E banking


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E banking

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