Electronic banking, also known as e-banking, allows customers to conduct financial transactions electronically using the internet or other electronic channels without visiting a brick-and-mortar branch. E-banking first emerged in the 1920s and grew in popularity through the 1960s with electronic funds transfers and credit cards. It is now estimated that 40% of banking transactions are conducted online. Technologies that have enabled e-banking include ATMs, online and mobile banking, telephone banking, and smart cards. E-banking offers benefits like convenience, lower costs, and increased customer relationships but also faces challenges around technology adoption, costs, and security concerns.

1. Electronic Banking On The Rise
Presented by
Abdul Qayoom
Source:
Pakistan Economist
(Tariq Ahmed Saeedi)

2. E-
BANKING
Banking done electronically is electronic
banking. In other words, it is the
products and services provided by the
banks by using the electronic media or
internet.

3. History Of E-Banking
„ E-Banking made its debut in UK and USA
during 1920s. It became prominently
popular during 1960s through electronic
funds transfers and credit cards. The
concept of Web-based banking came into
existence, in Europe and USA in the
beginning of 1980s. It has been estimated
that 40 percent of banking transactions
would be done through net at present..

4. Technology Commencement
in Banking
„ In 70’s, banks started to establish centralized data
processing centers.
„ Essentially the roles of these data processing centers
are:
ƒ collect the handwritten documents from branches
ƒ compile the documents
ƒ manual data entry by the operators
ƒ generate reports for the bank staff and the central
bank
ƒ execute some banking transactions

5. Branch Automation
„ In 80’s, banks started technology investments for the
branches.
„ The first step is offline branches.
„ Terminals connected to local branch computer
„ Second step is online branches connected centrally.
Most of the transactions started to be performed in the
central mainframe.

6. Product Based Banking
„ In the mid-1980s, banks accepted product based banking and
competed with their products.
„ Banks developed new products for their customers.
ƒ Credit card
ƒ Credit deposit account (Super Account)
ƒ Debit cards
„ Beside branch, banks brought new channels to give better service
to their customers.
ƒ ATM
ƒ POS (Point of sale)
ƒ IVR

7. Plastic Cards
„ The plastic card usage grown enormously in last 2
decade.
„ Plastic card became the main media for bank customers.
„ Number of credit card in Pakistan:
Credit Card Type National Cards International Cards Total
Visa 1,200,704 7,043,834 8,244,538
MasterCard 488,881 4,820,965 5,309,846
Other 13,599 36,884 50,483
total 1,703,184 11,901,683 13,604,867
data collected from BKM

8. ATM
„ In the mid-1980s, that cash dispensers truly became
a worldwide phenomenon.
„ Now,ATM became the electronic face of banking for
most customers.
„ Beside cash withdrawal, there exist various
transaction options from transfer to fund
buying/selling.

9. Alternative Delivery
Channels
Anytime, anywhere banking
–Telephone Banking
–Internet Banking
–Mobile Banking
–Television banking
–Next ???

10. Telephone Banking
„ 7x24 banking through the phone
„ Main components
ƒ Switch
ƒ IVR
ƒ CTI(Computer Telephony Integration)
‚ Manage each call using the computer
‚ Pop up the user information while transferring the call

11. Internet Banking
• More and more banks are coming to realize that internet is a part of banks'
alternative delivery channel strategies activities concentrated in the business-to-
consumer segment, focused on retaining clients
• In Internet banking, security is a primary concern. Security concerns have been
addressed from every angle within the architecture of the Internet banking
application.
Sample Internet Banking Architecture

12. Mobile Banking
„ Current Mobile Banking Applications:
ƒ SMS Banking
ƒ WAP Banking

13. SMS Banking
„ Basic banking inquiry transactions(balance inquiry, funds, exchange
rate inquiry…) are performed by the cooperation of bank and the
GSM operator
„ Security is the main problem

14. WAP Banking
„ Wireless application protocol (WAP) is an application
environment and set of communication protocols for
wireless devices designed to enable manufacturer-,
vendor-, and technology-independent access to the
Internet and advanced telephony services.
„ WAP is a global standard and is not controlled by any
single company
„ Various banking transactions offered in WAP
environment by banks.
„ Similar architecture with SMS banking

15. Smart Cards
„ About the size of a credit card, a smart card is a plastic card with an
embedded microchip that can be loaded with data, used for telephone
calling, electronic cash payments, and other applications, and then
periodically "recharged" for additional use.
„ Benefit of smart cards:
ƒ enhanced security
ƒ off line transaction
ƒ programmable card
‚ loyalty
‚ customer information

16. Rising Trend of E-Banking in
Pakistan
„ Electronic banking (e-banking) and branchless
banking transactions continued to show growth
momentum as both the volume and value of
these transactions displayed a rising trend in the
country during the last quarter of the fiscal year
(FY2008-09).

17. „ According to the Fourth Quarterly Report on
“Branchless Banking/ Electronic Banking,” the
volume and value of e-banking/ branchless
banking transactions in the country reached at
44.5 million and Rs 3.9 trillion respectively
showing an increase of 11.1 percent in number
and 7.8 percent in value as compared to 6.5
percent increase in number and 11.4 percent
increase in value in the previous quarter of FY09
(Jan-March 2009).

18. „ During the fourth quarter (April-June) of FY09,
the volume and value of online banking
transactions in the country reached at 13.7
million and Rs 3.7 trillion respectively showing a
growth of 10.8 percent in numbers and 7.4
percent increase in value as compared to 14.8
percent increase in numbers and 11.7 percent
increase in value in the previous quarter.

19. BENEFITS OF E-
BANKING
„ Any time banking
„ Any where banking
„ Cash free banking
„ Reduction in Cost of transaction
„ Easy to make utility payments
„ On-line purchases
„ Competitive advantage
„ Unlimited network
„ Lesser work load
„ Lesser chances of fraud & misappropriation
„ Better profitability
„ Better customer relationship

20. Drawbacks
„ Difficult in the adoption of technology
„ Fear of technology
„ High cost of technology
„ Lack of preparedness
„ Restrictions on usage of technology