FEM 3204 : 3 (2+1)FEM 3204 : 3 (2+1)Perancangan Kewangan Dalam Perancangan Kewangan Dalam
Pasaran GlobalPasaran GlobalFinancial Planning in a Global Financial Planning in a Global
MarketMarketHUSNIYAH BT. ABD. RAHIMHUSNIYAH BT. ABD. RAHIM
BILIK A2-14BILIK A2-14Jabatan Pengurusan Sumber & Pengajian Jabatan Pengurusan Sumber & Pengajian
PenggunaPenggunaFakulti Ekologi ManusiaFakulti Ekologi Manusia
Chapter 8Chapter 8
Financial Services Financial Services Development and its Development and its Impact on Individual Impact on Individual
and Organisationand Organisation
E-banking DefinedE-banking Defined
Electronic banking simply known as e-banking or Electronic banking simply known as e-banking or
electronic fund transfer (EFT) is the use of electronic fund transfer (EFT) is the use of
computers & telecommunications enabling computers & telecommunications enabling
banking transactions to be carried out by banking transactions to be carried out by
telephone or computer instead of through human telephone or computer instead of through human
interactioninteraction
Thus it is an automated delivery of banking Thus it is an automated delivery of banking
products & services directly to customers through products & services directly to customers through
electronic, interactive communication channelselectronic, interactive communication channels
Use of E-bankingUse of E-banking
Used by financial institution customers, Used by financial institution customers,
individuals or businesses for retail purchases, individuals or businesses for retail purchases,
automatic teller machines (ATMs), automatic automatic teller machines (ATMs), automatic
payroll deposits and bill paymentspayroll deposits and bill payments
Other than that to access accounts, transact Other than that to access accounts, transact
business, or obtain information on financial business, or obtain information on financial
products and services through a public or products and services through a public or
private network, including the Internet.private network, including the Internet.
E-banking SystemE-banking System
Uses computer & electronic technology as a Uses computer & electronic technology as a
substitute for checks & other paper transactions. substitute for checks & other paper transactions.
Initiated through devices like cards or codes that Initiated through devices like cards or codes that
enable individuals or authorized personnel to access enable individuals or authorized personnel to access
the account. the account.
Eg. ATM cards or debit cards, Personal Eg. ATM cards or debit cards, Personal
Identification Numbers (PINs), account holders’ Identification Numbers (PINs), account holders’
signature or a scan are used for this purpose. signature or a scan are used for this purpose.
. .
Medium of TransactionMedium of Transaction
Electronic channels involved are Electronic channels involved are
personal computer (PC), via landline & personal computer (PC), via landline &
mobile phone connections, automated mobile phone connections, automated
teller machines (ATMs), teller machines (ATMs), personal digital personal digital
assistant (PDA), kiosk, or Touch Tone assistant (PDA), kiosk, or Touch Tone
telephone. telephone.
Benefit of E-bankingBenefit of E-banking
For services such as home banking, whereby a For services such as home banking, whereby a
person can make transactions via personal computer person can make transactions via personal computer
or via a direct connection or by accessing a Web or via a direct connection or by accessing a Web
site., transactions could be made anywhere, & any site., transactions could be made anywhere, & any
time including at home & not only during the day.time including at home & not only during the day.
Vastly reduced the physical transfer of paper money Vastly reduced the physical transfer of paper money
& coinage from places to places or from persons to & coinage from places to places or from persons to
personspersons
Benefit of E-banking (cont.)Benefit of E-banking (cont.)
It facilitate retail paymentsIt facilitate retail payments
Consumers could appreciate the 24-hour Consumers could appreciate the 24-hour
access to cash through an automated access to cash through an automated
teller machine (ATM) or Direct Deposit of teller machine (ATM) or Direct Deposit of
paychecks into checking or savings paychecks into checking or savings
accounts. accounts.
Type of E-banking ServicesType of E-banking Services
1. Automated Teller Machines (ATM) or 24-hour Tellers:1. Automated Teller Machines (ATM) or 24-hour Tellers:
Electronic terminals allowed anytime banking Electronic terminals allowed anytime banking
transactions. transactions.
To withdraw cash, make deposits, or transfer funds To withdraw cash, make deposits, or transfer funds
between accounts, using an ATM card & PIN number.between accounts, using an ATM card & PIN number.
Some charge or fee will be required for interbank Some charge or fee will be required for interbank
transactions, from one bank to another bank (eg CIMB transactions, from one bank to another bank (eg CIMB
to RHB Bank). ATMs will tell that a fee will be charged to RHB Bank). ATMs will tell that a fee will be charged
at the terminal screen before completing the transaction. at the terminal screen before completing the transaction.
Type of E-banking ServicesType of E-banking Services
2. Direct Deposit 2. Direct Deposit
Authorized individuals with specific deposits, Authorized individuals with specific deposits,
such as paychecks & Social Security checks, to such as paychecks & Social Security checks, to
your account on a regular basis. your account on a regular basis.
Individuals can pre-authorize direct withdrawals Individuals can pre-authorize direct withdrawals
so that recurring bills, such as insurance so that recurring bills, such as insurance
premiums, mortgages, & utility bills, are paid premiums, mortgages, & utility bills, are paid
automatically. automatically.
Type of E-banking ServicesType of E-banking Services
3. Pay-by-Phone Systems:3. Pay-by-Phone Systems:
Individual can call the financial institution Individual can call the financial institution
to instruct on bill payment or to transfer to instruct on bill payment or to transfer
funds between accounts. funds between accounts.
A pre -agreement with the institution is A pre -agreement with the institution is
needed prior to the transfers. needed prior to the transfers.
Type of E-banking ServicesType of E-banking Services
4. Personal Computer Banking:4. Personal Computer Banking:
Enables individuals to handle many Enables individuals to handle many
banking transactions via personal banking transactions via personal
computer. computer.
Eg. viewing the account balance, request Eg. viewing the account balance, request
transfers between accounts, & pay bills transfers between accounts, & pay bills
electronically.electronically.
Type of E-banking ServicesType of E-banking Services
5. Debit Card Purchase Transactions :5. Debit Card Purchase Transactions :
Enable ones to purchases with a debit card, Enable ones to purchases with a debit card,
which also may be the ATM card. which also may be the ATM card.
This could be at a store or business, on the This could be at a store or business, on the
Internet or online, or by phone. Internet or online, or by phone.
Similar to the process of using a credit card, Similar to the process of using a credit card,
with some important exceptions., with enough with some important exceptions., with enough
fund in your accountfund in your account
Type of E-banking ServicesType of E-banking Services
6. Electronic Check Conversion:6. Electronic Check Conversion:
It converts a paper check into an electronic It converts a paper check into an electronic
payment in a store or when a company receives payment in a store or when a company receives
the check in the mail. the check in the mail.
In a store, the check given to the cashier is run In a store, the check given to the cashier is run
through an electronic system that captures the through an electronic system that captures the
individuals banking information & the amount of individuals banking information & the amount of
the check. the check.
One has to sign a receipt & have a copy of it. One has to sign a receipt & have a copy of it.
Type of E-banking ServicesType of E-banking Services
6. Electronic Check Conversion (cont.):6. Electronic Check Conversion (cont.):
The check is handed back to the individual with The check is handed back to the individual with
certain mark on it by the merchant so that it certain mark on it by the merchant so that it
can’t be reused.can’t be reused.
The merchant electronically sends information The merchant electronically sends information
from the check (but not the check itself) to the from the check (but not the check itself) to the
financial institution & the funds are transferred financial institution & the funds are transferred
into the merchant’s account. into the merchant’s account.
Type of E-banking ServicesType of E-banking Services
In cases where a check is mailed to a merchant , they In cases where a check is mailed to a merchant , they
may electronically send information from the check may electronically send information from the check
through the system, & funds are transferred into their through the system, & funds are transferred into their
account. account.
For a mailed check, an advance notice should be send For a mailed check, an advance notice should be send
by the merchant. The notice might be included in the by the merchant. The notice might be included in the
monthly statement or under its terms & conditions. monthly statement or under its terms & conditions.
It should also state if the merchant will electronically It should also state if the merchant will electronically
collect a fee, in cases of insufficient funds . collect a fee, in cases of insufficient funds .
Choice of E-banking SystemChoice of E-banking System
Financial institutions may choose their e-banking Financial institutions may choose their e-banking
system configuration based on four factors:system configuration based on four factors:
Strategic objectives for e-banking Strategic objectives for e-banking
Scope, scale, & complexity of equipment, Scope, scale, & complexity of equipment,
systems, & activities systems, & activities
Technology expertiseTechnology expertise
Security & internal control requirementsSecurity & internal control requirements
E-banking Support SystemE-banking Support System
Financial institutions may outsource in Financial institutions may outsource in
supporting their e-banking services through supporting their e-banking services through
the following hosts:the following hosts:
Another financial institutionAnother financial institution
Internet service providerInternet service provider
Internet banking software vendor or processorInternet banking software vendor or processor
Core banking vendor or processorCore banking vendor or processor
E-banking Support SystemE-banking Support System
Financial institutions may outsource in Financial institutions may outsource in
supporting their e-banking services through supporting their e-banking services through
the following hosts (cont.):the following hosts (cont.):
Managed security service providerManaged security service provider
Bill payment providerBill payment provider
Credit bureauCredit bureau
Credit scoring companyCredit scoring company
E-banking ComponentsE-banking Components
Website design & hostingWebsite design & hosting
Firewall configuration & managementFirewall configuration & management
Intrusion detection system or IDS Intrusion detection system or IDS
(network & host-based)(network & host-based)
Network administrationNetwork administration
Security managementSecurity management
Internet banking serverInternet banking server
E-banking Components (cont.)E-banking Components (cont.)
E-commerce applications (e.g., bill E-commerce applications (e.g., bill
payment, lending, brokerage)payment, lending, brokerage)
Internal network serversInternal network servers
Core processing systemCore processing system
Programming supportProgramming support
Automated decision support systemsAutomated decision support systems
In the late 1990s, the concept of electronic banking was In the late 1990s, the concept of electronic banking was
heavily promoted heavily promoted
Even in the first wave of the application of the Internet, Even in the first wave of the application of the Internet,
banks were advised to change from the traditional banks were advised to change from the traditional
transactions to the one supported by electronic, electronic transactions to the one supported by electronic, electronic
money was introducedmoney was introduced
E-banking Marketing & its Effect on financial management of
individual
E-banking Marketing & its E-banking Marketing & its effect on financial management effect on financial management
of individual (cont.)of individual (cont.)
Singapore may be the first place to Singapore may be the first place to
operate using mostly electronic money operate using mostly electronic money
by 2008. by 2008.
The bank Nordea in Scandinavia has a The bank Nordea in Scandinavia has a
significant proportion of customers who significant proportion of customers who
bank electronicallybank electronically
E-banking Marketing & its E-banking Marketing & its effect on financial effect on financial
management of individual management of individual (cont.)(cont.)
In promote heavily this technology, customers In promote heavily this technology, customers
did not really want this technology. did not really want this technology.
Instead, many require a friendly & efficient Instead, many require a friendly & efficient
service.service.
A research was conducted for this Market A research was conducted for this Market
Assessment report by BMRB Access in April Assessment report by BMRB Access in April
2004. 2004.
E-banking Marketing & its E-banking Marketing & its effect on financial effect on financial
management of individual management of individual (cont.)(cont.)
Although a significant proportion of the 977 Although a significant proportion of the 977
respondents claimed to use their bank respondents claimed to use their bank
electronically, however very few of them showed electronically, however very few of them showed
any enthusiasm for electronic banking services. any enthusiasm for electronic banking services.
This indicates that people are not very interested This indicates that people are not very interested
in automated telephone services, nor in being in automated telephone services, nor in being
advised on their financial affairs by their bank. advised on their financial affairs by their bank.
E-banking Marketing & its E-banking Marketing & its effect on financial effect on financial
management of individual management of individual (cont.)(cont.)
In addition, they are even less interested in In addition, they are even less interested in
using electronic purses/ cashpoint for all their using electronic purses/ cashpoint for all their
financial affairs,financial affairs,
They are not at all interested in interactive They are not at all interested in interactive
television banking or downloading cash to their television banking or downloading cash to their
mobile telephones. mobile telephones.
E-banking Marketing & its E-banking Marketing & its effect on financial effect on financial
management of individual management of individual (cont.)(cont.)
In fact, a considerable proportion of the In fact, a considerable proportion of the
respondents believed electronic banks to be respondents believed electronic banks to be
insecure & would not trust them to handle insecure & would not trust them to handle
their affairs. their affairs.
Even though many of these respondents were Even though many of these respondents were
elderly & in the lower social grades, it would elderly & in the lower social grades, it would
be unwise to disregard their opinions.be unwise to disregard their opinions.
E-banking Marketing & its E-banking Marketing & its effect on financial effect on financial
management of individual management of individual (cont.)(cont.)
In Scandinavia, Nordea bank does not face such In Scandinavia, Nordea bank does not face such
problems & has a large, international clientele of problems & has a large, international clientele of
remote customers of the wide range of services. remote customers of the wide range of services.
In Singapore, the introduction of electronic smart In Singapore, the introduction of electronic smart
cards has been pioneered by the road charging cards has been pioneered by the road charging
system & there is a consensus (85%) in favour of system & there is a consensus (85%) in favour of
these cards.these cards.
E-banking Marketing & its E-banking Marketing & its effect on financial effect on financial
management of individual management of individual (cont.)(cont.) In the UK, consumers are more cautious bank branches In the UK, consumers are more cautious bank branches
are critical to a multichannel distribution system. are critical to a multichannel distribution system.
Cashpoints are being upgraded, although providers are Cashpoints are being upgraded, although providers are
gaining benefits from this. gaining benefits from this.
In addition, plastic cards are being used increasingly In addition, plastic cards are being used increasingly
for both payments & borrowing. for both payments & borrowing.
Debit cards are more popular than credit cards, leads Debit cards are more popular than credit cards, leads
to a long-term decline in margins on card operations.to a long-term decline in margins on card operations.
E-banking Marketing and its E-banking Marketing and its effect on financial effect on financial
management of individualmanagement of individual Banks need to show that they have mastered Banks need to show that they have mastered
electronic banking technology, can offer full security electronic banking technology, can offer full security
& that they can provide a service that meets & that they can provide a service that meets
customer's needs.customer's needs.
When this happens, customers in the world will be When this happens, customers in the world will be
ready to accept the technology that is already ready to accept the technology that is already
accepted in such countries, eg. Singapore, Hong Kong accepted in such countries, eg. Singapore, Hong Kong
& South Korea. & South Korea.