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IN THE NAME OF ALLAH THE MOST MERCIFUL THE MOST BENEFICENT
IN THE NAME OF ALLAH THE MOST MERCIFUL THE MOST BENEFICENT
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PRESENTATION
MONEY BANKING & FINANCE
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ASSIGNED BY
MISS. AYESHA SABA
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TOPIC
SCOPE OF INTER NET OR E . BANKING
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PRESENTED BY
HAROON RASHEED
CLASS :B.COM 1ST ROOL NO :03
INFORMATICS COLLEGE OF SCIENCE AND TECHNOLOGY FSD
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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 ?
E -banking is defined as:
Banking is a combination of two, Electronic technology andBanking.
Electronic Banking is a process by which a customer performsbanking Transactions electronicallywithout 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 thecustomers through the use of electronic communication primarily the internet
Electronic banking is one of the truly
widespread avatars of E-commerce theworld over. Various authors define E-Bankingdifferently but the most definitiondepicting the meaning and features of
E-Banking are as follows:
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Informationtechnology
BANK
Customer
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Development of E-Banking
1980s :- Rapid development of the Internet
- TCP/IP system (communication system)
- E-commerce
Early 1980s :- Access to their accounts with the
computer of the bank
E-Banking made its debut in UK andUSA during 1920s. It became
prominently popular during 1960sthrough electronic funds transfers andcredit cards. The concept of Web-based banking came into existence, inEurope and USA in the beginning of1980s. It has been estimated that 40percent of banking transactions wouldbe done through net at present. Today,a wide range of services are being
rendered by banks using the electronicmedia. Since many years, banks havebeen operating inter-city transfer ofmoney through demand drafts, mailtransfers and telephonic transfers fromone city to other or even within thesame city and also from bank to bankthrough telephones. It facilitatesavailability of funds the next day itself.
It is a matter of great satisfaction thatthe e-Commerce is greatly assisted bythe e-Banking through electronic cashcheques and smart cards. It is one ofthe trend setting paperless mode ofeffecting payment by two kinds; I)Electronic Credit Clearing, and II)Electronic Debt Clearing. Thefollowings are other delivery channelsof banking.
History
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Development of E-Banking
May 1995 :
Wells Fargo - the first bank in the world
to offer customer access to their accountsover the internet .
Allows customer to see their accountsonline
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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 bankingbecause the customerget any services on thespot.
This is a online bankingbecause the customer getservices from manydistance
This is a wireless orPDA(personal digitalassistance) banking because inthis type no any wire isconnected and customer getservices at any where. when hewant.
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Types of E-Banking
Automated Teller Machine (ATM)
Tele banking or Phone Banking Mobile Banking
Pc Banking & Digital TV banking
Internet Banking Wireless or PDA Banking
MAIN TYPES OF E-BANKING SYSTEM
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e-Banking CSFs
Bank A Bank B
Clearing
Settlement
e-Banking
e-Tr adee-Banking:Inf r astructur e
Cost effectiveness
Mar ket segmentation
Multi channel delivery
Payment str eamsRisk management
e-Business e-Business
Bank Server
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Automated Teller Machine (ATM)
Types of E-Banking
First electronic channel introduced
Accepting deposits and dispenses cash
Convenient in handling accounts
AUTOMATIC TELLER MACHINE (ATM): This systemis known as "Any Time Money" because it allowscustomers who have an ATM card to withdrawmoney at any time from the bank withoutinteracting with human teller. Since the ATMmachine can be installed anywhere like petrolbunks, markets, railway stations etc, and can wellbe linked to the main computer. It allows customersto transact with the bank 24 hours a day and 365days a year. They allow the customers to transfermoney to and from accounts to view accountinformation, to deposit cheques or cash, to order
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Automated Teller Machine (ATM)
Types of E-Banking
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.
Using an ATM, customers can access their bankaccounts in order to make cash withdrawals (orcredit card cash advances) and check their accountbalances. Many ATMs also allow people to depositcash or checks, transfer money between their bankaccounts, pay bills, or purchase goods and services. ATMs are known by various casual terms including
cash machine, hole-in-the-wall, cash point or Bancmat (in Europe and Russia).
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Tele banking or Phone Banking
Types of E-Banking
It came into operation in the 1970s in the developedcountries like the US. It is accessible for corporatecustomers that have large volumes of payments toeffect and dispose of a fully automated accountingsystem. They can establish a Computer to Computerlink with their bank and in this way exchange truly
paperless credit transfers which are handled all theway from the originator to the beneficiary's accountwithout any paper involved.
HISTORY
This facility is available with the help of Voice
Response System (VRS or IVR). This system basically,accepts only TONE dialed input. Like the ATMcustomer has to follow particular process, initiallyaccount number and telephone PIN are fed for theprocess to start. Also the VRS system provides theusers within additional facilities such as changingexisting password with the new desired.
How Its Work
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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.
Types of E-Banking
Some of the advantages of TELE-BANKING ar e:-
Tele banking or Phone Banking
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Types of E-Banking
Mobile banking comes in as a part of the banks initiative tooffer multiple channel banking providing convenience for itscustomer. A versatile multifunctional, free service that isaccessible and viewable on the monitor of mobile phone.Mobile phones are playing great role in banking- bothdirectly and indirectly. They are being used both as bankingand other channels.
Mobile Banking
Its most commonly used type is SMS Banking
SMS-bankingThe Short Message Service (SMS) is a GSM service to exchange textmessages up to 140 byte (or 160 characters of 7 bit). The transmission
of mobile-originated short messages is carried out by the short messageservice center (SMSC) of the particular network operator. The SMSC isreceiving the message from the mobile device and routing it to thedestination device. For generating mobile-terminated short messages, itis possible that a company or a special service provider runs an ownSMSC. Thus, a bank could generate SMS from bank data like accountbalance or account movements and send it to the mobile device of thecustomer. This technique is used at SMS-banking: The customer sends anSMS with a request to the bank, and gets
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Types of E-Banking
PC Banking - The forerunner toInternet banking has been aroundsince the late 1980's and is still widelyused today. Individual banks providesoftware which is loaded on to anSME's office computer. The SME canthen access their bank account via amodem and telephone link to the bank.
Access is not necessarily via theInternet.
PC & Digital TV Banking
PC Banking
Digital TV Banking- Using the standarddigital reception equipment (set topbox and remote control), users canaccess their bank account. AbbeyNational and HSBC services areavailable via Digital TV providers. Oneof its main selling points is that noaccount details are transmitted via theWorld Wide Web.
Digital TV Banking
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Inter Net or Online Banking
Types of E-Banking
The advent of the Internet and thepopularity of personal computerspresented both an opportunity and achallenge for the banking industry. Foryears, financial institutions have usedpowerful computer networks to
automate million of daily transactions;today, often the only paper record isthe customers receipt at the point ofsale. Now that their customers areconnected to the Internet via personalcomputers, banks envision similaradvantages by adopting those sameinternal electronic processes to homeuse. Banks view online banking as apowerful value added tool to attract
and retain new customers whilehelping to eliminate costly paperhandling and teller interactions in anincreasingly competitive bankingenvironment
Internet Banking lets you handle many banking transactions viayour personal computer. For instance, you may use your computerto view your account balance, request transfers between accounts,and pay bills electronically. Internet banking system and method inwhich a personal computer is connected by a network serviceprovider directly to a host computer system of a bank such that
customer service requests can be processed automatically withoutneed for intervention by customer service representatives. Thesystem is capable of distinguishing between those customerservice requests which are capable of automated fulfillment andthose requests which require handling by a customer servicerepresentative. The system is integrated with the host computersystem of the bank so that the remote banking customer canaccess other automated services of the bank. The method of theinvention includes the steps of inputting a customer bankingrequest from among a menu of banking requests at a remotepersonnel computer; transmitting the banking requests to a host
computer over a network; receiving the request at the hostcomputer; identifying the type of customer banking requestreceived; automatic logging of the service request, comparing thereceived request to a stored table of request types, each of therequest types having an attribute to indicate whether the requesttype is capable of being fulfilled by a customer servicerepresentative or by an automated system; and, depending uponthe attribute, directing the request either to a queue for handlingby a customer service representative or to a queue for processingby an automated system.
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Thr ee Types of Inter net Banking
This type of Internet banking systems and the customer. Theinteraction between the banks system and the customer. Theinteraction may be limited to electronic mail, account enquiry, loanapplications, or static file updates (name and address change).Because these servers may have a path to the banks internalnetworks, the risk is higher with this configuration than withinformational systems. Appropriate controls need to be in the placeto prevent, monitor, and alert management of any unauthorizedattempt to access the banks internal networks and computersystems. Virus controls also become much more critical in thisenvironment.
This is the basic level of Internet or E-Banking. Typically, the bankhas marketing information about the banks products and services ona stand-alone server. The risk is relatively low, as informationalsystems typically have no path between the server and the banksinternal network. This level of Internet banking can be provided bythe banks or outsourced. While the risk to a bank is relatively low,the server or web site may be vulnerable to alteration. Appropriatecontrols therefore must be in place to prevent unauthorized alterations to the
banks server or web site.
This level of Internet banking allows customers to executetransactions. Since a path typically exists between the server andthe bank or outsourcers internal network, this is the highest riskarchitecture and must have the strongest controls. Customertransactions can include accessing accounts, paying bills,
transferringfunds etc.
Inf or mational
Communicative
Tr ansactional
Types of E-Banking
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ADVANTAGESOF INTERNET BANKING
Convenience
Ubiquity
Transaction speed
Efficiency
Effectiveness
Types of E-Banking
Unlike your corner bank,online banking sites neverclose; theyre available 24hours a day, seven days aweek, and theyre only amouse click away.If youre out of state or even
out of the country when amoney problem arises, youcan log on instantly to your
online bank and take care ofbusiness, 24\7.
Online bank sitesgenerally execute andconfirm transactions ator quicker than ATMprocessing speeds.
You can access and
manage all of yourbank accounts, evensecurities, from onesecure site.
Many online banking sites now offersophisticated tools, including accountaggregation, stock quotes, rate alertand portfolio managing program to helpyou manage all of your assets moreeffectively. Most are also compatiblewith money managing programs such asquicken and Microsoft money
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Types of E-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.
Wireless or PDA Banking
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WAP-bankingThe 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 tothe function of Electronic banking using http. The client sends arequest and gets a response with page content which is stored on ordynamically generated by a standard web server. The maindifference is in the usage of a WAP gateway for the conversion ofthe protocols. At banks must be considered that very sensitive datais processed. While a normal content provider doesnt has toobserve special security precautions, and in some cases can evenuse the services of extern providers, has to secure its web serverand WAP Gateway especially against unauthorized access. This isespecially necessary because of the fact that inside the WAPGateway the encryption protocol is converted from SSL/TLS to WTLSwith the effect that data is not encrypted while it is processed.While authentication is assured via a PIN (personal identificationnumber) of the user, authorization for transactions is realized viatransaction numbers (TAN). This concept, known from the electronicbanking, forces the user to carry a TAN list with him in order tomake transactions
Wireless Application Protocol
Types of E-Banking
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E-Banking Products
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
E-Banking Services
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Bill payment service Each bank has tie-ups with
various utility companies, service providers andinsur ance companies, across the country. It
facilitates the payment of electricity and telephone
bills, mobile phone, cr edit car d and insur ance
pr emium bills. To pay bills, a simple one-time
r egistr ation f or each biller i s t o be completed.
Standing instructions can be set, online to pay
r ecurring bills, automatically. One-time standing
instruction will ensur e that bill payments do not
get delayed due to lack of time. Most inter estingly,the bank does not char ge customers f or online bill
payment.
Bill payment service
Fund tr ansfer Any amount can be tr ansferr ed f rom one
account to another of the same or any another
bank. Customers can send money anywher e in
India. Payee¶s account number, his bank and
the br anch is needed to be mentioned af ter
logging in the account. The tr ansfer will take
place in a day or so, wher eas in a tr aditional
method, i t takes about thr ee wor king days.
ICICI Bank says that online bill payment
service and f und tr ansfer facility have been
their most popular online services.
Fund tr ansfer
Cr edit car d customers
Cr edit car d users have a lot in
stor e. With Inter net banking,customers can not only pay their
cr edit car d bills online but also get
a loan on their car ds. Not just this,
they can also apply f or an
additional car d, r equest a cr edit
line incr ease and God f or bid if you
lose your cr edit car d, you can
r eport lost car d online.
Cr edit car d
Debit Car d Debit Car d is an
identity car d issued by a bank to
a customer, which the customer
can use to buy goods. The price
of the goods is char ged to
customer's bank account.
Debit Car d
E-Banking Services
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Investing through Inter net bankingOpening a f ixed deposit account cannot get easier than this. An
FD can be opened online through f unds tr ansfer . Online banking
can also be a gr eat f riend f or lazy investors. Now investors with
inter linked demat account and bank account can easily tr ade in
the stock mar ket and the amount will be automatically debited
f rom their r espective bank accounts and the shar es will be
cr edited in their demat account. Mor eover, some banks even give
the facility to purchase mutual f unds dir ectly f rom the online
banking system.
So it r emoves the worry about f illing those bigf or ms f or mutual f unds, they will now be just a few clicks away.
Nowadays, most leading banks offer both online banking and
demat account. However if the customer have ther e demat
account with independent shar e brokers, then need to sign a
special f or m, which will link your two accounts.
Investing through Inter net banking
Rechar ging your pr epaid phone
Now ther e is no need to rush to the vendor to
r echar ge the pr epaid phone, every time the talk time
runs out. Just top-up the pr epaid mobile car ds by
logging in to Inter net banking. By just selecting the
oper ator's name, entering the mobile number and
the amount f or r echar ge, the phone is again back in
action within few minutes.
Recharging your prepaid phoneShopping at your f ingertips
Leading banks have tie ups with various
shopping websites. With a r ange of all
kind of products, one can shop online and
the payment is also made conveniently
through the account. One can also buy
r ailway and air tickets through Inter net
banking.
Shopping at your fingertips
Railway passThis is something that would inter est all the
aam janta. Indian Railways has tied up with
ICICI bank and you can now make your
r ailway pass f or local tr ains online. The pass
will be deliver ed to you at your doorstep.
But the facility is limited to Mumbai, Thane,
Nasik, Sur at and Pune. The bank would just
char ge Rs 10 + 12.24 percent of service tax.
Railway pass
E-Banking Services
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A smart car d usually contains an embedded 8-bit microprocessor
(a kind of computer chip). The microprocessor is under a contact
pad on one side of the car d. Think of the microprocessor as r eplacing
the usual magnetic stripe pr esent on a cr edit car d or debit car d. The
microprocessor on the smart car d is ther e f or security. The host
computer and car d r eader actually "talk" to the microprocessor . The
microprocessor enf orces access to the data on the car d. The chips in
these car ds ar e capable of many kinds of tr ansactions. For example,
a person could make purchases f rom their cr edit account, debit
account or f rom a stor ed account value that's r eload able. The
enhanced memory and processing capacity of the smart car d is manytimes that of tr aditional magnetic-stripe car ds and can accommodate
sever al differ ent applications on a single car d. It can also hold
identif ication inf or mation, which means no mor e shuffling through
car ds in the wallet to f ind the right one -- the Smart Car d will be the
only one needed. Smart car ds can also be used with a smart car d
r eader attachment to a personal computer to authenticate a user .
Smart car ds ar e much mor e popular in Europe than in the U.S. In
Europe the health insur ance and banking industries use smart car ds
extensively. Every Ger man citizen has a smart car d f or healthinsur ance. Even though smart car ds have been around in their
moder n f or m f or at least a decade, they ar e just starting to take off in
the U.S.
A smart
An e-Cheque is the electronic version or r epr esentation of paper cheque. The
Inf or mation and Legal Fr amewor k on the
E-Cheque is the same as that of the
paper cheque¶s. It can now be used in
place of paper cheques to do any and all
r emote tr ansactions. An E-cheque wor k
the same way a cheque does, the cheque
writer "writes" the e-Cheque using one of
many types of electronic devices and"gives" the e-Cheque to the payee
electronically. The payee "deposits" the
Electronic Cheque r eceives cr edit, and
the payee's bank "clears" the e-Cheque
to the paying bank. The paying bank
validates the e-Cheque and then
"char ges" the check writer's account f or
the check
E-CHEQUE
E-Banking Services
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Benef its of E-Banking
Benefits for Banks
Benefits for Small to MediumBusinesses
Benefits for Customers
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Benef its of E-Banking
Larger customer coverage
Reducing the costs of operations
Promoting their services and productsinternationally
Increasing the customer satisfaction andproviding a personalized relationshipwith customers
Benef its f or Banks
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To run its operations more effectively
Lower cost than traditional financialmanagement mechanisms
Benefits for Small to Medium Businesses
Benef its of E-Banking
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Benef its of E-Banking
Communicat ion
- communicate easily
Environment al
- Abolishing the uses of paper
Other s
- Offering one-stop-shop solutions
Benef its f or Customers
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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 someconfusion 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 frombanks
Use of Trojan Horse programs to captureuser IDs and passwords
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Scope of E-Banking In Pakistan
The State Bank Of Pakistan and other
commercial banks are quite aware of the
Changing needs of customers in Pakistan.
The SBP has promulgated Electronic
Transaction Ordinancein2002.
which provides legal recognition for
electronic settlement of transaction in
banking sector. At the present the 40% of the commercial bank branches have been
automated .The online banking which is
the wave of future is now on the move in
Pakistan and is progressing is
satisfactorily
E-Banking in Pakistan Opportunities & Challenges
Generally speaking three factors
Quickness
Easiness
cheapness
Gener ally speaking, thr ee factors, quickness, easiness and cheapness have
become the catchwor ds f or the competitiveness and usef ulness of all thebusiness oper ations. Particular ly it is commonplace today to say that banking is
under going a r adical tr ansf or mation. The symptoms ar e new products, new
players, new channels etc. This tr ansf or mation is taking place across all sectors
of the banking industry. That is why banks ur gently need to improve their ability,
to think str ategically about IT investments. Only those banks that use their
technology r esources effectively have the opportunity to secur e r eal competitive
advantage in this fast-changing industry through r eal product or service
differ entiation.
Firstly
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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
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 globalarena, 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
Secondly
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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 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 sametime 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 andgoodwill are becoming a great task and a challenge for
banks.
Thir dly
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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 r each
Migr ating tr ansaction behavior
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CONCLUSION
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1/14/2012 42CREATED BY:HAROON RASHEED