Lovely pandey

1
PROJECT REPORT
ON
“E-Banking”
FOR THE PARTIAL FULFILLMENT OF
MASTER OF COMMERCE
SUBMITTED TO: SUBMITTED BY:
Dr. Sunil Kumar Batra LOVELY PANDEY
S.M.J.N(PG) COLLEGE M.COM-IV SEMESTER
HARIDWAR, UTTRAKHAND ROLL.NO.19325322026
ENRL.NO. G163120049
S.M.J.N(PG)COLLEGE HARIDWAR
HEMWATI NANDAN BAHUGUNA GARHWAL UNIVERSITY
(A CENTRAL UNIVERSITY)
SRINAGAR GARHWAL, UTTRAKHAND, INDIA
SESSION
2019-21

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DECLARATION
I hereby declare that the project report titled “E-Banking” is submitted by me to
S.M.J.N (P.G) College Haridwar for the partial fulfillment of the degree of
master of commerce.
I further declare that this project report or any part there has not been submitted
previously to any university for the award of degree or diploma or tittle or
recognition before and that it represents the original work done by me.
LOVELY PANDEY
M.COM-IV SEMESTER
ROLL.NO.19325322026
ENRL.NO. G163120049

3
ACKNOWLEDGEMENT
The completion of the study would have been not possible if not dependent on
the steadfast support and encouragement of my parents and friends. They hence
paid equal contribution to the study for which I always feel profound gratitude
in my heart.
My special thanks to my teacher Dr. M.M Gupta, Dr. T.S Tomer, Dr. Shiv
Kumar Chauhan, Dr. M.K Sohi, Dr. Lata Sharma, SMT. Rinkal Goel, Dr. Ritu
Choudhary, Smt. Richa Minocha, Miss Nivindhya Sharma, Mr. Vivek
Mittal,Mr. Ankit Aggarwal, Smt. Shakshi Aggarwal, Miss Sugandha Verma,
Smt. Kavita Chhabra, Smt. Nimisha Sharma & Mr. Vaibhav Batra.
I am thankful and wish to acknowledge to help provided by library staff and
computer lab staff of S.M.J.N (P.G) College.
First and foremost, I would like to thank Dr. Sunil Kumar Batra. Principal head
of Dept. of commerce S.M.J.N (P.G) College, Haridwar, U.K, for their
assistance, ideas and feedbacks during the process in doing this project reports.
Without their guidance and support, this project report cannot be completed on
time.
LOVELY PANDEY
M.COM-IV SEMESTER
ROLL.NO.19325322026
ENRL.NO. G163120049

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CERTIFICATE
This is to certify that this project work titled “E-Banking” has been completed
by Aastha Anand of class M.com IV semester 2017-2019 batch and as
information and declaration given by the candidate, this is her own effort in my
belief.
Dr. Sunil Kumar Batra
S.M.J.N (P.G) College
Haridwar U.K.

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Sr.
No.
Contents Page
No.
E-Banking In India
1. Intoduction of E-Banking In India
1.1 Introduction 1
1.2 Definition 2
1.3 Scope of E-Banking 3
1.4 Objectives of E-Banking 4
1.5 What is E-Banking 5
1.6 Evolution of E-Banking
1.6.1 Reasons of E-Banking Evolution
1.7 Need For E-Banking
1.8 History of E-Banking
1.9 Why is E-Banking Important
1.9.1 Choice And Convenience For Customers
Attracting High Value of Customers
Enhanced Image
Increased Revenue
Easier Expansion
Load Reduction on Other Channels
Cost Reduction
Organizational Efficiency
1.10 E-Marketing
1.11 Features Of E-Banking
1.12 Usage Of E-Banking
1.13 Global View Of E-Banking

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2. Risk, Security, Benefits, Challenges, Swot Of E-
Banking
6
2.1 Risk In E-Banking
Transactional or Operational Risk
Credit Risk
Reputional Risk
Compliance or Legal Risk
Strategic or Legal Risk
6
2.2 Security Measures 7
2.3 Security Problems 9
2.4 Security Precautions
2.5 Benefits of E-Banking
Benefits to Consumers
Benefits to Banking Industry
2.5.3 Benefits to General Economy
2.6 Challenges and Opportunities
2.7 SWOT ANALYSIS
2.8 E-Banking to E-Commerce
3. Products of E-Banking
3.1 Online Banking
Features and Benefits of E-Banking
Disadvantages of E-Banking
3.2 Mobile Banking
Advantages of Mobile Banking
Reserve Bank has brought out a set of operating guidelines
for adoption by Banks
3.3 Tele Banking
3.3.1 Features and Benefits of E-Banking

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3.4 Automated Teller Machine(ATM)
Benefits of ATM
Disadvantages of ATM
3.5 Debit Card
Advantages of Debit Card
Disadvantages of Debit Card
3.6 Credit Card
Advantages of Credit Card
Disadvantages of Credit Card
3.7 Potential Area Where E-Banking Used
4. Scenario,How E-Banking Ease your life and
Internet Banking v/s Traditional Banking
4.1 Indian Scenario
The Entry of Indian Bank into Net Banking
Product and Services Offered
4.2 Future Scenario
4.3 How E-Banking Ease Your Life
4.4 Internet Banking v/s Traditional Banking
5. INTRODUCTION TO BANK OF BARODA
5.1 INTRODUCTION

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5.2 HISTORY
5.3 E-BANKING IN BARODA
5.4 CASE STUDY OF E-BANKING
6. CONCLUSION DATA ANALYSIS
APPENDIX
BIBLOGRAPHY
6.1 CONCLUSION
6.2 DATA ANALYSIS
6.3 APPENDIX
6.4 BIBLOGRAPHY

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An Introduction On E-Banking
Introduction:
Electronic banking is an umbrella term for the process by which a customer
may perform banking transactions electronically without visiting a brick-and-
mortar institution. The following terms all refer to one form or another of
electronic banking: personal computer (PC) banking, Internet banking, virtual
banking, online banking, home banking, remote electronic banking, and phone
banking. PC banking and Internet or online banking are the most frequently
used designations. Customers access e-banking services using an intelligent
electronic device, such as a personal computer (PC), personal digital assistant
(PDA), automated teller machine (ATM), kiosk, or Touch Tone telephone.
This allows customers to do their banking outside of bank hours and from
anywhere where Internet access is available. In most cases a web browser
such as Internet Explorer or Mozilla Firefox is utilized and any normal
Internet connection is suitable. No special software or hardware is usually
needed.
Like any other business you have to select a bank that has a good
reputation and that’s very important because you will be providing them
with your account number and password. It is also advisable to save or
print any transaction done on your behalf.
Online banking isn't out to change your money habits. Instead, it uses today's
computer technology to give you the option of bypassing the time-consuming,
paper-based aspects of traditional banking in order to manage your finances
more quickly and efficiently.

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Definition:
E-banking is defined as the automated delivery of new and traditional banking
products and services directly to customers through electronic, interactive
communication channels. E-banking includes the systems that enable financial
institution customers, individuals or businesses, to access accounts, transact
business, or obtain information on financial products and services through a
public or private network, including the Internet. Customers access e-banking
services using an intelligent electronic device, such as a personal computer
(PC), personal digital assistant (PDA), automated teller machine (ATM),
kiosk, or Touch Tone telephone. While the risks and controls are similar for the
various e-banking access channels, this booklet focuses specifically on
Internet-based services due to the Internet’s widely accessible public network.
Accordingly, this booklet begins with a discussion of the two primary types of
Internet websites: informational and transactional
Our e-banking and e-commerce solutions facilitate integration with a variety of
electronic delivery channels, like ATM, tele-banking, Internet and mobile banking,
and call centre operations. And our development efforts have helped us design
popular e-Banking products such as eTreasury, eBankWorks and eHelpdesk, an
Internet-based assistance tool.
The flexibility of our business offerings provides our banking clients the
choice of engaging us right through to implementation, or only up to a particular
stage, or to even proceed from wherever another consultant may have left off.
The considerable experience that we bring to the table makes our highly

12
regarded implementation and integration expertise available to your
organization. And we focus on the functional perspective rather than on the
information system.
Electronic banking, also
known as electronic funds transfer (EFT), is simply the use of electronic means
to transfer funds directly from one account to another, rather than by cheque
or cash. You can use electronic funds transfer to:
•Have your paycheck deposited directly into your bank or credit union checking
account
•Withdraw money from your checking account from an ATM machine with a
personal identification number (PIN), at your convenience, day or night.
•Instruct your bank or credit union to automatically pay certain monthly bills
from your account, such as your auto loan or your mortgage payment.
•Have the bank or credit union transfer funds each month from your checking
account to your mutual fund account.
•Have your government social security benefits check or your tax refund
deposited directly into your checking account.
•Buy groceries, gasoline and other purchases at the point-of-sale, using a
check card rather than cash, credit or a personal check.
•Use a smart card with a prepaid amount of money embedded in it for use
instead of cash at a pay phone, expressway road toll, or on college campuses
at the library's photocopy machine or bookstores.

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•Use your computer and personal finance software to coordinate your total
personal financial management process, integrating data and activities related
to your income, spending, saving, investing, record keeping, bill-paying and
taxes, along with basic financial analysis and decision making .
Evolution of E-Banking :
There have been significant developments in the e-financial services sector in the
past
30 years. According to Devlin (1995), until the early 1970s functional
demarcation was predominant with many regulatory restrictions imposed.
One main consequence of this was limited competition both domestically
and internationally. As a result there was heavy reliance on traditional
branch based delivery of financial services and little pressure for change.
This changed gradually with deregulation of the industry during 1980s and
1990s, whilst during this time, the increasingly important role of information
and communication technologies brought stiffer competition and pressure for a
faster pace of change. The Internet is a relatively new channel for
delivering banking services. Its early form ‘online banking services’, requiring
a PC, modem and software provided by the financial services vendors, were
first introduced in the early 1980s. However, it
failed to get widespread acceptance and most initiatives of this kind were
discon- tinued. With the rapid growth of other types of electronic services
since mid 1990s, banks renewed their interest in electronic modes of delivery
using the Internet. The bursting of the Internet bubble in early 2001 caused
speculation that the opportunities for Internet services firms had vanished. The
“dot.com” companies and Internet players struggled for survival during that

14
time but e-commerce recovered from that shock quickly and most of its
branches including e-banking have been steadily, and in some cases
dramatically, growing in most parts of the world. One survey conducted by
the TechWeb News in 2005 (TechWeb News, 2005) found e-banking to be
the fastest growing commercial activity on the Internet. In its survey of
Internet users, it found that 13 million Americans carry out some banking
activity online on a typical day, a 58 percent jump from late 2002. The
spread of online banking has coincided with the spread of high-
speed broad- band connections and the increasing maturation of the Internet
user population. Another factor in e-banking growth is that banks have
discovered the benefits of e-banking and have become keener to offer it as an
option to customers.
1.5 Features of "e-banking":
You can do all of your banking 24 hours a day, seven days a week.
Internet banking is simply a means of providing Customers with
more bankingchoices.
Many of the transactions you do over-the-counter can now be
done on the Internet, on a computer, in your home - or anywhere else in the
world.
E-banking provides a range of convenient online banking services.
Transaction History - an online list of your transactions with a
convenient sea
r
choption.
Bill payment provider.
Pay all your bills online.
Pay Anyone - transfer funds to any account.

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Security Measures And Benefits of E-Banking
Fraud or Risk in "e-banking"
Some customers avoid online banking as they perceive it as being too to
fraud. The security measures employed by most banks are never 100% safe,
but in practice the number of fraud victims due to online banking is very
small. Indeed, conventional banking practices may be more prone to abuse by
fraudsters than online banking. Credit card fraud, signature forgery vulnerable
and identity theft are far more widespread "offline" crimes than malicious
hacking. Bank transactions are generally traceable and criminal penalties for
bank fraud are high. Online banking can be more insecure if users are
careless, gullible or computer illiterate. An increasingly popular criminal
practice to gain access to a user's finances is phishing, whereby the user is in
some way persuaded to hand over their password(s) to a fraudster.
However, management should consider additional precautions when originating
and approving loans electronically, including assuring management information
systems effectively track the performance of portfolios originated through e-
banking channels.
Security Measures:
Protection through single password authentication, as is the case in most secure
Internet shopping sites, is not considered secure enough for personal online
banking applications in some countries. Online banking user interfaces are
secure sites (generally employing the https protocol) and traffic of all

16
information - including the password - is encrypted, making it next to impossible
for a third party to obtain or modify information after it is sent. However,
encryption alone does not rule out the possibility of hackers gaining access
to vulnerable home PCs and intercepting the password as it is typed in (key
logging). There is also the danger of password cracking and physical theft of
passwords written down by careless users.
Many online banking services therefore impose a second layer of security.
Strategies vary, but a common method is the use of transaction numbers, or
Tans, which are essentially single, use passwords. Another strategy is the use
of two passwords, only random parts of which are entered at the start of every
online banking session. This is however slightly less secure than the TAN
alternative and more inconvenient for the user. A third option, used in many
European countries and currently being trialled in the UK is providing
customers with security token devices capable of generating single use passwords
unique to the customer's token (this is called two-factor authentication or
2FA). Another option is using digital certificates, which digitally sign or
authenticate the transactions, by linking them to the physical device (e.g.
computer, mobile phone, etc). While most online banking in the United States
still uses single password protection, the FDIC has issued regulations requiring
that banks implement more secure authentication mechanisms by the end of the
year 2006.
Security Problems:
Internet security is still one of the major issues hindering the growth of
Internet related trade. Owing to the structure and intention of the Internet
to be an open network, financial transactions may involve high security
risks. Internet frauds are common, and related stories get immediate media

17
attention, making people hesi- tant to bank online. Different security methods
(for both hardware and software) are being tested and employed
continuously but there is still some way to go to win the trust of many
customers. E-banking managers need to be aware of new security threats as
well as new methods of combating those threats to stay on top of this
challenge. Managing information security is a very complex issue.
2.3 Security Precautions
Security Precautions
Customers should never share personal information like PIN numbers,
passwords etc with anyone, including employees of the bank. It is important
that documents that contain confidential information are safeguarded. PIN or
password mailers should not be stored,
the PIN and/or passwords should be changed immediately and memorized
before destroying the mailers.
Customers are advised not to provide sensitive account-related information over
unsecured e-mails or over the phone. Take simple precautions like changing
the ATM PIN and online login and transaction passwords on a regular basis. Also
ensure that the logged in session is properly signed out.
Benefits of e-banking
In recent time E-banking has spread rapidly all over the globe. All Banks
are making greater use of E-banking facilities to provide batter service and
to excel in competition. The spread of E-banking has also greatly benefited
the ordinary customer in general and corporate world in particular. The
following points summarize benefits of

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E-Banking.
Benefits to Consumers:
General consumers have been significantly affected in a positive manner by
E-banking. Many of the ordinary tasks have now been fully automated
resulting in greater ease and comfort.
• Customer’s account is extremely accesses able with an online account.
• Customer can withdraw can at any time through ATMs that are now widely
available throughout the country.
• Beside withdrawing cash customers can also have mini banks statements,
balance inquiry at these ATMs
• Through Internet banking customer can operate his account while sitting in
his office or home. There is no need to go to the bank in person for such
matter.
• E banking has also greatly helped in payment of utility bill. Now there is no
need to stand in long queues outside banks for his purpose.
• All services that are usually available from the local bank can be found on a
single website.
• The Growth of credit card usage also owes greatly to E-banking. Now a
customer can shop world wide without any need of carrying paper money with
him.

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• Banks are available 24 hours a day, seven days a week and they are only
a mouse click away.
Benefits to Banking Industry:
Banking industry has also received numerous benefits due to growth of E-
Banking infrastructure. There are highlighted below:
• The growth of E-banking has greatly helped the banks in controlling their
over heads and operating cost
• Many repetitive and tedious tasks have now been fully automated resulting in
greater efficiency, better time usage and enhanced control.
• The rise of E-banking has made banks more competitive. It has also led to
expansion of the banking industry, opening of new avenues for banking
operations.
• Electronic banking has greatly helped the banking industry to reduce paper
work, thus helping them to move the paper less environment.
• Electronic banking has also helped bank in proper documentation of their
records and transactions.
• The reach and delivery capabilities of computer networks, such as the Internet,
are far better than any branch network.

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Benefits to General Economy:
Electronic Banking as already stated has greatly serviced both the general public
and the banking industry. This has resulted in creation of a better enabling
environment that supports growth, productivity and prosperity. Besides many
tangible benefit in form of reduction if cost, reduced delivery time, increased
efficiency, reduced wastage, e-banking electronically controlled and thoroughly
monitored environment discourage many illegal and illegitimate practices
associated with banking industry like money laundering, frauds and
embezzlements. Further E-banking has helped banks in better monitoring of
their customer base. This it is a useful tool in the hand of the bank to device
suitable commercial packages that are in conformity with customer needs. As e
banking provide opportunity to banking sector to enlarge their customer base,
a consequence to increase the of volume of credit creation which results in
better economic condition, Besides all this E-banking has also helped in
documentation of the economic activity of the masses.

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E-banking in India - Challenges and Opportunities
E-banking is a generic term for delivery of banking services and products
through electronic channels, such as the telephone, the internet, the cell phone,
etc. The concept and scope of E-banking is still evolving. It facilitates an
effective payment and accounting system thereby enhancing the speed of
delivery of banking services considerably. While E-banking has improved
efficiency and convenience, it has also posed several challenges to the
regulators and supervisors. Several initiatives taken by the government of India, as
well as the Reserve Bank of India (RBI), have facilitated the development of E-
banking in India. The government of India enacted the IT Act, 2000, which
provides legal recognition to electronic transactions and other means of electronic
commerce. The RBI has been preparing to upgrade itself as a regulator and
supervisor of the technologically dominated financial system. It issued
guidelines on risks and control in computer and telecommunication system to
all banks, advising them to evaluate the risks inherent in the systems and put
in place adequate control mechanisms to address these risks. The existing
regulatory framework over banks has also been extended to E- banking. It covers
various issues that fall within the framework of technology, security standards,
and legal and regulatory issues.

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E-Banking Product Provided By Banks
TYPES OF E-BANKING PRODUCTS PROVIDED BY BANKS
1] ONLINE BANKING
2] MOBILE BANKING
3] TELE BANKING
4] AUTOMATED TELER MACHINE (ATM)
5] DEBIT CARD
6] CREDIT CARD
Online banking:
Since the internet has become a popular place to buy and sell goods, online
banking services have made their way into most homes. Easier to pay bills,

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manage money, and transfer money to other accounts, internet banking is a
convenient way to handle money. Many employers now have direct deposit,
which makes it easier to put money into one's account. No more trips to the bank
every day. The money is in the account the night before and is available for
use on next morning. Most banks now offer some type of banking services on
the net.
Features & benefits
1] Account services :
You can now access up to date information on your accounts, ANYWHERE,
ANYTIME. Complete account details like account balance, monthly
statements, uncleared funds or cheque status is available for your Savings
account and Current account.
2] Funds Transfers & Payments:
Transfer funds instantly within your accounts or to any third party account in
Barclays.
You can also leave standing instructions for frequent / periodic transfers.
3] Requests
Request a cheque book or give stop payment instructions.
4] Bill Payments
Our Bill Payment facility allows you to pay your utility bills online, at

24
you
r convenience.
5] Other Services
Services (Secure Mail box and Bulletins).
6] Protection Cover
As a personal customer, you are fully protected against third party fraud
when banking using Barclays Online Banking/mobile banking. You will not
suffer any loss if money is taken from your account without your
permission provided you have not acted fraudulently or negligently.
7] Security
Admittedly, such a service requires complete privacy protection and security
of the highest nature. We provide a completely secure environment, using
128-bit encryption SSL (Secure Sockets Layer), digitally certified by Verisign.
128-bit SSL guarantees world-class security for Internet and e-commerce
applications.
Disadvantages
The world has come from far and we are every day digging into the
unknown, what was unthinkable then is now a practice. Today, you can bank
right from the comfort of you home and benefits come with it. However,
though internet banking is such a good and desirable innocent, it has some
disadvantages as listed;

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1] Setting up an account may take time:
In order to register for your bank's online program, you will probably have
to provide ID and sign a form at a bank branch. Some banks even ask for photos
2] Legal issues:
If you and your spouse wish to view and manage your assets together
online, one of you may have to sign a durable power of attorney before the
bank will display all of your holdings together.
3] Learning difficulties:
Banking sites can be difficult to navigate at first. Getting acquitted with the
banking sites software may require some time to read the tutorials in order
to become comfortable in your virtual lobby.
4] Site changes and upgrades:
Even the largest banks periodically upgrade their online programs, adding
new features in unfamiliar places. In some cases, you may have to re-enter
account information.
5] Customer service:
There is no personal contact with any of the staff, and if talk to any staff through
the telephone, you have guarantee you are talking to the best person available
6] Internet account:
You need to get an account with an Internet Service Provider (ISP)
which may be another hectic experience
7] Security concern:
Even though online banking sites are heavily encrypted, with the developing

26
technology, it’s hard to rule out the "hackers" who may access your bank
accounts
8] Switching banks:
This can be more cumbersome online than in person
9] Money usage:
You can’t spend your money from the online bank account as you wish,
in the end; you will need to go to an ATM to withdraw money for usage.
MOBILE BANKING:
Advantages Of Using Mobile Banking Through Cell Phone
Mobile banking through cell phone is really catching up. Now you can
access your account, transfer funds or make payments with your mobile.
Mobile connectivity is vast and this makes mobile banking very successful.

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Advantages of Mobile Banking
Mobile banking through cell phone offers many advantages for customers as
well as banks. Some of them are as follows:-
1] Mobile banking has an edge over internet banking. In case of online
banking, you must have an internet connection and a computer. This is a
problem in developing countries. However, with mobile banking, connectivity
is not a problem. You can find mobile connectivity in the remotest of places
also where having an internet connection is a problem.
2] You can make transactions or pay bills anytime. It saves a lot of time
3] Mobile banking thorough cell phone is user friendly. The interface is also
very simple. You just need to follow the instructions to make the
transaction. It also saves the record of any transactions made.
4]. Cell phone banking is cost effective. Various banks provide this facility
at a lower cost as compared to banking by self.
5] Banking through mobile reduces the risk of fraud. You will get an SMS
whenever there is an activity in your account. This includes deposits, cash
withdrawals, funds transfer etc. You will get a notice as soon as any amount
is deducted or deposited in your account.
6] Banking through cell phone benefits the banks too. It cuts down on the
cost of tele- banking and is more economical.

28
7] Mobile banking through cell phone is very advantageous to the banks
as it serves as a guide in order to help the banks improve their customer care
services.
8] Banks can be in touch with their clients with mobile banking.
9] Banks can also promote and sell their products and services like credit
cards, loans etc. to a specific group of customers.
10] Various banking services like Account Balance Enquiry , Credit/Debit
Alerts, Bill Payment Alerts, Transaction History, Fund Transfer Facilities,
Minimum Balance Alerts etc. can be accessed from your mobile.
11] You can transfer money instantly to another account in the same bank
using mobile banking.
Mobile banking has become really popular owing to the convenience that it
gives its customers. You can access your account, pay bills, and make cash
transfers through cell

29
phone banking. It offers many benefits over internet banking and
banking in person. With the wide range of mobile connectivity, mobile
banking through cell phone can be accessed by anyone.
Pros of Mobile Banking:
1] Three ways to connect from your phone.
Arising from the need to accommodate the limitations of different cell
phones, banks are trying to offer a connection to meet most models. The
typical method to access your banking information is via a web browser on
those phones with Internet surfing
capability. You would log on in the same way as when using your computer.
For those phones without Internet capability, some banks provide special
software that you can download onto your phone. Other banks offer balance
information via text messaging.
How you access your banking information is really is a matter of cell phone
compatibility.
2] Accounts number are not displayed over wireless cell phone
When you log into your account from your cell phone you will not be
asked for account information and once you access your account the number is
not visible. Such precautions make it less likely (although not impossible) for your
sensitive financial information to bebre ached by hackers.

30
3] The servers of most banks are encrypted for wireless transactions.
Although safety does vary from bank to bank, if handled correctly, wireless
transactions can actually be more secure than wired or landline
connections due to the use of encrypted servers—though, again, there is no
guarantee.
4] Mobile banking is generally offered free by your bank.
Most banks are not charging their customers additional fees for this service.
However, your cell phone bill will increase due to Internet usage. Some
mobile banking programs also allow customers to pay their bills from their
phone. In this regard, the service might actually be less expensive than online bill
payment programs.

31
Reserve Bank has brought out a set of operating guidelines
for adoption by banks.
1] For the purpose of these Guidelines, “mobile banking transactions” is
undertaking banking transactions using mobile phones by bank customers that
involve credit/debit to their accounts. It also covers accessing the bank accounts
by customers for non-monetary transactions like balance
enquiry etc.
2] Regulatory & Supervisory Issues
 Only banks which are licensed and supervised in India and have a
physical presence in India will be permitted to offer mobile banking
services.
 The services shall be restricted only to customers of banks and holders of
debit/credit cards issued as per the extant Reserve Bank of India guidelines.
 Only Indian Rupee based domestic services shall be provided. Use of
mobile banking services for cross border transfers is strictly
prohibited.
 Banks may also use the services of Business Correspondent appointed
in compliance with RBI guidelines, for extending this facility to their
customers.
 The guidelines issued by the Reserve Bank on ‘Risks and Controls in
Computers and Telecommunications’ vide circular DBS.CO.ITC.BC.

32
10/ 31.09.001/ 97-98 dated 4th February 1998 will apply mutatis
mutandis to mobile banking.
 The guidelines issued by Reserve Bank on “Know Your Customer (KYC)”,
“Anti Money Laundering (AML)” and combating the Financing of
Terrorism (CFT) from time to time would be applicable to mobile based
banking services also.
 Only banks who have implemented core banking solutions would be
permitted to provide mobile banking services.
 Banks shall file Suspected Transaction Report (STR) to Financial
Intelligence Unit
– India (FID-IND) for mobile banking transactions as in the case of
normal banking transactions.
3. Registration of customers for mobile service
 Banks shall put in place a system of document based registration with
mandatory physical presence of their customers, before commencing
mobile banking service.
 On registration of the customer, the full details of the Terms and Conditions
of
the service offered shall be communicated to the customer.

33
4. Technology and Security Standards
 Information Security is most critical to the business of mobile banking
services and its underlying operations. Therefore, technology used for
mobile banking must be secure and should ensure confidentiality,
integrity, authenticity and non- repudiability. An illustrative, but not
exhaustive framework is given at Annex-I.
5. Inter-operability
 Banks offering mobile banking service must ensure that customers having
mobile phones of any network operator is in a position to avail of the
service. Restriction, if any, to the customers of particular mobile
operator(s) is permissible only during the initial stages of offering the
service, up to a maximum period of six months subject to review.
 The long term goal of mobile banking framework in India would be to
enable funds transfer from account in one bank to any other account
in the same or any other bank on a real time basis irrespective of the
mobile network a customer has subscribed to. This would require inter-
operability between mobile banking service providers and banks and
development of a host of message formats. To ensure inter-operability
between banks, and between their mobile banking service provider’s
banks shall adopt the message formats like ISO 8583, with suitable
modification to address specific needs.

34
6. Clearing and Settlement for inter-bank funds transfer transactions
 To meet the objective of a nation-wide mobile banking framework,
facilitating inter-bank settlement, a robust clearing and settlement
infrastructure operating on a 24x7 basis would be necessary. Pending
creation of such a national infrastructure, banks may enter into bilateral
or multilateral arrangement for inter- bank settlements, with express
permission from Reserve Bank of India, wherever necessary.
7. Customer Complaints and Grievance Redressal Mechanism
 The customer /consumer protection issues assume a special significance
in view of the fact that the delivery of banking services through
mobile phones is relatively new. Some of the key issues in this regard
are given at Annex-II.
8. Transaction limit
 A per transaction limit of Rs. 2500/- shall be imposed on all Mobile
Banking transactions. Subject to an overall cap of Rs. 5000/- per day,
per customer.
 Banks may also put in place monthly transaction limit depending on the
bank’s own risk perception of the customer.
9. Board approval
 Approval of the Board of Directors (Local Board in case of foreign
banks) for the product as also the related security policies must be
obtained before launching the scheme.

35
10. Approval of Reserve Bank of India
 Banks wishing to provide mobile banking services shall seek prior one time
approval of the Reserve Bank of India, by furnishing full details of the
proposal.
TELE BANKING
Introduction
Telebank helps track and control finances, all from the comfort of home or
office. Designed to save time and money, Telebank allows 24 hour access to
bank accounts via the telephone. You can access current balances, transfer
money between accounts, and much more. It is safe
and secure…and free! United Bank of India offers Tele-
Banking Services to its Retail Customers. The IVR (Interactive Voice Response)
supports three languages Hindi, English & Bengali. The facility is available
for Savings, Current, Cash Credit, Overdraft, Deposit and Loan accounts.

36
FEATURES AND BENEFITS OF TELEPHONE BANKING
 With balance and basic account enquiries
 Order cheque and paying-in books
 Stop a cheque
 Set up, cancel and amend standing orders
 Order foreign currency and traveler’s cheques
 Transfer money between your business and personal accounts
 Order copies of your statements and change the date you receive them
 With information on business products and services
Automated teller machine

37
Introduction
A wallet-sized plastic Automatic Teller Machine (ATM) card linked to your
bank account makes financial transactions a breeze by eliminating the waste of
writing checks or the dangers of carrying large sums of cash. Also known
as a debit card, ATM cards benefit both consumers and the banking
institution where they originated.
On most modern ATMs, the customer is identified by inserting a plastic
ATM card with a magnetic or a plastic smart card with a chip, that contains a
unique card number and
some security information such as an expiration date or CVVC (CVV).
Authentication is provided by the customer entering a personal identification
number (PIN). The newest ATM at Royal operates without a card to
withdraw cash up to £100. The customers should register first their mobile
phone number and bank will give a six-digit code to enter into ATM to
withdraw the cash.[1]
Using an ATM, customers can access their bank accounts in order to make
cash withdrawals, debit card cash advances, and check their account balances
as well as purchase prepaid cell phone credit. If the currency being withdrawn
from the ATM is different from that which the bank account is denominated
in (e.g.: Withdrawing Japanese Yen from a bank account containing US
Dollars), the money will be converted at an official wholesale exchange. Thus,
ATMs often provide one of the best possible official exchange rates for
foreign travelers, and are also widely used for this purpose.

38
BENEFITS OF ATM:
Benefits for Consumers
Use an ATM card to keep accurate records of banking transactions. Monthly
statements, usually available online or printed and mailed, itemize each transaction
made with the card. This benefit leads to fewer accidental overdrafts, and provides
a visual record of spending habits, unlike using cash. Transactions are processed
quickly with an ATM card. Sliding the card is faster than writing a check,
more accurate than paying with cash (since change can be miscounted), and
makes some transactions quicker. For example, using an ATM card at a gasoline
pump eliminates the hassle of standing in line in a convenience store to
complete the sale. After a quick swipe and approval, a receipt is often printed
at the gas pump for user convenience. ATM cards are usually free, according to
Merchant's State Bank. Unlike checks, many financial institutions do not charge
their customers for an ATM card.
Benefits for Businesses
When consumers use ATM cards to pay for purchases, funds are deposited quickly
into the business account. In as little as 48 hours, businesses will have access to
money from ATM card transactions. Checks can take up to seven days to clear,
putting a hold on accessible funds. Business owners pay to offer the convenience
of credit card transactions for their customers. For each transaction, a small
percentage is paid to the credit card company as a convenience fee. ATM card
transactions are a win-win for both the businesses that accept the ATM card and
the consumer. When consumers pay retailers with an ATM card, the

39
business owner doesn't have to pay a fee. And, consumers don't have to
pay interest or annual fees when using an ATM card, like they would with use
of a credit card.
Benefits for Travel
When you're trying to pack light, leave the checkbook and stack of paper
money at home. One simple ATM card can pay for purchases with funds
directly withdrawn from your checking account. The small card is simple to
tuck in a small purse or in a snug pocket. When cash is needed, get a
better exchange rate in foreign countries by using an ATM card. Foreign
ATM machines offer users access to the wholesale exchange rate, which is
often less expensive than paying service fees when exchanging cash or
travelers checks in a foreign bank or currency exchange office.
Disadvantages of Automatic TellerMachines
Automated teller machines, or ATMs, are machines that function like
bank tellers, allowing customers to perform basic banking functions, such as
making deposits, making withdraws and shifting money between different
accounts. In place of identification, bank members use personalized debit
cards to access their holdings. There are a number of disadvantages to these
machines.
Security
Unlike bank tellers, ATMs do not require the person

40
performing the transaction to present a picture identification. Rather, the
person must only insert a bank card and enter a personal identification
number. If the bank card is stolen and the number ascertained, an
unauthorized person can easily access the account.
Inability to Perform Complex Transactions
ATMs can only perform relatively basic transactions. This
means that people who need to complete these longer transactions will be
forced to use the teller, restricting use of the ATM for people who need to
complete simple business. In this sense, the ATM Is rather like the express
line in a supermarket--faster for some, but unavailable to others.
Fees
With the advent of ATMs came ATM fees. Not only do banks
of which you are not a member charge fees for the use of their ATMs,
but users are often charged surreptitious fees by their own banks for using
other banks' ATMs--meaning the customer is docked twice for the same
transaction.
Privacy
Unlike banks, in which security guards and tellers are present to
ensure the person performing a transaction receives privacy, there is no such
guarantee when using an ATM. People may try to spy on users as delicate
information appears on the screen, without the user being aware.
Difficulty of Use
The performance of business at an ATM is generally quicker than that

41
at a human teller. However, the ATM is incapable of providing personalized
instruction to the user in a way that a human teller can. This can result in longer
wait times if the user currently using the machine is struggling to complete a
transaction.
Eating a Card
Occasionally, ATMs will malfunction and swallow a user's ATM card.
The customer will then be directed to contact a service number or their bank and
wait for a repair technician to retrieve this card. While this happens only rarely,
if it occurs on a weekend or at night, the user may be left to wait for several
days before they can again use their card, something that would not happen with
a human cashier.
Debit card:
3.5.1 Introduction
A debit card (also known as a bank card or check card) is a plastic card
that provides the cardholder electronic access to his or her bank account(s) at a
financial institution. Some cards have a value with which a payment is made,
while most relay a message to the cardholder's bank to withdraw funds from
a designated account in favor of the payee's designated bank account. The card
can be used as an alternative payment method to cash when making purchases.

42
In some cases, the primary account number is assigned exclusively for use on the
Internet and there is no physical card.[1][2]
In many countries, the use of debit cards has become so widespread that
their volume has overtaken or entirely replaced cheques and, in some instances,
cash transactions. The development of debit cards, unlike credit cards and
charge cards, has generally been country specific resulting in a number of
different systems around the world, which were often incompatible. Since the
mid 2000s, a number of initiatives have allowed debit cards issued in one
country to be used in other countries and allowed their use for internet and
phone purchases.
Unlike credit and charge cards, payments using a debit card are immediately
transferred from the cardholder's designated bank account, instead of the
them paying the money back at a later date.
Debit cards usually also allow for instant withdrawal of cash, acting as the
ATM card for withdrawing cash. Merchants may also offer cash back
facilities to customers, where a customer can withdraw cash along with their
purchase.
Advantages of debit cards
 Obtaining a debit card is often easier than getting a credit card. If you
qualify to open a bank account, you can usually get a debit card.
 Unlike when you write a check, using a debit card saves you from
having to show identification or give out personal information at the time

43
of the transaction.
 It frees you from carrying cash or a checkbook.
 It can save you from having to stock up on traveler's checks or cash
when you travel.
 Debit cards may be more readily accepted than checks, especially in
other states or countries.
 If you return merchandise or cancel services paid for with a debit card,
the transaction will be treated as if it were made with cash or a check.
Customers usually get cash back for on-line purchases; for off-line
transactions, the amount is credited to your account.
 Most ATMs will allow you to get a cash advance against the line of
credit on your credit card, using your credit card and a separate PIN.
You do not necessarily have to have a bank account to do this.
Disadvantages of debit cards
 Unlike a credit card, debit card transactions give you no grace period. They
are a quick, pay-now deal.
 They can make balancing your account tricky if you are not fastidious
about keeping receipts and recording transactions in a timely fashion.
It is easy to forget, for example, when you pay at the gas pump with
a debit card and drive off without your receipt.

44
 Using a debit card may mean you have less protection than you would
with a credit card for goods that are never delivered, are defective or
were misrepresented. But, as with credit cards, you can dispute
unauthorized charges or other mistakes within 60 days. Contact your bank
if a problem with a merchant cannot be resolved.
 Fees -- The convenience can be costly, especially when using an ATM that is
not affiliated with your bank.
3.6.1 Introduction
A credit card is a payment card issued to users as a system of payment. It
allows the cardholder to pay for goods and services based on the holder's
promise to pay for them.
[1]
The issuer of the card creates a revolving account and grants a line of
credit to the consumer (or the user) from which the user can borrow
money for payment to a merchant or as a cash advance to the user.
A credit card is different from a charge card: a charge card requires the
balance to be paid in full each month.[2]
In contrast, credit cards allow the
consumers a continuing balance of debt, subject to interest being charged. A
credit card also differs from a cash card, which can be used like currency

45
by the owner of the card.
The size of most credit cards is 85.60 × 53.98 mm (33
/8 × 21
/8 in),[3]
and
conform t
o the ISO/IEC 7810ID-1 standard. Credit cards have an embossed
bank card number complying with the ISO/IEC 7812numbering standard.
Advantage of credit cards:
1. They allow you to make purchases on credit without carrying around a
lot of cash. This allows you a lot of flexibility.
2. They allow accurate record-keeping by consolidating purchases into a
single statement.
3. They allow convenient remote purchasing - ordering/shopping online or by
phone. They allow you to pay for large purchases in small, monthly
installments.
4. Under certain circumstances,they allow you to withhold payment
for merchandise which proves defective.
4. They are cheaper for short-term borrowing - interest is only paid
on the remaining debt, not the full loan amount.
5. Many cards offer additional benefits such as additional insurance
cover on purchases, cash back, air miles and discounts on holidays.

46
Disadvantages:
1. You may become an impulsive buyer and tend to overspend because
of the ease of using credit cards. Cards can encourage the purchasing of
goods and services you cannot really afford.
2. Credit cards are a relatively expensive way of obtaining credit if you
don't use them carefully, especially because of the high interest rates and
other costs.
3. Lost or stolen cards may result in some unwanted expense and
inconvenience.
4. The use of a large number of credit cards can get you even further into debt.
5. Using a credit card, especially remotely, introduces an element of risk as
the card details may fall into the wrong hands resulting in fraudulent
purchases on the card. Fraudulent or unauthorized charges may take
months to dispute, investigate, and resolve.
3.7.1 Potential Areas Where E-Banking Is Successfully Used
Online bill payment: Internet banking is frequently used for tax payments, Bill
payments like of electricity, water, municipal and telephones. Many public sector
companies are offering online payment services, for e.g. MTNL, BSNL etc.
Indian Railways has started online reservation system for credit card and debit
cardholders. In coming future even persons having Internet bank account can
book seat online at ease of their home. Online brokerage: Strong financial markets
are always backbone of any economy. Through e- banking channels stock

47
trading can reach to the people who want to invest their money in financial
markets but due to time constraints they are not able to visit the broker. At
Asian tigers like Korea and Taiwan 30% of the stock trading is done online.
This will create more dynamic environment and there will be more choice
for small investor for his investment. The small investor is not only dependent
on government bonds or other fixed deposits schemes. Online Account
Management: Citizens can manage their account online. Anytime banking, it will
reduce the time delays and dependency on bank staff and timing of operations.
Anywhere banking: Citizen can deposit/withdraw their money anywhere in country
irrespective of the branch where their parent account is held. This will give
greater security for traveling business people to deposit money collected from
traders/clients. ATMs is another mode of anywhere banking, consumer can
use services of ATMs anywhere in country, reducing burden of carrying money
while traveling. Smart Card Solutions: Smart cards will give helpful in
bringing governmental services and banking more closer to people. Farmer
service centers are example of this initiative. Smart cards will be greater
flexibility to users reducing the frauds and malpractices what debit cards and
credit cards are not able to offer. On the other hand smart card can be used
as identification card for number of other services like driving license,
passport, election id card and other things. The application of online banking in e-
governance can explain by two real life case studies.

48
Scenario of E-Banking and How it ease your life
THE INDIAN SCENARIO
The entry of Indian banks into Net Banking
Internet banking, both as a medium of delivery of banking services and as a
strategic tool for business development, has gained wide acceptance
internationally and is fast catching up in India with more and more banks
entering the fray. India can be said to be on the threshold of a major banking
revolution with net banking having already been unveiled. A recent questionnaire
to which 46 banks responded, has revealed that at present, 11 banks in India
are providing Internet banking services at different levels, 22 banks propose to
offer Internet banking in near future while the remaining 13 banks have no
immediate plans to offer such facility.
At present, the total Internet users in the country are estimated at 9 lakh.
However, this is expected to grow exponentially to 90 lakh by 2003. Only
about 1% of Internet users did banking online in 1998. This increased to 16.7%
in March 2000.
The growth potential is, therefore, immense. Further incentives provided by banks
would dissuade customers from visiting physical branches, and thus get ‘hooked’
to the convenience of arm-chair banking. The facility of accessing their
accounts from anywhere in the world by using a home computer with
Internet connection, is particularly fascinating to Non-Resident Indians and
High Net worth Individuals having multiple bank accounts.

49
Products and services offered
Banks in India are at different stages of the web-enabled banking cycle.
Initially, a bank, which is not having a web site, allows its customer to
communicate with it through an e-mail address; communication is limited to a
small number of branches and offices which have access to this e-mail account.
As yet, many scheduled commercial banks in India are still in the first stage of
Internet banking operations.
With gradual adoption of Information Technology, the bank puts up a web-
site that provides general information on the banks, its location, services
available e.g. loan and deposits products, application forms for downloading
and e-mail option for enquiries and feedback. Customers are required to fill in
applications on the Net and can later receive loans or other products
requested for at their local branch.
Some of the more aggressive players in this area such as ICICI Bank Ltd., HDFC
Bank Ltd., UTI Bank Ltd., Citibank, Global Trust Bank Ltd. and Bank of
Punjab Ltd. offer the facility of receipt, review and payment of bills on-line.
These banks have tied up with a number of utility companies. The ‘Infinity’
service of ICICI Bank Ltd. Also allows online real time shopping mall
payments to be made by customers. HDFC Bank Ltd. has made e-shopping
online and real time with the launch of its payment gateway.
It has tied up with a number of portals to offer business-to-consumer (B2C)
ecommerce transactions. The first online real time e-commerce credit card
transaction in the country was carried out on the Easy3shoppe.com shopping

50
mall, enabled by HDFC Bank Ltd. on a VISA card.
The Future Scenario of E-banking in India
Compared to banks abroad, Indian banks offering online services still have a
long way to go. For online banking to reach a critical mass, there has to be
sufficient number of users and the sufficient infrastructure in place. The
‘Infinity’ product of ICICI Bank Ltd. gets only about 30,000 hits per month,
with around 3,000 transactions taking place on the Net per month through this
service. Though various security options like line encryption, branch connection
encryption, firewalls, digital certificates, automatic signoffs, random pop-ups and
disaster recovery sites are in place or are being looked at, there is as yet no
Certification Authority in India offering Public Key Infrastructure which is
absolutely necessary for online banking.
The communication bandwidth available today in India is also not enough to
meet the needs of high priority services like online banking and trading.
Some banks even today do not have uninterrupted power supply unit or
systems to take care of prolonged power breakdown. Proper encryption of data
and effective use of passwords are also matters that leave a lot to be desired.
Systems and processes have to be put in place to ensure that errors do not take
place.
The Department of Telecommunications (DoT) is moving fast to make
available additional bandwidth, with the result that Internet access will become
much faster in the future. This is expected to give a fillip to Internet banking in
India.

51
Reserve Bank of India has taken the initiative for facilitating real time funds
transfer through the Real Time Gross Settlement (RTGS) System. Under the
RTGS system, transmission, processing and settlements of the instructions will be
done on a continuous basis. Gross settlement in a real time mode eliminates
credit and liquidity risks. Any member of the system will be able to access it
through only one specified gateway in order to ensure rigorous access control
measures at the user level. The system will have various levels of security, viz.,
Access security, 128 bit cryptography, firewall, certification etc. Further,
Generic Architecture, both domestic and cross border, aimed at providing inter-
connectivity across banks has been accepted for implementation by RBI.
Following a reference made this year, in the Monetary and Credit Policy
statement of the Governor, banks have been advised to develop domestic generic
model in their computerization plans to ensure seamless integration. The
abovementioned efforts would enable online banking to become more secure and
efficient.
How e-banking can ease your life :
Penalty due to non-payment of bill is not new to anyone of us. And quite
obviously, who likes the long procedure of writing a cheque, standing in a long
queue and then ensuring that the particular amount is available in your bank
account?.
Indian banks are trying to make your life easier. Not just bill payment, you can
make investments, shop or buy tickets and plan a holiday at your fingertips.
In fact, sources from ICICI Bank [ Get Quote ] tell us, "Our Internet banking
base has been growing at an exponential pace over the last few years.
Currently around 78 per cent of the bank's customer base is registered for
Internet banking."
To get started, all you need is a computer with a modem or other dial-up

52
device, a checking account with a bank that offers online service and the
patience to complete about a one-page application--which can usually be
done online. You can avail the following services.
Bill payment service
Each bank has tie-ups with various utility companies, service providers and
insurance companies, across the country. You can facilitate payment of
electricity and telephone bills, mobile phone, credit card and insurance
premium bills.
To pay your bills, all you need to do is complete a simple one-time
registration for each biller. You can also set up standing instructions online to
pay your recurring bills, automatically. One-time standing instruction will
ensure that you don't miss out on your bill payments due to lack of time.
Most interestingly, the bank does not charge customers for online bill
payment.
Fund transfer
You can transfer any amount from one account to another of the same or
any another bank. Customers can send money anywhere in India . Once
you login to your account, you need to mention the payee’s account number,
his bank and the branch. The transfer will take place in a day or so,
whereas in a traditional method, it takes about three working days. ICICI
Bank says that online bill payment service and fund transfer facility have
been their most popular online services.
Credit card customers
Credit card users have a lot in store. With Internet banking, customers can
not only pay their credit card bills online but also get a loan on their

53
cards. Not just this, they can also apply for an additional card, request a
credit line increase and God forbid if you lose your credit card, you can
report lost card online.
Railway pass
The bank would just charge Rs 10 + 12.24 per cent of service tax. This
is something that would interest all the aam janta. Indian Railways has
tied up with ICICI bank and you can now make your railway pass for
local trains online. The pass will be delivered to you at your doorstep.
But the facility is limited to Mumbai [ Images ], Thane, Nashik, Surat
Investing through Internet banking
Opening a fixed deposit account cannot get easier than this. You can now
open an FD online through funds transfer. Online banking can also be a
great friend for lazy investors.
Now investors with interlinked demat account and bank account can easily
trade in the stock market and the amount will be automatically debited from
their respective bank accounts and the shares will be credited in their demat
account.
Moreover, some banks even give you the facility to purchase mutual funds
directly from the online banking system.
So you need not worry about filling those big forms for mutual funds, they
will now be just a few clicks away. Nowadays, most leading banks offer
both online banking and demat account. However if you have your demat
account with independent share brokers, then you need to sign a special form,
which will link your two accounts.

54
Recharging your prepaid phone
Now you no longer need to rush to the vendor to recharge your prepaid
phone, every time your talk time runs out. Just top-up your prepaid mobile
cards by logging in to
Internet banking. By just selecting your operator's name, entering your
mobile number and the amount for recharge, your phone is again back
in action within few minutes.
Shopping at your fingertips
Leading banks have tie ups with various shopping websites. With a range of
all kind of products, you can shop online and the payment is also made
conveniently through your account. You can also buy railway and air tickets
through Internet banking.
Internet banking v/s traditional method
In spite of so many facilities that Internet banking offers us, we still seem to
trust our traditional method of banking and is reluctant to use online
banking. But here are few cases where Internet banking will turn out to be a
better option in terms of saving your money.
'Stop payment' done through Internet banking will not cost any extra fees but
when done through the branch, the bank may charge you Rs 50 per cheque
plus the service tax.
Through Internet banking, you can check your transactions at any time of
the day, and as many times as you want to.
On the other hand, in a traditional method, you get quarterly statements
from the bank and if you request for a statement at your required time, it

55
may turn out to be an expensive affair. The branch may charge you Rs 25
per page, which includes only 30 transactions. Moreover, the bank branch
would take eight days to deliver it at your doorstep.
If the fund transfer has to be made outstation, where the bank does not have
a branch, the bank would demand outstation charges. Whereas with the help
of online banking, it will be absolutely free for you.
As per the Internet and Mobile Association of India's report on online
banking 2006, "There are many advantages of online banking. It is convenient,
it isn't bound by operational timings, there are no geographical barriers and
the services can be offered at a miniscule cost."
Case Study - Bank A Background
This case was developed from a research conducted by the one of
the authors of this book. For confidentiality reasons we call it Bank
A. The Bank A is one of the UK’s leading providers of personal
financial services and products It is a very innovative company and its
enthusiasm for new technologies means that it is in forefront of
providing financial services through its e-banking channel. It is one of the
medium sized banks in United Kingdom with over 400 branches
nationwide. Initially it was opened as a small building society and
remained so until World War One. Following the development boom of the
‘30s, the Bank A was able to expand rapidly and by mid nineteen thirties
it was the third largest building society in the country with assets of
over £38m. Growth continued during the 1940s and 50s. The 1960’s
saw the transformation of the Bank A into a modern financial
services institution, with the opening of a new dedicated administration
centre. By 1970, half of all UK families owned their own homes and

56
the strong demand for mortgages enabled the Bank A to establish
itself as a national building society, with high street branches in most
of England. The Bank A was one of the first financial institution to
network its branches, using countertop on-line terminals linked to the
central mainframe. Deregulation in the mid-1980s enabled building
societies to compete in many new areas that had previously been
the traditional preserve of the banks and insurance companies. The
Bank A took a lead in this through diversification into new areas. It
developed several subsidiary companies offering a wide range of services
including life assurance unit trusts, estate agency, insurance and
direct sales. Abroad, the Bank A has established it’s subsidiaries in many
European countries such as Italy, France and Germany. In late 1990s,
like any other building societies it floated in London Stock Exchange
to become a Public Limited Company
E-Banking at Bank A
Most of the financial services at the Bank A are designed to be accessible
through a variety of different channels such as branches, telephone, the
Internet, digital televisions and mobile phones. This means that many
customers (those with right equipment of course) have all-time access to their
finances. This gives a flexibility to customers to manage their finances
wherever they are, and whenever they want, instantly. Using any of the e-
Channels available at the Bank A, customers can view their current account and
saving accounts; view the balance/valuation of any Bank A account including
mortgage; savings, current account, personal loan, and unit trusts; pay bills;
arrange to pay bills or transfer funds on future dates up to six weeks ahead;
move money between their accounts and mortgage; change their pin; apply for

57
personal loans, new accounts or mortgages. To provide this kind of access
and flexibility, the Bank A continuously invested heavily in technology and
has gone through many organizational changes, which are discussed in a later
section.
Reasons for Participation in E-Commerce
Since becoming a PLC, Bank A’s strategy has been focused on adapting
to the new world of multiple distribution outlets beyond the traditional
branches network. The main reason behind this was top management’s
belief that winners will be those organizations which combine new
technologies with traditional business to provide integrated solutions which
meet customer needs Another reason was the fast changing environment
in the retail banking industry with new entrants, such as Egg and Smile
providing financial services using innovative business models and tech-
nologies. Relative maturity of Internet technologies meant provision of
convenient services (via Internet, mobile phones and iTV) to customers
was now more feasible with a promise of much lower transaction costs.
Taking these factors into account, the Woolwich decided to be an
innovation leader in the area of e-commerce rather than drag behind its
competitors.
Enhancement of the company’s image for both customers, as well as
investors, was another key objective. Increasing customer retention through
depth of relationship and service was also an important objective. Internet
technology was seen as a key enabler for this purpose because it can provide
rich information about customers, enabling the Woolwich to personalise financial
services according to the needs of the individual customers, thus enriching the
relationship and as a result achieving greater loyalty. Very early into the e-

58
banking implementation, they noticed that customers who have signed up to
Woolwich e-banking service are 65 per cent more profitable for the bank
because these channels were attracting high-income customers. They were also
getting customers from the remote areas of UK, where they had no penetra- tion
in past.
CSFs in E-commerce at the Bank A
E-banking has been a very successful initiative for the Woolwich winning
the approval of existing customers (many of them have signed up the online
banking channel) and
attracting new ones. The following is brief description of the factors which
were reported (by our research participants) to be critical to the success of e-
banking.
Understanding Customers
This factor has been seen as a key to success at the Bank A. They invested
heavily in relevant technologies, which enables them to gather and analyze
extensive customer information. At a basic level they used a systems called
QuickStream which helped them to analyze (by providing the record of
customer’s clicks in the form of a stream) customer’s behaviour during their
visit to the Bank A’s website. “This information is
very useful for both design and marketing purposes”, said the Manager for
Customer Support for e-Channels. They also used a software tool, called
‘Webtrend’, which records where people enter the home page and how they
navigate through it and how they leave the site. According to the e-
commerce En- hancement Manager, “This enables us to evaluate our
advertising campaigns as well as get continuous feedback on our services

59
and accessibility issues (design of website etc.)”. They also used a software
web- collaboration tool, which was a call agent that could see where a customer
is on their website. It could record how long they have been on each individual
page. Viewing this information on screen in real time, a sales agent could type in
a message on customers’ screen, offering help and advice. This initiative was
aimed at improving their customer services and increasing sales. This
combined with other factors has helped them expand current customer base by
acquiring new customers as well as enriching existing relationships.
Organizational Flexibility
The Bank A has changed considerably in terms of departmental structures and
business process in order to web-enable itself. There are new teams such as the
e-commerce development team, which they did not have before but also
other business processes behind that team have been significantly changed.
According to e-commerce Enhancement Manager “we did it the wrong way, the
re-engineering of business process followed the introduction of e-commerce
rather than other way round”. There are many processes which have now
been totally integrated and automated such as delivering check or deposit
books on customer’s request. Staff number has not reduced, instead their role has
changed and they all are very much geared towards sales. The ability to
focus on sales has resulted in 3.6 products held by each customer, which is
much higher than its competitors. This radical transformation from being a
mortgage centred building society to a customer focused and integrated bank
was another reason for its takeover by the Barclays. Bank A’s Principal
Technical Specialist, pointed out that “Barclays want to utilise the experience
of the Bank A’s managers to transform themselves in similar ways. That is
why there have been number of senior appointments within Barclays from
the Bank A’s staff.

60
Web-Specific Marketing
The Bank A is aware of the power and uniqueness of the Internet medium. The
Internet requires a different way of marketing to sell products. Their Manager
for Customers’ Support for e-Channels stated that, “e-Channels have opened
up a whole new way of communicating with customers and we have a
dedicated area within our marketing function that deals with the e-Channels.
This means that e- commerce has changed the way the marketing
department works in order to cope with new ways of marketing.
Now the focus is on understanding customers and using that understanding to
enrich relationships with them”. Their home website presents adverts on the
right hand side of the screen which keep asking customers about their
requirements for other financial services. If a customer clicks on any of
those advertisement windows, they are led to the relevant page. According to
e-commerce Enhancements Manager “from next year we’re going to start
tailoring advertisements to personalise them. For example, when a customer logs
into our system, we will be able to conduct a quick profile of his/her account,
look at what he/she hasn’t got with us and that’s what we would start
advertising”. This profil- ing ability is also likely to enable them to assess
the requirements of individual customers and offer services accordingly. The
main idea behind this is replacing high margin products with smaller margin
– multi-product relations with customers. The management believes that e-
banking is key to success in relationship marketing. So far this strategy has
resulted in 65% increase in the average income per e-banking customer.

61
Rapid Delivery of Services
E-commerce has raised people’s expectations regarding the time it takes
to deliver services. Whereas in past, people were ready to accept a couple of
day’s delay in funds transfer, now it has come down to real time. As indicated
by e-commerce Enhancement Manager “people move money between their
accounts and walk straight to the branch to draw it out. WAP service is
heavily used for this purpose on Saturdays”. People want other services
such as loan or mortgage approval quickly too. This demand for instant
services is becoming a critical success factor and the Bank A see it as an
opportunity to gain more business.
Integration
-banking will not drain into upgrading legacy systems. This architecture also
allows the Bank A to add new off-the-shelf systems to quickly increase the
capacity of the systems. Another aspect of integration is helping customers to
see the whole financial picture.
This means providing customers with information about all products with the
Bank A, analyzed and summarised on a single page. For example a customer
may have a current account, a saving account distributed into many pots,
mortgage and credit card with the Bank A. It would be useful for him to
know at a glance, his financial position to make informed decisions. Another
word used for this type of services is account aggregation. The Bank A
was one of the first bank to offer this kind of services to its customers.
Availability of Resource Instant delivery required extensive integration of
business processes and Informa- tion Systems (IS). One of their senior IT

62
Manager explained that, “the Bank A uses a middleware layer for integration of
different systems and channels.
This allows a host of different clients (front end systems) to access a whole
lot of back- end systems”. This middleware layer which provides common
interface to all existing systems, enables them add new systems quickly as
the interface has to be implemented

63
just once, to the middleware rather than to the all range of different
systems. In addition, said Head of e-commerce at the Bank A, “this
middleware enabled us to implement a component-based architecture. Tasks
such as checking accounts are available as business objects in the middleware
and can be used by all channels”. This makes the channels interchangeable and
allows the bank to add new channels or services without disrupting core services.
As shown in Figure 8.1 the middleware allows access to all services through
all channels. The downside is that if the middleware goes down, it can have
quite a lot of effect on all channels. The technology architecture shown in Figure
8.1. has enabled the Bank A to easily adapt its business model to the new
requirements of e-banking, without touching the legacy mainframes used in the
back-end environment. This ensures that the system will evolve over time and
the resources allocated for e
Availability of human and financial resources is critical in all types of projects. In
new technology projects such as e-banking, shortage of readily skilled
human resources can be a severe handicap. The Bank A got round this problem
by imple- menting a very intensive training programme for some carefully
selected members of the existing staff. As an example, their e-commerce
Enhancements Manager stated that “when we implemented Wireless
Application Protocol (WAP), there was no one in the country who knew about
the implementation of WAP technology for financial services so we
decided to send seven of our people to Helsinki for training. They were the
people who implemented WAP technology on their return from that training.
Where need dictated, people from other organizations such as Unisys were
also brought in”. Regarding financial resources, they did not have any
considerable problems as top management was firmly behind this project and
providing sufficient resources for uninterrupted progress.

64
Support from the Top Management
Support from the top Management is widely considered to be a key success factor
in technological projects (Turban et al., 2000). In the Bank A’s case, its chief
execu- tive at the time of implementation of project, worked out the open
plan, came up with finances for it and participated in day- to-day
implementation of the project. “Without his
absolute commitment we wouldn’t have done it” (e-commerce En- hancements
Manager).
Security
Security is a mentioned as very critical success factor by almost
everybody in e- banking field. In fact, lack of it, or consumers’ fears about
it, is one of the biggest obstacles in the growth of e-banking. The Bank A
uses highest levels of encryption to secure their system. Their
Analyst/Programmer further elaborated on this point by saying,

65
“we use secure layer technology which encrypts all of the information, from
a customer logging in or filling in an application form to storage and
feedback to the customer”.
Costs of this high level of security are very high but they see it as necessary evil.
Established Brand Name
Having an established brand name was also cited by many informants at the
Bank A as a critical success factor. The main reason for this given by most
informants was that, a household name such as the Bank A gives customers
added confidence to conduct business online. Other reasons may include their
previous positive ex- periences with the company and the non-substantial nature
of the online medium which makes trust in a well-known name even more
important than when more traditional channels are used.
Bank A’s approach to using their brand name to enhance trust in online
environment is well supported in e-commerce related literature. For
example, Turban et al. (2000) proposed branding as a transferable resource
across physical and social barriers to entry for customers in a new and
perceptibly daunting environment. The importance of brand factor is widely
recognised now and some virtual financial organizations are opening or
considering to open some high street branches to enhance their brands.
Having Multiple Channels
This factor is also related to the non-substantial nature of the online
medium. Most of the informants at the Bank A stated that e-banking by an
organization, which is also accessible through other channels such as branches
and phone banking, is most likely to successful in the long run. This is because

66
customers can use the most desirable channel suitable for task in hand. For
example, a customer may use the Internet for checking account balances or
transfer money between accounts but may ring in to settle a dispute or go
to a branch for a face to face discussion on complex matters such as
mortgages. To fully utilise multiple channels advantage, channel integration is
required which may include: sharing of business rules and other components
across channels, a common set of interfaces into core systems for use across all
channels, high quality customer-centred functionality across all channels, ability
to deliver all products and services through all channels and customer
services which are able to support all channels. The Bank A was very close
to these ideals for channels integration.
Fast Responsive Customer Service
There is usually higher expectation for customer service from the e-
Channels. Also, to support 24 hours e-Channels, customer service has to be
available 24 hours too. Before the arrival of e-commerce at the Bank A,
customer services were not available 24 hours a day. To meet these
expectations and requirements, support to customers has improved
considerably, with this all- time availability of customer services and
increased choice for customers to use whichever channel they wish to
use at any time. The technical help desk to solve technical problem
experienced by the customers’ support services helpdesk at the call
centres. According to the Bank A’s Technical Support Analyst “our aim is
to develop seamless integrated architecture that will allow the customer to
view, access and interact with the set of services that the Bank A is
offering and a few technical problems are preventing us from this ideal,
but we’ll get there soon”. To minimise these technical problems, every new

67
component has to be tested across numerous hardware and software
platforms resulting in very high testing costs. However, it is also a
necessity to reduce load on customer services and to reduce any
inconvenience to the customers.
Mixed Strategy for Selection of Vendors
In information technology projects, choice of vendors is generally an
important issue. Some companies go for a single vendor solution to ensure
easy integration whereas others chose best of breed products to find
products, which meet their requirements better. At the Bank A, they have
adopted a mixed strategy. They try to get most of the components from
Microsoft but where requirements dictate, they also get some components
from other vendors or develop themselves. They have a Microsoft
consultancy team operating within their headquarters and in many projects,
their expertise of Microsoft products is heavily utilised. Therefore, they try to
use Microsoft products as their first choice. Another reason for this may be the
easier integration of different components from same vendor.
Systematic Change Management
The Bank A paid special attention to this issue from beginning. They
consulted most of the employees on major decisions. E-banking was quite
aggressively promoted within the organization in a number of ways. First, they
made sure that every employee has access to the Internet. Second, they
encouraged them to open “open plan” accounts by putting
£100 in the accounts of those who did, so they can actually experience new e-
Channels. Third, when mobile phone banking was launched, they provided
everyone who wanted, with a mobile phone. Fourth, they put Internet

68
booths in branches so staff can experiment with it and promote it to the
customers. As stated by the Bank A’s Principal Technical Specialist, “changes
are communicated to the Bank A’s staff in weekly or monthly team talks,
where staff get a chance to discuss all aspects of a change. In addition
the company’s intranet and monthly newsletters are used for this purpose”.
This strategy helps make staff feel an important part of the change and eases
resistance to change. A major benefit of this strategy they experienced was
useful feedback, which was invaluable for improving services and system
interface. Another major benefit of promotion of e-commerce within the
organization was that most members of staff were willing to go along with the
changes it brought with it. Their Principal Technical Specialist stated that
“we’ve seen a massive change in technologies and work practices during the
last few years, active promotion of e-commerce helped us get the required
commitment from our people”.
General comments about Bank a’s E-Banking
They did not consider incentivising e-Services (i.e. cheaper loans or
higher interest rates on savings in the Internet accounts) was necessary to
attract customers to their new channels. The main reason cited by them for this
was that, their brand name, customer service and technological leadership
was enough for this purpose. Another reason cited
by their Customers Support Manager for e-Channels was that “we don’t
differentiate products for e-Channels because our main target is customers who
prefer a multi-channel solution rather than hunt for bargains from Internet only
banks”. While this may be true, in our opinion product differentiation
(offering higher value products on e-Channels) would attract even larger
numbers of customers because many of them expect this from e-Channels. Their

69
website design and operational functionality was a rare weak link in the
Bank A’s e-commerce approach. The following criteria was used for evaluation
of the Bank A and other websites: the homepage, online quotation, online
application, pricing information, clarity of explanations, ease of navigation, on site
resources, return visit incentives and overall ease of doing business. On many
occasions, the Bank A’s financial calculator was ‘down for upgrade’ and the table
of typical examples of their financial
products was just one long page and was difficult to read. Application forms
were also a touch too long and difficult to fill in. A positive aspect of
the Bank A’s website operations is that they are keeping it fairly fresh
with regular changes on a monthly basis to its look and feel. Another
area in which they can build on their existing successes is to broaden
the scope of their information gathering and analysing technologies across
all channels. Whereas it’s true that e-Channels are better suited to
this kind of activity, understanding customers’ interaction patterns with all
channels would be very useful as it would provide a fuller picture to be
utilised to further enhance their relationship with customers. The Bank A’s
attitude and approach to e- banking is very impressive. In the beginning, they
made the mistake of jumping on to e- banking without much plan- ning and
realisation of its organizational impacts. However they learnt from their
mistakes quickly and followed e-banking with the organizational changes
required for e-banking, such as the re-engineering of business processes and
some modifi- cations in the organization’s management structure to speed up
decision- making process.

70
CONCLUSION
While electronic banking can provide a number of benefits for customers and
new business opportunities for banks, it exacerbates traditional banking risks. Even
though considerable work has been done in some countries in adapting banking
and supervision regulations, continuous vigilance and revisions will be essential as
the scope of e-banking increases. In particular, there is still a need to establish
greater harmonization and coordination at the international level. Moreover, the
ease with which capital can potentially be moved between banks and across
borders in an electronic environment creates a greater sensitivity to economic
policy management. To understand the impact of e-banking on the conduct of
economic policy, policymakers need a solid analytical foundation. Without one,
the markets will provide the answer, possibly at a high economic cost.
Further research on policy-related issues in the period ahead is therefore critical.
Current scenario of E-banking
E-banking cannot only improve the access to finance,
particularly for S
M
E
Sbut also allows access to finance with better and
more competitive rates.
Uses online banking as new delivery tools to improve to access to
finance a
n
d
alleviate financial constraints

71
BIBLIOGRAPHY
Books:
Banking Finance & Service System
E-Banking
Website :
www.thefreedictionery.com
www.google.com
o http://kalyan-city.blogspot.in/2011/02/e-banking-
online-banking- advantages-of.html
o http://www.rediff.com/money/2006/nov/17mc.htm
o http://www.worldjute.com/ebank.html
o http://www.scribd.com/doc/21099962/Project-on-E-Banking
www.yahoo.com
o http://www.scribd.com/doc/19146199/ebanking

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