Dr.Ch.Seetha Ram Assistant Professor GIM,GU.

9848398080

Banking Technology Management Course Material

Introduction:

Introduction Banking in India as old as from 19 th century. Drive towards building of

large number of low value transactions. Multiple Products, channels of distribution, customer group. Rise of e-commerce in banking industry. Innovation with minimum branch dependence. Constitute Low cost Funds for banks. Sunday, April 10, 2011 3 Present scenario: Present scenario According to FICCI survey the retail banking industry to grow at an average of 15-20%. Retail credit has been growing at an average of 30% CAGR and deposits @ 25%. Market transformation into Sellers market from Buyers market. A 21% CAGR of sharp rise in interest income came from bank lending in 2008 . Fierce competition has led to innovative customer centric products. Base rate system implementation by RBI to facilitate customers with more favorable rates. Corporate governance : The need of the hour. Over the last 5 years retail assets has crossed more than 1,89,000 cr and expected to touch 5,75,000 cr by 2010 end. Sunday, April 10, 2011 4 Drivers of Retail Banking Growth: Drivers of Retail Banking Growth Behavioral factors Increased purchasing power of people. Available Tax benefits from govt. Increasing literacy levels and adaptability to technology. Nuclear families. Buy and Pay attitude rather than Save and buy attitude. Increased demand for dwelling units in urban areas. Macro economic factors Shift in the pattern of GDP from hitherto agriculture and manufacturing sector to services sector. Banks vying for housing finance.why? Growing proffessional investment opportunities in the market. Emergence of new sectors in economy. Sunday, April 10, 2011 5 Industry response to change: Industry response to change Any where, Any time Banking Improved processes/Bundled product offerings Faster service/Reduced TATs Customer specific products/offerings on a regular basis Bank customer has replaced Branch customer Focus on understanding customer needs/ preferences Segmentation/Differentiation of customers Customer driven strategies Building relationships Sunday, April 10, 2011 6 Emerging issues in Indian Retail Banking: Emerging issues in Indian Retail Banking KYC. Technology issues. Organizational alignment. Product Innovation. Price Bundling approach. Business process reengineering(BPR). Effective human resource. Rural orientation. Sunday, April 10, 2011 7 Favorable role of RBI:

Favorable role of RBI Inclusion of housing loans within priority sector. Reduction of risk weightage in case of housing loans from 100% to 50%. Reduction in CAR up to 9%. Introduction of base rate system to provide favorable rates to customers. Using CRR and SLR as tools to control bank credit. Sunday, April 10, 2011 8 Catalyst role of Govt: Catalyst role of Govt Tax exemptions by govt for payment of interest on capital borrowed for housing loans. No TDS for Recurring deposits. Tax exemption under 80c in case of Life insurance premiums. MF investments under ELSS is also exempted from tax. Sunday, April 10, 2011 9 Challenges faced by Indian Retail banking: Challenges faced by Indian Retail banking Issue of money laundering. Issue of outsourcing. Isn't KYC a big challenge? Sustaining customer loyalty. Technology induced threats. Acute shortage of manpower talent. NPA reduction. Avoiding Debt Trap for customers. Bringing rural masses into the purview of retail banking. Sunday, April 10, 2011 10 Strategies for increasing Retail banking Business: Strategies for increasing Retail banking Business Constant product innovation. Quality service and reduction of TAT. Introduction of new delivery channels. Tapping of unexploited potential. Infrastructure outsourcing. Market research, cross sell and up sell. Tie ups to become One stop financial supermarket. TBTF organizations to be more big. Sunday, April 10, 2011 11 Key Players analyzed: Key Players analyzed Robust growth shown by SBI and ICICI and major banks grew at a rate of 13.8%. Growth wise report shown in percentage. Sunday, April 10, 2011 12 Global scenario: Global scenario Sunday, April 10, 2011 13 What the industry has to offer?: Savings Bank A/c and Current A/c & FD A/c No Frills A/c Internet Banking. Phone Banking. Mobile Banking. Cheque Truncation system. Kiosks, POS Terminals. Demat services, MF distribution services, Insurance products. Consumer loans , Home loans, Vehicle loans. Loans against Shares, Insurance policies. What the industry has to offer? Sunday, April 10, 2011 14 Future of Indian retail Banking?: Retail banking sector to grow at a rate of 30%. Direct agricultural loans of bank are worth Rs 17,239 cr towards end of March 2010. All banks are having an -5.02% growth rate in retail income due to inflation and recession effect. Share of retail income in total income of major banks. Future of Indian retail Banking? Sunday, April 10, 2011 15

Centralized Banking System in India:

The need for implementation of the CBS is as old as the Hills ! The revolutionary influence of Science & Technology has been felt everywhere . The modern technology grows more sophisticated enabling automatic control . Far behind are those times when a correct and efficient control had been found by trial-and-error approach . Now that the losses due to possible errors may cost too much while the respective correction will be too expensive which are no longer such as to improve anything , the CBS is a sigh of relief helping to spare time , efforts ,resources and avoidance of blunders . Scales of Business Ventures and their aftermath effects spread dramatically with the CBS PROCESSES called the 5*M - Approach delivered in judicious fashion . The comprehensive list of Menus under the CBS is provided hereunder. 1. CASH MENU 2.INVENTORY MENU 3.BACK OFFICE MENU 4.CUSTOMER RELATIONSHIP MENU 5.HOT ITEMS ENQUIRY 6.ABNORMAL LIMITS MENU 7.CLEARING MENU 8.DEPOSITS MENU 9.FOREX MENU 10.ANYWHERE MENU 11. MODULE ADMINISTRATION MENU 12.WORKFLOW MENU 13.PAYSYSTEM MENU 14.ONLINE SERVICE MENU 15.FINANCE AT BRANCH MENU 16.TRADE FINANCE MENU 17.DEBIT CARD MANAGEMENT MENU 18.COUNTRYWISE EXPOSURE REPORT MENU 19.BILLS EVENTS HISTORY MENU 20.VILLAGE MASTER MAINTENANCE MENU 21.ZEROISATION PROCESS MENU 22.SELF-HELP-GROUP MAINTENANCE MENU 23.BLACK LIST MAINTENANCE MENU 24.LOANS MODELLING MENU 25.SUSPECT TRANSACTION MENU 26.TREASURY MAINTENANCE MENU 27.STOCKS & INVESTMENTS MENU 28. LOANS DEMAND GENERATION MENU.

Commercial Banking:
Commercial Banking Technology in Indian Banking PGP I (2007-09) April, 2008 Commercial Banking Technology in Indian Banking 2007 2 Electronic Banking ATMs Head Office Branch Banking Branch 1 Branch 2 Branch 3 Branch 4 Branch 5 Branch 6 Branch n

Glossary in E-Banking : Commercial Banking Technology in Indian Banking 2007 3 Glossary in EBanking ALPM Advanced Ledger Posting Machine Micro processor based electronic device used for maintenance of primary ledgers, working out products and interests at periodical intervals, preparation of account statements and listing of standing instructions to be executed in the accounts. Glossary-2 : Commercial Banking Technology in Indian Banking 2007 4 Glossary-2 BANKNET A communication software to provide message and file transfer between branches of banks and across banks CRM Customer Relationship Manage-ment is an information technology industry term for methodologies, strategies, software, and other web-based capabilities that help an enterprise organise and manage customer relationships. Glossary-3 : Commercial Banking Technology in Indian Banking 2007 5 Glossary-3 DBMS Database Management System A set of computer programs that controls the creation, maintenance, and utilisation of the databases of an organisation E-Commerce is conducting business communications and transactions viz computers over networks. It is the buying and selling of goods and services through digital communication Glossary-4 : Commercial Banking Technology in Indian Banking 2007 6 Glossary-4 SWADHAN Indias first Shared Payment Network Service (SPNS) offering countrywide access to banking operations at more than 1,000 ATMs in and around 64 cities. It has 55 member banks in the network which includes public, private and foreign banks. Touch Screen recognises human touch. Users can point to the select something on the screen

E-BANKING DEVELOPMENTS:
Commercial Banking Technology in Indian Banking 2007 7 E-BANKING DEVELOPMENTS ALPMs and Back Office Computerisation NEED TO IMPROVE CUSTOMER SERVICE RECONCILIATION / UNION PROBLEMS ADVENT OF PC IN 1980s COMPETITION AND REFORMS INTRODUCTION OF COMPUTERISATION CLEARING HOUSES, ATMs, ELECTRONIC FUND TRANSFERS, BANKNET, SWIFT, ELECTRONIC MAIL, CREDIT CARDS, ONLINE BANKING, TELE-BANKING, ETC Committees on Computerisation in Banks in India 1982-1995 : Commercial Banking Technology in Indian Banking 2007 8 Committees on Computerisation in Banks in India 1982-1995 1. Working Group to consider feasibility of introducing MICR / OCR Technology for Cheque processing (1982) Convenor : Dr Y B Damle, Advisor, Management Services Department, RBI

Committees on Computerisation : Commercial Banking Technology in Indian Banking 2007 9 Committees on Computerisation 2. Committee on Mechanisation in the Banking Industry (1984) Chairman : Dr C Rangarajan, Deputy Governor, Reserve Bank of India Committees on Computerisation : Commercial Banking Technology in Indian Banking 2007 10 Committees on Computerisation 3. Committees on Communication Network for Banks and SWIFT implementation (1987) Chairman : Shri TNA Iyer, Executive Director, RBI Committees on Computerisation : Commercial Banking Technology in Indian Banking 2007 11 Committees on Computerisation 4. Committee on Computerisation in Banks (1988) Chairman : Dr C Rangarajan, Deputy Governor, RBI Committees on Computerisation : Commercial Banking Technology in Indian Banking 2007 12 Committees on Computerisation 5. Committee on Technology Issues relating to Payments System, Cheque Clearing and Securities System in the Banking Industry, (1994) Chairman: Shri W S Saraf, Executive Director, Reserve Bank of India Committees on Computerisation : Commercial Banking Technology in Indian Banking 2007 13 Committees on Computerisation 6. Committee on proposing Electronics Funds Transfer and Electronics Payments (1995) Chairperson: Smt K S Shere, Principal Legal Adviser, Reserve Bank of India Bank Branches 2006 (x- RRBs): Commercial Banking Technology in Indian Banking 2007 14 Bank Branches 2006 (x- RRBs) Indian Banking @ Cross Roads? : Commercial Banking Technology in Indian Banking 2007 15 Indian Banking @ Cross Roads? Computerisation - Modernisation ? Extended Hours (24x7)Competition? NPAs, Provisions & Strain on Profitability? Prudential Norms ALM - Risk Mgt ? Mergers & Acquisitions - Universal Bkg? Voluntary Retirement Scheme Effects ? Downsizing - Outsourcing ? Alliances Bancassurance ? Automate or Else ......... Perish ?????? Indian Banking-Now... : Commercial Banking Technology in Indian Banking 2007 16 Indian BankingNow... Transparency in Banking; Compliances Narrow Banking Relationship Banking Retail / Personal / Private Banking Hi-tech Banking E Age-Banking

Mobile Banking / Phone Banking Network Banking Virtual Banking Universal Banking Online Banking / Internet Banking WHY TECHNOLOGY IN BANKS? : Commercial Banking Technology in Indian Banking 2007 17 WHY TECHNOLOGY IN BANKS ? TO TRANSFORM FINANCIAL SERVICES INDUSTRY IN THE NET-WORKED WORLD BANKS TO BE CUSTOMER CENTRIC PROVIDE SERVICES / PRODUCTS ACROSS A RANGE OF CHANNELS TO BE FUTURISTIC AND HAVE TIME VALUE IN ALL ITS DEALINGS WITH CUSTOMERS Many Benefits of Technology : Commercial Banking Technology in Indian Banking 2007 18 Many Benefits of Technology Increased operational efficiency, profitability & productivity Superior Customer Service Multi-channel, real-time transaction processing Better Cross-Selling ability Improved management / accountability Efficient NPA and Risk Management Minimal transaction costs Improved financial analyses capabilities Commercial Banking Technology in Indian Banking 2007 19 Pre-requisites for Technology Commercial Banking Technology in Indian Banking 2007 20 Focus aspects of Commercial Banking Core Banking (CBS) ATMs Card Management Any Branch Banking Document Management Risk Management Resource Management MIS & Intranet CRM Corporate Network Electronic Banking POS Terminals and Cash dispenser BANKS BUSINESS BANKS BUSINESS RAISING DEPOSITS LOANS & MISC. SERVICES

Benefits of Virtual Banking:

Commercial Banking Technology in Indian Banking 2007 21 Benefits of Virtual Banking To Banks Large satisfied customers and higher retention Scope to attract new customers Improve quality and differential services Greater opportunity to cross sell Sharing network and Cost Saving Increased volumes and profits Reduce overall risk with proper MIS Benefits to Customer: Commercial Banking Technology in Indian Banking 2007 22 Benefits to Customer More convenience & flexi timings Better awareness of products & services Up-to-date information on accounts Low cost of accessing the accounts BANKS IT STRATEGY : Commercial Banking Technology in Indian Banking 2007 23 BANKS IT STRATEGY INVESTMENT IN HARDWARE ACQUIRING / DEVELOPING SOFTWARE TRAINING OF STAFF AT DIFFERENT LEVELS NETWORKING OF

OFFICES R-S-U-M? SECURITY FOR TRANSACTIONS & INFO GLOBAL REACH ONLINE BANKING, OUTSOURCING Internet Banking : Commercial Banking Technology in Indian Banking 2007 24 Internet Banking Issues of Confidentiality ? Hacking and Fraud prone ?? Scope for failure of Technology ??? Resultant denial of Services ???? INST. FOR DEV & RESEARCH IN BANKING TECHNOLOGY : Commercial Banking Technology in Indian Banking 2007 25 INST. FOR DEV & RESEARCH IN BANKING TECHNOLOGY TO PROVIDE TECH & OPERATING SUPPORT TO Bks / Financial Institutions SET UP BY RBI AT HYDERABAD 1996 FUNDED BY RESERVE BANK OF INDIA AN AUTONOMOUS CENTRE FOR DEV AND RESEARCH IN BANKING TECHNOLOGY THINK-TANK FOR PROMOTION OF TECH RESEARCH & CONSULTANCY www.idrbt.ac.in IDRBT, HYDERABAD : Commercial Banking Technology in Indian Banking 2007 26 IDRBT, HYDERABAD V-SAT BASED FIN NETWORK FOR BKs DATA WARE-HOUSING & DATA MINING PUBLISHING A JOURNAL ON IT IN BKG WEB BASED TRAINING TO EXECUTIVES INDIAN FINANCIAL NETWORK(INFINET) INTER BANK APPLICATIONS LIKE RTGS DELIVERY Vs PAYMENT, GOVERNMENT TRANSACTIONS AUTOMATIC CLEARING HOUSE, ETC DEVELOPMENTS : Commercial Banking Technology in Indian Banking 2007 27 DEVELOPMENTS ALPMs CLEARING HOUSE CAR,CRR,SLR,PS,NPAs CREDIT/DEBIT CARDS NICNET,I-NET, RABMN INFINET, RBINET BANKNET, NDS, SFMS MICR, ATMs, SWIFT DEMAT, IT ACT-2000 INTERNET BANKING ECS, EFT, SEFT, RTGS CROSS SELLING ALM & RM, MIS CRM, KYC, AML Core Banking Solutions KISAN /SME CARD CREDIT INFO BUREAU DISASTER MANAGEMENT Cheque Truncation CYBER CRIMES HACKING, PHISHING, PHARMING, TROJAN, SKIMMING, ETC SMART CARDS Commercial Banking Technology in Indian Banking 2007 28 Commercial Banking Technology in Indian Banking 2007 29 Communication Networks : Commercial Banking Technology in Indian Banking 2007 30 Communication Networks MICR (Magnetic Ink Character Recognition) Clearing BANKNET INFINET SWIFT Electronic Data Interchange (EDI) Electronic Funds Transfer (EFT) System Electronic Clearing Services (ECS) ATM network - SWADHAN (Shared Payment Network System -SPNS) MICR CLEARING :

Commercial Banking Technology in Indian Banking 2007 31 MICR CLEARING Magnetic Ink Character Recognition Introduced in 1987 in the four metros 1,047 Clearing Houses; 42 with MICR SB/CA Cheque leaves standardised size (8 X 3 2/3) are pre-printed with the bank-branch code and account type in MICR strip, while the amount is read manually and fed into the system using the encoders for funds settlements Speeds up clearing work BC/DW/TC/DD/PO/GC/IW/RW/SI... Automated Teller Machines : Commercial Banking Technology in Indian Banking 2007 32 Automated Teller Machines ATMs or 24 hour Tellers Electronic Terminals - allow to bank at any time... On-site (near branch) and Off-site ATM ATMs facilitate withdrawal/deposit.... Customer provided with a PIN / Card Introduced in India by Foreign Banks SWADHAN / SPNS wef Feb 1, 1997 Introduced in Mumbai by IBA initiative www.iba.org.in SBIs Mobile ATM in Kerala : Commercial Banking Technology in Indian Banking 2007 33 SBIs Mobile ATM in Kerala Bank ATMs 2007 (x-RRBs) : Commercial Banking Technology in Indian Banking 2007 34 Bank ATMs 2007 (x-RRBs) ATMs : Commercial Banking Technology in Indian Banking 2007 35 ATMs On-site and Off-site Automated Teller Machines -MOBILE, BIOMETRIC ATMs Total installed ATM base >21,000 Average withdrawal per ATM transaction - Rs 1,500 to Rs 3,000 Total cash movement through ATMs in India is Rs 35,000 40,000 crores every year Medium for non-cash transactions such as printing of statements, credit card enquiry, cross selling, etc Cross Selling : Commercial Banking Technology in Indian Banking 2007 36 Cross Selling The strategy of pushing new products to current customers based on their past purchases. Cross-selling is designed to widen the customer's reliance on the bank and decrease the likelihood of the customer switching to a competitor. Cross Selling ADVANTAGES: Commercial Banking Technology in Indian Banking 2007 37 Cross Selling ADVANTAGES Customer servicing, marketing, communication costs - lessen Credit appraisal made easy Increased loyalty married to the bank! All-inone financial super market consumer Business/employee - increases BANKNET : Commercial Banking Technology in Indian Banking 2007 38 BANKNET Set up in 1991 by RBI Meant to facilitate transfer of inter-bank/ inter-branch

messages within India by Public Sector banks who are members of this network Wide connectivity - Major Centres like Mumbai, Delhi, Calcutta, Madras, Nagpur, Bangalore, Hyderabad, Pune, Ahmedabad, Kanpur, Lucknow, Chandigarh, Kochi, Jaipur, Bhopal, Patna, Bhubaneshwar, Thiruvanantha-puram, Guwahati, Panaji, Jammu, etc INFINET : Commercial Banking Technology in Indian Banking 2007 39 INFINET Indian Financial Network Set up by RBI in June 1999 Satellite based WAN using VSAT (Very Small Aperture Terminal) technology The hub and Network Management System of INFINET are located in the Institute for Development and Research in Banking Technology, Hyd Major applications: E-mail, Electronic Clearing Service - Credit and Debit, Electronic Funds Transfer http://www.idrbt.ac.in/index_fromsm.html?infinet1.html?infinet SWIFT www.swift.com : Commercial Banking Technology in Indian Banking 2007 40 SWIFT www.swift.com Society for Worldwide Inter-bank Financial Telecommunication HQ La Hulpe, Brussels, Belgium Provides reliable, fast tele-communication facilities for exchange of financial messages all over the world between Banks and FIs As non-profit making co-operative society in 1973 by 239 banks in 15 countries Hubs in Brussels, New York and Netherlands Rules in 1975; first message in 1977 >7,000 members in 200 countries now Handles over 7 million messages every day India a member since 1991 88 Indian banks are members as on date Any Bank / FI can become a member Allots an address called Bank Identification Code (BIC) of 8 characters Enables members to send secure and reliable messages authenticated... Correspondent bank arrangements... Advantages: 24 hours service, system based fraud-free faster accurate confidential funds/LCs/Guarantees Electronic Data Interchange : Commercial Banking Technology in Indian Banking 2007 42 Electronic Data Interchange Facilitates transfer of banking transa-ctions using agreed protocol and standard data structure b/w computers Norms developed in respect of specific messages for transmission of business transactions which are electronic equivalents of commercial invoices, purchase orders, transport bookings, payment instructions etc Appropriate message formats and standards for financial applications in EDI developed by Message Development Group-Finance (constituted by IBA) Electronic Funds Transfer (EFT) : Commercial Banking Technology in Indian Banking 2007 43 Electronic Funds Transfer (EFT) Hosted and operated by the RBI Permits fund transfer up to Rs 5 lacs from any account at any branch of any member bank in any city to

any other account at any branch of any member bank in any other city RBI acts as the service provider as well as regulator ECS : Commercial Banking Technology in Indian Banking 2007 44 ECS Electronic Clearing Scheme (ECS) operated by the RBI since 1996-97 Utilises BANKNET and INFINET Facilitates payment from a single account at a bank branch to any number of accounts maintained with the branches of the same or other banks Eg., Payment of dividends RBI has also launched ECS Debit for payment to utility companies like Telephones, Electricity etc SWADHAN : Commercial Banking Technology in Indian Banking 2007 45 Launched in 1997 India's FIRST Shared Payment Network Service covers > 1000 ATMs in 64 cities 55 member banks in the network, which include nationalized, private and foreign banks Enables member banks to share their ATMs with other participating banks Objective - reduce the huge investment being made by the banks to deploy ATMs in different locations SWADHAN SERVICES : Commercial Banking Technology in Indian Banking 2007 46 SERVICES Bill Payment through Electronic Banking Electronic Shopping Mall Effecting Personal Investments through Electronic Banking Trading in shares Investing in Mutual Funds Trade In Derivatives IPOs Online Real Time Gross Settlement : Commercial Banking Technology in Indian Banking 2007 47 Real Time Gross Settlement Introduced in India in 2004 by RBI Internationally accepted system to minimise the settlement risks Settlements occur simultaneously >10,000 bank branches networked Balances held with RBI by banks 4 types of members A, B, C & D http://www.iba.org.in/FAQs-RTGS-NEFT-ECS.doc Cheque Truncation System : Commercial Banking Technology in Indian Banking 2007 48 Cheque Truncation System IN USE IN MANY COUNTRIES ... NI Act was amended appropriately Settlement based on e-images/MICR RBI Wg Gr submitted report in 2003 Images to be preserved for 8 years Pilot project in New Delhi in 2006 Reduces delays in collections... Fraught with risks, legal issues... Customer Relationship Management (CRM) : Commercial Banking Technology in Indian Banking 2007 49 Customer Relationship Management (CRM) Not a product / service, but a strategy Increasing competition among banks Customer expectations and demands Product development / Service Quality Know Your Customer (KYC) guidelines Knowledge Management in Banks Call Centres, DSAs, Franchisees in Banks

Two Banking Ombudsman Schemes Core Banking Solutions & CRM Packages for Best Customer Service Customer Relationship Management : Commercial Banking Technology in Indian Banking 2007 50 Customer Relationship Management Customer Analytics Statistical Credit Score Card Demographic details Transaction details Historical loan default data Targeted Marketing Campaign Carpet bombing avoided Hit rate increases Core Banking Solutions (CBS) : Commercial Banking Technology in Indian Banking 2007 51 Core Banking Solutions (CBS) POOLING DATA AT CENTRAL SERVER TRANSACTIONS OF DELIVERY CHANNELS FROM DELIVERY POINTS (BRANCH/ATM) FEED ONLINE TO HOST NO BACK OFFICE HOST DATABASE IS UP TO THE MINUTE END OF DAY (EOD) AND START OF DAY (SOD) TASKS PERFORMED AT BRANCHES WILL BE DONE BY HOST SERVER ELIMINATES BR RECONCILIATION WORK STAFF PRODUCTIVITY BANK CUSTOMER! Smart Cards The Future : Commercial Banking Technology in Indian Banking 2007 52 Smart Cards The Future Multi-application Smart Card Channel of the future Pilot project started Pilot Project funded by Govt. of India Project is in progress in partnership with IDRBT, IIT Mumbai and Banks Visit www.scafi.in The Smart Card Forum of India is a non-profit, multi-industry organization promoting the wide spread acceptance of multiple application smart card technology. Beware of : Commercial Banking Technology in Indian Banking 2007 53 Beware of Hacking Phishing Pharming Skimming Trojan Hacking : Commercial Banking Technology in Indian Banking 2007 54 Hacking Hacker: May mean simply a person with mastery of computers. TIMELINE Early 1960sHackers begin breaking into mainframe computers. 1983 The FBI busts six teen-age hackers from Milwaukee; one of the first arrests of hackers. 1984 First issue of 2600: The Hacker Quarterly in New York: prime source for hacking information 1985 Phrack, an electronic magazine about computer hacking, begins. In only three days some hackers brought down some of the biggest Web sites in the world that included Yahoo!, Amazon.com, Buy.com, eBay and CNN.com. They used"Denial of Service" attacks to overloaded the sites' servers by sending them an excessive number of data requests. Phishing : Commercial Banking Technology in Indian Banking 2007 55 Phishing A method of identity theft carried out through the creation of a website that

seems to represent a legitimate company. The visitors to the site, thinking they are buying something from a real business, submit their personal information to the site. The criminals then use the personal information for their own purposes, or sell the information to other criminal parties. www.antiphishing.com : Commercial Banking Technology www.antiphishing.com in Indian Banking 2007 56

Pharming : Commercial Banking Technology in Indian Banking 2007 57 Pharming Skimming: Commercial Banking Technology in Indian Banking 2007 58 Skimming An electronic method of capturing a victim's personal information used by identity thieves. The skimmer is a small device that scans a credit card and stores the information contained in the magnetic strip. Skimming can take place during a legitimate transaction at a business. Skimming can occur easily in a restaurant because your card is taken away when the bill is being settled. If your server is a skimming identity thief, he or she will, before giving the card back to you, scan the credit card with a hand-held electronic device, which takes only seconds. The electronically captured information is then used to by the thief or sold to other criminals Trojan : Commercial Banking Technology in Indian Banking 2007 59 Trojan Trojan horse is a program that installs malicious software while under the guise of doing something else. Though not limited in their payload, Trojan horses are more notorious for installing backdoor programs which allow unauthorized non permissible remote access to the victim's machine by unwanted parties normally with malicious intentions. Unlike a computer virus, a Trojan horse does not propagate by inserting its code into other computer files. The term is derived from the classical myth of the Trojan Horse. Like the mythical Trojan Horse, the malicious code is hidden in a computer program or other computer file which may appear to be useful, interesting, or at the very least harmless to an unsuspecting user. When this computer program or file is executed by the unsuspecting user, the malicious code is also executed resulting in the set up or installation of the malicious Trojan horse program. (See Social engineering.) Often the term is shortened to simply Trojan. References: : Commercial Banking Technology in Indian Banking 2007 60 References: Information Technology & Electronic Banking Indian Institute of Bankers, Mumbai, May 1998 Information Technology & E-Banking ICFAI, Hyderabad, October 2004 Retail Banking, Everything you need to know to work in a Bank - Raghu Palat, IBD, Mumbai 2006 Banking on Technology, Indian

Management AIMA Publication, August 2004 Building CRM Customer Relationship Management & KYC experience through Technology BanCon, IBA Conference, 2004; Indian Banker Feb 2006 Trend and Progress of Banking in India, RBI 2006 www.rbi.org.in; www.idrbt.ac.in; www.google.co.in; www.swift.com; www.iba.org.in; www.antiphishing.com; And now... ...WIMAX : Commercial Banking Technology in Indian Banking 2007 61 And now... ...WIMAX World-wide Interoperability Micro-wave Accessibility...

What is E-banking? :
What is E-banking? Definition: The provision of banking service through electronic channels and the customer can access the data without time and geographical limitation. Development of E-banking : Development of E-banking 1980s : - Rapid development of the Internet - TCP/IP system (communication system) - E-commerce Development of E-banking : Development of E-banking May 1995 : Wells Fargo - the first bank in the world to offer customer access to their accounts over the internet . Allows customer to see their accounts online Development of E-banking : Development of E-banking ICICI was the first bank to initiate the Internet banking revolution in India as early as 1997 under the brand name 'Infinity'. ICICI Bank kicked off online banking way back in 1996 . But even for the Internet as a whole, 1996 to 1998 marked the adoption phase, while usage increased only in 1999-due to lower ISP online charges, increased PC penetration and a tech-friendly atmosphere. RBI & E-Banking : RBI & E-Banking The Reserve Bank of India constituted a working group on Internet Banking. The group divided the internet banking products in India into 3 types based on the levels of access granted. They are:- i) Information Only System: ii) Electronic Information Transfer System: iii) Fully Electronic Transactional System: Information Only System: General purpose information like interest rates, branch location, bank products and their features, loan and deposit calculations are provided in the banks website. There exist facilities for downloading various types of application forms. The communication is normally done through e-mail. There is no interaction between the customer and bank's application system. No identification of the customer is done. In this system, there is no possibility of any unauthorized person getting into production systems of the bank through internet. Electronic Information Transfer System: The system provides customer- specific information in the form of account balances, transaction details, and statement of accounts. The

information is still largely of the 'read only' format. Identification and authentication of the customer is through password. The information is fetched from the bank's application system either in batch mode or off-line. The application systems cannot directly access through the internet. Fully Electronic Transactional System: This system allows bi-directional capabilities. Transactions can be submitted by the customer for online update. This system requires high degree of security and control. In this environment, web server and application systems are linked over secure infrastructure. It comprises technology covering computerization, networking and security, inter-bank payment gateway and legal infrastructure different services provided under e-banking : different services provided under e-banking ONLINE BILL PAYMENT SHOPPING TICKET BOOKING PRE PAID MOBILE RECHARGE MARKET WATCH PERSONAL HOME PAGE INVESTMENT SERVICES ONLINE APPLICATIONS PERSONAL UPDADATE SERVICE PROVIDED BY sbi : SERVICE PROVIDED BY sbi Self-account funds transfer across India. Third party transfers in the same branch New account opening Demand Draft requests Standing instructions New Cheque-book request and much more Railway tickets booking, Utility bill payments LIC and other insurance premium payments, SBI Mutual funds Investments Remit Subscription to PPF account, Credit card dues payments, Deposit your taxes, Donations to your religious inspirations Donations to Red Cross and such other organisations Setting up SMS alerts for transaction information. SERVICE PROVIDED BY icici : SERVICE PROVIDED BY icici BILL PAYMENT FUND TRANSFER ACCOUNT INFORMATION SMART MONEY ORDER SERVICE REQUEST CONVERT TO EMI A/C TO CARD TRANSFER PREPAID MOBILE RECHARGE ACCOUNT TRANSFER Advantages of E-banking : Advantages of E-banking Benefits for Banks Benefits for Small to Medium Businesses Benefits for Customers Benefits for Banks : Benefits for Banks Larger customer coverage Reducing the costs of operations Promoting their services and products internationally Increasing the customer satisfaction and providing a personalized relationship with customers Benefits for Small to Medium Businesses : Benefits for Small to Medium Businesses To run its operations more effectively Lower cost than traditional financial management mechanisms Benefits for Customers :

Benefits for Customers Convenience 24 hours a day, seven days a week Cost Reducing transfer fees Speed Faster circulation of assets Competitiveness - Fostering competition in financial market Benefits for Customers : Benefits for Customers Communication communicate easily Environmental Abolishing the uses of paper Others - Offering one-stop-shop solutions Disadvantages OF E-banking : Disadvantages OF E-banking A need for customer skill to deal with computers and browsers. E.g. Elderly, Housewives Inconvenient Site change it will make the customer have some confusion or delay. Security Risk Security Risk : Security Risk Increasing number of fraudulent bank websites Fake emails purporting to be sent from banks Use of Trojan Horse programs to capture user IDs and passwords Fraudulent Bank Websites : Fraudulent Bank Websites A suspicious bank website:www.sbionline.com Original bank websitewww.onlinesbi.com These website are believed to aim to trick persons into disclosing their sensitive personal information Fake e-mails : Fake e-mails Email send fromFraudulent bank Verify the personal information Guide customerenter the fraud link Disclosing their ATM card numbers and their passwords Viruses and Worms-Trojan Horse Program : Viruses and Worms-Trojan Horse Program When we open some suspiciouswebsites or email Trojan Horse Programwill install our computer secretly Hidden in the computer When you access bank websites Capture our account andthe password Case From Newspaper : Case From Newspaper Dont use the hyperlink to login to the website of banks Should deeply check the postscript of the website Observe that is it have the encryption and compare the login account of encryption cert is equal to the bank. Persecutions : Persecutions For Bank: Should provide specific guidance to their customers For Customers : Should not disclose their customer IDs (e.g., account numbers) or passwords to anyone else. Periodically change their passwords Should promptly log out from the service Should regularly check their account balances and statements to identify unusual transactions. Do not access Corporate Cyber banking through public terminals. To safeguard your computer from any other hacker attack, install anti-virus and anti-spyware software on your computer and update it regularly.

PAYMENT GATEWAY:
Payment gateway is the service to process credit card transactions for the online customers, these gateway transactions are offered by different banks and payment processors, this gateway services different from various account, Payment gateway transaction refers and used for e-commerce services and online retailers, this gateways encrypt sensitive information, such as credit card numbers, information passes securely between the customer and the merchant. TWO KINDS OF PAYMENT GATEWAYS: 1. REQUIRE MERCHANT ACCOUNT PAYMENT GATEWAY 2. DOES NOT REQUIRE A MERCHANT ACCOUT PAYMENT GATEWAY PAYMENT GATEWAYS THAT REQUIRE MERCHANT ACCOUNT : We can apply merchant account in local bank or else third party companies Benefits: You can get competitive rates ie profit more your company will reflect on the credit cards of your customers Built-in shopping cart Integration of your websites Disadvantages: This kind of payment take time As a merchant you should contain secure protocols to your website to prevent from frauds PAYMENT GATEWAY THAT DOES NOT REQUIRE A MERCHANT ACCOUT: Benefits: You can sell your products immediately Approve and gives you strict fraud detection protocol Provider will benefit by getting simple percentage for each transaction Disadvantages: You have to pay high commission rates They often may take some charges on the card Why Payment Gateway Integration ? Online shopping Pay for utility bills Make donations Online Money Transfer PAYMENT PROCESS SYSTEM: PayPal: PayPal is the payment gateway transaction for the money transfer through the internet, it is the ecommerce business allows payment in the online services, this provide complex infrastructure and necessary security . Money bookers : Money bookers is best online payment solution for the online business on the internet, it is less cost to send or receive transactions, they are suitable for the online merchants for the business and e-commerce stores. World pay: World Pay is otherwise called as RBS world pay, it is the payment processing company that provide payment services for the internet retailers and for the sale transaction for the online merchants. They have some other majority for the people who handling the services multinational . Authorize.net : Authorize.net connects the payment application to credit card , it is exclusively used for the most successful resource business, they are suitable for the online merchants for the business and e-commerce stores which provides the complex infrastructure and security necessary to ensure secure, fast and reliable transactions.