E-Banking

Presented By:Rana Singh

www.ranasingh.orgDr.ranasingh@gmail.com

Agenda

E-Banking – Concepts and advantages

Technical Framework Indian Banking Scenario ICICI “Infinity” - A Case Study

A non-resident Indian (NRI) in Paris has an easy way to access money in this fashion capital of the world.

His Citibank account in India can be accessed through an ATM in Paris, which in turn transmits information to Citibank’s central hub in the US.

The Indian rupees are converted to US dollars, which are in turn converted into French Francs at the current exchange rate, the Indian account is debited and the Francs made available to the NRI.

Welcome to the era of technology banking!

Imagine a Scenario

Definition

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."

What is E-banking?

Online banking or Internet banking In simple terms it does not involve any

physical exchange of money, but it’s all done electronically, from one account to another, using the Internet.

From a personal computer, you can access your bank account information, and perform many banking functions, like transferring money, making a loan payment

What is E-banking?

Once you register yourself on a bank website, you can view

o Your accounts, credit card & home loan balanceso Accrued interest, fees and taxeso Transaction details of each accounto Pay billso Transfer funds to third party accounts which you

nominateo Open a deposit right from the terminal you are

sitting at.

What is E-banking? However, till now Internet services in India only

allows for a minimum level of interactivity such as

o Answering e-mail querieso Feedback forms o Articles asking for readers’ opinion at the end

An accountholder, armed with a password, can use the Net to order a cheque book, stop payment of a cheque and spot the balance and individual operations in the account and transfer funds.

Advantages

Eliminates the use of paper and replaces it with computer screens

No need to stand in line at the bank, because all you have to do is log onto the internet & access your account

It’s safe, hassle free, saves hours of time a month

Advantages

It comes with a world of other benefitso Interest earning checking accounts, o Automatic bill paymento ATM/Debit cardso Credit Cardso Direct Deposito Online Statementso Loanso Money market accounts

Transaction costs

Source : Booz ,Allen and Hamilton

Customer service

As an online bank customer, you have a website that is at your disposal 24/7

You can get your online statement for the month, week, day, or year

You can send e-mails with questions or concerns

You can pay bills

E- Banking Setup

Elements of an E- Banking System

Hardwareo Serverso Storage device and databaseo Communication channels and lineso Gateways and remotely located

devices (e.g., thin clients or Internet appliances) serving as interfaces between users and computers

Software

Elements of an E- Banking System

o Operating systemso Firewallso Database management systemso Security application programs.

E- Banking Setup

Areas Of Security

Authentication o Verifying your identity using

passwords/pass phrases and certificates Confidentiality Non Repudiation

o Method by which the sender of data is provided with proof of delivery and the recipient is assured of the senders identity

Areas Of Security

Integrity Access Control

o Mechanisms and policies that restrict access to computer resources

Availability

Access Control Access control restricts the flow of

data traffic Internet Banking uses firewalls in

the area of access control. Internet Banking two firewalls are

usedo One before the Internet Banking server o Before the SQL database

Access Control

Banking uses firewall which fall into two categorieso Packet-filtering Gateways o Proxy services.

Data Transmission and Confidentiality

Public Key Encryption

Secure Socket Layer (SSL)

Authentication Digital Certificate

o A digital certificate is an electronic ID, which is verified by a third party, a certification authority (CA)

o The CA controls the Public Key Infrastructure (PKI).

o A security certificate ,associates an identity with a public key. Only the owner knows the corresponding private key that allows the owner to "decrypt" or make a digital signature.

o Eg Barclays UK’s Digital certificate

                                                 

           

E-Banking Scenario

E-banking – Trends Worldwide

Concept of E-banking is more prevalent in the technologically developed parts of the world such as Europe and the US

The number of online banks in Western Europe has mushroomed. As per Bluesky International Marketing, a US based research agency, the  number is quoted at 1,845 in  mid 1999.

The scene is similar in the US where a recent Dataquest survey forecasts that the number of US households banking online will reach 24.2 million by 2004.

Indian Banking Scenario

33 private banks and 43 foreign banks 27 public sector banks account for over

84% of the total deposits and over 82% of the total banking  advances in India

Rough estimates assuming teller at Re 1 per transaction put ATM transaction costs at 45p, phone banking at 35p, debit cards at 20p and Internet banking a measly 10p.

E-banking in India

Marriage of technology and banking is inevitable to keep pace with changes in the global scenario.

The Verma Committee recommended the need for greater use of IT even in the weak Public sector banks.

Presently Net Banking facility is offered by ICICI Bank, Citibank, HDFC Bank, Global Trust Bank etc.

Changing Scenario Jurassic banking is passé. The Internet is slowly converting

retail banking into a commodity where the days of loyalty to bricks and mortar banking are obsolete.

Retention of customers Survival in competitive markets Reduction of transaction costs

New Initiatives HDFC Bank is planning to introduce third

party payments whereby account holders will be in a position to make payments to predetermined parties through the Net.

The ICICI group has also launched an Internet payment gateway for handling Net transactions of its clients.

HSBC is working on a comprehensive interactive financial services in collaboration with IBM which would be a state-of-the-art local platform.

Relationship Banking

IT enabled Relationship banking

Emphasis on “Human Capital” Customer oriented. IT enabled Customer relationship

management for banking services. Maximisation of profitability through the

use of detailed Customer information. Financial portfolios tailormade to

Customer’s individual needs.

Tools used in Relationship banking

Networking Techniques. Parallel Systems. Data Warehousing Data Mining

Advantages of Relationship Banking

Higher customer retention More cost effective marketing Reduced Credit risk Reduced Customer Acquisition

costs

Customer Service

ATMs Personal banking centres Retail delivery Channels Home Banking Telephone Banking

Difficulties The picture in India, however, is a bit grey.

The RBI does not still allow inter-bank funds transfer through the Net since the cyber laws are still not in place. Once allowed, this could pave the way for smooth cash management.

Security also continues to remain a major issue, especially in the case of corporates, as bulk transactions are done in a day.

Bankers are aware of the fact reliable transaction technology as well as management of the security perceptions of customers are the keys to success.

Difficulties The infrastructural costs of

providing such services are quite high.

A bank not only has to automate its front-end systems which the customer interfaces with but also the back-end systems so that the bank is able to provide “robust functionality”.

ICICI’s Infinity

Internet Banking Service

As per Mr. K.V.Kamath, MD and CEO ICICI Ltd.,

“Technology today, particularly via the internet, is creating a platform-independent, low cost communication infrastructure permeating all sectors of the economy and providing  an affordable medium to conduct business”.

Infinity - Internet Banking Service was launched in December ’97 and has 15,000 customers. It offers you convenient remote banking facility. It provides you an easy and secure access to your accounts with us. With just a PC connected to the Internet, you can have your account information at your fingertips, from anywhere in the world, anytime. So, if you don't want brick and mortar bank timings to hassle you, Infinity Internet banking is just the service for you.

Online Services Offered Account information

Summary of all your Accounts by giving details of each account, snapshot of balances, available credit lines, record of payments and transfers.

Allows transaction tracking (retrieval of transaction details based on cheque number, transaction amount etc)

Provides account statement and transaction reports based on user defined criteria.

Displays account balance message and also a warning when the Account balance limit has been crossed.

Allows you to view details of fixed deposits and loan installments due.

•Funds transfer-Transfer money between your accounts across any of the branches

- Third party funds transfer which means you can transfer money to any other ICICI bank holder.

•Requests and intimations-electronically submit a request for :

-Cheque-book

-Stop Payment Instruction

-Opening a Fixed Deposit

-Opening a Recurring Deposit

•Communication with your account manager-Mail-box facility enables you to send secure mail to your account manager to find out the status of a request or for any clarifications.

•Personalised Content - Infinity provides customised content exclusively for its users.

-    Personal Finance containing views of experts -    Select articles on electronic commerce, information technology -    Lifestyle articles on various places of tourist attraction -    News updates

•Online investments

•Online real time e-shopping payments -Online shopping payments at rediff.com, fabmart.com, malamall.com, magiccart.com, indiainfoline.com, eindia.com, indbazaar.com, shoppersstop.com, sify.com

•Utility bill payments-ICICI Bank has now tied-up with Life Insurance Corporation to accept the payment of life insurance premium over Internet

-Payment of Bills of the cellular operators

Which equipment and software do I need to access Infinity?

If you have a PC connected to the Internet, you will be able to use Infinity. For optimal performance and security, the recommended browsers are :

•Microsoft Internet Explorer 4.x or later •Netscape Navigator 4.x or later

ICICI Bank launched a web banking service for non-resident Indians (NRIs).

NRIs can now open an account with the bank on-line by visiting its NRI services section on the web-site.

The bank presently has over 15,000 NRI customers, a majority of whom are in the United States, Middle East and Europe.

Thank You