth available today in India is also

not enough to meet the needs of high priority services like online

banking and trading.

o Banks offering online facilities also need to calculate their

downtime losses, because even a few minutes of downtime in a

week could mean substantial losses.

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o Users of Internet Banking Services are required to fill up the

application froms online and send a copy of the same by mail or

fax to the bank.

o A contractual agreement is entered into by the customer with the

bank for using the Internet banking services.

o Domestic customers for whom other access points such as

ATMs, telebanking, personal contact, etc. are available, are often

hesitant to use the Internet banking services offered by Indian

banks. Internet Banking, as an additional delivery channel, may,

therefore, be attractive/ appealing as a value added service to

domestic customers. Non-resident Indians, for whom, it is

expensive and time consuming to access their bank accounts

maintained in India find net banking very convenient and useful.

o Cyber crimes are, therefore, difficult to be identified and

controlled.

o In order to promote Internet banking services, it is necessary that

the proper legal infrastructure is in place.

o The Department of Telecommunications (DoT) is moving fast to

make available additional bandwidth, with the result that internet

access will become much faster in the future.

o Reserve Bank of India has constituted a group to examine

different issues relating to i-banking and recommend technology,

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security legal standards and operational standards keeping in

view the international best practices. In the following paragraphs

a generic set of risks discussed as the basis for formulating

general risk control guidelines.

2.2 Risk & Rewards: -

a) Operational Risk: -

Operational risk, also referred to as transactional risk is the mostcommon form of risk associated with i-banking.

It takes the from of inaccurate processing of transactions, non-

enforceability of contracts, compromises in data integrity, data

privacy and confidentiality, unauthorized access / intrusion to

banks systems and transaction, etc.

Such risks can arise out of weaknesses in design,

implementation and monitoring of banks information system.

Besides inadequacies in technology, human factors like

negligence by customers and employees, fraudulent activity of

employees and crackers/ hackers, etc. can become potential

source of operational risk.

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b) Security Risk: -

Security risk arises on account of unauthorized access to a

banks critical information stores like accounting system, risk

management system, portfolio management system, etc.

Other related risks are loss of reputation, infringing customers

privacy and its legal implications, etc.

Attackers could be hackers, unscrupulous vendors, disgruntled

employee or even pure thrill seekers.

In addition to external attacks banks are exposed to security risk

from internal sources e.g. employee fraud. Employee being

familiar with different systems and their weaknesses become

potential security threats in a loosely controlled environment.

They can manage to acquire the authentication data in order to

access the customer accounts causing losses to the bank.

Unless specifically protected, all data/ information transfer over

the internet can be monitored or read by unauthorized persons.

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c) System architecture and design: -

Banks face the risk of wrong choice of technology, improper

system design and inadequate control processes.

Numerous protocols are used for communication across internet.

Each protocol is designed for specific types of data transfer.

A system allowing communications with all protocols, say

HTTP (Hyper Text Transfer Protocol), FTP (File Transfer

Protocol), telnet, etc. is more prone to attack than one designed

to permit say, only HTTP.

Many banks rely on outside service providers to implement,

operate and maintain their e-banking system.

Security related operational risk include access control, use of

firewalls, cryptographic techniques, public key encryption,digital signature, etc.

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d) Reputational Risk: -

Reputational risk is the risks of getting significant negative

public opinion, which may result in a critical loss of funding or

customers. Such risks arise from actions which cause major loss

of the public confidence in the banks ability to perform critical

functions or impair bank-customer relationship. It may be due to

banks own action or due to third partys action.

The main reasons for this risk may be system or product not

working to the expectations of the customers, significant

security breach (both due to internal and external attack),

inadequate information to customers about product use and

problem resolution procedures, significant problems with

communication networks that impair customers access to their

funds or account information especially if, there are, noalternative means of account access.

e) Legal Risk: -

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Legal risk arises from violation of, or non-conformance with

laws, rules, regulations, or prescribed practices, or when the

legal rights and obligations of parties to a transaction are not

well established.

A customer, inadequately informed about his rights and

obligations, may not take proper precautions in using Internet

banking products or services, leading to disputed transactions,

unwanted suits against the bank or other regulatory sanctions.

f) Money Laundering Risk: -

o As internet banking transactions are conducted remotely banks

may find it difficult to apply traditional method for detecting and

preventing undesirable criminal activities. Application of money

laundering rules may also be inappropriate for some forms of

electronic payments.

o To avoid this, banks need to design proper customer

identification and screening techniques, develop audit trails,

conduct periodic compliance reviews, frame policies in internettransactions.

g) Cross-Border Risks: -

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Internet banking is based on technology that, by its very nature,

is designed to extend the geographic reach of banks and

customers. Such market expansion can extend beyond national

borders. This causes various risks.

Such considerations may expose banks to legal risks associated

with non-compliance of different national laws and regulations,

including consumer protection laws, record keeping and

reporting requirements, privacy rules and money laundering

laws.

The foreign-based service provider or foreign participants in

internet banking are sources of country risk to the extent that

foreign parties become unable to fulfil their obligations due to

economic, social or political factors.

h) Strategic Risk: -

For reducing such risk, banks need to conduct proper survey,

consult experts from various fields, establish achievable goals

and monitor performance.

Also they need to analyze the availability and cost of additional

resources, provision of adequate supporting staff, proper training

of staff and adequate insurance coverage.

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i) Other Risk: -

Traditional banking risks such as credit risk, liquidity risk,

interest rate risk and market risk are also present in internet

banking.

These risks get intensified due to the very nature of internet

banking on account of use of electronic channels as well as

absence of geographical limits.

Credit risk: Is the risk that a counterparty will not settle an

obligation for full value, either when due or at any time

thereafter. Banks may not be able to properly evaluate the

creditworthiness of the customer while extending credit through

remote banking procedures, which could enhance the credit risk.

Another facility of internet banking is electronic money. It

brings various types of risks associated with it. If a bank

purchases e-money from an issuer in order to resell it to a

customer, it exposes itself to credit risk in the event of the issuer

defaulting on its obligation to redeem electronic money.

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Liquidity risk: It is important for a bank engaged in electronic

money transfer activities that it ensures that funds are adequate

to cover redemption and settlement demands at any particular

time. Failure to do so,besides exposing the bank to liquidity

risk, may even give rise to legal action and reputational risk.

j) Risk of unfair competion: -

Internet banking is going to intensify the competition among

various banks. The open nature of internet may induce a few

banks to use unfair practices to take advantage over rivals. Any

leaks at network connection or operating system, etc. may allow

them to interfere in a rival banks system.

Thus, one can find that along with the benefits internet bankingcarries various risks for bank itself as well as banking system as

a whole.

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Chapter 3: - Internet Banking: Challenges for

Banks & Regulators.

3.1 Internet Banking in the United States

New Risks

3.2 The Basel Committees Electronic Banking

Group

3.3 e-Finance Oversight

3.4 Security Controls

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3.5 Legal & Reputational Risk Management

3.1 Internet Banking in the United States: -

An average industry estimates indicates the about 13 million US

households banked online by the end of 2000 twice as many as

in the pervious years.

At the beginning of 2001, 37% of all US national banks,

including nearly all of the largest national banks, were offering

full transactional capabilities online a near twofold increase in

little over a year.

Banks offering Internet-based transaction service and there are

more of them each day should be well positioned to compete

in the financial markets of the future.

New Risks: -

Internet banking poses risks that are different from those that

bank supervisors customarily dealt with in assessing credit,

market, or interest rate risk.

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First, banks must manage the unprecedented speed of

technological change, and assess how it relates to their

technology investments and their ability to provide consistently

high-quality customer service.

Second, bank are increasingly dependent on third parties to

provide the necessary information technology.

Security is another area of significant risk. So far, relatively few

financial institutions have reported being victimized by online

security violations.

3.2 The Basel Committees Electronic banking Group: -

o The Basel Committee on Banking Supervision has taken

the lead in this area through the creation of its Electronic

Banking Group (EBG) in late 1999 a group whose

members represent 17 Central banks and bank supervisory

agencies.

o The major focus of the EBGs work has been to develop

risk management guidance for Internet banking that will

guide bankers and promote effective and consistent bank

supervision around the world.

o The EBG has identified fourteen Risk Management

Principles for Electronic Banking to promote sound risk

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management of e-banking. These principles are intended

to help banking institutions expand their existing

oversight policies and processes to cover their e-banking

activities.

3.3 e-Finance Oversight: -

The EBG has dedicated considerable time and effort to

communicating supervisory expectations and guidance for home

country supervisors to oversee cross-border Internet banking

activity conducted by their local institutions.

In February of this year, the Financial Stability Forums Contact

Group on E-Finance held its first formal meeting. This group

was formed to promote enhanced information-sharing among the

various international sector-based working groups dealing with

e-finance supervisory issues e-banking, e-trading, retail

payments systems, e-commerce, and so on.

3.4 Security Controls: -

Authentication of e-banking customers.

Nonrepudiation and accountability for e-banking

transaction of duties.

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Appropriate measures to ensure segregation of duties.

Proper authorization controls within e-banking systems,

databases and applications.

Data integrity of e-banking transactions, records and

information.

Establishment of clear audit trails for e-banking

transactions.

Confidentiality of key bank information.

3.5 Legal & Reputational Risk Management: -

Appropriate disclosure for e-banking services.

Privacy of customer information.

Capacity, business continuity and contingency planning to

ensure availability of e-banking systems and services.

Incident response planning. The complete EBG Report on Risk

Management Principles for Electronic Banking can be obtained

at the Bank for International Settlements web site at

www.bis.org.

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Chapter 4: - What do Computers do in Banks

The different uses of Information Technology: -

a) Single Window System

b) Any Time Banking

c) Automated Teller machine

d) Shared Payment Network System

e) Customer Service

f) Telebanking

g) Home Banking

h) Electronic Fund Transfer

i) Plastic Cards as Media for Payment

1. Credit Card

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2. Debit Card

3. Smart Card

4. ATM Card

j) Intra-bank and Inter-bank Applications

4.1 The different uses of Information Technology: -

a) Single Window System (SWS): -

o The cashier or teller who accepts the cash, keys in the data from

his terminal after receipt of the amount.

o The amount is straight away posted to the system.

o If the customer wishes to update passbook the same is also

updated through the security form printer/pass book printer.

o If a customer wishes to obtain a draft, the clerk keys in the

details of the account to be debited and the particulars of the

drafts to be issued on the machine.

o The customers account is debited and security form printer

prints out draft and clerk can hand over the same to customer

duly signed.

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b) Any Time Banking: -

This refers to banking service available 24 hours a day and 365

days a year.

Such facility is made available to the customer through the

Automated Teller machine.

Banking, being a service industry, is primarily driven by

customers needs.

Each customer is willing to pay a price for the services provided

it is made available to him when he wants and where he wants.

In the present day of server competion, banking services are

driven by technology, which is more oriented towards providing

better services to the customer.

The concept of banking hours has been changed from the fixed 4

hours to 24 hours.

This has been made possible through use of ATMs. Even under

the manual service, the banks have stated to extend the service

from the traditional 4 hours to 5 hours and even up to 12 hours

say from 8 AM to 8 PM.

Some banks have introduced the practice of Sunday Banking or

Holiday Banking.

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c) Automated Teller Machine (ATM): -

ATM is a machine in the nature of a computer in general sense,

but is dedicated to do certain types of specific jobs only.

The hardware and the proprietary i.e. the software used in one

machine can not be used in one machine.

d) Shared Payment Network System (SPNS): -

The SPNS, named SWADHAN, has been sponsored by the

Indian Banks Association (IBA).

It is a network of ATMs, points of sale terminals and Cash

Dispensers with a view to pool the resources of the banks and

underlines the spirit of competition through cooperation.

It became operational in Mumbai on 1st February 1997 and in

two years about 150 ATMs were owned and installed by 38

banks including foreign banks, public and private sector Indian

commercial banks as also cooperative banks.

The biggest advantage of the network is that the ATM cards

issued by different banks can used at any member banks ATM.

Banks can have as many ATM as they want and follow some

standards set by the SPNS committee.

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The heart of the network is the Switch and its main components

are: Tandem Mainframe Computer, BASE 24 Software,

Motorola networking equipments and the leased lines.

e) Customer Services: -

The following customer services are offered through the system:

i. Cash withdrawal (up to a specified limit)

ii. Cheque/Cash deposit (the receipt being only for the deposit of

the envelope containing cash but not for the amount therein)

iii. Enquiry about balances

iv. Printing of statement of accounts

v. Request for cheque book and standing instructions.

vi. Transfer of funds

vii. PIN change

f) Telebanking: -

From the conventional banking, where the services were

provided manually across the table, it has come to a stage where

the customer is not required to visit the bank enquiry of balance

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in the account, sending a remittance, to get a statement of

account, etc.

The concept has become so popular that in USA customers do

not visit the bank for 97% of their transactions and these are

done from either customers residence or office using a

telephone or a home PC.

In telebanking the customer is required to open the account with

the bank initially by visiting the bank.

Telebanking services are, generally, provided by the bank over

the telephone on a special number.

The number at the bank is connected to a terminal in the bank,

which is either handled manually or is automated by connecting

the same to the computer network.

Where the system is automated, two types of technology are

used.

g) Home Banking: -

Under home banking the customer is served at his residence and

there is no need for the customer to visit the banks premises for

a number of routine transactions.

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If the customer needs some information the same can be got by

contacting the bank over the phone as described in the

telebanking.

If the customer wants to put through transaction and wishes to

see his account or to get a statement of his account, he may have

to use a PC.

This type of facility is available with a town, city or

metropolitan area.

Under such a situation the customer should have a:

PC

Modem

Telephone line

A compatible software for the home PC

The home banking service can be broadly classified under two

groups, one without using the information technology and

another using information technology.

When customer contacts the bank o the phone no specific

technology is involved and the service of telebanking are

provided to him.

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h) Electronic Fund Transfer (EFT): -

o In India the fund transfers are basically done through Mail

Transfer, Draft or Telegraphic Transfer.

o In case of Telegraphic Transfer (TT) again the Department of

Telecommunication was the sole provider of Telephone, Telex

and Telegram facilities.

o With the process of liberalization private operators have started

providing alternative voice communication channels through

mobile phones and vast communication as an alternative

channels for data communication.

o It was normal for any TT to be credited to the beneficiarys

account after delay of 2 to 4 days

o The different forms of EFT prevalent in the use are:

EFT through Electronic Data Interchange

BANKNET

RBINET

IDRBT VSAT Network

EFT from Point of Sales

Electronic Cash

SWIFT- Global System for Funds Transfer

Electronic Clearing Settlement

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i) Plastic Cards as Media for Payment: -

There are four types of plastic cards being used ad media for making

payments. These are:

1. Credit Card

2. Debit Card

3. Smart Card

4. ATM Card

1. Credit Cards: -

The credit card enables the cardholders to:

Purchase any item like clothes, jewellery, railway/air tickets, etc.

Pay bills for dining in a restaurant or boarding and lodging in a

hotel

Avail of any service like car rental, etc.

2. Debit Card: -

A debit card is issued on payment of a specified amount by the issuing

company like a telephone company to a customer on cash payment or

on debiting his account by a bank.

Thus it is like an electronic purse, which can be read and debited by

the required amount.

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It may be noted that while through a credit card, the customer first

makes a purchase or avails service and pays later on, but for getting the

debit card, a customer has to first pay the due amount and then make a

purchase or avail the service. For this reason, debit card are not as

popular as credit cards.

3. Smart Cards: -

Smart Cards have a built-in microcomputer chip, which can be used for

storing and processing information. For example, a person can have a

smart card from a bank with the specified amount stored electronically

on it. As he goes on making transactions with the help of the card, the

balance keeps on reducing electronically. When the specified amount is

utilized by the customer, he can approach the bank to get his card

validated for a further specified amount. Such cards are used for

paying small amounts like telephone calls, petrol bills, etc.

In India, a smart card, suiting Indian banking environment, is being

developed and tested at IIT, Mumbai, in collaboration with the RBI and

SBI. The card is being used as an experimental tool for promoting

cashless society in and around the IIT Campus. The latest smart card

being developed will combine all the features of electronic purses,credit cards and ATM cards.

4. ATM Cards: -

The card contains a PIN (Personal Identification Number) which is

selected by the customer or conveyed to the customer and enables him

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to withdraw cash up to the transaction limit for the day. He can also

deposit cash or cheque.

Function of ATM Card: -

The customer has to enter the card into the machine slot. The

machine first reads for hot carding of the card number, i.e. it

checks whether the card has already been cancelled or placed on

the rejection list.

Rejection can be because of the reason like lost card or stolen

card.

The machine then reads the PIN and asks for the PIN from the

customer.

If the PIN matches, it present the main menu on the screen. The

menu contains options from which the withdrawal option is

selected.

The ATM then checks whether the amount is under the day limit

magnetically inscribed by the customer. Accordingly, the ATM

dispenses cash. It then releases the card and a printed statement

comes out of the slot.

5. Intra-Bank & Inter-Bank applications: -

Computerization is now all pervasive in banks. Almost all the activities

in a bank can be performed more efficiently with the help of

computers. Broadly, we can divide the applications of computerization

in banks in two types

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A) Intra-Bank Applications: -

i. Funds transfer and payment message

ii. Banks owned ATM/Credit Card and other application on the

corporate network

iii. Inter-Branch Reconciliation

iv. Quick disposal of loan/investment proposal

v. Funds information from clearing centers to the fund

management office for optimal allocation of funds.

vi. Cash Management Product

vii. Treasury Management

viii. Any Branch Banking

ix. Asset Liability Management

x. E-mail

xi. Software distribution in the bank

xii. Organizational bulletin boards may contain the following:a. Circulars

b. News letters, phone and address directories

c. Undesirable parties

d. Missing security items

e. Confidential circular on attempted frauds.

xiii. Human Resources Development and Personnel Administration

xiv. Auditing and Inspecting computerized branches using the

network

xv. Organizational database may include

a. Statutory returns

b. Control returns

c. Standardized returns

xvi. Management Information Systems

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a. Borrowers profile

b. Branch profile

c. Employee analysis

d. Product/service profile

e. Business profile of branches.

xvii. Apart from providing efficient service to customers the

financial network will also fulfill the following objectives:

a. Timely information to top management

b. Helping in development of new products

c. Speedy communication among branches and with the

controlling offices.

B) Inter-Bank Applications: -

i. Electronic Funds Transfer

a. Retail EFT (Small value credit transfer) on net settlement

basis.

b. Wholesale EFT (Large value credit transfer) on Real Time

Gross Settlement (RTGS) basis for time critical payments.

ii. Clearing and settlement systems for securities Delivery vs.

Payment (DVP). The final delivery of securities will occur if and

only if final payment occurs.

iii. Transferring balance from net settlement systems to RTGS

Server at periodic intervals. The net obligation could be from:

a. Local paper-based clearing

b. Inter-city paper-based clearing (including IT discounting

facilities)

c. Bulk payments ECS (Debit, Credit, RAPID) including

intercity.

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d. Shared ATM networks

e. Smart cards and other pre-paid/pre-authorized debit cards

iv. Exchange of defaulting borrowers list among RBI and banks

v. EDI services to the extent they pertain to payment cycle to EDI

(Electronic Data Interchange)

vi. Consolidation of current account balance from the existing DAD

(Deposit Accounts Department in RBI Offices) applications

synchronously/asynchronously to facilitate balance enquiry by

banks on all India/center-wise basis and if necessary to activate

transfer of funds among DADs at different centers.

vii. Reporting of government account transactions

viii. Reporting of BSR (Basic Statistical Returns) etc. to RBI

ix. Asset Liability Management

x. Intranet in RBI to enable banks to get circulars, press releases

etc.

xi. Returns to be submitted by the banks to Departments of Banking

Supervision (DBS) for off-site supervision and monitoring.

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Chapter 5: Credit Card Frauds

5.1 Credit Card Frauds

Meaning

Defrauder

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Aware of Credit Card

Advantages of Credit Card

Credit Card Frauds

5.2 The Prevention of Frauds

Duplicate Card

White plastics

Bankers Role

Cyber Laws

Altering Sale terminals

Internet Relays

Monitoring Deposit

Risk Management

Central Credit Card Clearing House

Loss of Credit Cards in Transit

Fraud Consciousness

Physical Evidence

Check the handwriting

5.3 How to Accept the Master Card

5.4 How to get reimbursed

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5.1 Credit Card Frauds: -

Meaning: -

A credit card is a money transaction device without using cash or

fiduciary documents.

Defrauder: -

The defrauder has been slow to exploit the credit card, for making a

fast buck. In USA, he made 15 million dollars. through the cards, in

1981. in 1982 his earning through the card, rose to 50 million dollars.

in 1983, the fraudulent card brought over 100 million dollars to its

creators. The fraudulent card industry is rising higher and higher to

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dizzy height every year. Like other countries if the genuine credit card

has come in India, the fraudulent credit card cannot be far behind.

Aware of Credit Card: -

The credit card, as already seen, is a money transaction device. The

institutions issuing the credit card give the card holders authority to

obtain money, goods, services or any other thing of value, on credit.

They guarantee payment of debit so raised. These institutions are banks

and other financial institutions, clubs and travel agencies and

departmental stores, etc. Credit Cards, Bob Cards, Master Cards, Visa

Cards, express Cards, Euro Cards have wide circulation. Some of them

have wide circulation. Some of them have world-wide circulation..

Advantages of Credit Cards: -

Following types of safety measures are being introduced increasingly

in the credit card manufacture. They can be adopted with advantages

1. Simultaneous printing on both sides of the cards,; creating some

superimposed graphics, patterns, digits or writings.

2. Multi-layered laminates incorporating lateen images which may

distinguish the genuine from the forged.

3. Intricate graphics and distinctive letter and digit designs.

4. Laser printing to engrave the letter and digits on the credit card.

5. Three dimensional insignia, logo of high artistic quality on the

credit card.

6. Encoded information track in magnetic inks on magnetic stripe.

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7. Cards inserted in the imprinter head, designed and manufactured

to rigid specification to permit limited tolerance to admit only

genuine credit cards.

8. Secure Signature Panel.

9. 3- Dimensional hologram.

10.U.V. fluorescent images and designs.

11.Micro printing

12. Optically illusive figures, designs, etc.

13.heavy duty embossing logo.

Credit Card Frauds: -

Credit card frauds manifest themselves in a number of ways:

1. Genuine cards are manipulated.

2. Genuine cards are altered.

3. Counterfeit cards are created.

4. Fraudulent telemarketing is done with credit cards.

5. Genuine cards are obtained on fraudulent applications in thenames/addresses of other persons and used.

It is feared that with the expansion of E-Commerce, M-Commerce, and

Internet facilities being available on massive scale, the fraudulent fund

freaking via credit cards will increase tremendously. The shape it takes

will be limited only by the ingenuity of the future.

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5.2 The Prevention of Frauds

Duplicate Card: -

The duplicate fraudulent credit cards are those where the defrauders

have made sincere efforts to duplicate the original cards through photo-

mechanical processes.

They follow the footsteps of the original manufactures of the genuine

credit cards to produce as close a replica of the genuine card as

possible, employing similar materials and similar processes of printing

and embossing, besides magnetic encodings.

White Plastic: -

The counterfeit credit cards known as white plastics are imitations of

credit cards in general aspect.

Bankers Role: -

The credit card industry is one of the fastest growing activities of the

banking industry. The artist has to be there (where the money is). The

banks have to suffer losses.

Cyber Laws: -

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Information Technology Ministry be approached for stringent laws

against credit card crimes.

Altering Sales terminals: -

Internet E-Mail should be utilized on the pattern of Hot Box organized

about a decade ago, suitably modified to benefit from the advances the

information technology has made since them.

Internet Relays: -

Computers should be pressed into service via internet connection by

suitably upgrading the Television System Vertical blanking Intervals

for notifying the fraudulent cards in the market.

Monitoring Deposit: -

Monitoring system can help locate the unscrupulous merchants who

use or allow the use of white plastics and fraudulent cards, knowing

fully well their fraudulent nature for making a fast back.

Risk Management: -

To meet the menace one of the top card companies has imitated risk

management service to identify these high risk centers where daily all

the inter-change transactions of the areas are scrutinized and the credit

card number are checked against those which have been declared

fraudulent, stolen or lost.

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Central credit Card Clearing House: -

There should be a joint list of credit card holders on central basis with

their addresses and other details, if any. New applicants to any bank for

credit cards should be checked: -

If he is holding card from other issuers.

If he has held a card at other times. If so, when? Why did he

discontinue?

If he has applied to more than one credit card issuers

The new card holders business transactions should be watched

for some time.

Loss of Credit cards in Transit: -

It must be prevented.

It is simple for either the customer to collect personally or the banker

should deliver it personally, or it should be sent by courier and

confirmation obtained on telephone, in addition to the paper receipt.

Fraud Consciousness: -

The problem of credit card frauds must be brought to the notice of

users as well as of the servers at sale terminals.

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Proper training in the check up of the credit card in its various aspects

has no substitute and in view of the huge issues the same is

indispensable.

Physical Evidence: -

Immediately on the discovery of fraud all the physical evidence

available should at once be taken into possession and the case reported

to the police for investigation.

Check the Handwriting: -

Handwriting (in signatures) is available on sale drafts and on credit

cards. The comparison of hand-writing inter se and with that of the

suspect and of genuine card holders, can lead to the identity or non-

identity of alleged writer.

How to accept: -

Master Card International guarantees payment of all Master Card

Travelers Cheques if the following procedures are followed: -

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Watch the customer signs each cheque in ink on the

countersignature line.

Compare this signature to the original signature. Ensure they

look the same.

If a cheque is already countersigned, or if you doubt the two

signatures are the same, ask the customer to sign the cheque

again on the back for comparison. Also, request identification

such as a passport, driving license or similar document, and

write the details on the back of the cheque.

If a cheque is presented by anyone other than the original

purchaser, treat it the same way you would a personal check

from a third party. You should know the customer and be able to

contact the customer if theres problem.

How to get Reimbursed: -

Stamp or write your company name on the front of the cheque

where it says, Issuer will pay to the order of.. and also

endorse at the back of the cheque.

Deposit cheques in your bank as cash items. US dollar Master

Card Travelers Cheques, regardless of location of issuer, are

cleared and paid in the US.

Do not send cheque directly to the issuing institution.

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Chapter 6: - Banks Control in Online Banking

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6.1 Will Banks Control Online Banking: -

Internet Banking in India

Real threats

Online

6.2 Banking in the Cyberworld: -

Internet Purchases without Payment Gateways

Risk of Gateway

6.1 Will Banks Control Online Banking: -

Internet Banking in India: -

Online banking is expected to explode in the ext few years. We will be

entering the age of non-physical exchange of cash aided by complete

transparency leading to perfectly competitive electronic market place

and inevitably to customer supremacy. Growth in online banking will

be driven by the following reasons:

Increasing access to low cost electronic services

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Emergence of open standards in the banking industry

Improved customer awareness

Entry of global majors in the market

Integration of banking services with e-commerce and emergence

of e-cash

Convenient international transactions as Internet eliminates

geographic boundaries

Shift from one-stop shopping to unbundled product purchases

Internet Banking An Overview: -

Internet Banking sites can be segregated into four categories from

Level I, which offer just minimum functionalities such as access to

ones deposit account data, to Level IV sites that offer sophisticatedservices. To be successful, an Internet bank must offer:

High rates on deposits

24 hour access

Free checking and bill payment facilities with rebates on ATM

surcharges Credit cards with low rates

Simple and easy online applications for all accounts including

personal loans

Innovative products

High quality customer service

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Real Threats: -

A majority of leading online brokers are beginning to offer

banking products and services as part of their overall offers.

They are actively seeking to capture excess balances in existing

checking and saving accounts by offering better rates.

There are other threats to banks as well. Several leading system

providers have developed bank-in-a-box solution unbranded,

electronic, full-service, virtual-bank system that can be bought,

branded, and offered to consumer by any authorized company

that wishes to provide banking service.

Online: -

An online service that merely mimics an offline one has a second

problem as well; it doesnt give customers an adequate inducement to

move a significant portion of their banking online.

As a result, most customers tend to tend to treat online banking as no

more than an extra channel to check their balance and transaction

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histories, and they continue to do the rest of their business at the ATM

or the teller window.

A vicious offering increase the banks total costs. This makes the banks

reluctant to make further large investments in the online channel,

which thus, does nothing to move customers away from tellers and

ATMs.

In fact, consumers didnt stop using tellers to the extent that banks has

hoped, but they also used ATMs so frequently that the reduction in cost

per use was more than offset by the higher volume of transactions.

The study of information systems through broad band connection,

satellite, a network or through a view chat.

This online information systems provides information about allaspects, Information providing on the demand of the subscriber.

This online information systems may be of study program, a

graduation program or sharing of data through internets, extranet and

internet.

Sharing of Data: -

The data base store data and information extracted from selectedoperational and external databases. The database has most needed

information by a manager or any end users. This database can be

accessed by the ONLINE ANALYTICAL POCESSING (OLAP)

systems.

This network model can access a data element by several paths. In an

organization departmental records can be related to more than one

employee record.

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Thus in an organization data can be shared through internet, internet

and extranet.

ONLINE LEARNING: -

This online information system provides online courses through

internet, broad band satellite connection.

The recent online course is provided by XLRI, (Xavier Labour

Relations Institute) joined hands with Hughes Escorts communication

limited. Their main course is on BUSINESS MANAGEMENT.

Hughes Escorts is the Indian Operations of US based communication

major, Hughes network systems, which is a wing of Hughes electronic.

This job is being done by Directing Global education which is joint

venture between Hughes network systems and one touch knowledge

systems.

This job arrangement with Hughes Escorts to offer Management

training on satellite platform will take expertise of XLRI faculty

beyond the borders of their concern.

This information has live videos, voice and transmission to classesthrough Hughes broadband satellite network. Interaction is through

voice and data.

This course is conducted across through four metros, Trichy,

Bangalore, Hyderabad, Chandigarh, Pune, Kochi, Coimbatore and

Madurai.

This course is targeted at working executives

COUNTRY STUDIES: -

This country studies by online service is from 1988 onwards. In this,

the study of every country is made.

B-B (Business Business E-Commerce). Despite all the buzz, we still

dont know about what makes B-B. there is a growing relation that B-B

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will take years to mature, and the rate of adoption even if companies

deliver a huge value equation improvement will be gradual because it

requires system and individuals to act in fundamentally new ways.

The next thing after B-B is enabling technologies to incorporate moresophisticated back-end integration system, financing options and

logistical support.

In India, NASSCOM puts the value of online B-B transactions at Rs.

400 crore in 1999-00 of total E Commerce of Rs. 450.

But the question is how much B-B-E-Commerce is really happening in

India? It is hard to quantify in terms of real numbers with no

established data available in specific reverence to the Indian context.But there is a possibility of this business assuming a huge proportion in

future.

B-B has been happening all through and a new channel has been

opened with the advent of the Internet. Obviously organizations will

switch over to this channel for the cost effectiveness it provides. The

market is emerging in the country and it will be a boom time in the

next year.

6.2 Banking in the Cyberworld: -

Internet Purchases without Payment Gateway: -

The dangers are three-fold

Since a manual process requires human intervention, risk ofinformation leakage exists.

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No exchange of Digital ID, so no authentication of the merchant

risk of bogus merchant.

No exchange of Digital Certificate to authenticate card holder

risk of repudiation of transaction by the card holder.

The benefits which the user would get by using the Internet payment

gateway are

Card details travel encrypted on the Net (if encryption facility

available on the gateway).

On-line status of order, if the gateway has on-line authorization.

Secure Merchant identification, so that fraudulent web sites

posing as genuine merchants get weeded out

Whats a Payment Gateway?

A payment gateway is software that supports multiple payment models

simultaneously in a safe and secure manner.

Funds can be transferred through credit, debit and smart cards,

cheques, electronic payment wallets and even direct debits through a

central payment switch.

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Put simply, a payment gateway enables on-line commercial

transactions on the internet on a secure system, which have firewalls

against hacking.

Risk of Gateways: -

Currently, in India HDFC Bank and ICICI have launched

payment gateways for business to customer (B2C) transactions.

Payments can be effected through credit cards or through

directly debiting the account of the customers of the respective

banks.

Some payment mechanisms on the Internet are not safe, as they

are in the open-loop where a merchant portal can see the credit

card number.

This is unsafe for credit card holder and is susceptible to fraud as

his number can be physically seen.

The dust is yet to settle in the B2C payment gateways, but action

is already heating up in the business to business (B2B) arena.

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Besides HDFC Bank and ICIC, Global Tele-System and a few

other non-bank companies are toying the idea of launching

payment gateways for inter bank and B2B transactions.

No prizes for guessing who are they targeting, Nationalized

banks, of course.

Recommendations: -

Technological development has been nothing less than

explosion. Banks have been harnessing such technological

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innovations on one hand and adapting themselves to such

changes on the other hand.

The most significant event has been development of semi-

conductor technology, which has resulted in spectacular

expansion of automation.

Processing, storage and transmission of information is very

essence of banking and financial services.

The electronic technology has bought revolutionary changes in

these areas. The elimination of paper as medium for processing

and storage of transactions / information has been a great event.

Large volume of information can be processed, stored and

retrieved very economically at terrific speed, which is not

possible manually.

The space required for managing enormous volume of

information has been reduced dramatically.

With the revolution in telecommunication technology,

information can be made accessible from remote distance at

lightening speed. The final output of information after

manipulation and analysis can be printed by printer at high speed

directly from computers.

Thus, the computer now has the ability to retrieve data or update

files instantaneously. Subsequently with the development in

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telecommunication, Local Area Network (LAN)/Wide Area

Network (WAN) have been established.

Suggestions: -

To prevent online banking from remaining an expensive

additional channel that does little to retain footloose customers,banks must act quickly.

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The first and most obvious step they should take is to see to it

that the basic problem fueling dissatisfaction have been

addressed.

After repairing this basic deficiency, banks must ensure that

there services is competitive.

Obviously, it should include checking, savings and brokerage

services, which anchor customers to the institution.

In addition, to meet the challenge of online brokerage and other

new entrants, banks would need to add supermarkets selling

products such as mortgage, mutual funds and insurance.

Conclusion: -

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Technology innovation and fierce competition among existing banks

have enable a wide array of banking products and services, being made

available to retail and wholesale customer through an electronic

distribution channel, collectively referred to as e-banking. The

integration of e-banking application with legacy system implies an

integrated risk management approach for all banking activities of a

banking institution. Latest recommendations of Basle Committee

recognize that each banks risk profile is different and requires a

tailored risk mitigation approach appropriate for the scale of e-banking

operations, the materiality of the risks present and the willingness and

ability of the institution to manage their risks. This implies that a one

size fits all approach to e-banking risk management issues may not be

appropriate.

Banks have traditionally been in the forefront of harnessing technology

to improve product and efficiency. Technology is altering the

relationships between banks and its internal and external customers.

Technology has also eroded the entry barriers faced by many

industries. With one time investment, technology has brought about

superior products and channel management with a special focus on

customer relationship. The incremental costs incurred for expansionand diversification are also more beneficial.

The major driving force behind the rapid spread of e-banking is its

acceptance as an extremely cost effective delivery channel. But on the

flipside, it is associated with risks such as reputation risk, security risk,

cross-border risk and strategic risk, which are unique to e-banking.

Banks need to have an effective disaster recovery plan along with

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comprehensive risk management tool is significant not only to the bank

but also to the banking system as a whole. All these issues underscore

the importance of sound supervisory policies and high level of

international co-operation among the bank regulators. The Basle

Committee on banking Supervision has taken the lead in this area

through the creation of its Electronic Banking Group a group

comprising 17 central banks and bank supervisory agencies in the late

1999. The main focus of this group has been to develop sound risk

management practices.

Internet has created plenty of opportunities for players in the banking

sector. While the new entrants have the advantage of latest technology,

the good-will of the established banks gives them a special opportunity

to lead the online world. By merely putting existing service online

wont help the banks in holding their customer close. Instead, banks

must learn to capitalize their customers different online financial-

services relationships. The article Will Banks Control Online

Banking? focuses on how banks have to reinvent their role to remain

as their customers preferred bank.

Coming home, India is on threshold of a major banking revolution with

the invasion of net banking. With the concept of payment gateway

coming in, banks are vying with one another for the lions share in the

market. Highlighting the benefits of payment gateway over the open-

loop payment mechanism, the article Banking in the Cyber worlds

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gives a brief report of the tug of war between the two major Indian e-

banking players.

ROLE AND SIGNIFICANCE :

If computerization has today become a byword in banking, itssustained growth is wholly due to its role as an enabler in the smooth

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and efficient conduct of a whole range of banking practices. Computers

were originally destined for a minor role in banks, primarily intended

to facilitate accounting transactions. Subsequently, once its superiority

was firmly established, it grew in status as a tool for a management

information information and a host of other inventions. Although theaccounting aspect is still quite important and relevant, IT has a far

greater role to play to day to day banking operations, especially in

decision making process. Further, facilities like ATM, Anywhere

Banking, Internet as well as Mobile Banking have been increasing

their presence. It has, to be conceded that Information Technology is

not the end in itself, but is useful tool in the hands of the management

to leverage business prospects in its favour and enchance efficiency.

Banks now have come under great pressure to reduce operational costs

to safeguard their bottom lines. With banking tuning more and more

customer-centric with every passing day, technology as an enabler has

helped banks to launch a whole array of customer-centric products

such as ATMs, Debit Cards, 24 hour Anywhere Banking. The

nomenclature Banking Accounts have also yielded to more

sophisticated term banking relationship. Customer Relations

Management is now a very potent and potential concept. E-Banking

also has a role to play in ensuring a fair return to shareholders, by

facilitating in ensuring greater profits to the banking sector. The recent

emerging trends in self-service channels, namely ATM,s, Call-centers,

Internet and mobile banking would increase the use of E-banking as

this offer the twin benefit i.e convenience to the customers and

reduction and cost of operation to the banks. E- banking can increase

the easy access of internet facilities among the masses which would

rise the comfort level for transacting via the web. The popularity of

internet banking likely depends upon inculcating in customers about

their security and personal privacy of their money and assests.

BIBLIOGRAHY: -

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O Brien James. A, Management Information System, Galgotia

Publication

Muedic & Ross, Management Information System

Lucae, Management Information System

Sen, Management Information System

Indian Banking, S. Natarahan and R. Parameswaran

Banking In the New Millennium, ICFAI University

copy of ebanking

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