E-Banking

Manish Kumar Aery

Assistant Professor
SVSDPG College Bhatoli

Agenda

E-Banking Concepts and

advantages
Technical Framework
Indian Banking Scenario
ICICI Infinity - A Case Study

Imagine a Scenario
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 Citibanks 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.

Definition
E-Banking
"is an umbrella term for the
process by which a customer may
perform banking transactions
electronically without visiting a brickand-mortar institution."

What is E-banking?

Online banking or Internet banking

In simple terms it does not involve any
physical exchange of money, but its 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
o
o
o
o

Your accounts, credit card & home loan balances

Accrued interest, fees and taxes
Transaction details of each account
Pay bills
Transfer funds to third party accounts which you
nominate
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
o
o

Answering e-mail queries

Feedback forms
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
Its safe, hassle free, saves hours of
time a month

Advantages

It comes with a world of other benefits

o
o
o
o
o
o
o
o

Interest earning checking accounts,

Automatic bill payment
ATM/Debit cards
Credit Cards
Direct Deposit
Online Statements
Loans
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 EBanking System

Hardware
o
o
o
o

Servers
Storage device and database
Communication channels and lines
Gateways and remotely located
devices (e.g., thin clients or Internet
appliances) serving as interfaces
between users and computers

Software

Elements of an EBanking System

o
o
o
o

Operating systems
Firewalls
Database management systems
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
used
o
o

One before the Internet Banking server

Before the SQL database

Access Control

Banking uses firewall which fall

into two categories
o
o

Packet-filtering Gateways
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)
The CA controls the Public Key Infrastructure
(PKI).
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.
Eg Barclays UKs 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 pass.

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
Customers 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.

ICICIs 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
-

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 online 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