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E banking E banking Document Transcript

  • E banking, or electronic banking, is a method used to allow people to make transactions andmanage their money without having to go to their bank. Electronic banking can be accesseIntroductionElectronic banking is an umbrella term for the process by which a customer may perform bankingtransactions electronically without visiting a brick-and-mortar institution. The following termsall refer to one form or another of electronic banking: personal computer (PC) banking, Internetbanking, virtual banking, online banking, home banking, remote electronic banking, and phonebank. PC banking and Internet or online banking is the most frequently used designations. Itshould be noted, however, that the terms used to describe the various types of electronic bankingare often used inter changeably. Electronic banking is an activity that is not new to banks ortheir customers. Banks having been providing their services to customers electronically for yearsthrough software programs. These software programs allowed the user‟s personal computer todial up the bank directly. In the past however, banks have been very reluctant to provide theircustomers with banking via the Internet due to security concerns.Today, banks seem to be jumping on the bandwagon of Internet banking. Why is there asudden increase of bank interests in the Internet? The first major reason is because of theimproved security and encryption methods developed on the Internet. The second reason isthat banks did not want to lose a potential market share to banks that were quick to offer theirservices on the Internet. Many of the banks like ICICI, HDFC, IndusInd, IDBI, Citibank, GlobalTrust Bank (GTB), Bank of Punjab and UTI were offering E-banking services. Based on the abovestatistics and the analysts’ comments that India had a high growth potential for e-banking theplayers focused on increasing and improving their E-banking services. As a part of this, thebanks began to collaborate with functions online Why is there a sudden increase of bankinterests in the Internet? The first major reason is because of the improved security and
  • encryption methods developed on the Internet. The second reason is that banks did not wantto lose a potential market share to banks that were quick to offer their services on the Internet.E-banking is defined as the automated delivery of new and traditional banking products andservices directly to customers through electronic, interactive communication channels. E-banking includes the systems that enable financial institution customers. Individuals orbusinesses, to access accounts, transact business, or obtain information on financial products andservices through a public or private network including the Internet, Customers access e-bankingservices using an intelligent electronic device.The E-banking was firstly introduced in India by the ICICI around 1996. There after many otherbanks like HDFC, IndusInd bank, IDBI, Citibank Trust Banks, UTI, etc. followed the service. Astoday private and foreign bank had started capturing the market through e-banking hence “thecompetition is heating up and the lack of technology can make a bank loose a customer” so nowthe public banks are breaking the shackles of traditional set-up and gearing up to face thecompetition posed by the private sector counterparts.The Global E-Banking ScenarioThe banking industry is expected to be a leading player in e-business. While the banks indeveloped countries are working primarily via Internet as non-branch banks, banks in thedeveloping countries use the Internet as an information delivery tool to improve relationship withcustomers.In early 2001, approximately 60 percent of e-business in the UK was concentrated in thefinancial services sector, and with the expected 10-fold increase of the British e-businessmarket by 2004, the share of the financial services will further increase. Around one fifth ofFinish and Swedish bank customers are banking online, while in the US, according to UNCTAD,online banking is growing at an annual rate of 60 percent and the numbers of online accountsare expected to reach 15 million by 2003.Banks have established an Internet presence with various objectives. Most of them are using theInternet as a new distribution channel. Financial services, with the use of Internet, may beoffered in an equivalent quantity with lower costs to the more potential customers. There may becontacts from each corner of the world at any time of day or night. This means that banks may
  • enlarge their market without opening new branches. The banks in the US are using the Web toreach opportunities in three different categories: to market information, to deliver bankingproducts and services, and to improve customer relationshipIn Asia, the major factor restricting growth of e-banking is security, in spite of several countriesbeing well connected via Internet. Access to high-quality e-banking products is an issue as well.Majority of banks in Asia are just offering basic services compared with those of developedcountries. Still, e-banking seems to have a future in Asia. According to McKinsey survey, e-banking will succeed if the basic features, especially bill payment, are handled well. Billpayment was the most popular feature, cited by 40 percent of respondents of the survey.However, providing this service would be difficult for banks in Asia because it requires a highlevel of security and involves arranging transactions with a variety of playersIn India, approximately one percent of high and middle-income group banking customersconducted banking on the Internet in 2000 compared to 5 to 6 percent in Singapore and SouthKorea. In 2001, a Reserve Bank of India survey revealed that more than 20 major banks wereeither offering e-banking services at various levels or planned to do so in the near future. Someof the private banks included ICICI Bank, HDFC Bank, IndusInd Bank, IDBI Bank, Citibank,Global Trust Bank, Bank of Punjab and UTI Bank. In the same year, out of an estimated 0.9million Internet user base, approximately 17 percent were reported to be banking on the Internet.The above statistics reveal that India does have a high growth potential for e-banking. The bankshave already started focusing on increasing and improving their e-banking services. As a part ofthis, the banks have begun to collaborate with various utility companies to enable the customersto perform various functions online.In 2001, over 50 percent of the banks in the US were offering e-banking services. However,large banks appeared to have a clear advantage over small banks in the range of services theyoffered. Some banks in the US were targeting their Internet strategies towards businesscustomers. Apart from affecting the way customers received banking services; e-banking wasexpected to influence the banking industry structure. The economics of e-banking was expectedto favor large banks because of economies of scale and scope, and the ability to advertiseheavily. Moreover, e-banking offered entry and expansion opportunities that small bankstraditionally lacked.In Europe, the Internet is accelerating the reconfiguration of the banking industry into threeseparate businesses: production, distribution and advice. This reconfiguration is being furtherdriven by the Internet, due to the combined impact of: The emergence of new, more focused business models. New technological capabilities that reduces banking relationship and transaction costs. High degree of uncertainty over the impact that new entrants will have on current business models
  • Though e-banking in the Europe is still in the evolutionary stage, it is very clear that it is havinga significant impact on traditional banking activities. Unlike in the US, though large banks in theEurope have a competitive edge due to their ability to invest heavily in new technologies, theyare still not ready to embrace e-banking. Hence, medium-sized banks and start-ups have animportant role to play on the e-banking front if they can take concrete measures quickly andeffectively.Indian E-banking ScenarioAs per the international report the banking transactions on a brick and mortar banking costsaround $ 1.1. While through ATM it costs around $ 0.27 and just 1 percent of over the counterbanking in case of Internet banking. Statistics such as these have woken the Indian BankingIndustry. Thus, the Indian banking system is seeing a fabulous change in the quality of serviceprovided by them. Technology is the root of this change, which is implemented by the banks‟ towin more business from customers.Almost all the private sector banks are moving towards e-enabling their existing products. HDFCBank and ICICI Bank have taken a lead in introducing e-banking in India.Internet banking starts from migrating existing products to the net. This started initially withsimple functions such as getting information about interest rates, checking account balances andcomputing loan eligibility. Then the services were extended to online bill payment, transfer offunds between accounts and cash management services for corporate. Recently, banks startedsetting up payment gateways for B2B and B2Ctransactions. This is to facilitate payment for e-commerce transactions by directly debiting bank accounts or through credit cards. Banks canearn a commission based income, on the transaction or sale value resulting in higher otherincome. This could be more than the revenues they can generate from credit card transactions.Private sector banks have leveraged the Internet effectively in taking away the customers frompublic sector banks and significantly increased their revenue potential. Internet banking is justone manifestation of these banks‟ technological capabilities. They have a complete automation,an electronic customer database, real time transaction processing capabilities and the latesttechnological platforms. Management of these banks is very focused in using technology as akey competitive tool. The capability of the management is also visible in terms of theirprofitability. Among the private sector banks HDFC Bank and ICICI Bank have excellent returnson equity compared to their peers in the industry.
  • Who offers what?Citibank  See up-to-date account information View transaction details View account statement for up to 12 months Order demand drafts to couriered free to over 200 locations Order a cheque book stop payments Request a deposit Pay utility bills E-mail queriesICICI Bank Account information – summary of account and transactions Bills payment Funds Transfer including third-party transfers Requests for cheque books, stop payment, account opening, Reporting loss of ATMs card Online e-shopping payments Communication with Account Manager Personalized viewing of content updates – personal finance, select articles one- commerce,
  • HDFC Bank Real-time account information incl. transactions Transfer money between accounts Bill payment facility Third party funds transfer – within HDFC bank Request for De, and Draft/Bankers Cheque Stop payment requests Opening fixed-deposit accounts Sending messages to the bank via e-mail
  • Mediums of E-bankingVarious products and servicesElectronic banking, also known electronic fund transfer (EFT), uses computer and electronictechnology as a substitute for checks and other paper transactions. EFTs is initiated throughdevices like cards or codes that let you, or those you authorize, access your account. Manyfinancial institutions use ATM or debit cards and Personal Identification Numbers (PINs) for thispurpose. Some use other forms of debit cards and personal Identification Numbers (PINs) forthis purpose. Some use other forms of debit cards such as those that require, at the most, yoursignature or a scan. The federal Electronic Fund Transfer Act (EFT Act) covers some electronicconsumer transactions.Following are the electronic medium by which services are generally provided by the banks as apart of e-banking services. 1. Internet Banking 2. ATM (Automatic Teller Machine) 3. Phone Banking 4. Mobile Banking 5. Payment Cards (Debits/Credit Card)All the above mediums provide services, which can be, also known as “any time anywherebanking”. This facilitates the customer of the bank to operate their account from any corner ofthe world, without visiting local or any subsidiary branch of their banks. Efforts are made by thebank not only to provide the facility to the customer, but also to reduce the operational cost ofthe bank by providing e-banking services. So with this,Banks have to employ less staff and still would be able to deliver service to the customer, roundthe corner.
  • Internet BankingNet banking is a web-based service that enables the banks authorized customers to accesstheiraccount information. It allows the customers to log on to the banks website with thehelp ofbank‟s issued identification and personal identification number (PIN). The banking systemverifies the user and provides access to the requested services, the rage of products and serviceoffered by each bank on the internet differs widely in there content. Most banks offer netbanking as a value-added service. Net banking has also led to the emergent of new banks, whichoperate only through the internet and do not exists physically, Such banks are called “virtual”banks or “Internet Only” banks.A couple of years ago, there was a belief even among bankers that customers opening newaccounts wanted the online banking facility, just to „feel good‟ and very few of them actuallyused that services. Today, bankers believe that the trend from „nice to have‟ is changing to „needto have‟ .after all it depends on how busy a person is. Services provided through InternetBankingServices provided through Internet Banking account information E-cheques (Online Fund Transfer) Bill Payment Service Requests And Intimations Demat Account share trading
  • Account informationProvides summary of all bank accounts,Allow transaction tracking which enables retrieval of transaction details based on chequenumber,transaction amount, and date.Provide account statement and transaction reports used on user-defined criteria. Customerscan even download and print the statement of accounts.E-Cheques (Online Fund Transfer)Customer can transfer funds: Transfer funds between accounts, even if they are in differentbranches‟ cities Customer can also transfer funds to any person having an account with the samebank anytime, anywhere, using third party funds transfer option.Bill Payment ServiceBanks Bill Pa is the easiest way to manage bills. A/c holder can pay their regular monthly billsi.e. telephone, electricity, mobile phone, insurance etc. at anytime, anywhere for free. Saves timeand effort. Make bill payments at customer‟s convenience form their home or office. Lets a/cholders check their hill amount before it is debited form their account. No debits to accountwithout their knowledge. No more missed deadlines, no more loss of interest – a/c holder canschedule their bills in advance, avoid missing the bill deadlines as well as earn extra interest ontheir moneyTrack payment history – all payments to a biller are stored automatically for future reference. Noqueuing up at collection centers or writing cheque anymore! Just a few clicks and customersaccount will be debited for the exact amount they ask.
  • Requests and IntimationsCan electronically submit a request for: Cheque-book Stop payment instructions Opening a fixed deposit Opening a recurring deposit Intimate for the loss of ATM card Register online for phone and mobile banking Cheque status Online application for debit card Issue a DD or a Banker‟s cheque form account at special rates. Just select the account to be debited form and give details of the amount, location and beneficiary. The demand draft will be couriered to a/c holder at their mailing address. Customers can get their applications for issuance of Letters of Credit and Bank Guarantees processed online Book your Railways Ticket OnlineDemat Account and Share Trading Demat Account Demat is commonly used abbreviation of „Dematerialization‟, which is a process whereby securities like share, debentures are converted from the „material‟ (paper documents)unto electronic data and stored in the computer of an electronic Depository. A depository is a security „banks,‟ where dematerialized physical securities are held in custody, and form where they can be traded. This facilitates faster, risk-free and low cost settlement.
  • Share Trading In share trading a customer can buy and sell securities online without stepping into a broker‟s office. Once the share are dematerialized then the trading can be done from Home or office. As Demat a/c are directly linked to the customer‟s bank a/c, so there is no need to write cheque for the payments or to fill up the slips to deposit the cheque. Amount for the purchase and sale of securities is automatically debited or credited to their bank a/c. it also brings the same convenience while investing in Mutual funds also Hassle free and PaperlessATMsAutomated Teller Machines or 24-hour Tellers are electronic terminals that let you bank almostanytime. To withdraw cash, make deposits, or transfer funds between accounts, you generallyinsert an ATM card and enter your PIN. Some financial institution and ATM owners charge afee, particularly to consumers who don‟t have accounts with them or on transactions at remotelocations. Generally, ATMs must tell you they charge a fee and its amount on or at the terminalscreen before you complete the transaction. Check the rules of our institution and ATMs you useto find out when or whether a fee is charged.It won‟t be just if I start explaining what an ATM is. ATMs and cash dispensers are by far thelargest investment ever made in electronic self-service by financial institutions. Over US$ 40billion has been invested in simply buying these machines and many times that in running them.There are now over 1.1 million machines operating in over 140countries worldwide.The banks are losing the cashier‟s checks, check cashing and even cash dispensing to the c-stores and grocery stores. They are asleep at the switch and watching more transactions walkaway to convenience stores and supermarkets that provide 24 hour access and integratedtransactions.ATMs do provide a larger set of functions, such as check cashing, ticket sales or money orders.We already know that cash dispensing as a dedicated function is a sustainable applications, the
  • question is whether that application can be incorporated successfully into a more complexconsumer product that offers multiple applications.It is worth noting that, due to market saturation, overall ATM usage is increasing whiletransaction volume on a per-ATM basis is now in decline.Cash withdrawal: Withdraw up to Rs.15,000/- per day from your account. Fast cash optionsprovide the facility of withdrawing prefixed amounts. Ultra Fast Cash opetion allows you towithdraw Rs.3000/- in one shot.Balance Enquiry: Know your ledger balance and available balanceMini Statement: Get a printout of your last 8 transactions and your current balance.Deposit Cash / Cheques: available at all full function ATMs. Customers can deposit both cash andcheques. / Cash deposited in ATMs will be credited to the account on the same day (providedcash is deposited before the clearing) and cheques are sent for clearing on the next working day.Funds Transfer: Transfer funds from one account to another linked account in the same branch.PIN Changes: Change the Personal Identification Number (PIN) of ATM or Debit card.Payments: The latest feature of our ATMs, this functionality can be used for payment of bills,making donations to temples / trusts, buying internet packs, airtime recharges for prepaid mobilephones and much more…Others: Request for a checkbook from our ATMs and our concerned branch will dispatch it suchthat it reaches you within 10 working days.
  • ATM Advantages 24-hour access to cash You can withdraw up to Rs. 40,000/- per day on your ATM Card. The fast cash option saves your time by providing the cash in denominations of Rs. 500/- Balance inquiry 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 you 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. Anytime cash deposits: Your cash or cheques can be deposited into your account and the ATM will immediately print a receipt for the same.
  • Phone BankingNow your bank account is now just a phone call away. Through Phone Banking you can: Check your account balance. Check the last 5 transactions in your account. Enquire on the cheque status. Have a mini statement faxed across to you. Request for a cheque book / Account statement. Enquire on your Fixed deposits / TDS. Open a fixed deposit Request for Demand Draft / Managers Cheques. Transfer funds amongst your linked accounts Pay utility and HDFC Bank Credit Card bills. Do a stop cheque payments. Report loss of your ATM /Debit Card. Product information. Enquire on the interest / Exchange rates.