The concept and meaning of E-Banking
Online banking E-Banking electronic banking, net banking or banking over the internet are the buzzwords of business today they are commonly used in the banking industry it is the information technology which has revolutionized the way of the banking both at the local, national and international level it is a cutting edge technology, a new business paradigm.
Internet services mean that any enquiry or transaction should be processed online without any reference to the branch (any where banking) at any time.
Online banking, a little know concept so far, has soon taken centre stage so it is imperative for us to understand that online banking is all about doing banking transactions over the net.
E-banking is a concept which will enable anyone to conduct business with a bank from the comforts of the home or office. The need hither to is to personally visit the bank to conduct one’s business and with e-banking on the net, the working hours of the bank is done away with. Instead, all one will have to do is to tap a few keys, go to the banks site, identify himself and get on with his business at any time convenient to him.
It is called as banking on the net, which has been in practice for more than a decade now, and gained popularly since 1994 because it has used to friendly way of online business and is cost effective. The leap forward in this service happened when the banks started offering online banking service in its customers.
Electronic banking is an umbrella term for the process by which a customer may perform banking transactions electronically without visiting a brick-and-mortar instruction.
Definition of E-Banking
E-Banking is defined as the automated delivery of new and traditional banking products and services directly to customers through electronic, interactive communication channels. E-Banking includes the systems that enable financial institution customers. Individuals or businesses, to access accounts, transact business, or obtain information on financial products and services through a public or private network including the internet, Customers access E-Banking services using intelligent electronic devices.
The Electronic Delivery Channels includes
Internet banking
ATM
Telephone banking
Mobile banking
PC
Internet Banking
Internet banking means any user with a personal computer and a browser can get connected to his banks – S website to perform any of the vertical banking functions.
Internet banking involves consumers using the internet to access their banking account and to undertake banking transactions. At the basic level internet banking can mean the setting up as a web page by a bank to give information about its product and services. At an advances level, it involves provision of facilities such as accessing accounts, funds transfer, and buying financial products or services online, this is called ‘transactional’ online banking.
There are two ways to offer internet banking
An existing bank with physical offices can establish a web site and offer internet
banking in addition to its traditional delivery channels.
A bank may be established as a “Branch less, internet only, or virtual bank”
without any physical branch.
Banking service through Internet
Levels of Banking Services
The levels of banking services offered through internet can be categorized in three types.
The basic level services use the banks website which disseminates 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.
In the next level are simple transactional website which allow customers to
submit their instructions, applications for different services, queries on their
accounts balances etc, but do not permit any fund based transactions on their
account.
The third level of internet banking services are offered by fully transactional
websites which allow the customers to operate 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.
Most of the banks providing internet banking products and services after, to a large extent, an identical and standard package of banking services and transactional capabilities.
Structure of Banking Services
Internet banking products are offered in a two-tiered structure. A basic tier of internet banking products includes customer account inquiry, funds transfer and electronic bill payment.
A second or premium tier includes basic services plus one or more additional services such as
1. Brokerage
2. Cash
3. Credit applications
4. Credit and debit cards
5. Customer correspondence
6. Demat holdings
7. Financial advice
8. Foreign exchange trading
9. Insurance
10. Online trading
11. opening accounts
12. requests and intimations
13. tax services
14. E-shopping
15. Standing instructions
16. Investments
17. Asset management services etc.
Traditional Banking Vs Internet Banking
In traditional banking, the customer has to visit the branch of the bank in person to perform the basic banking operations viz., account enquiry, fund transfer, cash with drawing etc.
On the other hand, E-banking enables the customers to perform the basic banking transactions by sitting at their homes or at offices through a desktop or laptop round the clock globally through electronic media, this is called any time, any where banking. The customers can access the banks website for viewing their accounts details and perform the transactions as per their requirements customers can make use of these services with no restricted banking hours, no queues, no teller and no waiting.
E-Banking Transactions:
The following are some of the basic functions in internet banking
Account Enquiry
Fund transfer
Payment of electricity, water and telephone bills
Online payment for transactions actually performed through internet
Request for issuance of cheque book, demand drafts etc.
Statement of accounts
Access to latest schemes
Access to rates of interest and other services charges.
Advantages of internet Banking
Round the clock banking: E-banking facilitates performing basic banking transactions by customers round the clock globally. In fact there are no restricted office hours for E-banking.
Convenient Banking: Customer can perform basic banking transactions by simply sitting at their office or at home through PC or LAPTOP. No personal visit to the branch is required for routine.
Low Cost Banking: The operational costs have come down due to technology adoption is much less than any other traditional mode. There is also much saving on the cost of infrastructure as the banks can have access to a greater number of potential customers without the commitment costs of physically opening branches. Moreover, requirements of staff at the banks get reduced to a greater extent.
Profitable Banking: The increased speed of response to customer requirements can enhance customer satisfaction and consequently can lead to higher profits as a result of handing more number of customer accounts.
Quality Banking: Internet banking allows the possibility of improved quality and an enlarged range of services being made available to customers.
Speed banking: The increased speed of response to customer requirement will lead to greater customer satisfaction and handing a large number of transactions at a lesser time. Thus, it increases the customers’ convenience to a greater extent and facilitates better customer retention.
Service banking: Bank can also offer many cash management products. Instant credit, one day credit immediate payment of utility bills, instant transfer of funds etc., is possible under E-Banking.
Internet Banking in Reserve Bank of
The Reserve Bank of
Information only System: General purpose information like interest rates, branch location, bank products and their features, loan and deposit calculation are provided in the banks website. There exist facilities for down loading various types of application forms. The communication is normally done through E-mail there is no interaction between the customer and banks application system. No identification of the customer is done. In this system. There is no possibility of any unauthorized person getting into production system of the bank through internet.
Electronic Information Transfer System: The System provides customer – specific information in the form of account balances transaction details, and statement of accounts. The information is still largely of the read only format. Identification and authentication of the customer is through password. The information is fetched from the banks application system either in batch mode or off-line the application systems cannot directly access through the internet.
Fully electronic Transactional System: This system allows bi-directional transactions can be submitted by the customer for online update this system requires high degree of security and control. In this environment. Web server and application system are linked over secure infrastructure. It comprises technology covering computerization, networking and security, inter bank payment gateway and legal infrastructure.
Automatic Teller Machine (ATM’s )
Automated Teller Machines or 24-hour Tellers are electronic terminals that let you bank almost anytime. To withdraw cash, make deposits, or transfer funds between accounts you generally insert an ATM card and enter you PIN. Some financial institution and ATM owners charge a fee, particularly to consumers who don’t have accounts with them or on transactions at remote locations. Generally, ATMs must tell you they charge a fee and its amount on or at the terminal screen before you complete the transaction. Check the rules of our institution and ATM’s you use to find out when or whether a fee is charged.
ATM is only one type of electronic fund transfer (EFT) situation, usually connected to financial computers, the banks or other financial institutions own their stations located at the important check out counters of stores, hotels, hospitals and in rail, road and airline terminals.
ATM are now widely used in bank enabling quick cash withdrawal waiting in queue to pay over electricity bills or to buy railway season tickets has nowadays become tedious and time consuming payment of bills on utilities and issuance of railway passes are a few additional applications that the bankers have been providing through their ATMs.
Automatic Teller Machine (ATM) at Home
Home automatic teller machines have been designed and are available for installation at homes of the PC users. A banking ATM at home is not a big – sized machine as installed in banks, there is a software that pro vides ATM like service from the users computer it has features similar to the machine kept by banks as ATM. Thus makers are producing home ATM, home pay system and home ATM. Turning the PC into an ATM with the help of ATM. Users can get electronic accounts statements, pay bills, transfer funds and apply for loans. It permits users to withdraw cash from the bank account instantly by remaining at home or in office. The user who wants the benefit of electronic bill payments, there is the home pay bill package.
Advantages of ATM
24 –hour access to cash
You can withdraw up to Rs. 10,000/- per day on your ATM Card. The fast cash option saves your time by providing the cash in denominations of Rs. 500/-
Balance enquiry
Your updated balance will appear on the screen and will also be printed on the transaction slip.
Mini-statement request
Get details of the last 9 transactions on your account with the mini-statement, along with your balance.
Cheque book request
Send us a request for a cheque book or account statement it will arrive at your doorstep.
Funds transfer
Transfer money from one of your accounts to another. It’s easy, select the account from which you want to transfer, then indicate the amount and the account to which your want it transferred. Both accounts must be linked to your ATM card and customer ID. A maximum of 5 saving and 5 current accounts can be linked.
PIN change
Your can conveniently charge your (PIN) given at the time of opening your account whenever you wish. Stay totally in control and ensure complete security for your ATM Card.
Bill pay
Pay your cellular, telephone and electricity bills using your ATM Card.
Any time cash deposits
Your cash or cheques can be deposited into your account and the ATM will immediately print a receipt for the same.
Tele Banking
Tele banking facility is another variant form of bank automation. Some banks in cities have potential and they introduced tele banking a service where the banks get hundred of calls during the banks working hours. Banking on telephone helps to do all usual banking transactions sitting at home / office except deposit of amount and withdrawals all that a customer has to do is to call up the bank where in he is advised to press a particular number for a particular service it works with the technology of the microprocessor there is no need to have any software fore this, it recognizes the tone signal and pulse tele banking or banking on phone is more popular in advanced countries.
The advantages of this system are :
The caller can obtain information of his accounts as well as his credit card account.
Thousands of calls can be processed within a short time
It facilities the sending of fax through the same system.
It gives security against unauthorized access to the customers information.
Mobile Banking:
Mobile usages have seen an explosive growth is most of the Asian economies like
The main reason that mobile banking scores over Internet banking is that it enable ‘anywhere anytime Banking Customers don’t need access to a computer terminal to access their bank accounts, now the can do so on the ago while waiting for the bus to work traveling or when they are waiting for their orders to come through in a restaurant.
The scale at which mobile Banking has the potential to grow can be gauged by looking at the pace users are getting mobile in these big Asian Economies. According to the cellular operators’ Association of India(COAI) the mobile subscriber base in
Mobile Banking Services
Banks offering mobiles access is mostly supporting some or all of the following services.
Accounts information
Mini – statements and checking of account history
Alerts of account activity or passing of set thresholds
Monitoring of term deposits
Access to loan statements
Access to card statements
Mutual funds / equity statements
Insurance policy management
Pension plan management
Payment and Transfer
Domestic and International fund transfer
Micro payment handling
Mobile recharging
Commercial payment processing
Bill payment processing
Investments
Portfolio management services
Real – time stock quotes
Personalized alerts and notification on security prices
Personal Banking
PC banking is a form of online banking that enables customers to execute bank transaction from a PC via a modern. In most PC banking ventures, the bank offers the customers a proprietary financial software program that allows the customer to perform financial transactions from his or her home computer. The customer then dials into the bank with his or her modem. Downloads data and runs the programs that are resident on the customers computer. Currently, many banks offer PC banking systems that allow customers to obtain account balances and credit card statements, pay bills and transfer funds between accounts.
Advantages of E-Banking
The potential benefits for banks conducting their business online are manifold with decreased transaction costs and access to new customers providing substantial advantages of conducting online business. However, the uptake of internet banking within the country has been slow with only a handful of players providing internet banking services. The following are the some benefits emerging from e-banking or internet banking.
Internet banking enables NRIs in particular to monitor their local bank accounts from abroad transfer money to joint accounts held by them in
The global means of banking not only provides enormous convenience but the money starts earning return faster than the conventional method where returns were lost for the period that the draft was in transmission and clearing.
A small business firm writing about 100 cheques a month including pay roll chenque costs more per cheques in paper. Postage and employee time. In contrast, most electronic bill payments software costs less cheque. An electronic bill payment is one of the key services offered by the banks.
It offers and assures security to get electronic statements printed or downloaded, send cheques, payments an transfer funds between two or more accounts
Permits better, efficient and timely accurate management of funds and payments in real time.
All financial data can obtained at anytime, 24 hours a day and 7 days per week.
Internet banking services provide remote banking services and facilitate information needed by online customers.
Freedom and access to bank anytime and anywhere
Avoid to drive long distance to approach neighbourhood banks
Internet banking helps banks reduce the workload of branches like no routine generation of statements, balance enquiry and cheque requests.
Customers can get the details of accounts of accounts and transactional details instantly.
Disadvantages of E-Banking:
Customers going for line banking prefer seeking complete satisfactions and maximum benefits particularly in
Compared to other countries, banks and financial institutions in
Providing complete transactions and services involving huge investments in web development that will completely integrate the website with back – end systems including customer data base and application.
Presently banks, working with centralized data have distinct edge, and no processing is done at local branches. So, information moves seamlessly across different banking channels, the lack of centralized data base system is one of the main handicaps in the case of online banking.
There is no facility for inter – bank funds transfer through the net because the cyber laws in this regard are still not in place. Hence smooth cash management is not possible.
Lack of awareness is seen as one of the biggest road block for successful online banking.
Internet access in
A formal governmental paper on cyber laws and the legal framework for internet banking are not formulated.
The Reserve Bank of India (RBI) has so for not issued a policy paper covering the regulatory aspects and legal framework which are important to internet banking to protect customers or for financial transactions over the net and the acceptance of digital signatures.
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