Online Banking or E Banking

Introduction
Online banking
(
Internet banking
or
E-banking
) allows customers of a financial institutiontoconduct financial transactions on a
secured website operated by the institution, which can be aretail bank, virtual bank, credit
union or building society.
Online banking
is an umbrella term for the process by which a customer may perform bankingtransactions electronically without
visiting a brick-and-mortar institution. The following termsall refer to one form or another of online banking:
personal computer (PC) banking, Internet banking, virtual banking, online banking, home banking, remote electronic
banking, and phone bank. PC banking and Internet or online banking is the most frequently used designations.
Itshould be noted, however, that the terms used to describe the various types of online banking areoften used inter
changeably.Online banking is an activity that is not new to banks or theircustomers. Banks having been providing
their services to customers electronically for yearsthrough software programs. These software progr
ams allowed the users personal computer to
dial up the bank directly. In the past however, banks have been very reluctant to provide theircustomers with banking
via the Internet due to security concerns.
Today, banks seem to be jumping on the bandwagon of Internet banking. Why is there a suddenincrease of bank
interests in the Internet? The first major reason is because of the improvedsecurity and encryption methods
developed on the Internet. The second reason is that banks didnot want to lose a potential market share to banks that
were quick to offer their services on theInternet.Many of the banks like DBBL, HSBC, IFIC, Citibank, GlobalTrust
Bank (GTB), Bank of Madhumati Bank were offering E-banking services. Based on theabove statistics and the
analysts
comments that Bangladesh had a high growth potential for e- banking or Online banking the players focused on
increasing and improving their E-banking orOnline Banking services. As a part of this, the banks began to
collaborate with functions onlineWhy is there a sudden increase of bankinterests in the Internet? The first major
reason is because of the improved security and

Online Banking or E Banking

encryption methods developed on the Internet. The second reason is that banks did not want tolose a
potential market share to banks that were quick to offer their services on the Internet.To access a financial
institution's online banking facility, a customer having personal Internetaccess must register with the
institution for the service, and set up some password (under variousnames) for customer verification. The
password for online banking is normally not the same asfor [telephone banking]. Financial institutions now
routinely allocate customers numbers (alsounder various names), whether or not customers intend to access
their online banking facility.
Customers numbers are normally not the same as account numbers, because number of
accountscan be linked to the one customer number. The customer will link to the customer number any
ofthose accounts which the customer controls, which may be cheque, savings, loan, credit card andother
accounts. Customer numbers will also not be the same as any debit or credit card issued bythe financial
institution to the customer.To access online banking, the customer would go to the financial institution's
website, and enterthe online banking facility using the customer number and password. Some financial
institutionshave set up additional security steps for access, but there is no consistency to the
approachadopted.Online Banking or E-banking is defined
as the automated delivery of new and traditional
banking products and services directly to customers through electronic, interactive communicationchannels.
Online Banking or
E-banking includes the systems that enable financial institutioncustomers. Individuals or businesses, to
access accounts, transact business, or obtain informationon financial products and services through a public
or private network including the Internet,Customers access e-banking services using an intelligent electronic
device.The
Online Banking or
E-banking was firstly introduced in Bangladesh by the DBBL around 1996.There after many other banks
like HSBC, IFIC, Citibank Trust Banks, Islami Bank, etc. followedthe service. As today private and foreign
bank had started capturing the market through
Online
Banking or e-banking hence
the
competition is heating up and the lack of technology can make a bank loose a
customer
so now the public banks are breaking the shackles of traditional set-upand gearing up to face the
competition posed by the private sector counterparts.

Online Banking or E Banking

Definition OF Online Banking
Online banking is an outgrowth of PC banking. Online banking uses the Internet as the
deliverychannel by which to conduct banking activity, for example, transferring funds, paying
bills,viewing checking and savings account balances, paying mortgages, and purchasing
financialinstruments and certificates of deposit. An Internet banking customer accesses his or
heraccounts from browser software that runs Online
banking programs resident on the banks WorldWide Web server, not on the users PC. Net
Banker defines a true Internet bank as one that
provides account balances and some transactional capabilities to retail customers over
the WorldWide Web. Internet banks are also known as virtual, cyber, net ,interactive, or web
banks.Internet banking is just like nor
mal banking, with one big exception. You dont have to
go to the bank for transactions. Instead, you can access your account any time and fromany
time and from any part of the world, and do so when you have the time, and
notwhen the bank is open. For busy executives, students, and homemakers,e-banking is virtual
blessing. No more talking precious time off from work to get ademand draft made or a cheque
book issued.Electronic banking, also known as electronic funds transfer (EFT), is simply the
use of electronicmeans to transfer funds directly from one account to another, rather than by
cheque or cash. Youcan use electronic funds transfer to:

Online Banking or E Banking

Have your paycheck deposited directly into your bank or credit union checking
account.Withdraw money from your checking account from an ATM machine with a
personalidentification number (PIN), at your convenience, day or night.Instruct your bank or
credit union to automatically pay certain monthly bills from your account,such as your auto
loan or your mortgage payment.Have the bank or credit union transfer funds each month from
your checking account to yourmutual fund account.Have your government social security
benefits check or your tax refund deposited directly intoyour checking account.Buy groceries,
gasoline and other purchases at the point-of-sale, using a check card rather thancash, credit or
a personal check.Use a smart card with a prepaid amount of money embedded in it for use
instead of cash at a
pay phone, expressway road toll, or on college campuses at the library's photocopy machine o
r bookstores.Use your computer and personal finance software to coordinate your total
personal financialmanagement process, integrating data and activities related to your income,
spending, saving,investing, recordkeeping, bill-paying and taxes, along with basic financial
analysis and
decisionmaking.Banks offer Internet banking in tow main ways. An existing bank with physic
al offices canestablish a Web site and offer Internet banking to its customers in addition to
itstraditional delivery channels.
A second alternative is to establish a virtual, branchless, or
Internetonly bank. The
computer server that lies at the heart of a virtual bank may be housed in an office thatserves
as the legal address of such a bank, or at some other location.Virtual banks may offer their
customers the ability to make deposits and withdraw fundvia automated teller machines
(ATMs) or other remote delivery channels owned by otherinstitutions.Online system allow
customers to plug into a host of banking services from a personal
computer by connecting with the banks computers over telephone wires the convenience
can be compelling. Not only is travel time reduced, but ATM machines,
telephone banking or banking by mail are often unnecessary. And, technology continues to m
akeonline banking once attempted only by computer enthusiasts, easier for the
averageconsumer.