E - BANKING Onkar Sule Roll no: - 54
What is E - BANKING Electronic banking, also known as electronic funds transfer (EFT), it is simply the use of electronic means to transfer funds directly from one account to another, rather than by cheque or cash.
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.
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-to-consumer 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
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 and 3 months 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 1217463 ATM installed in and around Mumbai
ATM and POS Application Architecture Debit Card Authorization Switch System Credit Card Authorization
Point of Sale • New habits in shopping • Increased the use of plastic cards • Now there are 313140 POS installed in India (Ref: www.moneylife.in)
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 Telecom IVR CTI HOST
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
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 India:
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 Leased line GSM Operator Application Server Bank SMS Gateway GSM Network 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.
Relationship Management Portfolio CIF Product Factory Management ATM I N Deposit (TD,DD) FX Promissory F FBS Securities POS Import / Export Notes O C Loans&Credits NBS EFT Cheques Merchant Teletel E N T Sales Support E CMS Treasury Payments YKB HR Telerom System R Information Delivery Delivery Services Teller (Branch) Corporate Tables DAL Internet Banking GL / Accounting Settlement Reporting Phone Banking Batch Operations Internet Shopping Campaign Credit Risk PCM Productivity Management Management Management & Control Banking Application Architecture
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 Transform Extract Deliver Transaction Data Extraction Data Scrubbing and Cleansing Load, index and Aggregate Publish and Subscribe Partial Solutions Data Access Tools Data Mapping Data Replication Data Histories and Summaries Complete Integrated Solution Integrated Data Warehouse Infrastructure
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 e-commerce 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.
Advantages of E-banking • Benefits for Banks • Benefits for Small to Medium Businesses • Benefits for Customers
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
Benefits for Small to Medium Businesses • To run its operations more effectively • Lower cost than traditional financial management mechanisms
Benefits for Customers Convenience • 24 hours a day, seven days a week Cost • Reducing transfer fees Speed • Faster circulation of assets Competitiveness - Fostering competition in financial market
Benefits for Customers Communication • communicate easily Environmental • Abolishing the uses of paper Others - Offering one-stop-shop solutions
Disadvantages OF 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
Security Risk • Increasing number of fraudulent bank websites • Fake emails purporting to be sent from banks • Use of Trojan Horse programs to capture user IDs and passwords
Fraudulent Bank Websites • A suspicious bank website:www.sbionline.com • Original bank websitewww.onlinesbi.com • These website are believed to aim to trick persons into disclosing their sensitive personal information
Fake e-mails • Email send fromFraudulent bank • Verify the personal information • Guide customerenter the fraud link • Disclosing their ATM card numbers and their passwords
Viruses and Worms-Trojan Horse Program • When we open some suspiciouswebsites or email • Trojan Horse Programwill install our computer secretly • Hidden in the computer • When you access bank websites • Capture our account andthe password
Case From Newspaper • Don’t use the hyperlink to login to the website of banks • Should deeply check the postscript of the website • Observe that is it have the encryption and compare the login account of encryption cert is equal to the bank.
Precautionary Measures For Bank: • Should provide specific guidance to their customers
For Customers : • Should not disclose their customer IDs (e.g., account numbers) or PIN to anyone else. • Periodically change their PIN • Should promptly log out from the service • Should regularly check their account balances and statements to identify unusual transactions.
Do not access Corporate Cyber banking through public terminals. • To safeguard your computer from any other hacker attack, install anti-virus and anti-spyware software on your computer and update it regularly.
Alternative Delivery Channels Anytime, anywhere banking • Telephone Banking • Internet Banking • Mobile Banking • Television banking • Next ???
What is the Next channel Microwave Banking ???