26784727 Presentation of e Banking

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IN THE NAME OF ALLAH THE MOST MERCIFUL THE MOST BENEFICENT

IN THE NAME OF ALLAH THE MOST MERCIFUL THE MOST BENEFICENT

1/14/2012 1CREATED BY:HAROON RASHEED



PRESENTATION

MONEY BANKING & FINANCE




ASSIGNED BY

MISS. AYESHA SABA




TOPIC

SCOPE OF INTER NET OR E . BANKING




PRESENTED BY

HAROON RASHEED

CLASS :B.COM 1ST ROOL NO :03

INFORMATICS COLLEGE OF SCIENCE AND TECHNOLOGY FSD







Contents

What is E-Banking ?

Development of E-Banking

Types of Banking is Varied by Diagram Types of E-Banking

E-Banking Products

Benefits of E-Banking

Disadvantages and Risk of E-banking

Scope of E-Banking in Pakistan




What is E-Banking ?

E -banking is defined as:

Banking is a combination of two, Electronic technology andBanking.

Electronic Banking is a process by which a customer performsbanking Transactions electronicallywithout visiting a brick-and-mortar institutions

Electronic banking is also called Cyber banking , virtual banking and online banking .

In short, Electronic banking is the delivery of banking services to thecustomers through the use of electronic communication primarily the internet

Electronic banking is one of the truly

widespread avatars of E-commerce theworld over. Various authors define E-Bankingdifferently but the most definitiondepicting the meaning and features of

E-Banking are as follows:




Informationtechnology

BANK

Customer





1980s :- Rapid development of the Internet

- TCP/IP system (communication system)

- E-commerce

Early 1980s :- Access to their accounts with the

computer of the bank

E-Banking made its debut in UK andUSA during 1920s. It became

prominently popular during 1960sthrough electronic funds transfers andcredit cards. The concept of Web-based banking came into existence, inEurope and USA in the beginning of1980s. It has been estimated that 40percent of banking transactions wouldbe done through net at present. Today,a wide range of services are being

rendered by banks using the electronicmedia. Since many years, banks havebeen operating inter-city transfer ofmoney through demand drafts, mailtransfers and telephonic transfers fromone city to other or even within thesame city and also from bank to bankthrough telephones. It facilitatesavailability of funds the next day itself.

It is a matter of great satisfaction thatthe e-Commerce is greatly assisted bythe e-Banking through electronic cashcheques and smart cards. It is one ofthe trend setting paperless mode ofeffecting payment by two kinds; I)Electronic Credit Clearing, and II)Electronic Debt Clearing. Thefollowings are other delivery channelsof banking.

History





May 1995 :

Wells Fargo - the first bank in the world

to offer customer access to their accountsover the internet .

Allows customer to see their accountsonline





Hong Kong (September 1999 ):

Bank of East Asia - first launched Internet

banking Mortgage applications

personal loans stock trading




TYPES OF BANKNG IS VARIED

This is a direct bankingbecause the customerget any services on thespot.

This is a online bankingbecause the customer getservices from manydistance

This is a wireless orPDA(personal digitalassistance) banking because inthis type no any wire isconnected and customer getservices at any where. when hewant.




Types of E-Banking

Automated Teller Machine (ATM)

Tele banking or Phone Banking Mobile Banking

Pc Banking & Digital TV banking

Internet Banking Wireless or PDA Banking

MAIN TYPES OF E-BANKING SYSTEM




e-Banking CSFs

Bank A Bank B

Clearing

Settlement

e-Banking

e-Tr adee-Banking:Inf r astructur e

Cost effectiveness

Mar ket segmentation

Multi channel delivery

Payment str eamsRisk management

e-Business e-Business

Bank Server





Types of E-Banking

First electronic channel introduced

Accepting deposits and dispenses cash

Convenient in handling accounts

AUTOMATIC TELLER MACHINE (ATM): This systemis known as "Any Time Money" because it allowscustomers who have an ATM card to withdrawmoney at any time from the bank withoutinteracting with human teller. Since the ATMmachine can be installed anywhere like petrolbunks, markets, railway stations etc, and can wellbe linked to the main computer. It allows customersto transact with the bank 24 hours a day and 365days a year. They allow the customers to transfermoney to and from accounts to view accountinformation, to deposit cheques or cash, to order

cheques, to receive cash etc.1/14/2012 16CREATED BY:HAROON RASHEED




Types of E-Banking

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 ATM.

Using an ATM, customers can access their bankaccounts in order to make cash withdrawals (orcredit card cash advances) and check their accountbalances. Many ATMs also allow people to depositcash or checks, transfer money between their bankaccounts, pay bills, or purchase goods and services. ATMs are known by various casual terms including

cash machine, hole-in-the-wall, cash point or Bancmat (in Europe and Russia).




Tele banking or Phone Banking

Types of E-Banking

It came into operation in the 1970s in the developedcountries like the US. It is accessible for corporatecustomers that have large volumes of payments toeffect and dispose of a fully automated accountingsystem. They can establish a Computer to Computerlink with their bank and in this way exchange truly

paperless credit transfers which are handled all theway from the originator to the beneficiary's accountwithout any paper involved.

HISTORY

This facility is available with the help of Voice

Response System (VRS or IVR). This system basically,accepts only TONE dialed input. Like the ATMcustomer has to follow particular process, initiallyaccount number and telephone PIN are fed for theprocess to start. Also the VRS system provides theusers within additional facilities such as changingexisting password with the new desired.

How Its Work




Automatic balance voice out for the default account.

Balance inquiry and transaction inquiry in all

Inquiry of all term deposit account

Statement of account by Fax, e-mail or ordinary mail.

Cheque book request

Stop payment which is on-line and instantaneous

Transfer of funds with CBS which is automatic and instantaneous

Utility Bill Payments

Renewal of term deposit which is automatic and instantaneous

Voice out of last five transactions.

Types of E-Banking

Some of the advantages of TELE-BANKING ar e:-

Tele banking or Phone Banking




Types of E-Banking

Mobile banking comes in as a part of the banks initiative tooffer multiple channel banking providing convenience for itscustomer. A versatile multifunctional, free service that isaccessible and viewable on the monitor of mobile phone.Mobile phones are playing great role in banking- bothdirectly and indirectly. They are being used both as bankingand other channels.

Mobile Banking

Its most commonly used type is SMS Banking

SMS-bankingThe Short Message Service (SMS) is a GSM service to exchange textmessages up to 140 byte (or 160 characters of 7 bit). The transmission

of mobile-originated short messages is carried out by the short messageservice center (SMSC) of the particular network operator. The SMSC isreceiving the message from the mobile device and routing it to thedestination device. For generating mobile-terminated short messages, itis possible that a company or a special service provider runs an ownSMSC. Thus, a bank could generate SMS from bank data like accountbalance or account movements and send it to the mobile device of thecustomer. This technique is used at SMS-banking: The customer sends anSMS with a request to the bank, and gets

the desired data as an answer.1/14/2012 20CREATED BY:HAROON RASHEED



Types of E-Banking

PC Banking - The forerunner toInternet banking has been aroundsince the late 1980's and is still widelyused today. Individual banks providesoftware which is loaded on to anSME's office computer. The SME canthen access their bank account via amodem and telephone link to the bank.

Access is not necessarily via theInternet.

PC & Digital TV Banking

PC Banking

Digital TV Banking- Using the standarddigital reception equipment (set topbox and remote control), users canaccess their bank account. AbbeyNational and HSBC services areavailable via Digital TV providers. Oneof its main selling points is that noaccount details are transmitted via theWorld Wide Web.

Digital TV Banking




Inter Net or Online Banking

Types of E-Banking

The advent of the Internet and thepopularity of personal computerspresented both an opportunity and achallenge for the banking industry. Foryears, financial institutions have usedpowerful computer networks to

automate million of daily transactions;today, often the only paper record isthe customers receipt at the point ofsale. Now that their customers areconnected to the Internet via personalcomputers, banks envision similaradvantages by adopting those sameinternal electronic processes to homeuse. Banks view online banking as apowerful value added tool to attract

and retain new customers whilehelping to eliminate costly paperhandling and teller interactions in anincreasingly competitive bankingenvironment

Internet Banking lets you handle many banking transactions viayour personal computer. For instance, you may use your computerto view your account balance, request transfers between accounts,and pay bills electronically. Internet banking system and method inwhich a personal computer is connected by a network serviceprovider directly to a host computer system of a bank such that

customer service requests can be processed automatically withoutneed for intervention by customer service representatives. Thesystem is capable of distinguishing between those customerservice requests which are capable of automated fulfillment andthose requests which require handling by a customer servicerepresentative. The system is integrated with the host computersystem of the bank so that the remote banking customer canaccess other automated services of the bank. The method of theinvention includes the steps of inputting a customer bankingrequest from among a menu of banking requests at a remotepersonnel computer; transmitting the banking requests to a host

computer over a network; receiving the request at the hostcomputer; identifying the type of customer banking requestreceived; automatic logging of the service request, comparing thereceived request to a stored table of request types, each of therequest types having an attribute to indicate whether the requesttype is capable of being fulfilled by a customer servicerepresentative or by an automated system; and, depending uponthe attribute, directing the request either to a queue for handlingby a customer service representative or to a queue for processingby an automated system.

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Thr ee Types of Inter net Banking

This type of Internet banking systems and the customer. Theinteraction between the banks system and the customer. Theinteraction may be limited to electronic mail, account enquiry, loanapplications, or static file updates (name and address change).Because these servers may have a path to the banks internalnetworks, the risk is higher with this configuration than withinformational systems. Appropriate controls need to be in the placeto prevent, monitor, and alert management of any unauthorizedattempt to access the banks internal networks and computersystems. Virus controls also become much more critical in thisenvironment.

This is the basic level of Internet or E-Banking. Typically, the bankhas marketing information about the banks products and services ona stand-alone server. The risk is relatively low, as informationalsystems typically have no path between the server and the banksinternal network. This level of Internet banking can be provided bythe banks or outsourced. While the risk to a bank is relatively low,the server or web site may be vulnerable to alteration. Appropriatecontrols therefore must be in place to prevent unauthorized alterations to the

banks server or web site.

This level of Internet banking allows customers to executetransactions. Since a path typically exists between the server andthe bank or outsourcers internal network, this is the highest riskarchitecture and must have the strongest controls. Customertransactions can include accessing accounts, paying bills,

transferringfunds etc.

Inf or mational

Communicative

Tr ansactional

Types of E-Banking




ADVANTAGESOF INTERNET BANKING

Convenience

Ubiquity

Transaction speed

Efficiency

Effectiveness

Types of E-Banking

Unlike your corner bank,online banking sites neverclose; theyre available 24hours a day, seven days aweek, and theyre only amouse click away.If youre out of state or even

out of the country when amoney problem arises, youcan log on instantly to your

online bank and take care ofbusiness, 24\7.

Online bank sitesgenerally execute andconfirm transactions ator quicker than ATMprocessing speeds.

You can access and

manage all of yourbank accounts, evensecurities, from onesecure site.

Many online banking sites now offersophisticated tools, including accountaggregation, stock quotes, rate alertand portfolio managing program to helpyou manage all of your assets moreeffectively. Most are also compatiblewith money managing programs such asquicken and Microsoft money




Types of E-Banking

Wireless banking is gaining popularity.

With a phone number and a special PIN number a customer has

access to his account balance from his cellular device.

Allows user to pay bills, transfer funds between accounts and

check accounts from anywhere.

Net bank ,td bank offers wireless banking.

Security is an important issue in Wireless Banking.

Newsbytes reports that wireless banking users will number over

7 million in the US by 2005.

Wireless or PDA Banking




WAP-bankingThe most widespread solution for mobile banking is based on micro-websites following the WAP standard (Wireless Application

Protocol). The function of WAP banking is in many ways similar tothe function of Electronic banking using http. The client sends arequest and gets a response with page content which is stored on ordynamically generated by a standard web server. The maindifference is in the usage of a WAP gateway for the conversion ofthe protocols. At banks must be considered that very sensitive datais processed. While a normal content provider doesnt has toobserve special security precautions, and in some cases can evenuse the services of extern providers, has to secure its web serverand WAP Gateway especially against unauthorized access. This isespecially necessary because of the fact that inside the WAPGateway the encryption protocol is converted from SSL/TLS to WTLSwith the effect that data is not encrypted while it is processed.While authentication is assured via a PIN (personal identificationnumber) of the user, authorization for transactions is realized viatransaction numbers (TAN). This concept, known from the electronicbanking, forces the user to carry a TAN list with him in order tomake transactions

Wireless Application Protocol

Types of E-Banking




E-Banking Products

Bill payment service

Fund transfer

Credit card Debit Card

Investing through Internet banking

Railway pass

Recharging your prepaid phone

Shopping at your fingertips

E-Cheque

Smart Card

E-Banking Services




Bill payment service Each bank has tie-ups with

various utility companies, service providers andinsur ance companies, across the country. It

facilitates the payment of electricity and telephone

bills, mobile phone, cr edit car d and insur ance

pr emium bills. To pay bills, a simple one-time

r egistr ation f or each biller i s t o be completed.

Standing instructions can be set, online to pay

r ecurring bills, automatically. One-time standing

instruction will ensur e that bill payments do not

get delayed due to lack of time. Most inter estingly,the bank does not char ge customers f or online bill

payment.

Bill payment service

Fund tr ansfer Any amount can be tr ansferr ed f rom one

account to another of the same or any another

bank. Customers can send money anywher e in

India. Payee¶s account number, his bank and

the br anch is needed to be mentioned af ter

logging in the account. The tr ansfer will take

place in a day or so, wher eas in a tr aditional

method, i t takes about thr ee wor king days.

ICICI Bank says that online bill payment

service and f und tr ansfer facility have been

their most popular online services.

Fund tr ansfer

Cr edit car d customers

Cr edit car d users have a lot in

stor e. With Inter net banking,customers can not only pay their

cr edit car d bills online but also get

a loan on their car ds. Not just this,

they can also apply f or an

additional car d, r equest a cr edit

line incr ease and God f or bid if you

lose your cr edit car d, you can

r eport lost car d online.

Cr edit car d

Debit Car d Debit Car d is an

identity car d issued by a bank to

a customer, which the customer

can use to buy goods. The price

of the goods is char ged to

customer's bank account.

Debit Car d

E-Banking Services




Investing through Inter net bankingOpening a f ixed deposit account cannot get easier than this. An

FD can be opened online through f unds tr ansfer . Online banking

can also be a gr eat f riend f or lazy investors. Now investors with

inter linked demat account and bank account can easily tr ade in

the stock mar ket and the amount will be automatically debited

f rom their r espective bank accounts and the shar es will be

cr edited in their demat account. Mor eover, some banks even give

the facility to purchase mutual f unds dir ectly f rom the online

banking system.

So it r emoves the worry about f illing those bigf or ms f or mutual f unds, 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 ther e demat

account with independent shar e brokers, then need to sign a

special f or m, which will link your two accounts.

Investing through Inter net banking

Rechar ging your pr epaid phone

Now ther e is no need to rush to the vendor to

r echar ge the pr epaid phone, every time the talk time

runs out. Just top-up the pr epaid mobile car ds by

logging in to Inter net banking. By just selecting the

oper ator's name, entering the mobile number and

the amount f or r echar ge, the phone is again back in

action within few minutes.

Recharging your prepaid phoneShopping at your f ingertips

Leading banks have tie ups with various

shopping websites. With a r ange of all

kind of products, one can shop online and

the payment is also made conveniently

through the account. One can also buy

r ailway and air tickets through Inter net

banking.

Shopping at your fingertips

Railway passThis is something that would inter est all the

aam janta. Indian Railways has tied up with

ICICI bank and you can now make your

r ailway pass f or local tr ains online. The pass

will be deliver ed to you at your doorstep.

But the facility is limited to Mumbai, Thane,

Nasik, Sur at and Pune. The bank would just

char ge Rs 10 + 12.24 percent of service tax.

Railway pass

E-Banking Services




A smart car d usually contains an embedded 8-bit microprocessor

(a kind of computer chip). The microprocessor is under a contact

pad on one side of the car d. Think of the microprocessor as r eplacing

the usual magnetic stripe pr esent on a cr edit car d or debit car d. The

microprocessor on the smart car d is ther e f or security. The host

computer and car d r eader actually "talk" to the microprocessor . The

microprocessor enf orces access to the data on the car d. The chips in

these car ds ar e capable of many kinds of tr ansactions. For example,

a person could make purchases f rom their cr edit account, debit

account or f rom a stor ed account value that's r eload able. The

enhanced memory and processing capacity of the smart car d is manytimes that of tr aditional magnetic-stripe car ds and can accommodate

sever al differ ent applications on a single car d. It can also hold

identif ication inf or mation, which means no mor e shuffling through

car ds in the wallet to f ind the right one -- the Smart Car d will be the

only one needed. Smart car ds can also be used with a smart car d

r eader attachment to a personal computer to authenticate a user .

Smart car ds ar e much mor e popular in Europe than in the U.S. In

Europe the health insur ance and banking industries use smart car ds

extensively. Every Ger man citizen has a smart car d f or healthinsur ance. Even though smart car ds have been around in their

moder n f or m f or at least a decade, they ar e just starting to take off in

the U.S.

A smart

An e-Cheque is the electronic version or r epr esentation of paper cheque. The

Inf or mation and Legal Fr amewor k on the

E-Cheque is the same as that of the

paper cheque¶s. It can now be used in

place of paper cheques to do any and all

r emote tr ansactions. An E-cheque wor k

the same way a cheque does, the cheque

writer "writes" the e-Cheque using one of

many types of electronic devices and"gives" the e-Cheque to the payee

electronically. The payee "deposits" the

Electronic Cheque r eceives cr edit, and

the payee's bank "clears" the e-Cheque

to the paying bank. The paying bank

validates the e-Cheque and then

"char ges" the check writer's account f or

the check

E-CHEQUE

E-Banking Services




Benef its of E-Banking

Benefits for Banks

Benefits for Small to MediumBusinesses

Benefits for Customers





Larger customer coverage

Reducing the costs of operations

Promoting their services and productsinternationally

Increasing the customer satisfaction andproviding a personalized relationshipwith customers

Benef its f or Banks




To run its operations more effectively

Lower cost than traditional financialmanagement mechanisms

Benefits for Small to Medium Businesses






Communicat ion

- communicate easily

Environment al

- Abolishing the uses of paper

Other s

- Offering one-stop-shop solutions

Benef its f or Customers




Disadvantages on E-banking

A need for customer skill to deal with computers and browsers.

E.g. Elderly, Housewives Inconvenient

Site change it will make the customer have someconfusion or delay.

Security Risk




Security Risk of E-Banking

Increasing number of fraud net bank websites

Fake emails purporting to be sent frombanks

Use of Trojan Horse programs to captureuser IDs and passwords




Scope of E-Banking In Pakistan

The State Bank Of Pakistan and other

commercial banks are quite aware of the

Changing needs of customers in Pakistan.

The SBP has promulgated Electronic

Transaction Ordinancein2002.

which provides legal recognition for

electronic settlement of transaction in

banking sector. At the present the 40% of the commercial bank branches have been

automated .The online banking which is

the wave of future is now on the move in

Pakistan and is progressing is

satisfactorily

E-Banking in Pakistan Opportunities & Challenges

Generally speaking three factors

Quickness

Easiness

cheapness

Gener ally speaking, thr ee factors, quickness, easiness and cheapness have

become the catchwor ds f or the competitiveness and usef ulness of all thebusiness oper ations. Particular ly it is commonplace today to say that banking is

under going a r adical tr ansf or mation. The symptoms ar e new products, new

players, new channels etc. This tr ansf or mation is taking place across all sectors

of the banking industry. That is why banks ur gently need to improve their ability,

to think str ategically about IT investments. Only those banks that use their

technology r esources effectively have the opportunity to secur e r eal competitive

advantage in this fast-changing industry through r eal product or service

differ entiation.

Firstly






liberalization, privatization and globalization have been

recognized as the key elements propelling the world

towards the present era, characterized by rapid changes

and increased challenges in various fields. In order to meet

the challenges of competition unleashed in the globalarena, it has become an imperative on the part of captains

of various segments of the economy to open up to harvest

the advantages that are forthcoming from such global

challenges. It is in this context, the most vibrant and

important sector, the banking sector, started gearing up to

face the challenges of such ground realities. Accordingly,

several measures were initiated and implemented for improving and strengthening the competitive position of the

banking industry vis-à-vis the foreign banks. Such

measures include e-Banking entry into mutual funds and

insurance sector business

Secondly






banking is service-oriented industry, which has peculiarity

to implement various social as well as commercial

objectives. It is an instrument for the development of the

economy of the country. Banks have two roles to play.

They create a runway for the free flow of capital

necessary for the growth of the economy. At the sametime it must attend to lending and deposit mobilization in

order to make profit for its survival and growth. Banking,

though, is now not a high profit service industry in most

countries. In many countries banks are affected by loan

losses and this has a great impact on the health of the

banks. This has resulted in the poor quality of service.

Complaints of deterioration in service are viewed in

several quarters. Getting customer patronage andgoodwill are becoming a great task and a challenge for

banks.

Thir dly




Comparison

Comparison E-banking system of Pakistan with E-Banking system of South Africa

ALLPAY

Biometrically enabled

Human assistance

Expansion to include other banking services

MOBILE ATM¶s

Reaching the under -banked

Flexible r each

Migr ating tr ansaction behavior




CONCLUSION





26784727 Presentation of e Banking

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