104-Session7-Banking.ppt

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  • Advantages Usage : Easy to use. Available 24X7. Quick and efficient. Anywhere banking. Cross banking facility. No need to carry cash always or depend on bank timings. Physical security : A common method is to simply rob the staff filling the machine with money. To avoid this, the schedule for filling them is kept secret, varying and random. The money is often kept in cassettes, which will dye the money if incorrectly opened. Transactional secrecy and integrity: ATM often uses commodity components that are not considered to be "trusted systems". Customer identity integrity: There have also been a number of incidents of fraud by Man-in-the-middle attacks, where criminals have attached fake keypads or card readers to existing machines. These have then been used to record customers' PINs and bank card information in order to gain unauthorized access to their accounts. Various ATM manufacturers have put in place countermeasures to protect the equipment they manufacture from these threats Device operation integrity: Openings on the customer-side of ATMs are often covered by mechanical shutters to prevent tampering with the mechanisms when they are not in use. Alarm sensors are placed inside the ATM and in ATM servicing areas to alert their operators when doors have been opened by unauthorized personnel. Customer security: multiple security cameras and security guards are a common feature
  • 1. Information Only System : General-purpose information like interest rates, branch location, bank products and their features, loan and deposit calculations are provided in the banks website. There exist facilities for downloading various types of application forms. The communication is normally done through e-mail. There is no interaction between the customer and bank’s application system. No identification of the customer is done. In this system, there is no possibility of any unauthorized person getting into production systems of the bank through internet. 2. 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 bank’s application system either in batch mode or off-line. The application systems cannot directly access through the internet. 3. Fully Electronic Transactional System : This system allows bi-directional capabilities. 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 systems are linked over secure infrastructure. It comprises technology covering computerization, networking and security, inter-bank payment gateway and legal infrastructure.
  • 104-Session7-Banking.ppt

    1. 1. Sushil S Mundada
    2. 2. AgendaBasics of Banking and Banking ApplicationsSaving Bank AccountTransactions – Deposit, WithdrawalChequesATM ApplicationE-BankingBiometric Devices and its scope in ApplicationsImportant Questions 2
    3. 3. Basics of BankingWhat is a Bank: Accepting deposits of money from the public for purpose of lending or investment, repayable on demand and withdrawal by cash, cheque, draft, order, etc.Customer Segments: Personal banking SME/Commercial banking Corporate & Investment banking Private banking 3
    4. 4. Relationship- Bank & CustomerDebtor & Creditor: Customer deposits money with bank hence he becomes a Lender or Creditor of the bank. Bank has accepted deposit from customer hence bank becomes a Debtor.Pledger and Pledgee: When customer pledges (promises) certain assets or security with the bank in order to get a loan, the customer becomes the Pledger and the bank becomes the Pledgee.Bailor & Bailee: Banks acts as a caretaker for valuables & securities in the safe custody, in this case, customer becomes the Bailor and the bank becomes the Bailee.Trustee & Beneficiary: When the Bank holds property for the beneficiary, it becomes Trustee for the Beneficiary. 4
    5. 5. Relationship- Bank & CustomerAgent & Principal: Bank acts as Agent of customer, provides agency services to customer and is responsible for carrying out customer’s instruction.Lessee and Lessor: Bank acts as a Lessor when it rents out space (e.g. locker) to customer who is a Lessee.Advisor and Client: When a customer invests in securities, on advice from the bank, the banker acts as an Advisor and the customer as a Client. 5
    6. 6. Bank Products 6
    7. 7. Bank Services 7
    8. 8. Savings Bank AccountsHabit of saving among the citizens while allowing them to use their funds when requiredHigh liquidity and safetyOpening an account - Who Can Open An individual or in joint names of the depositors Minors provided they have completed ten years of age Hindu Undivided Families (HUF)Closing of Account - If a depositor closes the account within 12 months of opening it, a small charge will generally be made. All remaining cheque books and passbooks should be submitted with a letter of closing 8
    9. 9. Opening a Savings AccountTwo passport size photographsProof of residenceAn introduction of the person from an existing account holder.PAN number / Declaration in form no.60 or 61 as per the Income Tax Act 1961.Account Transfer - Savings accounts may be transferred from one office of the bank to another office in India, free of charge on a written request from the depositor and on return of the unused cheque leaves, if any, along with the pass book. 9
    10. 10. TransactionsDeposits Amounts received for the credit of a savings account Cheques and Dividend WarrantsWithdrawals Drawings from savings bank account will be by withdrawal forms or cheques supplied by the bank 10
    11. 11. ChequesWritten instruction you give to your banker to make payment by debit to your account on demandCheque is a valid payment instrument from the date shown on the face of it. Three months - normal validityBearer cheque is payable to the holder. An Order cheque is payable to the person on whose favour it is drawn or subsequent endorseesBanks verify the signature on the chequeReport loss of cheque to the issuing bank immediately and give Stop Payment instruction to themCheques should not be issued without adequate balance in the account or arrangements to pay 11
    12. 12. Automated teller machineComputerised telecommunications device provides the clients access to financial transactions without the need of bank tellerCustomer is identified by inserting a plastic ATM card with a magnetic stripe or a plastic smart cardAuthentication by entering a personal identification numberIf the currency being withdrawn from the ATM is different from that which the bank account is denominated in the money will be converted at a wholesale exchange rate 12
    13. 13. ConstructionCPU (control user interface and transaction devices)Magnetic and/or Chip card readerPIN Pad (similar in layout to a Touch tone or Calculator keypad)Secure cryptoprocessor, generally within a secure enclosureDisplay (used by customer for transaction)Function key buttons (usually close to the display) or a Touchscreen (to select various aspects of transaction)Record Printer (to provide the customer with a record of their transaction) Vault (to store the parts of the machinery requiring restricted access) 13Housing (for aesthetics and to attach signage to)
    14. 14. 14
    15. 15. Mechanisms found inside vaultDispensing mechanism (to provide cash or other items of value)Deposit mechanism including a Check Processing Module and Bulk Note Acceptor (to allow the customer to make deposits)Security sensors (Magnetic, Thermal, Seismic, gas)Locks (ensure controlled access to contents of vault)Journaling systems; many are electronic (a sealed flash memory device) or a solid-state device (an actual printer) which accrues all records of activity including access timestamps, number of bills dispensed, etc. 15
    16. 16. AdvantagesUsage: Easy to use and Available 24X7 Quick and efficient, Anywhere banking Cross banking facility No need to carry cash always or depend on bank timings Low cost 16
    17. 17. Alternative usesDeposit currency recognition, acceptance, and recyclingPaying routine bills, fees, and taxes (utilities, phone bills, social security, legal fees, taxes, etc.)Printing bank statements and Updating passbooksLoading monetary value into stored value cards Purchasing Postage stamps, Lottery and Train tickets Cheque Processing ModuleAdding pre-paid cell phone / mobile phone credit 17
    18. 18. E-Banking -Online (Or Internet Banking)Conduct financial transactions on a secure website. Advantages:Transactional  Electronic bill presentment and payment – EBPP  Funds transfer  Investment purchase or sale  Loan applications and transactionsNon-transactional (e.g. online statements, check links, chat)Financial Institution Administration  Support of multiple users having varying levels of authorityLow cost 18
    19. 19. Types of Internet Banking Products(Services)Information Only SystemElectronic Information Transfer SystemFully Electronic Transactional System 19
    20. 20. Security methodsThe PIN/TAN system where the PIN represents a password, used for the login and TANs representing one-time passwords to authenticate transactionsDigital certificates are used against phishing and pharming, the use of class-3 card readers is a measure to avoid manipulation of transactions by the software in signature based online banking variantsTo protect their systems against Trojan horses, users should use virus scanners and be careful with downloaded software or e-mail attachments 20
    21. 21. Biometric DevicesWidely known as “the science of measuring physical characteristics, to verify a person’s identity”. Divided into:Physiological are related to the shape of the body.  Fingerprint  Face recognition  DNA  Palm print and Hand geometry  Iris recognition  Odour/scentBehavioral are related to the behavior of a person  Typing rhythm  Gait and Voice 21
    22. 22. Types of Biometric DevicesFingerprint biometrics: Widely accepted, convenient and reliable than other forms of physical identificationHand Geometry: Measure the geometry of the hand rather than the fine skin patterns as found in finger tipRetina/Iris Scanners: Retina and iris have more characteristics to identify and match than on the handFacial Scan: An image is examined for overall facial structure which works well over short distances 22
    23. 23. Usage MethodologyThe first time an individual uses a biometric system is called an enrollment - biometric information from an individual is storedThe first block (sensor) is the interface between the real world and the system; it has to acquire all necessary dataThe second block performs all the necessary pre- processing: it has to remove artifacts from the sensor, to enhance the input (e.g. removing background noise), to use some kind of normalization, etcIn the third block necessary features are extracted. A vector of numbers or an image with particular properties is used to create a template 23
    24. 24. AdvantagesA card-based access system will control the access of authorized pieces of plastic, but not who is in possession of the cardSystems using PINs require an individual only know a specific number to gain entry; but who actually entered the code cannot be determined.On the contrary, biometric devices verify who people are by what they are, whether by hand, eye, or voice recognitionContrary to using badges, sign-ins or other ways of tracking employees, a biometric time clock assures that no employee can punch in for another, eliminating time fraud24
    25. 25. Important QuestionsWhat is saving account. List the steps of open saving account. What are the documents required to open Saving Accounts in the bank?What are the advantages of ATM to customer?What are the merits and demerits of Ebanking?Why is the need of Biometric? Which devices are used for Biometric? State any 2 types of Biometrics. 25

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