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ELECTRONIC BANKING

ELECTRONIC BANKING. POPULAR ELECTRONIC DELIVERY CHANNELS. ATMs SMART CARD TELE BANKING INTERNET BANKING. ATM. It is a novel cash dispenser They are user friendly and have mass acceptability I reaches out to large customer base at low cost

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ELECTRONIC BANKING

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  1. ELECTRONIC BANKING

  2. POPULAR ELECTRONIC DELIVERY CHANNELS • ATMs • SMART CARD • TELE BANKING • INTERNET BANKING

  3. ATM • It is a novel cash dispenser • They are user friendly and have mass acceptability • I reaches out to large customer base at low cost • Now banks have started to outsource and share ATMs to reduce cost • ATM also dispenses railway tickets, movie tickets etc. • It is now used also as a marketing tool to target the masses • ATMs with finger print scanning technology may become operative in future making it more convenient and cost effective

  4. SMART CARDS • It’s a chip based card which will store a monetary value • It is more secure than a ATM, Debit & Credit Cards • It recognises signature & voices • Doesn't necessitate the use of PIN • When transaction is made using the card, the value is debited and the balance automatically comes down

  5. FACETS OF E-BANKING • Customer- to- Bank E-Banking • Bank- to- Bank E-Banking • Electronic Central Banking • Intranet Procurement

  6. E-Banking Transactions • Account Enquiry • Fund Transfer • Payment of Electricity, Water, Telephone Bills • Online payment for transactions actually performed through Internet • Request for issuance of cheque book, draft etc. • Statement of Accounts • Access to latest schemes • Access to rates of interest & other service charges

  7. TRUNCATED CHEQUE “A cheque which is truncated during the course of a clearing cycle, either by the clearing House or by the bank, whether paying or receiving payment immediately on generation of an electronic image for transaction, substituting the further physical movement of the cheque in writing.”

  8. Essential Features • It is electronic image of a physical paper cheque • It is only the clearing house or the banks involved • Any holder or drawer cannot truncate a cheque • It substitutes the physical cheque from the time of truncation • Used only for the purpose of clearing • Physical cheque after truncation is retained in the custody of the Clearing House/ Bank • The addition of digital signature of Truncating Bank or Clearing House is optional

  9. Electronic Cheque • It is electronic image of a paper cheque • It is generated, written and signed in a secured manner using digital signature which has been legally recognised. • Digital signature is compulsory • There should be minimum safety standards like asymmetric crypto system

  10. MChq Product • In countries like Japan & other Asian Countries • Working: all vital personal information is stored in a magnetic strip & then loaded on to the sim card in a secured format • Existing sim card has to be replaced with 128 bit encryphon key which offers a higher degree of safety than the existing sim card. • While shopping one only gives phone no. to merchant, who would then send on a special mobile phone an sms to the server of the mobile service provider. • The customer will get inturn an sms asking him to confirm payment • The customer will have to enter his persoanlised PIN number as an added security measure and send back an sms confirming the amount to be paid . • The merchant and the customer will then get an sms confirming the completion of transaction. • The exchange normally happens within a minute

  11. MChq - Advantages • No need to log on to the Net • No need to log on to enter any personal information • No need to log on to have a point-of-sale terminal as in case of credit cards • Facilitates small purchases as low as Rs.50 which are not normally suitable with Credit cards • A mobile will serve dual purpose for communication and MChq • ICICI Bank has offered in collaboration with Airtel on a pilot basis only in Delhi, Mumbai, and the National Capital Region- transaction limit Rs.5000 or 10 No.s whichever exhausted first

  12. Models of E-Banking • Complete Centralised Solution • Cluster Approach • High tech Bank within Bank

  13. Advantages of E-Banking • Round the Clock Banking-Time • Convenient Banking-Place • Low Service Cost in Banking • Profitable Banking – increases customer satisfaction • Low Establishment Cost in Banking • Improved Quality banking • Speed Banking • Service Banking

  14. Constraints in E-Banking • Start-up cost • Sophisticated Instruments Cost • Cost of Maintenance of all equipments • Training & Maintenance • Lack of Skilled Personnel • Security • Legal Issues • Restricted Clientele & Technical Problems • Restricted business – not all transactions • Destruction of Pricing Mechanisms- advantage to New players

  15. REAL-TIME GROSS SETTLEMENT (RTGS) Under RTGS when a payment message is moved through the clearing house online, the paying bank’s account with the RBI is simultaneously debited and credited in the receiving bank’s account. Advantages: • Certainty of Payment • Faster Collection of funds • No settlement risk • Improved liquidity management • Less Fraud & less processing cost • Better inventory Management & Supply Chain Management

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