E-Banking

Agenda
Technology Commencement in Banking

Product Based Banking Customer Based Banking Data Warehouse CRM Alternative Delivery Channels Banks Position in the New Economy

Technology Commencement in Banking

In 70 s, banks started to establish centralized data processing centers. Essentially the roles of these data processing centers are: collect the handwritten documents from branches compile the documents manual data entry by the operators generate reports for the bank staff and the central bank execute some banking transactions

Branch Automation
In 80 s, banks started technology investments for the branches. The first step is offline branches. Terminals connected to local branch computer Second step is online branches connected centrally. Most of the transactions started to be performed in the central mainframe.

Product Based Banking

In the mid-1980s, banks accepted product based banking and competed with their products. Banks developed new products for their customers. Credit card Credit deposit account (Super Account) Debit cards Beside branch, banks brought new channels to give better service to their customers. ATM POS IVR

Plastic Cards
The plastic card usage grown enormously in last 2 decade. Plastic card became the main media for bank customers. Number of credit card in Turkey:
Cre d it C a rd T yp e Na tio n a l Ca rd s In te rn a tio n a l C a rd s T o ta l V is a 1.200.704 7.043.834 8.244.538 M as terC ard 488.881 4.820.965 5.309.846 O ther 13.599 36.884 50.483 total 1.703.184 11.901.683 13.604.867

data collected from BKM

Plastic Cards
Number of debit card in Turkey:
De bit Card Ty pe Electron (Visa) Plus (Visa) Electron ve Plus (Visa) C irrus ve Maestro (MasterC ard) Private Label card De bit card 6.230.782 68.304 2.881.126 14.225.245 6.893.479

Total

30.298.936

data collected from BKM

ATM
In the mid-1980s, that cash dispensers truly became a worldwide phenomenon. It took 16 years for the first 100,000 cash dispensers to be installed, but only four years more for the next 100,000. Now,ATM became the electronic face of banking for most customers. Beside cash withdrawal, there exist various transaction options from transfer to fund buying/selling. Now there are 12.174 ATM installed in Turkey (Ref: BKM)

Point Of Sale
New habits in shopping Increased the use of plastic cards Now there are 313.140 POS installed in Turkey (Ref: BKM)

ATM and POS Application Architecture

Debit Card Authorization

Switch System

Credit Card Authorization

IVR
Interactive Voice Response (IVR) is a software application that accepts a combination of voice telephone input and touch-tone keypad selection and provides appropriate responses in the form of voice IVR has come into our life at the beginnings of 90 s. First step in Telephone Banking Peak transaction volume in salary payment days for balance inquiry Integrated with ATM system

Customer Based Banking

Product Based
Customer introduction on different systems Difficulty in creating new products Different user interfaces for different environments Product based Customer - Bank relation

Customer Based
One customer information file Product factory Standard graphical user interface Consolidated customer data

Banking Application Architecture

Relationship Management
CIF ATM I N F O Product Factory Portfolio Management

POS

Deposit (TD,DD)

FBS

Securities

Promissory Notes

FX Import / Export

Delivery Services

Teletel

NBS

EFT

Cheques

Merchant

Telerom

Sales Support System

CMS

Treasury

Payments

YKB HR

Teller (Branch)

Corporate Tables DAL

Internet Banking

GL / Accounting Settlement Reporting

Phone Banking

Batch Operations

Internet Shopping PCM Campaign Management Credit Risk Management Productivity

Management & Control

Information Delivery

Loans&Credits

C E N T E R

Data Warehouse
Electronic repositories of summarized historical data The main idea behind data warehouse is get all company data working together so users can see more,learn more, and make the organization work better Data Warehouse helps users to identify trends, find answers to business questions and derive meaning from historical and operational data. Data access is easier and less costly Decision support solutions run faster and are more accurate.

Data Warehouse Process

Life Cycle
Design
Transaction Data Extraction

Transform

Extract

Deliver

Data Scrubbing and Cleansing

Partial Solutions
Data Mapping Data Replication

Load, index and Aggregate

Publish and Subscribe

Data Histories and Summaries

Data Access Tools

Complete Integrated Solution

Integrated Data Warehouse Infrastructure

CRM
CRM is an integrated sales, marketing and service strategy CRM goals are : Use existing relationships to grow revenue Use integrated information for excellent service Introduce more repeatable sales processes and procedures Create new value and loyalty Implement a more proactive solution strategy

The Three Phases of CRM

Acquire New Customer
ifferentiation
Innovation Convenience

Enhance The Bundling Profitability Reduce Cost of Existing Customer service Customer

Adaptibility
Listening New products

Retain Profitable Customer

Integrated CRM Applications

Life Cycle

Acquire Direct Marketing

Sales Force Automation

Enhance
Cross Sell and Up Sell

Retain
Proactive Service

Partial Functional Solutions

Customer Support

Complete Integrated Solution

Integrated CRM Applications

Alternative Delivery Channels

Anytime, anywhere banking
Telephone Banking Internet Banking Mobile Banking Television banking Next ???

Telephone Banking
7x24 banking through the phone Main components Switch IVR CTI(Computer Telephony Integration) Manage each call using the computer Pop up the user information while transferring the call Agent Desktop Application Win32,ActiveX, HTML Host Application

Telephone Banking Infrastructure

Telecom

IVR

CTI

HOST

Internet Banking
More and more banks are coming to realize that internet is a part of banks' alternative delivery channel strategies activities concentrated in the business-toconsumer segment, focused on retaining clients In Internet banking, security is a primary concern. Security concerns have been addressed from every angle within the architecture of the Internet banking application.

Sample Internet Banking Architecture

Mobile Banking
Current Mobile Banking Applications:
SMS Banking WAP Banking STK (Sim Toolkit) Banking

SMS Banking
Basic banking inquiry transactions(balance inquiry, funds, exchange rate inquiry ) are performed by the cooperation of bank and the GSM operator Security is the main problem

GSM Network

GSM Operator Application Server

Leased line Bank SMS Gateway

GSM Operator SMS DB

Bank SMS DB

Bank Host

WAP Banking
Wireless application protocol (WAP) is an application environment and set of communication protocols for wireless devices designed to enable manufacturer-, vendor-, and technology-independent access to the Internet and advanced telephony services. WAP is a global standard and is not controlled by any single company Various banking transactions offered in WAP environment by banks. Similar architecture with SMS banking

SIM Toolkit
SIM card enables to keep and load different applications. SIM Application Toolkit has been agreed as a GSM standard SIM Application Toolkit is independent of phone manufacturers and designs. SIM Application Toolkit allows the flexibility to update the SIM to alter the services and download new services over the air SIM Application Toolkit is designed as a client-server application. On the server side, SimCard platform and the client side, phone that supports the SIM Application Toolkit In the near future, banks will start to offer banking transactions in this platform.

Television Banking
Digital television (DTV) is the transmission of television signals using digital rather than conventional analog methods. Advantages of DTV over analog TV include: y Superior image resolution (detail) for a given bandwidth y Smaller bandwidth for a given image resolution y Compatibility with computers and the Internet y Interactivity y Superior audio quality y Consistency of reception over varying distances y y Banks offer their banking transaction in this new environment T-commerce in the near future.

What is the Next channel

Microwave Banking ???

Channel Costs
2

1,5

0,5

0 Web ATM Call Center Branch

Channel Integration Evolution

Channel Integration evolution Reuse Efficiencies of Scale Reduction of Redundancies

The Role of Banks in the New Economy

Internet and mobile devices have brought new rules to economy and shaped the way to do business Banks has also evolved according to the new economy and took their places in this new world to add value to their customer The new ways to do business are :

e-commerce (B2C) m-commerce B2B

E-commerce - B2C
E-commerce is the buying and selling of goods and services on the Internet. Main feature of e-commerce 24-hour availability a global reach the ability to interact provide custom information and ordering and multimedia prospects, The Web is rapidly becoming a multibillion dollar source of revenue for the world's businesses. Banks provide secure payments infrastructure - virtual POS

M-commerce
Mobile commerce applications involve using a mobile phone to carry out financial transactions- this usually means making a payment for goods or transferring funds electronically. As content delivery over wireless devices becomes faster, more secure, and scalable, there is wide speculation that m-commerce will surpass wireline ecommerce as the method of choice for digital commerce transactions.

B2B
A housands of companies that sell products to other companies have discovered that the Web provides not only a 24-hour-a-day showcase for their products but a quick way to reach the right people in a company for more information. In the B2B, the bank role is to provide a reliable payment infrastructure that add value to corporate business This infrastructure should cover: Bill presentment Bill payment Different payment types(credit card, deposit account, loan) Information after payment

E-Security
To improve the e-business, all the users should feel secure to perform the transaction this environment The main concepts in e-security are:
PKI (public key infrastructure) enables users of a basically unsecure public network such as the Internet to securely and privately exchange data and money through the use of a public and a private cryptographic key pair that is obtained and shared through a trusted authority. Public key is a value provided by some designated authority as a key that, combined with a private key derived from the public key, can be used to effectively encryption messages and digital signature. Private or secret key is an encryption/decryption key known only to the party or parties that exchange secret messages. Public key is used together with a private key

E-Security - continued
Digital certificate is an electronic "credit card" that establishes your credentials when doing business or other transactions on the Web. It is issued by a certification authority (CA). CA (certificate authority) is an authority in a network that issues and manages security credentials and public key for message encryption. As part of a public key infrastructure, a CA checks with a registration authority to verify information provided by the requestor of a digital certificate An RA (registration authority) is an authority in a network that verifies user requests for a digital certificate and tells the certificate authority to issue it.

Smart Cards
About the size of a credit card, a smart card is a plastic card with an embedded microchip that can be loaded with data, used for telephone calling, electronic cash payments, and other applications, and then periodically "recharged" for additional use. smart card contains more information than a magnetic stripe card and it can be programmed for different applications. Some cards can contain programming and data to support multiple applications and some can be updated to add new applications after they are issued Benefit of smart cards: enhanced security off line transaction programmable card loyalty customer information

Related Links
www.ykb.com www.teleweb.com.tr www.bkm.com.tr www.visa.com www.europay.com www.banktech.com www.bai.org www.mobilesimtoolkit.com www.itworld.com