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 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

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What is E-Banking ?
Electronic banking is one of the
truly widespread avatars of E-
commerce the world over.
Various authors define E-Banking
E -banking is defined as: differently but the most definition
depicting the meaning and features
of E-Banking are as follows:

 Banking is a combination of two, Electronic technology and

Banking.
 Electronic Banking is a process by which a customer performs
banking Transactions electronically without 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 the

customers through the use of electronic communication primarily the
internet
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BANK

Information
technology

Custome
r

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Development of E-Banking
History E-Banking made its debut in UK
and USA during 1920s. It became
prominently popular during 1960s
through electronic funds transfers
and credit cards. The concept of

1980s : Web-based banking came into

existence, in Europe and USA in
the beginning of 1980s. It has
- Rapid development of the Internet been estimated that 40 percent of
banking transactions would be
- TCP/IP system (communication done through net at present.
Today, a wide range of services
system) are being rendered by banks using
the electronic media. Since many
- E-commerce years, banks have been operating
inter-city transfer of money

Early 1980s : through demand drafts,

transfers and telephonic transfers
from one city to other or even
mail

- Access to their accounts with the within the same city and also from
bank to bank through telephones.
computer of the bank It facilitates availability of funds
the next day itself. It is a matter
of great satisfaction that the e-
Commerce is greatly assisted by
the e-Banking through electronic
cash cheques and smart cards. It
is one of the trend setting
paperless mode of effecting
payment by two kinds; I)
Electronic Credit Clearing, and II)
CREATED BY:HAROON RASHEED Debt Clearing. The10
Electronic02/15/10
Development of E-Banking

May 1995 :
Wells Fargo - the first bank in the
world
to offer customer access to their
accounts over the internet .

 Allows customer to see their accounts

online

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Development of E-Banking

Hong Kong (September 1999 ):

Bank of East Asia - first launched Internet

banking
 Mortgage applications
 personal loans
 stock trading

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TYPES OF BANKNG IS VARIED

This is a direct This is a online banking This is a wireless or

banking because the because the customer PDA(personal digital
customer get any get services from many assistance) banking
services on the spot. distance because in this type no any
wire is connected and
customer get services at
any where. when he want.

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Types of E-Banking
MAIN TYPES OF E-BANKING SYSTEM

 Automated Teller Machine (ATM)

 Tele banking or Phone Banking
 Mobile Banking
 Pc Banking & Digital TV banking
 Internet Banking
 Wireless or PDA Banking

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e-Banking CSFs

e-Trade
e-Business e-Business

e-Banking

Clearing

Bank A Bank B
Bank Server

Settlement

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Types of E-Banking
Automated Teller Machine (ATM)
 First electronic channel introduced

 Accepting deposits and dispenses cash

 Convenient in handling accounts

AUTOMATIC TELLER MACHINE (ATM): This

system is known as "Any Time Money"
because it allows customers who have an ATM
card to withdraw money at any time from the
bank without interacting with human teller.
Since the ATM machine can be installed
anywhere like petrol bunks, markets, railway
stations etc, and can well be linked to the
main computer. It allows customers to
transact with the bank 24 hours a day and
365 days a year. They allow the customers to
transfer money to and from accounts to view
account information, to deposit cheques or
cash, to order cheques, to receive cash etc. CREATED BY:HAROON RASHEED 02/15/10 16
Types of E-Banking
Automated Teller Machine (ATM)
Using an ATM, customers can access their
bank accounts in order to make cash
withdrawals (or credit card cash advances)
and check their account balances. Many ATMs
also allow people to deposit cash or checks,
transfer money between their bank accounts,
pay bills, or purchase goods and services.
ATMs are known by various casual terms
including cash machine, hole-in-the-wall, cash
point or Banc mat (in Europe and Russia).

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.

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Types of E-Banking
Tele banking or Phone Banking
It came into operation in the 1970s in the
developed countries like the US. It is accessible
for corporate customers that have large
volumes of payments to effect and dispose of a

HISTOR fully automated accounting system. They can

establish a Computer to Computer link with
their bank and in this way exchange truly
Y paperless credit transfers which are handled all
the way from the originator to the beneficiary's
account without any paper involved.

This facility is available with the help of Voice

Response System (VRS or IVR). This system
basically, accepts only TONE dialed input. Like
the ATM customer has to follow particular
How Its Work process, initially account number and telephone
PIN are fed for the process to start. Also the
VRS system provides the users within
additional facilities such as changing existing
password with the new desired.

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Types of E-Banking
Tele banking or Phone Banking

Some of the advantages of TELE-BANKING are:-

 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.

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Types of E-Banking
Mobile Banking
Mobile banking comes in as a part of the banks
initiative to offer multiple channel banking providing
convenience for its customer. A versatile
multifunctional, free service that is accessible and
viewable on the monitor of mobile phone. Mobile
phones are playing great role in banking- both
directly and indirectly. They are being used both as
banking and other channels.

Its most commonly used type is SMS Banking

SMS-banking
The Short Message Service (SMS) is a GSM service to exchange
text messages up to 140 byte (or 160 characters of 7 bit). The
transmission of mobile-originated short messages is carried out
by the short message service center (SMSC) of the particular
network operator. The SMSC is receiving the message from the
mobile device and routing it to the destination device. For
generating mobile-terminated short messages, it is possible
that a company or a special service provider runs an own SMSC.
Thus, a bank could generate SMS from bank data like account
balance or account movements and send it to the mobile device
of the customer. This technique is used at SMS-banking: The
customer sends an SMS with a request to the bank, and gets
the desired data as an answer. CREATED BY:HAROON RASHEED 02/15/10 20
Types of E-Banking
PC & Digital TV Banking

PC Banking Digital TV
Banking
PC Banking - The forerunner to Digital TV Banking- Using the
Internet banking has been around standard digital reception
since the late 1980's and is still equipment (set top box and
widely used today. Individual remote control), users can access
banks provide software which is their bank account. Abbey
loaded on to an SME's office National and HSBC services are
computer. The SME can then available via Digital TV providers.
access their bank account via a One of its main selling points is
modem and telephone link to the that no account details are
bank. Access is not necessarily via transmitted via the World Wide
the Internet. Web.

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Types of E-Banking
Inter Net or Online Banking
The advent of the Internet and the
popularity of personal computers
presented both an opportunity and
a challenge for the banking
industry. For years, financial
institutions have used powerful
computer networks to automate
million of daily transactions; today,
often the only paper record is the
customer’s receipt at the point of
sale. Now that their customers are
connected to the Internet via
personal computers, banks envision
similar advantages by adopting
those same internal electronic
processes to home use. Banks view
online banking as a powerful “value
added” tool to attract and retain
new customers while helping to
eliminate costly paper handling and
teller interactions in an increasingly
competitive banking environment
I
n Internet Banking lets you handle many banking transactions
via your personal computer. For instance, you may use your
t computer to view your account balance, request transfers
between accounts, and pay bills electronically. Internet
e banking system and method in which a personal computer is
connected by a network service provider directly to a host
r computer system of a bank such that customer service
requests can be processed automatically without need for
N intervention by customer service representatives. The system
is capable of distinguishing between those customer service
e requests which are capable of automated fulfillment and those
requests which require handling by a customer service
t 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
B customer banking request from among a menu of banking
requests at a remote personnel computer; transmitting the
A banking requests to a host computer over a network; receiving
the request at the host computer; identifying the type of
N customer banking request received; automatic logging of the
service request, comparing the received request to a stored
K table of request types, each of the request types having an
attribute to indicate whether the request type is capable of
I being fulfilled by a customer service representative or by an
automated system; and, depending upon the attribute,
N directing the request either to a queue for handling by a
customer service representative or to a queue for processing
g by an automated system.
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Types of E-Banking
Three Types of Inter net Banking
This is the basic level of Internet or E-Banking. Typically, the
bank has marketing information about the bank’s products
and services on a stand-alone server. The risk is relatively
low, as informational systems typically have no path
Informational between the server and the bank’s internal network. This
level of Internet banking can be provided by the banks or
outsourced. While the risk to a bank is relatively low, the
server or web site may be vulnerable to alteration.
Appropriate controls therefore must be in place to prevent
unauthorized alterations to the bank’s server or web site.
This type of Internet banking systems and the customer. The
interaction between the bank’s system and the customer.
The interaction may be limited to electronic mail, account
enquiry, loan applications, or static file updates (name and
Communicative address change). Because these servers may have a path to
the bank’s internal networks, the risk is higher with this
configuration than with informational systems. Appropriate
controls need to be in the place to prevent, monitor, and
alert management of any unauthorized attempt to access
the bank’s internal networks and computer systems. Virus
controls also become much more critical in this environment.

This level of Internet banking allows customers to execute

transactions. Since a path typically exists between the
Transactional server and the bank or outsourcer’s internal network, this is
the highest risk architecture and must have the strongest
controls. Customer transactions can include accessing
accounts, paying bills, transferring funds etc.
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Types of E-Banking
ADVANTAGES OF INTERNET BANKING
Unlike your corner bank,
online banking sites
 Convenience never close; they’re
available 24 hours a day,
seven days a week, and
If you’re out of state or they’re only a mouse click
  even out of the country away.
when a money problem
 Ubiquity arises, you can log on
instantly to your online
bank and take care of
business, 24\7.
Online bank sites
 Transaction speed generally execute and
confirm transactions
at or quicker than
ATM processing
You can access and speeds.
 Efficiency manage all of your
bank accounts, even
securities, from one Many online banking sites now
secure site. offer sophisticated tools, including
account aggregation, stock quotes,
 Effectiveness rate alert and portfolio managing
program to help you manage all of
your assets more effectively. Most
are also compatible with money
managing programs such as
quicken and Microsoft money
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Types of E-Banking
Wireless or PDA 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.

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Types of E-Banking
Wireless Application Protocol

WAP-banking
The 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 to the function of Electronic banking using http.
The client sends a request and gets a response with page
content which is stored on or dynamically generated by a
standard web server. The main difference is in the usage of a
WAP gateway for the conversion of the protocols. At banks
must be considered that very sensitive data is processed. While
a normal content provider doesn’t has to observe special
security precautions, and in some cases can even use the
services of extern providers, has to secure its web server and
WAP Gateway especially against unauthorized access. This is
especially necessary because of the fact that inside the WAP
Gateway the encryption protocol is converted from SSL/TLS to
WTLS with the effect that data is not encrypted while it is
processed. While authentication is assured via a PIN (personal
identification number) of the user, authorization for
transactions is realized via transaction numbers (TAN). This
concept, known from the electronic banking, forces the user to
carry a TAN list with him in order to make transactions

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E-Banking Products
E-Banking Services
 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

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 E-Banking Services
Bill payment service Fund transfer
Bill payment service Each bank has tie-ups with
Fund transfer
various utility companies, service providers and
Any amount can be transferred from one
insurance companies, across the country. It
account to another of the same or any another
facilitates the payment of electricity and telephone
bank. Customers can send money anywhere
bills, mobile phone, credit card and insurance
in India. Payee’s account number, his bank
premium bills. To pay bills, a simple one-time
and the branch is needed to be mentioned
registration for each biller is to be completed.
after logging in the account. The transfer will
Standing instructions can be set, online to pay
take place in a day or so, whereas in a
recurring bills, automatically. One-time standing
traditional method, it takes about three
instruction will ensure that bill payments do not
working days. ICICI Bank says that online bill
get delayed due to lack of time. Most interestingly,
payment service and fund transfer facility
the bank does not charge customers for online bill
have been their most popular online services.
payment.

Debit Card
Debit Card Debit Card is an
identity card issued by a bank to
a customer, which the customer
can use to buy goods. The price
of the goods is charged to
customer's bank account.

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E-Banking Services

Shopping at your fingertips

Shopping at your fingertips
Leading banks have tie ups with various
shopping websites. With a range of all
kind of products, one can shop online and
the payment is also made conveniently
through the account. One can also buy
railway and air tickets through Internet
banking.

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E-Banking Services

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Benefits of E-Banking

 Benefits for Banks

 Benefits for Small to

Medium Businesses

 Benefits for Customers

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Benefits of E-Banking
Benefits for Banks
 Larger customer coverage

 Reducing the costs of operations

 Promoting their services and products

internationally

 Increasing the customer satisfaction and

providing a personalized relationship
with customers
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Benefits of E-Banking
Benefits for Small to Medium
Businesses

To run its operations more effectively

Lower cost than traditional financial

management mechanisms

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Benefits of E-Banking

Benefits for Customers

Communication
- communicate easily

Environmental
- Abolishing the uses of paper

Others
- Offering one-stop-shop solutions

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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 some
confusion or delay.
Security Risk

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Security Risk of E-Banking

Increasing number of fraud net bank

websites
Fake emails purporting to be sent from
banks
Use of Trojan Horse programs to
capture user IDs and passwords

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Scope of E-Banking In Pakistan
E-Banking in Pakistan Opportunities & Challenges
The State Bank Of Pakistan and other
commercial banks are quite aware of the
Changing needs of customers in Pakistan.
Generally speaking three factors The SBP has promulgated Electronic
Transaction Ordinancein2002.
which provides legal recognition for
electronic settlement of transaction in
Quickness banking sector. At the present the 40% of
the commercial bank branches have been
automated .The online banking which is
Easiness the wave of future is now on the move in
Pakistan and is progressing is
satisfactorily
cheapness

Generally speaking, three factors, quickness, easiness and cheapness have

become the catchwords for the competitiveness and usefulness of all the
business operations. Particularly it is commonplace today to say that banking is
undergoing a radical transformation. The symptoms are new products, new
players, new channels etc. This transformation is taking place across all sectors

Firstly
of the banking industry. That is why banks urgently need to improve their ability,
to think strategically about IT investments. Only those banks that use their
technology resources effectively have the opportunity to secure real competitive
advantage in this fast-changing industry through real product or service
differentiation.
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Scope of E-Banking In Pakistan
E-Banking in Pakistan Opportunities & Challenges

liberalization, privatization and globalization have been

recognized as the key elements propelling the world

Secondly
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 global
arena, 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

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Scope of E-Banking In Pakistan
E-Banking in Pakistan Opportunities & Challenges

banking is service-oriented industry, which has

peculiarity to implement various social as well as
commercial objectives. It is an instrument for the

Thirdly 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 same time 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 and goodwill are becoming a great task and a
challenge for banks.

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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 reach
•Migrating transaction behavior

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