DEFINITION OF E-BANKING

Electronic banking, also known as electronic funds transfer (EFT), is simply the use of electronic
means to transfer funds directly from one account to another, rather than by cheque or cash. You can
use electronic funds transfer to:

 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 personal identification
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 your
mutual fund account.

 Have your government social security benefits check or your tax refund deposited directly into
your checking account.

 Buy groceries, gasoline and other purchases at the point-of-sale, using a check card rather than
cash, 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 or
bookstores.

 Use your computer and personal finance software to coordinate your total personal financial
management process, integrating data and activities related to your income, spending, saving,
investing, recordkeeping, bill-paying and taxes, along with basic financial analysis and decision
making.
 VARIOUS FORMS OF E-BANKING:
Following are the electronic medium by which services are generally provided by the banks as a part
of e-banking services.

1) Internet Banking
2) ATM (Automatic Teller Machine)
3) Phone Banking
4) Mobile Banking
5) Payment Cards (Debits/Credit Card)
All the above mediums provide services, which can be, also known as “any time any where banking”.
This facilitates the customer of the bank to operate their account from any corner of the world, without
visiting local or any subsidiary branch of their banks. Efforts are made by the bank not only to provide
the facility to the customer, but also to reduce the operational cost of the bank by providing e-banking
services. So with this, banks have to employ less staff and still would be able to deliver service to the
customer, round the corner.

INTERNET BANKING:
Internet Banking lets you handle many banking transactions via your personal computer. For
instance, you may use your computer to view your account balance, request transfers between
accounts, and pay bills electronically.

Internet banking system and method in which a personal computer is connected by a network
service provider directly to a host computer system of a bank such that customer service requests
can be processed automatically without need for intervention by customer service representatives.
The system is capable of distinguishing between those customer service requests which are capable
of automated fulfillment and those requests which require handling by a customer service
representative. The system is integrated with the host computer system of the bank so that the
remote banking customer can access other automated services of the bank. The method of the
invention includes the steps of inputting a customer banking request from among a menu of banking
requests at a remote personnel computer; transmitting the banking requests to a host computer over
a network; receiving the request at the host computer; identifying the type of customer banking
request received; automatic logging of the service request, comparing the received request to a
stored table of request types, each of the request types having an attribute to indicate whether the
request type is capable of being fulfilled by a customer service representative or by an automated
system; and, depending upon the attribute, directing the request either to a queue for handling by a
customer service representative or to a queue for processing by an automated system.

Services provided through Internet Banking

1) Account information

2) E-cheques (Online Fund Transfer)

3) Bill Payment Service

4) Requests And Intimations

5) Demat Account share trading

AUTOMATED TELLER MACHINES (ATM):

An unattended electronic machine in a public place, connected to a data system and related
equipment and activated by a bank customer to obtain cash withdrawals and other banking services.
Also called automatic teller machine, cash machine; Also called money machine.

An automated teller machine or automatic teller machine (ATM) is an electronic computerized

telecommunications device that allows a financial institution's customers to directly use a secure
method of communication to access their bank accounts, order or make cash withdrawals (or cash
advances using a credit card) and check their account balances without the need for a human bank
teller (or cashier in the UK). Many ATMs also allow people to deposit cash or cheques, transfer
money between their bank accounts, top up their mobile phones' pre-paid accounts or even buy
postage stamps.

On most modern ATMs, the customer identifies him or herself by inserting a plastic card with a
magnetic stripe or a plastic smartcard with a chip, that contains his or her account number. The
customer then verifies their identity by entering a passcode, often referred to as a PIN (Personal
Identification Number) of four or more digits. Upon successful entry of the PIN, the customer may
perform a transaction.

If the number is entered incorrectly several times in a row (usually three attempts per card insertion),
some ATMs will attempt retain the card as a security precaution to prevent an unauthorised user from
discovering the PIN by guesswork. Captured cards are often destroyed if the ATM owner is not the
card issuing bank, as non-customer's identities cannot be reliably confirmed.

Balance Enquiry:
Know your ledger balance and available balance

Mini Statement:
Get a printout of your last 8 transactions and your current balance.

Deposit Cash / Cheques :

Available at all full function ATMs. Customers can deposit both cash and cheques. / Cash
deposited in ATMs will be credited to the account on the same day (provided cash is deposited before
the clearing) and cheques are sent for clearing on the next working day.

Funds Transfer:
Transfer funds from one account to another linked account in the same branch.

PIN Changes:
Change the Personal Identification Number (PIN) of ATM or Debit card.
TELE BANKING:
Undertaking a host of banking related services including financial transactions from the convenience
of customers chosen place anywhere across the GLOBE and any time of date and night has now
been made possible by introducing on-line Telebanking services. By dialing the given Telebanking
number through a landline or a mobile from anywhere, the customer can access his account and by
following the user-friendly menu, entire banking can be done through Interactive Voice Response
(IVR) system. With sufficient numbers of hunting lines made available, customer call will hardly fail.
The system is bi-lingual and has following facilities offered

 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.

SMART CARD:
A smart card usually contains an embedded 8-bit microprocessor (a kind of computer chip). The
microprocessor is under a contact pad on one side of the card. Think of the microprocessor as
replacing the usual magnetic stripe present on a credit card or debit card.
The microprocessor on the smart card is there for security. The host computer and card reader
actually "talk" to the microprocessor. The microprocessor enforces access to the data on the card.
The chips in these cards are capable of many kinds of transactions. For example, a person could
make purchases from their credit account, debit account or from a stored account value that's reload
able. The enhanced memory and processing capacity of the smart card is many times that of
traditional magnetic-stripe cards and can accommodate several different applications on a single
card. It can also hold identification information, which means no more shuffling through cards in the
wallet to find the right one -- the Smart Card will be the only one needed.
Smart cards can also be used with a smart card reader attachment to a personal computer to
authenticate a user.
Smart cards are much more popular in Europe than in the U.S. In Europe the health insurance and
banking industries use smart cards extensively. Every German citizen has a smart card for health
insurance. Even though smart cards have been around in their modern form for at least a decade,
they are just starting to take off in the U.S.

E-money:
E-money may be broadly defined as “an electronic store of monetary value on a technical device
used for making payments to undertakings other than the issuer on a technical device used for
making payments to undertakings other than the issuer on a technical device used for making
payments to undertakings other than the issuer without necessarily involving bank accounts in the
transaction, but acting as a prepaid bearer instrument” (Eropean Central Bank, 1998)These products
could be classified in to two broad categories viz.,
A) Pre-paid stored value card (sometimes called “electronic purse”) and
B) Pre-paid software based product that used computer networks such as internet (sometimes
referred to as “digital cash” or “network money”) The stored value card scheme typically uses a
microprocessor chip embedded in a plastic card while software based scheme typically
specialized software installed in a personal computer. The stored value card could be of three
types single-purpose card, closed-system or limited-purpose card could be of three types single-
purpose card, closed-system or limited-purpose card and general-purpose or multi-purpose card.
The single-purpose card generally with a magnetic chip recording the amount of fund therein is
designed to facilitate only one type of transaction e.g telephone calls, public transportation,
laundry, parking facilities etc. Here, the distinguishing point is that the issuer and the service
provider (acceptor ) are identical for the cards. These cards are expected to substitute coins and
currency notes. It is important to note that the European Central Bank (ECB) has exempted these
single-purpose pre-paid cards

DEBIT CARD:

Debit cards are also known as check cards. Debit cards look like credit cards or ATM (automated
teller machine) cards, but operate like cash or a personal check. Debit cards are different from credit
cards. While a credit card is a way to "pay later," a debit card is a way to "pay now." When you use a
debit card, your money is quickly deducted from your checking or savings account.

Debit cards are accepted at many locations, including grocery stores, retail stores, gasoline stations,
and restaurants. You can use your card anywhere merchants display your card's brand name or logo.
They offer an alternative to carrying a checkbook or cash.
E-CHEQUE:
 An e-Cheque is the electronic version or representation of paper cheque.
 The Information and Legal Framework 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 remote transactions.

 An E-cheque work 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 receives credit, and the payee's bank
"clears" the e-Cheque to the paying bank. The paying bank validates the e-Cheque and then
"charges" the check writer's account for the check

OTHER FORMS OF ELECTRONIC BANKING

 Direct Deposit

 Electronic Bill Payment

 Electronic Check Conversion

 Cash Value Stored, Etc.

BENEFITS/CONCERNS OF E-BANKING

BENEFITS OF E-BANKING

For Banks:

Price- In the long run a bank can save on money by not paying for tellers or for managing branches.
Plus, it's cheaper to make transactions over the Internet.

Customer Base- The Internet allows banks to reach a whole new market- and a well off one too,
because there are no geographic boundaries with the Internet. The Internet also provides a level
playing field for small banks who want to add to their customer base.
Efficiency- Banks can become more efficient than they already are by providing Internet access for
their customers. The Internet provides the bank with an almost paper less system.

Customer Service and Satisfaction- Banking on the Internet not only allow the customer to have a full
range of services available to them but it also allows them some services not offered at any of the
branches. The person does not have to go to a branch where that service may or may not be offer. A
person can print of information, forms, and applications via the Internet and be able to search for
information efficiently instead of waiting in line and asking a teller. With more better and faster options
a bank will surly be able to create better customer relations and satisfaction.

Image- A bank seems more state of the art to a customer if they offer Internet access. A person may
not want to use Internet banking but having the service available gives a person the feeling that their
bank is on the cutting image.

For Customers:

Bill Pay: Bill Pay is a service offered through Internet banking that allows the customer to set up bill
payments to just about anyone. Customer can select the person or company whom he wants to make
a payment and Bill Pay will withdraw the money from his account and send the payee a paper check
or an electronic payment

Other Important Facilities: E- banking gives customer the control over nearly every aspect of
managing his bank accounts. Besides the Customers can, Buy and Sell Securities, Check Stock
Market Information, Check Currency Rates, Check Balances, See which checks are cleared, Transfer
Money, View Transaction History and avoid going to an actual bank. The best benefit is that Internet
banking is free. At many banks the customer doesn't have to maintain a required minimum balance.
The second big benefit is better interest rates for the customer.

CONCERNS WITH E-BANKING

As with any new technology new problems are faced.

Customer support - banks will have to create a whole new customer relations department
to help customers. Banks have to make sure that the customers receive assistance quickly if they
need help. Any major problems or disastrous can destroy the banks reputation quickly an easily. By
showing the customer that the Internet is reliable you are able to get the customer to trust online
banking more and more.
Laws - While Internet banking does not have national or state boundaries, the law does.
Companies will have to make sure that they have software in place software market, creating a
monopoly.

Security: customer always worries about their protection and security or accuracy. There are
always question whether or not something took place.

Other challenges: lack of knowledge from customers end, sit changes by the banks, etc

E-BANKING GLOBAL PERSPECTIVE

The advent of Internet has initiated an electronic revolution in the global banking sector. The dynamic
and flexible nature of this communication channel as well as its ubiquitous reach has helped in
leveraging a variety of banking activities. New banking intermediaries offering entirely new types of
banking services have emerged as a result of innovative e-business models. The Internet has
emerged as one of the major distribution channels of banking products and services, for the banks in
US and in the European countries.

Initially, banks promoted their core capabilities i.e., products, services and advice through Internet.
Then, they entered the e-commerce market as providers/distributors of their own products and
services. More recently, due to advances in Internet security and the advent of relevant protocols,
banks have discovered that they can play their primary role as financial intermediators and facilitators
of complete commercial transactions via electronic networks especially through the Internet. Some
banks have chosen a route of establishing a direct web presence while others have opted for either
being an owner of financial services centric electronic marketplace or being participants of a non-
financial services centric electronic marketplace.

The trend towards electronic delivery of banking products and services is occurring partly as a result
of consumer demand and partly because of the increasing competitive environment in the global
banking industry. The Internet has changed the customers' behaviors who are demanding more
customized products/services at a lower price. Moreover, new competition from pure online banks
has put the profitability of even established brick and mortar banks under pressure. However, very
few banks have been successful in developing effective strategies for fully exploiting the opportunities
offered by the Internet. For traditional banks to define what niche markets to serve and decide what
products/services to offer there is a need for a clear and concise Internet commerce strategy.
Banking transactions had already started taking place through the Internet way back in 1995. The
Internet promised an ideal platform for commercial exchange, helping banks to achieve new levels of
efficiency in financial transactions by strengthening customer relationship, promoting price discovery
and spend aggregation and increasing the reach. Electronic finance offered considerable
opportunities for banks to expand their client base and rationalize their business while the customers
received value in the form of savings in time and money.

Conclusion
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. To day, 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.