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E banking



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  • 1. E-Banking
  • 2. Banking
    • Banking as a business can be subdivided into five types:
    • Retail
    • Domestic wholesale
    • International wholesale
    • Investment
    • Trust
  • 3. Technology effect on Banking
    • Controlling cost
    • Development of new products & services
    • Interaction between banks & consumers
    • More competition
  • 4. Changing Dynamics in Banking Industry
    • Changing consumer needs
      • Customer want to access a/c related information, transfer funds between a/c, pay bill electronically.
      • Customers want to be able to bank at their convenience, including over the weekend or late at night.
      • Bankers want more stable and long term relationship with their customers.
  • 5. Changing Dynamics in Banking Industry
    • Cost reduction
      • The central goal is to reduce operating costs.
      • As banks merge to reduce their operating costs, they are obviously growing in size.
  • 6. Changing Dynamics in Banking Industry
    • Demographic trends
      • Consumers are increasingly careful about their personal finances.
      • Americans spend more time working, thus they are a very receptive audience for time saving products & services.
      • The consumer concerns can be seen in the trend of customer purchase of investment services like mutual funds.
  • 7. Changing Dynamics in Banking Industry
    • Technology based financial service products
      • The cost associated with e-payments technologies can be high because e-cash requires large investments in computer s/w and other resources to establish a network to secure electronic transactions.
      • Development of e-banking might actually increase competition in banking markets.
      • Many banks have started web sites on the internet and many plan to offer banking services over the internet.
      • Some banks are already offering certain banking seervices over the telephone.
  • 8. Home Banking History
    • Financial institutions were interested in home banking concept into reality as early in 1970.
    • The most popular approach of the 1970 was home banking via touch tone telephone, which enable customers to check a/c balances, transfer funds and pay bills.
    • With telephone banking customers use a numeric password on a push button telephone to access banking services.
    • In 1980, cable television also was considered as a possible medium for home banking.
    • Then comes home banking from PC.
  • 9. Why it will be different this time?
    • Consumer up the learning curve
      • Consumers are becoming increasingly comp-literate and are able to interact more fluently with their financial service providers.
    • Increasing consumer awareness
      • Mainstream magazines are increasing the amount of coverage given to comp aided topics. As a result, consumers are increasingly aware of alternatives to traditional branch banking.
    • Large base of installed PCs
      • Today there are more than 30 million PCs in american homes and consumers now spending more on PCs than TV sets. Modem penetration into house hold is a key issue for home banking, as online services require a modem.
  • 10. Why it will be different this time?
    • The alternative is too expensive
      • The cost associated with writing, mailing and processing these checks is staggering.
    • Fierce competition
  • 11. Home Banking Implementation approaches
    • Proprietary bank dial-up services
    • Off the shelf home financial s/w
    • Online services based banking
    • World wide web based banking
  • 12. Home Banking using bank’s Proprietary S/W
    • Bank mainframe comp system connected with terminal server with modem.
    • When a consumer wants to communicate with Bank, then the information has been transmitted via terminal server which is connected to bank.
  • 13. Banking via the PC using Dial-Up S/W
    • Intuit: is the leading provider of home & small business financial S/W, supplies and services for PC users.
    • Quicken: allows users to organize, understand and manage their personal finances.
  • 14. Intuit Services
    • To check current a/c balances, transfer funds between a/c, determine the clearance of given transactions.
    • Online bill payments enables users to pay bills by transmitting payment instructions via modem.
    • E.g. a Quicken user needs to pay three bills, the user would open Quicken and type the names of the payees and the amounts and then hit transmit.
    • Multiplatform strength: DOS, windows
    • New revenue strength: new products & services
    • Recurring revenue opportunities: e-credit card statement delivery, attractiveness to s/w product.
  • 15. Banking via Online Services
    • Prodigy & CityBank providing home banking services.
    • Prodigy providing home banking to consumers since 1988 and has relationship with more banks than any commercial online services.
    • Customers can check their a/c balances, transfer money between a/c, pay bills electronically, review their CitiBank credit card a/c, buy & sell stock through CitiCorp Investment services.
    • AOL users will not need to use Quicken s/w to access the banking services. Rather Intuit built a Quicken like application into AOL that will have the basic banking functionality of transferring funds etc.
  • 16. Banking via the Web: Security First Network Bank(SFNB)
    • The goal is to provide superior customer service & secure electronic environment.
    • Internet banking: Consumers do not need to purchase any additional s/w, store any data on their comp, wait for new versions & upgrades, since all transactions occur on a secure server over the internet.
    • The first Internet bank to provide e-banking services to internet users was SFNB.
    • Secure registration via login id & password
    • SFNB provides joint a/c facility.
  • 17. Open vs Closed Models
    • In an open system, content changes can occur easily because of the use of standard technology and components.
    • Banking(web) used open system : easy to customize to a bank changing needs.
    • Closed system: in which the changes are difficult since everything is proprietary.
    • E.g. Banking interfave developed around Intuit cannot be modified unless the vendor distributes a new version of its s/w.
  • 18. Management issues in Online Banking
    • Banks must deliver high quality products.
    • Creation of online financial supply chain
    • Low cost interactive access terminals for he home
    • Some banks are forming cooperative partnership with bank s/w companies, while others are writing their own s/w.
    • Pricing affect online banking via:
      • Initial s/w pricing
      • Financial product pricing
      • Usage pricing
    • Marketing issue
    • Back-office support for online banking