A PROJECT REPORT ON E-BANKING

BACHELOR OF COMMERCE BANKING & INSURANCE SEMESTER V (2013-14) SUBMITTED BY: SHRADDHA ANIL YELLATTIKAR 1382348

UNDER THE GUIDENCE OF PROF. BARKHA SHAMNANI

VIDYA PRASADAK MANDALS R.Z.SHAH COLLEGE OF ARTS, SCIENCE &COMMERCE MITHAGHAR ROAD, MULUND (EAST) MUMBAI400081.
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DECLARATION

I, MISS. SHRADDHA ANIL YELLATTIKAR student of B.Com Banking & Insurance Semester V (2013-14) hereby declare that I have completed the Project on E-BANKING. The information submitted is true & original to the best of my knowledge.

D ATE: PLACE:

Students Signature SHRADDHA YELLATTIKAR

1382348

ACKNOWLEDGEMENT
I would sincerely like to give my heartfelt acknowledgement and thanks to my parents. Any amount of thanks given to them will never be sufficient. I would like to thank the University of Mumbai, for introducing Banking and Insurance course, thereby giving the student a platform to abreast with changing business scenario, with the help of theory as a base and practical as a solution. I would sincerely like to thank our Principal Mrs. SUSY KURIAKOSE. I would also like to thank my project guide PROF. BARKHA SHAMNANI. for her valuable support and guidance whenever needed. I also feel heartiest sense of obligation my library staff members & seniors who helped in collection of Data and materials and also in this processing as well as in drafting manuscript. Last, but not the least, I would like to thank my friends & colleagues for always being there.

Executive Summary
E-banking- The execution of financial services via internet, reducing cost and increase in convenience for the customer to access the transaction. e- 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. It should be noted, however, that the terms used to describe the various types of electronic banking are often used interchangeably. The ever increasing speed of internet enabled phones & personal assistant, made the transformation of banking application to mobile devices, this creative a new subset of electronic banking i.e. mobile banking. In 1999 & 2000 mobile banking as an established channels, still seems to be a distant prospect. The internet is revolutionizing the way the financial industry conducts business online, has created new players who offer personalize services through the web portals. This increase to find new ways and increase customer loyalty to add the value to this product and services. Banks also enables customers lifestyle needs by changing and increasing preference for speed and convenience are eroding the traditional affinity between customer and branch offices as a new technology disinter mediates traditional channels, delivering the value proposition hinges on owing or earning the customer interface and bringing the customer a complete solution which satisfies their needs. Smart card is a new trend which provides the opportunity to build an incremental revenue stream by 4

providing an ideal platform for extended application and services. Banks are well positioned to play central role unit in future M-commerce market. Banks have strong relationships with corporate and business customers and a wide experience in providing them with corporate banking services. Bank provides a multimedia of small and large retailers with acquiring functionality in credit card transactions. Customers have trusted relationships with banks and a lower propensity to switch banking providers.

SR NO.

CONTENT

PG NO.

CHAPTER 1

1.1 1.2 1.3 1.4 2.1 2.2 2.3 2.4 3.1 3.2 3.3 3.4

INTORDUCTION OF EBANKING SCOPE/OBJECTIVE OF EBANKING NEED OF E-BANKING HISTORY OF E-BANKING

CHAPTER 2

INDIAN VIEW OF E-BANKING GLOBAL VIEW OF E-BANKING EVOLUTION OF E-BANKING USAGE OF E-BANKING
CHAPTER 3

TYPES OF E-BANKING SWOT ANALYSIS OF EBANKING E-BANKING PRODUCTS HOW E-BANKING CAN EASY YOUR LIFE.
CHAPTER 4

4.1 4.2

RISK IN E-BANKING SIMPLE GUIDENCE FOR SAFE ONLINE BANKING

CHAPTER 5

5.1 5.2 5.3 5.4

INTRODUCTION OF ICICI BANK HISTORY OF ICICI BANK E-BANKING IN ICICI BANK CASE STUDY
CHAPTER 6

6.1 6.2 6.3 6.4

CONCUSION DATA ANALYSIS QUESTIONAIRY WEBSITES

CHAPTER 1

1.1 INTRODUCTION OF E-BANKING 1.2 SCOPE/ OBJECTIVE OF E-BANKING

1.3 NEED OF E-BANKING

1.4 HISTORY OF E-BANKING

INTRODUCTION OF E-BANKING
The world is changing at a staggering rate and technology is considered to be the key driver for these changes around us. An analysis of technology and its uses show that it has permeated in almost every aspect of our life. Many activities are handled electronically due to the acceptance of information technology at home as well as at work place. Slowly but steadily, the Indian customer is moving towards the internet banking. The ATM and the Net transactions are becoming popular. But the customer is clear on one thing that he wants net-banking to be simple and the banking sector is matching its steps to the technology. E-banking or Online banking is a generic term for the delivery of banking services and products through the 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 9

thereby enhancing the speed of delivery of banking services considerably. Several initiatives have been taken by the Government of India as well as the RBI(Reserve Bank of India); have facilitated the development of ebanking 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 regulator and supervisor of the technologically do maintend financial system. It issued guidelines on the risks and controls in computer and telecommunication systems to all banks, advising them to evaluate the risks inherent in the systems and put in place adequate control mechanisms to address these risks.

WHAT IS E-BANKING?
Electronic banking is one of the truly widespread avatars of E-commerce the world over. Various authors define E-Banking differently but the most definition depicting the meaning and features of E-Banking are as follows: 1. Banking is a combination of two, Electronic technology and Banking.

2.Electronic Banking is a process by which a customer performs banking Transactions electronically without visiting a brick-and-mortar institutions. 3. E-Banking denotes the provision of banking and related service through Extensive use of information technology without direct recourse to the bank by the customer.

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Definition of E-Banking
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 of 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, personal digital assistant, automated teller machine, 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. 11

Scope Of E- Banking
The traditional mode of banking is manual It is paper based It is now no longer acceptable in the changing global economy. With the widespread internet technology the business is also all electronic - electronic commerce, electronic import and export, electronic procurement of goods electronic trade mobile banking etc. The banking sector, if it is to survive in the 21st century, shall have to change its entire banking structure. It shall have to provide better, economical and quick monetary services through the use of advance electronic technology. The customers of the banking are fast becoming computer literate. They are now able to interact more fluently with the provision of basic electronic services. The needs of the customers have also changed. They require the services of banks at home, in office, 24 hours a day, seven days a week, anywhere, anytime and anyhow. The banks are quite alive to the changing needs of the customers. They fully realize that if they are to compete they shall have to provide electronic delivery of financial services to the customers. They are rendering services such as electronic fund transfer (EFT) payment by phone services, personal computer banking, point of sale transfer, electronic check conversions etc., etc. The scope of e-banking is now fast expanding in the developed and also underdeveloped countries of the world.

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OBJECTIVE OF E-BANKING
1. The system at any point of time can give the customers information related to their Accounts and accounts status The balance enquiry The fund transfer standards The cheque book request

2. The system can provide information related to the different types of accounts that are existing within the bank.

3. The system can provide the bank administration with information on the number of customers who are existing in the system.

4. The system at any point of time can provide the information related to the executed transactions by the customer.

5. The system with respect to the necessities can identify all the history details of theatrical participants along with their outcome of the results.

6. The system with respect to the necessities can provide the status of research and development process that is under schedule within the organization currently

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7. With proper storage of the data in a relational environment the system can Applegate itself to cater to the standards of providing a clear and easy path for future search standards that may arise due to organizational policies

Features of Internet Banking

Easily adoptable by customers. Easy to maintains. Cost effective solution. Enables the bank to reach its customers on the net. Reduce rush at the counters of the bank. Enables the customers of the bank to access information from anywhere and at any time. Balance and transaction history search. Transaction history export. Order new statements. Mobile banking. Transfers. Pay bills Pay anyone payments. SMS banking services

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NEED FOR E-BANKING

One has to approach the branch in person, to withdraw cash or deposit a cheque or request a statement of accounts. In true Internet banking, any inquiry or transaction is processed online without any reference to the branch (anywhere banking) at any time. Providing Internet banking is increasingly becoming a "need to have" than a "nice to have" service. The net banking, thus, now is more of a norm rather than an exception in many developed countries due to the fact that it is the cheapest way of providing banking services. Banks have traditionally been in the forefront of harnessing technology to improve their products, services and efficiency. They have, over a long time, been using electronic and telecommunication networks for delivering a wide range of value added products and services. The delivery channels include direct dial up connections, private networks, public networks etc and the devices include telephone, Personal Computers including the Automated Teller Machines, etc. With the popularity of PCs, easy access to Internet and World Wide Web (WWW), Internet is increasingly used by banks as a channel for receiving instructions and delivering their products and services to their customers. This form of banking is generally referred to as Internet Banking, 15

HISTORY OF E-BANKING
The concept of Internet banking has been simultaneously evolving with the development of the world wide web. Programmers working on banking data bases came up with ideas for online banking transactions, sometime during the 1980s. The creative process of development of these services were probably sparked off after many companies started the concept of online shopping. The online shopping promoted the use of credit cards through Internet. Many banking organizations had already started creating data ware housing facilities to ease their working staffs. The development of these databases were widely used during the development of ATM's.

Sometime in 1980s, banking and finance organizations in Europe and United States started suggestive researches and programming experiments on the concept of 'home banking'. Initially in the 80's when computers and Internet were not so well-developed, 'home banking' basically made use of fax machines and telephones to facilitate their customers. The widespread of Internet and programming facilities created further opportunities for development of home banking.

In 1983, the Nottingham Building Society, commonly abbreviated and referred to as the NBS, launched the first Internet banking service in United Kingdom. This service formed the basis for most of the Internet banking facilities that followed. This facility was not very well-developed and restricted the number of transactions and functions that account holders could execute. The facility introduced by Nottingham Building Society is said to have been derived from a system known as Prestel, that is deployed by the postal service department of United Kingdom. 16

The first online banking service in United States was introduced, in October 1994. The service was developed by Stanford Federal Credit Union, which is a financial institution. The online banking services are becoming more and more prevalent due to the well-developed systems. Though there are pros and cons of electronic cash, it has become a revolution that is enhancing the banking sector.

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CHPTER 2 2.1 INDIAN VIEW OF E-BANKING 2.2 GLOBAL VIEW OF E-BANKING 2.3 EVOLUTION OF E-BANKING 2.4 USAGE OF E-BANKING

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INDIAN VIEW
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:

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

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security, inter-bank payment gateway and legal infrastructure. It includes the followings: o ATM o DEBIT CARDS o SMART CARDS o MOBILE BANKING

THE INDIAN SCENARIO

DRIVERS OF CHANGE: Advantages previously held by large
financial institutions have shrunk considerably. The Internet has leveled the playing field and afforded open access to customers in the global marketplace. Internet banking is a cost effective delivery channel for financial institutions. Consumers are embracing the many benefits of Internet banking. Access to one's accounts at anytime and from any location via the World Wide Web is a convenience unknown a short time ago. Thus, a bank's Internet presence transforms from 'brouchreware' status to 'Internet banking' status once the bank goes through a technology integration effort to enable the customer to access information about his or her specific account relationship. The six primary drivers of Internet banking includes, in order of primacy are: Improve customer access Facilitate the offering of more services Increase customer loyalty Attract new customers Provide services offered by competitors Reduce customer attrition 20

GLOBAL VIEW.
Since its inception, Internet banking has experienced strong and sustained growth. World Bank report on leapfrogging in e-finance pointed out that the three countries with impressive progress in information technology in this sense are Estonia, Republic of Korea and Brazil. Creation of the worlds leading electronic banking systems has been done at a remarkably low cost compared to other world-class internet banks. In the European Union, 60 million people, representing 18 per cent of the adult population, use online banking In France, the number of online banking accounts is recording an annual growth rate of 75 per cent. However, Estonia is a country that has become a leader in Internet banking (which now reaches 18 per cent of the population), not only among Eastern European countries but in world rankings, through a combination of easy to- use software, free-of-charge transactions and behavior changes resulting from the influence of the Nordic countries IT culture on Estonia. A sector in which Latin America is seems to be performing better than in other industries is online retail banking. Growth in this area has been driven by traditional banks, which have used the online channel to generate customer loyalty and improve their operating margins. Two Brazilian banks, Bradesco and Banco do Brasil have thus achieved more than 4 million online customers each. Mexico is another leader of Internet banking in Latin America. It adopted legislation providing for the development of both E-Commerce and e-finance. In Mexico, the number of online bank users more than tripled from 700,000 in 2000 to 2.4 million in 2001, and it could reach 4.5 million in 2005 (E-Marketer 2002b). One reason for the success of Latin American banks online 21

ventures seems to be the attention they have paid to providing retail customers with multiple ways to access their accounts (Internet, telephone, wireless). However, given that the share of the total population that actually has a bank account is relatively small, the expansion of Latin American online banking may be facing a bottleneck. Compared with overall Internet usage estimated at 4.4 million in Australia, the major banks together have attracted only 1.2 million to online banking. The Internet is a global phenomenon and so is e-finance. Its deployment is not limited to developed countries, and indeed some developing countries such as India and the Republic of Korea are experiencing particularly strong growth in E-Banking. In Asia one of the most impressive records has been achieved by the Republic of Korea. The Republic of Korea is leading in online brokerage and in mobile banking. In South-East Asia Internet banking is also developing rapidly in Thailand, Malaysia, and Singapore and to a lesser extent, in the Philippines. In Bangladesh there is a large gap between the computerization of foreign banks and that of local commercial banks and as regards the state of their intra- and interbranch online networks. However, 75 per cent of local banks are planning to introduce E-Banking, which implies very dynamic improvements. Apart from North and South Africa the Sub Saharan Africa is the region that is seriously lagging behind in Internet banking, although it is giving to the rest of the world the good example of microfinance developments.

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EVOLUTION OF E-BANKING
The story of technology in banking started with the use of punched card machines like Accounting Machines or Ledger Posting Machines. The use of technology, at that time, was limited to keeping books of the bank. It further developed with the birth of online real time system and vast improvement in telecommunications during late 1970s and 1980s.it resulted in a revolution in the field of banking with convenience banking as a buzzword. Through Convenience banking, the bank is carried to the doorstep of the customer. The 1990s saw the birth of distributed computing technologies and Relational Data Base Management System. The banking industry was simply waiting for these technologies. Now with distribution technologies, one could configure dedicated machines called front-end machines for customer service and risk control while communication in the batch mode without hampering the response time on the frontend machine. Intense competition has forced banks to rethink the way they operated their business. They had to reinvent and improve their products and services to make them more beneficial and cost effective. Technology in the form of E-banking has made it possible to find alternate banking practices at lower costs. More and more people are using electronic banking products and services because large section of the banks future customer base will be made up of computer literate customer, the banks must be able to offer these customer products and services that allow them to do their banking by electronic means. If they fail to do this will, simply, not survive. New products and services are emerging that are set to change the way we look at money and the monetary system.

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Reasons of E-Banking Evolution

Speaking in the most general way, the cause of E-Banking applications evolution changes application domain or context. Being more precise we must mention the evolution of clients needs. Its the most evident, important and common reason that leads the banks to the evolution of EBanking. Banks are facing the constant evolution of the client's needs. They need to follow this evolution in order to achieve clients satisfaction and to preserve banks competitive advantage. E-Banking solution must cover the clients needs, otherwise bank risks to lose its clients. Below we give an example of such an evolution. The Evolution of the business model can be as well an incentive to E-Banking Evolution. An excellent example of such an evolution is how the Swiss quote bank evolved first from online financial information provider to online brokerage firm and then became a full electronic bank. Entrance to the new market or in the national law can be another source of changes. Differences in rules and national authorities requirements can result in specific procedures or different security level. In the same manner an evolution can appear, when existing laws basis are changing. We believe for instance, that current financial crisis will bring some deep changes to law regulations and as a result on E-Banking applications. In conclusion of this section we need to underline the following statement: No matter which exactly of the abovementioned reasons or set of them leads to evolution, but what is the most important is that the initiator of this incentive is always a business side. The needs of business are transformed into business requirements. Business representatives which use the IT solution, must always approve specified business requirements. The evolution of the EBanking applications caused by the evolution of the client's needs is the most perceptible for the external study. E-Banking applications were exposed to such an evolution especially during the last ten years. 24

USAGE OF E-BANKING
The rise in the e-commerce and the use of internet in its facilitation along with the enhanced online security of transactions and sensitive information has been the core reason for the penetration of online banking in everyday life. According to the latest official figures from the office of National Statistics ( ONS 2007) indicate that subscriptions to the internet has grown more than 50% from 25 million in 2005 to 45 million in 2007 in India. It has also been estimated that 60% of the population in India use internet in their daily lives. The fundamental shift towards the involvement of the customer in the financial service provision with the help of the technology especially internet has helped to reduce the costs of financial institutions as well as helped client to use the service at anytime and from virtually anywhere with access to an internet connection. The use of electronic banking has removed personnel that facilitate the transactions and has placed additional responsibilities on the customers to transact with the service. The computerization of the banking operations has made maximum impact on:1) Internal Accounting System 2) Customer service 3) Diversification of system

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CHAPTER 3 3.1- TYPES OF E-BANKING 3.2- SWOT ANALYSIS OF E-BANKING 3.3- E-BANKING PRODUCTS 3.4- HOW E-BANKING CAN EASY YOUR LIFE

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TYPES OF INTERNET BANKING OR EBANKING

Understanding the various types of Internet banking will help examiners assess the risks involved. Currently, the following three basic kinds of Internet banking are being employed in the marketplace.

Informational- this is the basic level of Internet banking. Typically, the bank has marketing information about the banks products and services on a standalone server. The risk is relatively low, as informational systems typically have no path between the server and the banks internal network. This level of Internet banking can be provided by the banks or outsourced. While the risk to a bank is relatively low, the server or web site may be vulnerable to alteration. Appropriate controls therefore must be in place to prevent unauthorized alterations to the banks server or web site.

Communicative- this type of Internet banking systems and the customer. The interaction between the banks system and the customer. The interaction may be limited to electronic mail, account enquiry, loan applications, or static file updates (name and address change). Because these servers may have a path to the banks internal networks, the risk is higher with this configuration than with informational systems. Appropriate controls need to be in the place to prevent, monitor, and alert management of any unauthorized attempt to access the banks internal networks and computer systems. Virus controls also become much more critical in this environment 27

 Transactional- this level of Internet banking allows customers to execute transactions. Since a path typically exists between the server and the bank or outsourcers internal network, this is the highest risk architecture and must have the strongest controls. Customer transactions can include accessing accounts, paying bills, transferring funds etc.

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SWOT Analysis of Internet Banking

The following are the strength, Weakness opportunists and threats of Internet Banking in India

1. Strength
Aggression towards development of the existing standards of banks Strong regulatory impact by central bank to all the banks Presence of intellectual capital to face the change in implementation with good quality Fully computerized and techno savvy A person can access his account from anywhere he is A person can do banking transactions like funds transfer to any account, book ticket, bill pay at any time of the day

2. Weakness
High bank service charges. All the bank charges highly to the customers for the services provided through internet banking Poor technology infrastructure Ineffective risk measures Easy Access of internet banking account by wrong people through email ids When the server is down the whole process is handicapped

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3. Opportunities
Increasing risk management expertise Advancement of technologies, strong asset base would help in bigger growth Safety of using internet banking is robust, so more internet banking users in future The international scope of internet banking provides new growth perspectives and internet business is a catalyst for new technologies and new business processes

4.

Threats
Banks provides all services through electronic computerized machines and this creates problems to the less educated people Inability to meet the additional capital requirements Huge investment in technologies Internet banking will be replaced by mobile banking

E-BANKING PRODUCTS

Automated Teller Machine (ATM): These are cash dispensing

machine, which are frequently seen at banks and other locations such as shopping centers and building societies. Their main purpose is to allow customer to draw cash at any time and to provide banking services where it would not have been viable to open another branch e.g. on university campus. An automated teller machine or automatic teller machine (ATM) is a 30

computerized telecommunications device that provides a financial institution's customers a method of financial\ transactions in a public space without the need for a human clerk or bank teller. On most modern ATMs, the customer identifies him or herself by inserting a plastic ATM card with a magnetic stripe or a plastic smart card with a chip that contains his or her card number and some security information, such as an expiration date or CVC (CVV). Security is provided by the customer entering a personal identification number (PIN). Using an ATM, customers can access their bank accounts in order to make cash withdrawals (or credit card cash advances) and check their account balances. Many ATMs also allow people to deposit cash or checks, transfer money between their bank accounts, pay bills, or purchase goods and services. Some of the advantages of ATM to customers are: Ability to draw cash after normal banking hours Quicker than normal cashier service Complete security as only the card holder knows the PIN Does not just operate as a medium of obtaining cash. Customer can sometimes use the services of other bank ATMs.

Tele banking or Phone Banking: Telephone banking is relatively

new Electronic Banking Product. However it is fastly becoming one of the most popular products. Customer can perform a number of transactions from the convenience of their own home or office in fact from anywhere they have access to phone. Customers can do following: Check balances and statement information Transfer funds from one account to another Pay certain bills Order statements or cheque books 31

 Demand draft request This facility is available with the help of Voice Response System (VRS). This system basically, accepts only TONE dialed input. Like the ATM customer has to follow particular process, initially account number and telephone PIN are fed for the process to start. Also the VRS system provides the users within additional facilities such as changing existing password with the new desired, information about new products, current interest rates etc.

Mobile Banking: Mobile banking comes in as a part of the banks initiative to offer multiple channels banking providing convenience for its customer. A versatile multifunctional, free service that is accessible and viewable on the monitor of mobile phone. Mobile phones are playing great role in Indian banking- both directly and indirectly. They are being used both as banking and other channels.

Internet Banking: The advent of the Internet and the popularity of personal computers presented both an opportunity and a challenge for the banking industry. For years, financial institutions have used powerful 32

computer networks to automate million of daily transactions; today, often the only paper record is the customers receipt at the point of sale. Now that their customers are connected to the Internet via personal computers, banks envision similar advantages by adopting those same internal electronic processes to home use. Banks view online banking as a powerful value added tool to attract and retain new customers while helping to eliminate costly paper handling and teller interactions in an increasingly competitive banking environment. In India first one to move into this area was ICICI Bank. They started web based banking as early as august 1997.

HOW E-BANKING CAN EASE YOUR LIFE

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 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 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.

1. Bill payment service: Each bank has tie-ups with various utility
companies, service providers and insurance companies, across the country. It facilitates the payment of electricity and telephone bills, mobile phone, credit card and insurance premium bills. To pay bills, a 33

simple one-time registration for each biller is to be completed. Standing instructions can be set, online to pay recurring bills, automatically. Onetime standing instruction will ensure that bill payments do not get delayed due to lack of time. Most interestingly, the bank does not charge customers for online bill payment.

2. Fund transfer: Any amount can be transferred from one account to

another of the same or any another bank. Customers can send money anywhere in India. Payees account number, his bank and the branch is needed to be mentioned after logging in the account. 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.

3. 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 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.

4. Railway pass: 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, Thane, Nasik, Surat and Pune. The bank would just charge Rs 10 + 12.24 percent of service tax.

5. Investing through Internet banking: Opening a fixed deposit

account cannot get easier than this. An FD can be opened online through 34

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 the facility to purchase mutual funds directly from the online banking system. So it removes the 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 the customer have there demat account with independent share brokers, then need to sign a special form, which will link your two accounts.

6. Recharging your prepaid phone: Now there is no need to rush

to the vendor to recharge the prepaid phone, every time the talk time runs out. Just top-up the prepaid mobile cards by logging in to Internet banking. By just selecting the operator's name, entering the mobile number and the amount for recharge, the phone is again back in action within few minutes.

7. Shopping at your fingertips: Leading banks have tie ups with

various shopping websites. With a range of all kind of products, one can shop online and the payment is also made conveniently through the account. One can also buy railway and air tickets through Internet banking.

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CHAPTER 4 4.1- RISK IN E-BANKING. 4.2- SIMPLE GUIDELINES FOR SAFE ONLINE BANKING.

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RISK IN E-BANKING
Transactional / Operational risk Credit Risk Reputational Risk Legal Risk Strategic Risk

Transaction or Operations Risk in E-Banking

The most important category of risk management for e-banking services is transaction risk or operational risk. Operational risk is the risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or from external events. The main causes for operational risk can be:

Inadequate Information Systems Breaches in internal controls Fraud Processing Errors Unforeseen catastrophes The inadequate information system can result from general risks or from application oriented risks. The general risks can include physical access 37

to the hardware, logical access to the information and communication technology systems, emergency management or from an insufficient backup recovery measures-mitigate the consequences of system failures.

Control of Transaction Risks

Controlling transaction risk lies in adapting effective policies, procedures, and controls to meet the new risk exposures introduced by e-banking

Basic internal controls including segregation of duties, dual controls, and reconcilements

Information security controls become more significant requiring additional processes, tools, expertise, and testing.

Institutions should determine the appropriate level of security controls abased on their assessment of the sensitivity of the information to the

customer and to the institution and on the institutions established risk tolerance level.

Credit Risk
Credit risk is the risk to earning and eventually capital, arising from a borrowers failure to meet the terms of a credit contract with the bank or otherwise to perform as agreed. It is found in all activities where success depends on counterparty, issuer, or borrower performance. It arises any time bank findings are extended, committed, invested, or otherwise exposed through actual or implied contractual agreements, whether on or off the banks balance sheet.

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The following aspects of on-line loan origination and approval tend to make risk management of the lending process more challenging. If not properly managed, these aspects can significantly increase credit risk.

Verifying the customers identity for on-line credit applications and executing an enforceable contract

Monitoring and controlling the growth, pricing, underwriting standards, and ongoing credit quality of loans originated through e-banking channels

Monitoring and oversight of third-parties doing business as agents or on behalf of the financial institution (for example, an Internet loan origination site or electronic payments processor).

Collecting loans from individuals over a potentially wider geographic area.

Monitoring any increased volume of, and possible concentration in, outof-area lending.

Reputational Risk
This is the current and prospective risk to earnings and capital arising from negative public opinion. A banks reputation can be damaged by Internet banking services that are poorly executed (e.g., limited availability, buggy software, poor response). Customers are less forgiving of any problems and thus there are more stringent performance expectations from the Internet channel. Hypertext links could link a banks site to other sites and may reflect an implicit endorsement of the other sites.

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Risk of damage to the banks reputation goes along with the other risks. It can arise, for example, from operational risk even if customers suffer no actual damage. If a hacker successfully breaks into a banks website and makes alterations, the bank concerned can suffer substantial damage to its reputation although customers balances are safe and the hacker has not obtained any financial benefit. This does not only affect the individual bank concerned but may also undermine confidence in the security of ebanking more generally and therefore slow down development in this area. Systems breakdown, even if only temporary, is another example of how banks may be affected by bad publicity. Given the fact that the element of trust is so fundamental to banks business, banks will find it increasing important to adopt measures to manage reputational risk and incorporate public relations strategies into their overall risk management framework. Some of the ways in which e-banking can influence an institutions reputation include the following: 1. Loss of trust due to unauthorized activity on customer accounts. 2. Disclosure or theft of confidential customer information to unauthorized parties (e.g., hackers). 3. Failure to provide reliable service due to the frequency or duration of service disruptions. 4. Customer complaints about the difficulty in using e-banking services and the inability of the institutions help desk to resolve problems. 5. Confusion between services provided by the financial institution and services provided by other businesses linked from the website 6. Compliance or Legal Risk

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This is the risk to earnings or capital arising from violations of, or nonconformance with, laws, regulations and ethical standards.

Compliance risk may lead to diminished reputation, actual monetary losses and reduced business opportunities. Banks need to carefully understand and interpret existing laws as they apply to Internet banking and ensure consistency with other channels such as branch banking. This risk is amplified when the customer, the bank and the transaction are in more than one country. Conflicting laws, tax procedures and reporting requirements across different jurisdictions add to the risk. The need to keep customer data private and seek customers consent before sharing the data also adds to compliance risk. Customers are very concerned about the privacy of their data and banks need to be seen as reliable guardians of such data. Finally, the need to consummate transactions immediately (straight-through processing) may lead to banks relaxing traditional controls, which aim to reduce compliance risk. Compliance and legal issues arise out of the rapid growth in usage of e-banking and the differences between electronic and paper-based processes Specific regulatory and legal challenges include the following:

Uncertainty over legal jurisdictions and which states or countrys laws govern a specific e-banking transaction.

Delivery of credit and deposit-related disclosures/notices as required by law or regulation.

Retention of required compliance documentation for on-line advertising, applications, statements, disclosures and notices.

Establishment of legally binding electronic agreements.

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Strategic Risk
This is the current and prospective risk to earnings and capital arising from adverse business decisions or improper implementation of business decisions. Many senior managers do not fully understand the strategic and technical aspects of Internet banking. Spurred by competitive and peer pressures, banks may seek to introduce or expand Internet banking without an adequate cost-benefit analysis. The organization structure and resources may not have the skills to manage Internet banking. To manage the strategic risk financial institutions should pay attention to the following:

Adequacy of management information system (MIS) to track e-banking usage and profitability.

Costs involved in monitoring e-banking activities or costs involved in overseeing e-banking vendors and technology service providers.

Design, delivery, and pricing of services adequate to generate sufficient customer demand.

Retention of electronic loan agreements and other electronic contracts in a format that will be admissible and enforceable in litigation. (court case / legal action)

Costs and availability of staff to provide technical support for interchanges involving multiple operating systems, web browsers, and communication devices.

Competition from other e-banking providers. Adequacy of technical, operational, compliance, or marketing support for e banking products and services.

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Simple guidelines for safe online banking:

On no account utilize communal terminals like cyber cafes when you are carrying out banking transactions online. The peril of compromise while making use of a wireless connection is to a large extent greater. Clients should carry out online banking transactions through a wireless connection provided that they are completely assured of the connection safety. Clients should be certain that their spyware and anti -virus applications are up to date and it is advisable to perform regular system scans. Clients should on no account log into a banking site via a link. Alternative ly, clients should type out the address of the banks website into the browser bar. Clients should never access any other web site when they are logged into an online banking site; they should be sure as to ascertain that there is only one window open. Clients should choose their user name and password cautiously. Both password and user name shouldn't be easy for anyone to deduce and they should be changed regularly. Clients computer software should be updated regularly. Clients should check for the padlock logo on the lesser right hand side of the browser window (it shows that the website is secured). Once a client is done with his or her Online banking, the client should log out and close the browser window.

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CHAPTER 5 5.1- INTRODUCTION OF ICICI BANK 5.2- HISTORY OF ICICI BANK 5.3- E- BANKING IN ICICI 5.4- CASE STUDY ON ICICI

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ICICI BANK PROFILE

INTRODUCTION
ICICI Bank is India's second-largest bank with total assets of Rs. 3,562.28 billion (US$ 7 billion) at December 31, 2009 and profit after tax Rs. 30.19 billion (US$ 648.8 million) for the nine months ended December 31, 2009. The Bank has a network of 1,723 branches and about 4,883 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

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HISTORY
ICICI Bank was established by the Industrial Credit and Investment Corporation of India, an Indian financial institution, as a wholly owned subsidiary in 1954. The parent company was formed in 1955 as a jointventure of the WORLD BANK, India's public-sector banks and publicsector insurance companies to provide project financing to Indian industry. The bank was initially known as the Industrial Credit and Investment Corporation of India Bank, before it changed its name to the abbreviated ICICI Bank. The parent company was later merged with the bank. ICICI Bank launched internet banking operations in 1998. ICICI's shareholding in ICICI Bank was reduced to 46 percent, through a public offering of shares in India in 1998, followed by an equity offering in the form of AMERICAN DEPOSITORY RECEIPT on the NYSE in 2000. ICICI Bank acquired the Bank of Madura Limited in an all-stock deal in 2001 and sold additional stakes to institutional investors during 2001-02. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group, offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. In 2000, ICICI Bank became the first Indian bank to list on the New York Stock Exchange with its five million American depository shares issue generating a demand book 13 times the offer size. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly owned retail finance subsidiaries, ICICI Personal Financial Services Limited and 46

ICICI Capital Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High court of gujrat at Ahmadabad in March 2002 and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. In 2008, following the 2008 financial crisis, customers rushed to ICICI ATMs and branches in some locations due to rumours of adverse financial position of ICICI Bank. The Reserve Bank of India issued a clarification on the financial strength of ICICI Bank to dispel the rumours.

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E- BANKING IN ICICI
INTERNET BANKING
ICICI Bank brings convenience and security to your desktop. Now you can check your account balance, transfer funds, download your account statement, and pay bills or even book tickets online, from the comfort of your home or in the middle of a busy day at the office. Explore the power of simpler and smarter Banking whether you are a Banking, Credit Card, Loan or Demat customer.

ATM BANKING
Bank 24/7 through a widespread network of ICICI Bank ATMs making life easy and convenient for you. User-friendly graphic screens and easy to follow instructions available in a choice of local languages, makes ATM Banking with ICICI Bank a smoother experience. ICICI Bank's widespread network of ATMs makes it easy and convenient for you to bank 24/7. With over 4,883 + ATMs and 1,626 + branches set up within 48

India, we ensure that you are never too far from an ICICI Bank ATM. User friendly graphic screens and easy to follow instructions in a choice of local languages, makes ATM Banking with ICICI Bank a smooth experience. ICICIBank.com also features the easy to access ATM Locator, making it easy for you to find an ICICI Bank ATM in your neighborhood.

MOBILE BANKING
ICICI Bank's iMobile is a breakthrough innovation in banking that allows you to transfer funds, make your credit card payments, pay utility bills, check your balance and do lots more, for free. So why wait anymore. Just download the iMobile application on your phone by sending us an SMS and experience iMobile. . ICICI Bank brings to you the 2nd generation iMobile that has newer features, smarter interface, quicker navigation and 49

enhanced functionality. ICICI Bank's iMobile is your answer to banking on the move. The next generation iMobile is your key to a faster, easier and simplified banking service. Using GPRS enabled on your mobile handset or through SMS, iMobile helps you to connect directly to your bank account. This Rich Client Based Application needs to be installed on your mobile thereby enabling a single click access to your account.

Services available with i Mobile:

Payment of utility bills and credit card bills Transfer of funds to any bank account Payment of insurance premium Placement of service request such us ordering of cheque books, bank account statements, cheque status and balance enquiry Access the following ICICI Bank services via iMobile:

Bank Account
Funds transfer Bill Payment Balance Enquiry Last 5 transactions 50

 Cheque Book Request Stop Cheque request Cheque status Enquiry

Credit Card
Balance Details Last Payment Details Payment Due Date Reward Point Status

Demat A/c
Holding Enquiry Transaction Status Bill Enquiry ISIN Enquiry

Loan A/c
Provisional IT Certificate Final IT Certificate Reset Letter Rescheduled Letter Loan Agreement Copy

M Shop

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Other Services
Status of Service Request Raised Locate US

INSTANT VOICE RESPONCE (IVR) BANKING

Find answers to all your banking needs from your phone. ICICI Bank's Instant Voice Response (IVR) Banking is free of charge, fully automated and at the same time user friendly. Just having an ATM PIN for your account and credit card ensures that your transactions are secure. Saving A/C Credit cards Demat Bonds Others

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The ICICI Bank Edge

Cash withdrawal up to Rs. 25,000/- per day from your account (50,000 for HNI's). Fast Cash option facilitates withdrawal of prefixed amounts; Ultra Fast Cash allows withdrawal of Rs. 3000/- in one shot Check your ledger balance and available balance Print out your Mini Statement which displays your last 8 transactions and the current balance Deposit Cash / Cheques at all full function ATMs; cash deposited in ATMs will be credited to the account on the same day if deposited before the clearing and cheques are sent for clearing on the next working day Transfer funds from one account to another linked account in the same branch. Change the Personal Identification Number (PIN) of your ATM or Debit card Pay bills, make donations to temples / trusts, buy internet packs, airtime recharges for prepaid mobile phones, etc. Request for a cheque book from our ATMs; concerned branch dispatches it to reach you within 10 working days No charge is levied on ICICI Bank customers for transacting through ICICI Bank's ATMs. But, if the minimum quarterly average balance is not maintained in your savings account, first 6 transactions in the quarter are free and thereafter, Rs. 25 per transaction is charged.

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OTHER SERVICE PROVIDED BY ICICI Bill payment Fund transfer Account information Account transfer

A Study of E-Banking in India: A Case Study of the ICICI Bank

A sound banking system is the backbone of economic as well social development and information technology in turn has become the backbone of banking activities. Technology which was playing supportive role became an essential part of modern banking activities. The Indian banking system has undergone a significant structural transformation since the 1990s. An administered regime under state ownership until the initiation of financial sector reforms in 1992, the sector was opened to greater competition and technological up-gradation by the entry of private banks and more liberal entry of foreign banks in line with the recommendations of the Report of the Committee on the Financial System (Chaired by Shri M. Narasimham).

The Indian banking sector was early adopter of e-banking and that way set an example to other industries, the need to opt for automation for taking full advantage of operational efficiency. E-banking through modern banking technology ensures 27-7-365 services and marks the customers feel comfortable to undertake the financial transactions with plastic cards and transact from the home. Today, banks are not only 54

automating their core banking operations, but also increasingly using information Technology for front-end customer intensive operations. This trend is expected to be strengthened over the next few years and spread from urban to rural areas and from foreign and Indian private banks to public sector, regional rural banks and co-operative banks. The study will cover following major objectives : 1. To examine the impact of E-banking on development of Indian banking industry. 2. To find paucity of infrastructural facilities and to suggest for fundamental infrastructure facilities required for E-banking adoption. 3. To evaluate the current status of e-banking and identify potential areas, in banking industry based on available resources and draw up integrated development plans for each such area. 4. To scrutinize the hurdles before e-banking practices in various operations activities and suggesting suitable strategy. 5. To analyze the impact of e-banking on cost of transaction of customer as well as bank. 6. To identify international best practices on operational and internal control issues of e-banking and suggesting appropriate ways for adopting the same in India. 7. To find the factors responsible for e-banking backwardness in Indian banking industry. 8. To find the changing customer expectations from banking services in technological era. 9. To evaluate the impact of e-banking practices on performance of banks. 10. To suggest measures for raising the e-banking practices levels and standards for Indian banking.

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CHAPTER 6 6.1- CONCUSION 6.2- DATA ANALYSIS 6.3- QUESTIONAIRES 6.4- WEBSITE

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CONCUSION
From all of this, we have learnt that information technology has empowered customers and businesses with information needed to make better investment decisions. At the same time, technology is allowing banks to offer new products, operate more efficiently, raise productivity, expand geographically and compete globally. A more efficient, productive banking industry is providing services of greater quality and value. E-banking has become a necessary survival weapon and is fundamentally changing the banking industry worldwide. Today, the click of the mouse offers customers banking services at a much lower cost and also empowers them with unprecedented freedom in choosing vendors for their financial service needs. No country today has a choice whether to implement E-banking or not given the global and competitive nature of the economy. The invasion of banking by technology has created an information age and commoditization of banking services. Banks have come to realize that survival in the new e-economy depends on delivering some or all of their banking services on the Internet while continuing to support their traditional infrastructure. The rise of E-banking is redefining business relationships and the most successful banks will be those that can truly strengthen their relationship with their customers. Without any doubt, the international scope of E-banking provides new growth perspectives and Internet business is a catalyst for new technologies and new business processes. With rapid advances in telecommunication systems and digital technology, E-banking has become a strategic weapon for banks to remain profitable. It has been transformed beyond what anyone could have foreseen 25 years ago. Two years ago, E-banking was a strategic advantage, nowadays; it is a business reality, if not a necessity 57

DATA ANALYSIS
1. USES OF E-BANKING YES NO 65% 35%

Uses of E-banking

YES NO

2. NUMBER OF USER OF BANKS ICICI SBI AXIS HDFC 30% 20% 10% 12%

USER %
ICICI SBI AXIS HDFC

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3. PREFRENCE FOR ONLINE BILL PAYMENT YES NO 60% 40%

ONLINE BII PAYMENT %

YES NO

4.PREFRENCE FOR ONLINE SHOPPING YES NO 70% 30%

ONLINE SHOPPING %

YES NO

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5.PREFRENCE FOR ONLINE FUND TRANSFER. YES NO 35% 65%

70 60 50 40 30 20 10 0 YES NO

ONLINE FUND TRANSFER %

6.SATISFIED CUSTOMERS. YES NO 65% 35%

SATISFIED CUSTOMERS %

YES NO

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QUESTIONAIRES TO BANKERS
How the e-banking is helpful to your customer??? What type of new techniques helpful to your bank??? Is there any special training given to your employees for transacting whit customer using e-banking??? Is e-banking safe way for customer to control their account without going to banks?? Is there is any risk involved in e-banking transaction?? Is there facility provided to your each branch of your bank or only at main branches? Which type of software are you using for e-banking? What is the important thing during the transaction of e-banking? In which way you convinced your customer for using e-banking? Till now is there any complaint of your customer who use this system? .

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WEBSITE
www.google.co.in in.yahoo.com/ www.scribd.com

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