e-

banking

OVERVIEW

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 INTERNET BANKING (E-BANKING) IS THE
LATEST IN THIS SERIES OF TECHNOLOGICAL
WONDERS IN THE RECENT PAST INVOLVING USE OF
INTERNET FOR DELIVERY OF BANKING PRODUCTS &
SERVICES.

 Why e-Banking?
 Important banking projects these days -such as Internet
Banking, easily come in this price range.
 ATMs (Automated teller machine)
 24 hour account access
 Easy online applications for all accounts, including personal
loans and mortgages

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THE SIX PRIMARY DRIVERS OF INTERNET
BANKING IN ORDER OF PRIMACY ARE:
 Improved customer access
 Facilitate the offering of more services
 Increased customer loyalty
 Attract new customers
 Provide services offered by competitors
 Reduce customer attrition

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 FACTS TO KNOW

 Throughout the country, the Internet Banking is in the nascent

stage of development (only 50 banks are offering varied kind of
Internet banking services).
 In general, these Internet sites offer only the most basic
services. 55% are so called 'entry level' sites, offering little more
than company information and basic marketing materials. Only
8% offer 'advanced transactions' such as online funds transfer,
transactions & cash management services.
 Foreign & Private banks are much advanced in terms of the
number of sites & their level of development.

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 EMERGING CHALLENGES

 Demand pressure due to increasing access to low cost electronic

services.
 Growing customer awareness and need of transparency.
 Global players in the fray
 Close integration of bank services with web based E-commerce
or even disintermediation of services through direct electronic
payments (E- Cash).
 More convenient international transactions due to the fact that
the Internet eliminate geographic boundaries.

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STRATEGIES TO BE ADOPTED BY INDIAN BANKS

 For long term success, a bank must follow:

 Adopting a web mindset

 Catching on the first mover's advantage

 Recognizing the core competencies

 Ability to deal multiplicity with simplicity

 Senior Management’s initiative to transform the
organization from inward to outward looking

 Acquiring new capabilities through strategic alliances.

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INTERNET BANKING IN INDIA

(A) In June 2001 banks were advised to seek prior approval of

Reserve Bank of India before offering transactional services
on the Internet. The position has since been reviewed and
RBI has advised on 20th July 2005, that while the offering of
Internet Banking services will continue to be governed by
the provisions of the above circular, no prior approval of the
Reserve Bank of India will be required by banks for offering
Internet Banking services.

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 Banks should, however, ensure compliance with the
(B)following conditions:

The Internet Banking policy must be approved by the
Bank’s Board.

 The policy fits into the bank's overall IT and

Information Security policy and ensures confidentiality of
records and security systems.
 The policy takes into account operational risk.

 The policy clearly lays down the procedure to be

followed in respect of "Know Your Customer"
requirements,
The policy broadly meets the parameters laid down in the
earlier circular.

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NEW BANKING OPTIONS

 Automated teller machine (ATMs) De La Rue

developed the first electronic ATM, which was installed first
in Enfield Town in North London on June 27, 1967 by
Barclays Bank

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 NEW BANKING OPTIONS

 Electronic funds transfer-point of sales terminals

 Installed at Airlines, Hotels, Railways, Super bazaar

etc.

No need to carry cash.

Security features of personal identification number

(PIN).

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 NEW BANKING OPTIONS

 Electronic funds transfer system

 Computerized clearing of cheques
 Electronic clearing service (ECS)
 Credit cards/Debit cards
 Electronic pass book
 Home banking
 Corporate electronic banking
 Anywhere banking
 Tele banking
 Banking through internet

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 APPLICATIONS OF E-BANKING

 Product and services.

 Business to business applications.
 Retail banking
 Advisory services through branches.
 Payment services.

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 EXAMPLES
 For the Lucas-TVS staff in Chennai, the online payment
of shipping bills is now a hassle-free job. With a mouse click,
the company saves transaction time and cuts down on costs
 Software enterprise Polaris has backed up its huge
retail network and supply chain with e-banking facilities. Bills
from vendors are processed online thrice a month. The cash
surplus gets automatically re-allocated overnight, explains a
finance department official from Polaris, adding that e-banking
has reduced the cost of logistics.
 Marico made headway in online banking with the launch
of ‘e-collections’ this August. The scheme entails the online
transfer of funds from distributors, instead of cheque
collections. Online collections will definitely reduce the cost of
cash management services

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 EXAMPLES

 The Bank of Punjab Ltd (BoP), with 135 banking offices is

expanding its e-banking facilities, namely - Internet banking, e-
alerts, kiosks, ATMs and mobile banking, mobile wallet, family e
banking, and e-payment direct debit. The bank bas started
processing of retail loans application forms through the Internet.

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 PROBLEMS FACED BY INTERNET BANKING

 Customers resistances.

 Expenses incurred on advertisement.

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 THANK YOU

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