Amrish Kumar goel
The Internet banking is changing the banking industry and is having the major effects on banking relationships. Even the Morgan Stanley Dean Witter Internet research emphasised that Web is more important for retail financial services than for many other industries. Internet banking involves use of Internet for delivery of banking products & services. It falls into four main categories, from Level 1 - minimum functionality sites that offer only access to deposit account data - to Level 4 sites - highly sophisticated offerings enabling integrated sales of additional products and access to other financial services- such as investment and insurance. In other words a successful Internet banking solution offers
• Exceptional rates on Savings, CDs, and IRAs
• Checking with no monthly fee, free bill payment and rebates on ATM surcharges
• Credit cards with low rates
• Easy online applications for all accounts, including personal loans and mortgages
• 24 hour account access
• Quality customer service with personal attention
DRIVERS OF CHANGE
Advantages previously held by large financial institutions have shrunk considerably. The Internet has leveled the playing field and afforded open access to customers in the global marketplace. Internet banking is a cost-effective delivery channel for financial institutions. Consumers are embracing the many benefits of Internet banking. Access to one's accounts at anytime and from any location via the World Wide Web is a convenience unknown a short time ago. Thus, a bank's Internet presence transforms from 'brouchreware' status to 'Internet banking' status once the bank goes through a technology integration effort to enable the customer to access information about his or her specific account relationship. The six primary drivers of Internet banking includes, in order of primacy are:
• Improve customer access
• Facilitate the offering of more services
• Increase customer loyalty
• Attract new customers
• Provide services offered by competitors
• Reduce customer attrition
[b]INDIAN BANKS ON WEB [/b]
The banking industry in India is facing unprecedented competition from non-traditional banking institutions, which now offer banking and financial services over the Internet. The deregulation of the banking industry coupled with the emergence of new technologies, are enabling new competitors to enter the financial services market quickly and efficiently.
Indian banks are going for the retail banking in a big way. However, much is still to be achieved. This study which was conducted by students of IIML shows some interesting facts:
• Throughout the country, the Internet Banking is in the nascent stage of development (only 50 banks are offering varied kind of Internet banking services).
• In general, these Internet sites offer only the most basic services. 55% are so called 'entry level' sites, offering little more than company information and basic marketing materials. Only 8% offer 'advanced transactions' such as online funds transfer, transactions & cash management services.
• Foreign & Private Banks are much advanced in terms of the number of sites & their level of development.
Information technology analyst firm, the Meta Group, recently reported that "financial institutions who don't offer home banking by the year 2000 will become marginalized." By the year of 2002, a large sophisticated and highly competitive Internet Banking Market will develop which will be driven by
• Demand side pressure due to increasing access to low cost electronic services.
• Emergence of open standards for banking functionality.
• Growing customer awareness and need of transparency.
• Global players in the fray
• Close integration of bank services with web based E-commerce or even disintermediation of services through direct electronic payments (E- Cash).
• More convenient international transactions due to the fact that the Internet along with general deregulation trends eliminates geographic boundaries.
• Move from one stop shopping to 'Banking Portfolio' i.e. unbundled product purchases.
Certainly some existing brick and mortar banks will go out of business. But that's because they fail to respond to the challenge of the Internet. The Internet and it's underlying technologies will change and transform not just banking, but all aspects of finance and commerce. It represents much more than a new distribution opportunity. It will enable nimble players to leverage their brick and mortar presence to improve customer satisfaction and gain share. It will force lethargic players who are struck with legacy cost basis, out of business-since they are unable to bring to play in the new context.
MAIN CONCERNS IN INTERNET BANKING
In a survey conducted by the Online Banking Association, member institutions rated security as the most important issue of online banking. There is a dual requirement to protect customers' privacy and protect against fraud. Banking Securely: Online Banking via the World Wide Web provides an overview of Internet commerce and how one company handles secure banking for its financial institution clients and their customers. Some basic information on the transmission of confidential data is presented in Security and Encryption on the Web. PC Magazine Online also offers a primer: How Encryption Works. A multi-layered security architecture comprising firewalls, filtering routers, encryption and digital certification ensures that your account information is protected from unauthorized access:
• Firewalls and filtering routers ensure that only the legitimate Internet users are allowed to access the system.
• Encryption techniques used by the bank (including the sophisticated public key encryption) would ensure that privacy of data flowing between the browser and the Infinity system is protected.
• Digital certification procedures provide the assurance that the data you receive is from the Infinity system.
Internet Banking System helps the customer and the employee to make transaction online. An online Bank Account’s can be viewed, transact, funds transfer facility from anywhere from the world by the customer, so with these facility number of customer increases tremendously. This result into increase in customer satisfaction and the Bank profits increases also. The main objectives of the project are given below:
1. Many Customers don’t like to visit the Bank for new Cheque book, funds transfer, grievance reports, they can done these tasks online so work load of Bank reduces and requires less number of paper wok, staff and resources. This results into sharp cut into expenditure.
2. Transaction is now being online; cash is directly transferred into the customer account. Cash management becomes easy.
3. Passbook entries can view online in customer’s account so customer can done his further activities according to their balances which is cleared and not cleared, so customer can get information at any time when he need. This also ensure that transaction is secure and no chance of fraud.
4. The administration module of project provides option of generating various types of report. This will help the management to setup new policies, which will further enhance the working of organization.
5. This software also has an eye on Branches status. If Branches status is not well then according to that new policies can be offered for that particular area.
6. This project will increase bank efficiency. Working will be done in quicker manner and it will decrease the queues in a great number.
Internet banking, sometimes called online banking, is an outgrowth of PC banking. Internet banking uses the Internet as the delivery channel by which to conduct banking activity, for example, transferring funds, paying bills, viewing checking and savings account balances, paying mortgages, and purchasing financial instruments and certificates of deposit. An Internet banking customer accesses his or her accounts from a browser— software that runs Internet banking programs resident on the bank’s World Wide Web server, not on the user’s PC. NetBanker defines a “ true Internet bank” as one that provides account balances and some transactional capabilities to retail customers over the World Wide Web. Internet banks are also known as virtual, cyber, net, interactive, or web banks.
To date, more banks have established an advertising presence on the Internet— primarily in the form of informational or interactive web sites—than have created transactional web sites. However, a number of Banks that do not yet offer transactional Internet banking services have indicated on their web sites that they will offer such banking activities in the future.
Although Internet banks offer many of the same services as do traditional brick-and-mortar Banks, analysts view Internet banking as a means of retaining increasingly sophisticated customers, of developing a new customer base, and of capturing a greater share of depositor assets. A typical Internet bank site specifies the types of transactions offered and provides information about account security.
Because Internet banks generally have lower operational and transactional costs than do traditional brick-and-mortar banks, they are often able to offer low-cost checking and high-yield Certificates of deposit. Internet banking is not limited to a physical site; some Internet banks exist without physical branches, for example, Telebank (Arlington, Virginia) and Banknet (UK). Further, in some cases, web banks are not restricted to conducting transactions within national borders and have the ability to make transactions involving large amounts of assets instantaneously. According to industry analysts, electronic banking provides a variety of attractive possibilities for remote account access, including:
• Availability of inquiry and transaction services around the clock;
• worldwide connectivity;
• Easy access to transaction data, both recent and historical; and
• “ Direct customer control of international movement of funds without intermediation of financial institutions in customer’s jurisdiction.”
OPENING AN ACCOUNT
There are several ways to open and fund an electronic banking account in the United States. Customers who have existing accounts at brick-and-mortar banks and want to begin using electronic banking services may simply ask their institution for the software needed for PC banking or obtain a password for Internet banking. Either approach requires minimal paperwork. Once they have joined the system, customers have electronic access to all of their accounts at the bank. New customers can establish an account either by completing a PC banking application form and mailing it to an institution offering such a service or by accessing a bank’s web site and applying online for Internet banking. In either instance, the customer can fund the new online account with a check, wire transfer, or other form of remittance. No physical interface between the customer and the institution is required.