BANKING INFORMATION SYSTEMSLECTURE 4

E-Banking Services

1.  Account Access2.  Balance Transfer

3.  Bill Payment4.  Bill Presentment

5.  Mortgage /Credit card / Misc. Lending6.  Business Banking Services & Administration7.  Cross Selling‐

8.  Personalized Content and Tools9.  Account Aggregation

10.  Electronic Fund Transfer

1.  Account Access

•  Access online to all of one’s accountinformation (usually checking, savings, andmoney market), which is either updated inreal time or on a daily bath basis.

2.  Balance Transfer

•  Transfer funds between accounts:

-  Between accounts in the same bank

-  Between accounts in different banks in the samecountry

-  Between accounts in different banksinternationally

3. Bill Payment

•  Pay any designated bill based on instructionsone proves including whether to payautomatically or manually each month.

4. Bill Presentment

•  View billing statements as presentedelectronically, which allows inter active‐capabilities such as sorting, drill down‐details, or advertising, in addition to on click‐payments.

5. Mortgage /Credit card / Misc.Lending

•  Search, apply, and receive approval online forvarious types of loans and then review yourstatements using online bill presentment.

6. Business Banking Services

•  In addition to all of the basic payment andaccount access services, merchant canmanage their electronic lock box for receivedpayment, accounts receivable posing, as wellas initiative payment via networks.

7. Customer Service andAdministration•  While the Web will eventually enable livecommunication, it is most optimally designed tofacilitate interaction with information so thatcustomers can more easily service themselves. In theprocess, customers receive as good, if not better,service while the bank saves money with eachadditional transaction as it realizes the scaleeconomies of its largely fixed online investment.Advanced e Mail systems with automated replies and‐intelligent routing are also helping to improve theonline customer service experience.

8. Cross selling‐

•  Just as visitors to a branch are being offered newproducts by tellers and simple signage. In most cases today, banks perform this function online with standard, broadly targeted text offers or by just making their product literature available online. In the future, banks will be able to harness the true power of the Internet by providing targeted offers to Web customers based on a combination of their indicated interests and financial situation. Not only will banks be able to sell banks products, but non financial ‐products as well.

9. Personalized Content and Tools

•  As one visits the Web branch, one is instantlyrecognized and content displayed is orientedtoward one’s interests including weather,investment, and hobbies. More importantly,by using the Web, bank customers could useonline financial planning tools to bettermanage their finances.

10. Account Aggregation

•  Accounts aggregation enables a consumer to be presentedwith all his or her account details (current account, savingaccount, mortgage account etc.) on a single page.

•  For access to external financial data consumers to provide their account passwords to the aggregator (usually a bank). The aggregator uses the passwords to access automatically the consumer’s accounts.

The information is then provided to the consumer on aconsolidated basis on a single page so the customer has afull view of his/her financial poreolio.

11. Electronic Funds Transfer

•  Electronic Funds Transfer (EFT) is a system oftransferring money from one bank accountdirectly to another without any paper moneychanging hands.

•  One of the most widely used EFT programs is‐Direct Deposit, in which payroll is depositedstraight into an employee’s bank account. Thissystem may also be used for debit transfers,such as mortgage payments.

E banking Technologies‐

•  E-banking relies heavily on information andcommunication technologies (ICT) to achieve itspromise of 24 hours availability, low error rates,and quicker delivery of financial services.

•  When considering e banking, bank websites‐usually come to mind first, but e banking‐requires much more than just a good website.

Services and Structure

E banking and E commerce‐ ‐

•  E banking may be viewed as one branch of e‐ ‐commerce.

•  The Internet may be the most common and wellknown medium for e commerce, but it is not the‐only one.

•  In a banking context, ATMs and credit cards arealso classified as e commerce.‐

The Internet•  The emergence of the Internet has posed a host of new

organizational opportunities and challenges.

•  Other e channels such as Interactive Television (iTV) and Wireless‐Application Protocol (WAP) technologies are available for servicesdelivery, their use is still limited in the provision of financialservices.

•  The Internet is a massive global network of interconnectedpacket switched computer networks. Hoffman (2002) offers three‐(mutually consistent) definitions of the Internet: a network ofnetworks based on the TCP/IP protocols; a community of peoplewho use and develop those networks; and a collection ofresources that can be reached from those networks.

The Internet

•  A more recent development is web 2.0 whichmay be described as a newer version of web-based applications(such as wikis, social-

networking sites, and blogs) which aim toenhance creativity, collaboration, andinteraction between Internet users. Thesedevelopments on the Internet are expandingbeyond the utilization of the Internet as acommunication medium to an important view ofthe Internet as a new market place.

The Internet

•  The Internet influences the future services/products distribution channel structure.

•  Increased competition between suppliers isalso likely to result in lower prices forconsumers.

The Internet

•  Internet technology can make a significant contribution toa company’s value chain.

•  It can improve a company’s relationship with vendors andsuppliers, its internal operations and its customerrelations, and offers the prospect of reaching anexpanding customer base.

•  The Internet also promises to dramatically lowercommunications costs by eliminating obstacles created bygeography, time zones, and locations (Tan & Teo, 2000).

The Internet

•  The Internet provides a powerful platform forcorporations with home pages to market and advertisetheir products and services.

•  It has proved an efficient and cost-effective way ofdistributing information almost instantaneously tomillions of potential clients in global markets.

•  Many companies use the Internet to conduct market andscientific research, as well as to source business-relatedinformation to improve their products and services.

The Internet•  The rise of the Internet has resulted in the formation of virtual

organizations, which have virtually no physical presence in terms of retailoutlets but enjoy access to national and international markets.

•  There is a scope for physical organizations to become virtual, as they canleverage their core competencies in primary activities. Physicalcompanies often have a great deal more experience/knowledge of theirproducts and how to sell them than new Internet traders and theyusually also have established brands and a large customer base.

•  Owens and Robertson (2000) contend that it takes longer for physicalorganizations to develop an integrated e- commerce structure than it‐does for virtual traders to commence trading. This is due to the reduced,simple physical structure of the virtual organizations. They argue that astructure of similar efficiency must be adopted by physical organizationsfor the provision of Internet services.

Mobile Banking Technologies•  Mobile banking is the newest channel in electronic banking to

provide a convenient way of performing banking transaction usingmobile phones or other mobile devices.

•  Some banks are making significant investments in mobile systemsto deliver a range of types of business value, from increasedefficiency and cost reduction, to improved operationaleffectiveness and customer service to provide a competitiveadvantage.

•  A factor that has contributed to this development has been theextended availability and capacity of mobile communicationsinfrastructure around the world.

Mobile Banking Technology

•  The number of types of mobile devices has beenincreasing rapidly and the functionality availablehas also improved.

•  The shrinking costs of data transmission and,due to the intense competition from suppliers,the reduced costs of devices have catalyzed thedistribution of mobile technologies andamplified the growth of the worldwide mobilemarket.

Mobile Banking Technology•  Wireless Application Protocol (WAP): is an applicationenvironment and set of communication protocols forwireless devices designed to enable manufacturer,vendor, and platform independent access to theInternet and advanced telephony services.

•  Wireless Internet Gateway (WIG): is a Short MessageService (SMS) based service, in which a menu of‐available banking options is initially downloaded fromthe bank to the phone device (Brown et al. 2003). Thisenables users to browse bank accounts and conductother banking related tasks.

Mobile Banking Disadvantages1. Internet connectivity costs: Although connection

costs from mobile phones is steadily declining it isstill high enough in many countries to detercustomers from using their mobiles for applicationssuch as e banking.‐

2. Difficult user interface: Human Computer Interface(HCI) issues are a key factor in mobile technologyacceptance. A general rule is that the easier andmore adoptable the interface, the greater is the useracceptance.

Mobile Banking Disadvantages3. Lack of awareness amongst customers: Many banking

customers are not even aware of availability of mobile bankingor associated benefits. Awareness increases with time and needsconsiderable promotional efforts.

4. Limitations in functionality of mobile devices: Mobiletechnologies are still dogged by limitations such as limitedbattery life, unreliable network connections, volatile accesspoints, risk of data loss, portability, and location discovery.

Mobile Banking Disadvantages5. Security concerns: Mobile technology still suffers from

questionable security. So it may not be suitable fortransfer of highly confidential financial information.Mobile devices are increasingly becoming a target forvirus writers, hackers, and short message service (SMS)spammers.

6. Organizational changes: To offer mobile banking manyorganizations will need to change their businessprocesses, ways in which information is provided andaccessed, working practices and work relationships,working styles and changes in roles, responsibilities andmanagement structures.

Mobile Banking Disadvantages

7. Small number of choices: Not all banks offermobile banking.

8. Technology overload: Fragmented informationchannels often result in inefficient workingpatterns as users switch from device to deviceand between different media (Evans, 2004)which may result in mobile ignorant customersunable to use their devices for day to day taskssuch as e-banking.