This document provides a summary of a presentation on the introduction to banking operations. It discusses key topics like the changing nature of banking operations, the importance of customer relationship management, the different types of products and services offered to customers, the role of technology in banking operations, the need for asset-liability management, electronic banking and e-banking in India. It provides details on various banking products, services, and operations and how technology has transformed the banking industry.

1. Presentation on –
“Introduction to Banking Operations”
Presented By –
Shete Shubham
M.com ( Banking & Finance), MBA ( International Finance & Banking)

2. Sr No Content
1 The Changing Nature Of Banking Operation
2 Importance Of Customer Relationship Management
3 Different Types Of Products And Services Offered To
Customer
4 Role Of Technology In Banking Operation
5 Need For Asset-Liability Management
6 Introduction To Electronic Banking
7 E- Banking In India
8 E- Commerce
9 Risk In E- Banking
10 RTGS And Clearing House
11 Internet Banking Strategies
12 Conclusion

3. Introduction -
Banking operation make sure our processes and transaction are
executed correctly, which minimising risk and maximising quality
of service.
Some of the range of service that a bank can offer to its
customer particularly
The banking operation involves the practices and procedures that
a bank uses to ensure that customer’s transactions are completed
accurately and appropriately.
Changing Nature of Banking Operations
 Savings and investment accounts
 Lending facilities
 Money transmission and Payment services
 Share dealing and investment advice

4. Savings and investment accounts
One function of the bank is to attract the depositors of
funds. The bank pay the interest on the majority of fund
deposited with them, and this deposited business is actually
profitable for bank because they can on lend the money
deposited to other customer at higher rate of interest.
If the bank does not sufficient money to deposit to fund its
lending it may have to borrow in money market.
If the bank has surplus deposit then these fund can be placed
on the money market at a rate of interest
Lending facilities
Bank “borrow” funds from depositors which are then advanced
to other customers. The margin between the rate of return of
interest paid by the bank and rate charged to borrower is profit
for bank. Therefore that lending is important part of banking
business.

5. Money transmission and Payment services
Money transmission is the transfer of money one party to another,
normally from the receiver of goods and services to the supplier of
goods and services. Simplest form of money transmission is the
physical transfer of cash from one party to another party.
A payment services for accepting electronic payment by a variety of
payment methods. Bank are preformed the payment function in
banking operation.
Following is numbers of method of Money transmission and Payment
services
 Standing orders
 Direct deposit
 Banker’s draft
 Credit card
 Debit card
 Telephone banking
 Internet banking

6. Share dealing and investment advice
Bank are provided a range of services and advice relating to
investment in product not offered by them. The buying and
selling of shares, government stocks and unit trust, local
authority loans, can all be arranged through branches.
Bank may also offer investment advice and manage portfolio of
investor through specialist department.

7. Customer Relationship Management (CRM) -
Customer relationship management
(CRM) is the combination of practices, strategies and
technologies that companies use to manage and analyse customer
interactions and data throughout the customer lifecycle, with the
goal of improving customer service relationships and assisting in
customer retention and driving sales growth. CRM systems
compile customer data across different channels, or points of
contact between the customer and the company, which could
include the company's website, telephone, live chat, direct mail,
marketing materials and social media. CRM systems can also
give customer-facing staff detailed information on customers'
personal information, purchase history, buying preferences and
concerns.

8. Importance Of CRM –
 A CRM system consists of a historical view and analysis of all
the acquired or to be acquired customers.
 CRM contains each and every bit of details of a customer,
hence it is very easy for track a customer
 In CRM system, customers are grouped according to
different aspects according to the type of business
 A CRM system is not only used to deal with the existing
customers but is also useful in acquiring new customers.
 The strongest aspect of Customer Relationship Management
is that it is very cost-effective.
 All the details in CRM system is kept centralized which is
available anytime on fingertips.
 Efficiently dealing with all the customers and providing
them what they actually need increases the customer
satisfaction.

9. Different Types And Services Offered To A Customers –
The different products in a bank can be broadly classified into:
 Retail Banking.
 Trade Finance.
 Treasury Operations.
Retail Banking and Trade finance operations are conducted at
the branch level while the wholesale banking operations, which
cover treasury operations, are at the head office or a designated
branch.
Retail Banking:
• Deposits
• Loans, Cash Credit and Overdraft
• Negotiating for Loans and advances
• Remittances
• Book-Keeping (maintaining all accounting records)
• Receiving all kinds of bonds valuable for safe keeping

10. Trade Finance:
• Issuing and confirming of letter of credit.
• Drawing, accepting, discounting, buying, selling, collecting
of bills of exchange, promissory notes, drafts, bill of
lading and other securities.
Treasury Operations:
• Buying and selling of bullion, Foreign exchange.
• Acquiring, holding, underwriting and dealing
in shares, debentures, etc.
• Purchasing and selling of bonds and securities on behalf of
constituents.

11. Common Banking Products Available -
 Credit Card:
 Debit Cards:
 Automated Teller Machine:
 Electronic Funds Transfer (EFT):
 Telebanking:
 Mobile Banking:
 Internet Banking:
 Demat:
.

12. The Role Of Technology In Banking Operations –
The banking sector has embraced the use of
technology to serve its client’s faster and also to do more with less.
Emerging technologies have changed the banking industry from
paper and branch based banks to ”digitized and networked
banking services.
E-banking:
This enables the bank to deliver its services easily to its
high end customers. To make the system user friendly to all clients,
banks have used a Graphical User Interface (GUI) , with this
software , customers can access their bank details on their own
computers, make money transfers from one account to another,
print bank statements and inquire about their financial
transactions.

13. NRI Banking Services:
This technology has been embraced in
countries like India, USA, UAE, just to mention but a
few. Since many people go abroad to work, they have a need of
supporting their families. So technology has made it simple for
them to send money to their loved ones easily.
RURAL Banking:
Unlike in the past when banking was centralized
in urban areas, now day’s technology has made it simple to set
up banking facilities in rural areas. For example: In Africa, they
have introduced Mobile money banking facilities. In this case a
user in a rural area will have an account with a mobile
company which is opened for free. They can then deposit
money on that account via a near by mobile money operating
centre. This money can be withdrawn at any time any were in
that area and they can also receive or send money using the
same system.

14. Plastic money:
Credit cards or smart cards like ‘’VISA
ELECTRON’’ have made the banking industry more flexible
than before. With a credit card , a customer can borrow a
specific amount of money from the bank to purchase any thing
and the bank bills them later. In this case, they don’t have to go
through the hassle of borrowing small money. Then with
‘’Smart Cards’’ like visa electron , a customer can pay for any
thing using that card and that money is deducted from their
bank accounts automatically, they can also use the same card to
deposit or withdraw money from their accounts using an ATM
machine.

15. Asset Liability Management –
Asset/liability management is
the process of managing the use of assets and cash flows to
reduce the firm’s risk of loss from not paying a liability on
time. Well-managed assets and liabilities increase business
profits. The asset/liability management process is typically
applied to bank loan portfolios and pension plans. It also
involves the economic value of equity.
sheet.
Need Of Asset Liability Management –
 ALM basically refers to the process by which an institution
manages its balance sheet in order to allow for alternative
interest rate and liquidity scenarios.

16.  ALM models enable institutions to measure and monitor
risk, and provide suitable strategies for their management.
 ALM includes not only a formalization of understanding
the risks, but also provides a way to quantify and manage
these risks.
 RBI has developed an ALM framework based on GAP
Analysis and is intended to introduce the banks to the
process of ALM.
 Process of ALM is multifaceted and will vary from one
bank to another.
 Based on the RBI model, banks can segregate their assets
and liabilities into various maturity buckets.

17. Electronic banking –
Electronic banking is a form of
banking in which funds are transferred through an exchange of
electronic signals rather than through an exchange of cash,
checks, or other types of paper documents. Transfers of funds
occur between financial institutions such as banks and credit
unions. They also occur between financial institutions and
commercial institutions such as stores. Whenever someone
withdraws cash from an automated teller machine (ATM) or
pays for groceries using a debit card (which draws the amount
owed to the store from a savings or checking account), the
funds are transferred via electronic banking.

18. Electronic Banking: Market Assessment –
The Electronic Banking
Market size is expected to reach $29,976 million in 2023 from
$7,305 million in 2016, growing at a CAGR of 22.6% from 2017
to 2023. Electronic banking includes all kinds of online/internet
transactions done for various purposes. It is the incorporation
of new technologies, to deliver enhanced customer services.
Customer convenience, higher interest rates, and technologically
advanced interface majorly drive the market. High security risk
of customer’s data hinders the market growth. Growth in
smartphone usage, increase in internet penetration among
consumers, and increasing technology and growth of developing
economies in Asia-Pacific region are some of the key factors,
which are fuelling the market growth.

19. E-Commerce -
E-commerce (electronic commerce) is the buying
and selling of goods and services, or the transmitting of funds
or data, over an electronic network, primarily the internet.
These business transactions occur either as business-to-business
(B2B), business-to-consumer (B2C), consumer-to-consumer or
consumer-to-business. The terms e-commerce and e-business
are often used interchangeably. The term e-tail is also
sometimes used in reference to the transactional processes for
online shopping.
Types Of E- Commerce -
Business-to-business (B2B)
E-commerce refers to the electronic
exchange of products, services or information between
businesses rather than between businesses and consumers.

20. Business-to-consumer (B2C)
It is the retail part of e-
commerce on the internet. It is when businesses sell products,
services or information directly to consumers.
Consumer-to-consumer (C2C)
It is a type of e-commerce
in which consumers trade products, services and information
with each other online.
Consumer-to-business (C2B)
It is a type of e-commerce in
which consumers make their products and services available
online for companies to bid on and purchase.
Business-to-administration (B2A)
It refers to transactions
conducted online between companies and public administration
or government bodies

21. E-banking in India
In India, since 1997, when the ICICI Bank
first offered internet banking services, today, most new-
generation banks offer the same to their customers. In fact, all
major banks provide e-banking services to their customers.
Popular services under e-banking in India
 ATMs (Automated Teller Machines)
 Telephone Banking
 Electronic Clearing Cards
 Smart Cards
 EFT (Electronic Funds Transfer) System
 ECS (Electronic Clearing Services)
 Mobile Banking
 Internet Banking
 Telebanking
 Door-step Banking

22. Further, under Internet banking, the following services are
available in India:
Bill payment –
Every bank has a tie-up with different utility
companies, service providers, insurance companies, etc. across the
country. The banks use these tie-ups to offer online payment of
bills (electricity, telephone, mobile phone, etc.).
Funds transfer –
A customer can transfer funds from his account
to another with the same bank or even a different bank, anywhere
in India. He needs to log in to his account, specify the payee’s
name, account number, his bank, and branch along with the
transfer amount.

23. Investing –
Through electronic banking, a customer can open a
fixed deposit with the bank online through funds transfer.
Shopping –
With an e-banking service, a customer can
purchase goods or services online and also pay for them using
his account. Shopping at his fingertips.

24. Internet Banking Strategies –
E-banking strategy has become an alternative if modern
financial institution. E-banking strategy that considers factor
such a customer demand, competition, expertise,
implementation expense, maintenance costs, and capital
support has become competitive edge of modern successful
financial institution.
Some institution may choose not to provide e-banking
services or to limit e-banking services to an informational
website.
Understanding e-banking important for several stakeholder,
not least of which is management of banking related
organisations, since it help derive benefit for it.

25. The internet as a channel for service delivery is different from
other channel such as branch networks, telephone banking or
Automated teller machines. Therefore, it brings up unique type
of challenges and requires innovation solution.
Bank have already implemented or are planning to implement
e-banking strategy because of the numerous potential benefits
associated with it.
Internet banking has evolved into a “one step service and
information unit” that promises great benefit to both bank and
consumers.
E-banking achieve the 24 hour availability strategy with lower
error rate and quick financial services.

26. Risks of E-Banking
Operational Risk -
Operation risk or transactional risk is the most common type of
risk of e-banking. It includes:
Incorrect transaction processing
Compromises in the integrity of data, data privacy, and
confidentiality
Unauthorized access to the bank’s systems
Non-enforceability of contracts, etc.
Security Risk
When we talk about banking transactions, security of the
transaction is of paramount importance. All customers want their
transactions to be confidential.
However, since all information is online, there is always a chance
that someone might retrieve the information and misuse it.

27. Reputational Risk
For any business, its reputation is of critical importance. When
it comes to electronic banking, if a bank fails to perform critical
functions or not work according to the expectations of its
customers, then it faces a risk of loss of reputation. This
eventually leads to a loss of funding or customers.
Legal Risk
Whenever there is a violation of laws, regulations, or prescribed
practices, or when the legal rights and obligations of any of the
parties to a transaction are not established, then there is a legal
risk involved.
Money Laundering Risk
All transactions through the e-banking channel are done
remotely. Therefore, it is difficult for banks to use traditional
methods to detect and prevent criminal activities.

28. Cross-border Risks
The core idea of electronic banking is to extend the
geographical reach of both banks as well as customers. This
means that the expansion can go beyond national borders. This
leads to several cross-border risks.
Strategic Risk
This risk is associated with issues pertaining to:
 The development of a business plan
 In the case of outsourced activities, the credibility of the
vendor
 For employees, any change in the work environment
 Level of technology used in comparison with the available
technology, etc.

29. Other Risks
The other risks of e-banking are the same as those of
traditional banking like credit risk, liquidity risk, interest rate
risk, market risk, etc. However, in e-banking, these risks are
magnified due to the use of electronic channels and the
absence of geographical boundaries.

30. Payment and settlement systems in India -
Payment and settlement systems in
India are payment and settlement systems in India for
financial transactions. They are covered by the Payment and
Settlement Systems Act, 2007 (PSS Act), legislated in
December 2007 and regulated by the Reserve Bank of
India and the Board for Regulation and Supervision of
Payment and Settlement Systems.
Electronic Clearing Service (ECS Credit)
Known as "Credit-push" facility or one-to-many facility this
method is used mainly for large-value or bulk payments where
the receiver's account is credited with the payment from the
institution making the payment. Such payments are made on a
timely-basis like a year, half a year, etc.

31. Electronic Clearing Services (ECS Debit) -
Known as many-to-one or "debit-pull" facility this method is used
mainly for small value payments from consumers/ individuals to big
organizations or companies. It eliminates the need for paper and
instead makes the payment through banks/corporates or
government departments. It facilitates individual payments like
telephone bills, electricity bills, online and card payments and
insurance payments.

32. RTGS –
Real-time gross settlement The acronym 'RTGS' stands for real
time gross settlement. The Reserve Bank of India (India's
Central Bank) maintains this payment network. Real Time Gross
Settlement is a funds transfer mechanism where transfer of
money takes place from one bank to another on a 'real time' and
on 'gross' basis. This is the fastest possible money transfer system
through the banking channel. Settlement in 'real time' means
payment transaction is not subjected to any waiting period. The
transactions are settled as soon as they are processed. 'Gross
settlement' means the transaction is settled on one to one basis
without bunching with any other transaction.

33. National Electronic Funds Transfer (NEFT) -
National Electronic Fund Transfer (NEFT) system is a
nationwide system that facilitates individuals, firms and
corporates to electronically transfer funds from any bank
branch to any individual, firm or corporate having an account
with any other bank branch in the country. It is done via
electronic message.
Unified Payments Interface (UPI)
UPI is an instant real-time payment system developed by India
facilitating inter-bank transactions. The interface is regulated
by the Reserve Bank of India and works by instantly
transferring funds between two bank accounts on a mobile
platform

34. Conclusion –
Now a days, the nature of banking operation is modern
one. The scope of banking business is very wide. Technology
plays a very essential role in banking operation. E-Banking is the
electronic banking which gives a faster services to customers and
saves the time. E-Commerce is electronic commerce which
includes the online trading. A customer of a bank can transfer an
amount from one bank to other through RTGS and NEFT
system

35. References -
Modern banking of India- O.P.Agarwal-Himalaya
publication- 2nd edition.
Banking theory, Law And Practice-E.Gordon & Natrarajan-
Himalaya publishing house