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PROJECT REPORT ONE-BANKING

SUBMITTED BY:

KSHITIJ SAXENAROLL NO.B-103

F-1(2009-2011)

UNDER THE GUIDANCE OFPROF. ARUN D. CHANDARANA

A PROJECT SUBMITTED IN COMPLETIONOF PGDM TO THE

CHETANA¶S INSTITUTE OF MANAGEMENT &RESEARCH

SURVEY NO.341, GOVT. COLONY, BANDRA (EAST),MUMBAI- 400 051

(2009-2011)

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DECLARATION

This is to declare that the study presented by me to Chetana¶s Institute of

Management and Research, in full completion of the PGDM under the title ³ E-BANKING ´ had been done under the guidance of

CHANDARANA

PROF. ARUN D.

KSHITIJ SAXENA

CIMR

F-1 ROLL NO. B-103(2009-2011)

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CERTIFICATE

This is to certify that the study presented by KSHITIJ SAXENA to the

CHETANA¶S INSTITUTE OF MANAGEMENT AND RESEARCH , in full

completion of the PGDM under the title ³E-BANKING´ has been done under the

guidance of PROF. ARUN D. CHANDARANA.

The project is in the nature of original work that has not so far been submittedforany Diploma of CHETANA¶S INSTITUTE OF MANAGEMENT &

RESEARCH or any other University / Institute. References of work and related

sources of information have been given at the end of eachchapter.

Signature of the Guide

PROF.ARUN D. CHANDARANA

Signature of the Director

DR. M.V.DESHPANDE

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ACKNOWLEDGEMENT

I express my sincere thanks to the management of my college for giving metheopportunity to experience the working on ³ E-BANKING´.

I am a grateful to my institute Director DR.M.V.DESHPANDE for his excellent

co-operation with the industry and thus giving me an opportunity to enhancemymanagement and technical skills in the sense of organizationalactivity.First of all I would express my heartfelt gratitude to my mentor PROF.ARUN D.

CHANDARANA who helped in every aspect of my project from start to end.

Without his active support this project would not have beensuccess.Finally, I also would like to express my deepest gratitude to each and every

personwho made this project a success.

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Table of Content

Executive Summary

Introduction

Objectives & hypothesis of the project

Literature review & secondary data collection

y Internet Banking

y Features of Internet Banking

y Advantages & disadvantages

y Mobile banking

y Characteristics of Mobile Banking

y Mobile Banking use cases.

y Debit card

y Credit card

y ATM

y E-cheque , etc

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7

11

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Benefits /concerns of E-banking

Dangers of E-Banking

Securities of E-Banking

Primary data collection & testing of hypothesis

Findings & suggestions

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Executive Summary

³E-banking´- The execution of financial services via internet, reducing cost and increase inconvenience for the customer to access the transaction. e- banking is an umbrella term fortheprocess by which a customer may perform banking transactions electronically withoutvisiting abrick-and-mortar institution. The following terms all refer to one form or another of electronicbanking: personal computer (PC) banking, Internet banking, virtual banking, onlinebanking,home banking, remote electronic banking, and phone banking. PC banking and Internet or

onlinebanking are the most frequently used designations. It should be noted, however, that thetermsused to describe the various types of electronic banking are often used interchangeably.

The ever increasing speed of internet enabled phones & personal assistant, made thetransformation of banking application to mobile devices, this creative a new subset of electronicbanking i.e. mobile banking. In 1999 & 2000 mobile banking as an established channels,stillseems to be a distant prospect. The internet is revolutionizing the way the financial industry conducts business online, hascreated new players who offer personalize services through the web portals. This increaseto findnew ways and increase customer loyalty to add the value to this product and services.

Banks also enables customers lifestyle needs by changing and increasing preference forspeedand convenience are eroding the traditional affinity between customer and branch offices as

anew technology disinter mediates traditional channels, delivering the value propositionhingeson owing or earning the customer interface and bringing the customer a complete solutionwhichsatisfies their needs. Banks have strong relationships with corporate and businesscustomers anda wide experience in providing them with corporate banking services.Bank provides amultimedia of small and large retailers with acquiring functionality in credit cardtransactions.Customers have trusted relationships with banks and a lower propensity to switch bankingproviders.

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INTRODUCTION

E-banking:-

Internet banking (or E-banking) in simple, means any user with a

personal computer and a browser can get connected to his banks website to perform any of thevirtual banking functions. In internet banking system the bank has a centralized databasethat isweb-enabled. All the services that the bank has permitted on the internet are displayed inmenu.Any service can be selected and further interaction is dictated by the nature of service.Once thebranch offices of bank are interconnected through terrestrial or satellite links, there wouldbe nophysical identity for any branch. It would a borderless entity permitting anytime, anywhereandanyhow banking.

The delivery channels include direct dialup connections, private networks, public networks,etc.with the popularity of computers, easy access to Internet and World Wide Web(WWW),Internet is increasingly used by banks as a channel for receiving instructions and deliveringtheirproducts and services to their customers. This form of banking is generally referred to asInternetBanking, although the range of products and services offered by different banks vary widelybothin their content and sophistication.

E-banking is defined as the automated delivery of new and traditional banking products and

services directly to customers through electronic, interactive communication channels. E-banking includes the systems that enable financial institution customers, individuals orbusinesses, to access accounts, transact business, or obtain information on financialproducts andservices through a public or private network, including the Internet. Customers access e-bankingservices using an intelligent electronic device, such as a personal computer (PC), personaldigitalassistant (PDA), automated teller machine (ATM), kiosk, or Touch Tone telephone. While therisks and controls are similar for the various e-banking access channels, this bookletfocusesspecifically on Internet-based services due to the Internet¶s widely accessible publicnetwork.Accordingly, this booklet begins with a discussion of the two primary types of Internetwebsites:informational and transactional.

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E-BANKING SUPPORT SERVICES

WEBLINKING

A large number of financial institutions maintains sites on the World Wide Web. Somewebsites are strictly informational, while others also offer customers the ability toperformfinancial transactions, such as paying bills or transferring funds between accounts.

WIRELESS E-BANKING

Wireless banking is a delivery channel that can extend the reach and enhance theconvenience of Internet banking products and services. Wireless banking occurs when customers access afinancial institution's network(s) using cellular phones, pagers, and personal digitalassistants (orsimilar devices) through telecommunication companies¶ wireless networks. Wirelessbankingservices in the United States typically supplement a financial institution's e-bankingproducts andservices.Person-to-Person PaymentsElectronic person-to-person payments, also known as e-mail money, permit consumers tosend³money´ to any person or business with an e-mail address. Under this scenario, aconsumerelectronically instructs the person-to-person payment service to transfer funds to anotherindividual. The payment service then sends an e-mail notifying the individual that thefunds areavailable and informs him or her of the methods available to access the funds includingrequesting a check, transferring the funds to an account at an insured financial institution,orretransmitting the funds to someone else. Person-to-person payments are typically funded

bycredit card charges transfer from the consumer¶s account at a financial institution. Sinceneitherthe payee nor the payer in the transaction has to have an account with the paymentservice, suchservices may be offered by an insured financial institution, but are frequently offered byotherbusinesses as well.

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Banking Services through Internet:

1)The Basic Level Service is the banks¶ web sites which disseminate information ondifferentproducts and services offered to customers and members of public in general. It may

receiveand reply to customer¶s queries through e-mail;2) In the next level are Simple Transactional Web sites which allows customers to submittheirinstructions, applications for different services, queries in their account balances, etc.but donot permit any fund-based transactions on theiraccounts.

3. The third level of Internet banking service are offered byFully Transactional Web sites which allow the customers to operate on their accountsfortransfer of funds, payment of different bills, subscribing to other products of the bankand to

transact purchase and sale of securities, etc. The above forms of Internet bankingservice thecustomer or by new banks, who deliver banking service primarily through Internet orotherelectronic delivery channels as the value added services. Some of these banks areknown asµVirtual¶ banks or µInternet only¶ banks and may not have physical presence in acountrydespite offering different banking services.E-banking services are delivered to customers through the Internet and the web usingHypertextMarkup Language (HTML). In order to use e-banking services, customers need Internetaccessand web browser software. Multimedia information in HTML format from online banks canbedisplayed in web browsers. The heart of the e-banking application is the computer system,which includes web servers, database management systems, and web applicationprograms thatcan generate dynamic HTML pages.One of the main concerns of e-banking is security. Without great confidence in security,customers are unwilling to use a public network, such as the Internet, to view theirfinancialinformation online and conduct financial transactions. Some of the security threats includeinvasion of individuals' privacy and theft of confidential information. Banks with e-bankingservice offer several methods to ensure a high level of security: (1) identification andauthentication, (2) encryption, and (3) firewalls. First, the identification of an online banktakes

the form of a known Uniform Resource Locator (URL) or Internet address, while a customerisgenerally identified by his or her login ID and password to ensure only authenticatedcustomerscan access their accounts. Second, messages between customers and online banks are allencrypted so that a hacker cannot view the message even if the message is interceptedover theInternet. 9

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The particular encryption standard adopted by most browsers is called Secure SocketLayer(SSL). It is built in the web browser program and users do not have to take any extrasteps toset up the program. Third, banks have built firewalls, which are software or hardware

barriersbetween the corporate network and the external Internet, to protect the servers andbankdatabases from outside intruders. For example, Wells Fargo Bank connected to theInternetonly after it had installed a firewall and made sure the firewall was sufficientlyimpenetrable.

On October 1, 2000, the electronic signatures bill took effect, recognizing documentssignedonline as legal. Some banks plan to begin using electronic checks as soon as they canworkout various security measures. The range of e-banking services is likely to increase in the future. Some banks plan tointroduce electronic money and electronic checks. Electronic money can be stored incomputers or smart cards and consumers can use the electronic money to purchasesmallvalue items over the Internet. Electronic checks will look similar to paper checks, buttheycan be sent from buyers to sellers over the Internet, electronically endorsed by theseller, and

forwarded to the seller's bank for electronic collection from the buyer's bank. Further,banksseek to offer their customers more products and services such as insurance, mortgage,etc.

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HYPOTHESIS

� Assumed that E banking activity helps to increase the banking process fastermake itconvenient.

� To understand how E banking activities are carried out & how it is easy touse

� To understand the awareness of e banking.

Objective

� To understand the uses of E banking , its advantages &disadvantages.

� To understand role of technology in making the banking process

faster.

� To understand the different type of E banking services & itsuse

� To understand the future prospects of E-BANKING

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Literature review

E-banking fails to take off in India, says RBIBy IANS

Monday, 18 November 2002, 00:00Hrs The Reserve Bank of India (RBI) Friday said the use of technology and electronictransactionsystems had failed to make significant inroads into Indian banking systems due toinfrastructure constraints.

NEW DELHI: "E-banking leads to greater competition among banks, both domesticandforeign, as well as competition from the non-banking segment," the central bank saidin its

annual report, Trend and Progress of Banking in India 2001-02."In India, e-banking, however, has not been able to make significant inroads as anindependent mode of banking due to psychological, technological and socio-economicfactors.

"There are the additional hurdles relating to infrastructure and legal constraints," thereportsaid.

The report gives a detailed account of the performance of commercial banks,cooperativebanks, financial institutions and non-banking financial companies in the fiscal yearended

March 31, 2002.E-banking refers to the use of electronic delivery channels for banking products andservicesthrough automated teller machines (ATM), Internet banking and tele-banking.

"This channel of distribution, though promising, is unlikely to threaten traditionaldistributionchannels in the immediate future," the central bank observed in its report.

Competition results in lowering of transaction costs and enables penetration into newmarkets, said the Reserve Bank. It noted that competition also compels banks to offer abroadrange of products through diverse distribution channels.

The RBI report further said major legal reforms had been initiated in the banking

sectorpertaining to security laws, frauds and regulatory framework.BANGALORE, INDIA:

HCL Infosystems today announced a tie-up with Korean major Nautilus Hyosung, toprovidecomplete ATM solutions for Indian banks across the country with special emphasis onservice offering for rural India. HCL Infosystems¶ System Integration strengths coupledwith

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the product domain expertise of Nautilus Hyosung, a leader in ATM Business with over40percent market share in Korea, will offer the Indian Banking Sector a range of productsandservices as India expands its ATM penetration within the country.With just 38000 plus ATMS in India, a country with a population of over 1.2 billion, thereis

a huge demand for ATM banking services across India. Nautilus Hyosung comes withextensive knowledge and Product experience on both the ATM and various applicationsoftware platforms and remote management solutions to make the ATM an effectivechannel.Commenting on the partnership, J V Ramamurthy, COO, HCL Info systems said, ³HCL hasbeen working with major banks across the country for the past 33 years and with our500+service touch points spreading across 4,000 cities, we are well placed to address themarketanywhere in India. We are very excited about this project as we believe that thispartnershipwill make banking a smoother experience for many banking customers in the urban andrural

areas.´

Speaking on the occasion, Hyun Sik Sohn, Sr. Executive vice president, NautilusHyosung,said, ³Banking in India has come a long way due to a combination of factors likeincreasingconsumer awareness, technological advancement and growing financial value. Our tie-upwith HCL is definitely a long-term commitment, which will bring value to the Indianbanksand will definitely give a good opportunity to get closer to the customers across India.´India being an emerging market has high growth rate and size. Number of ATMinstallationsis approximately 38,000 units and the ATM¶s per million people approximately is 33units ascompared to Korea which is 1,920 units. Experts forecast that the growth rate (CAGR) isexpected to grow 18 percent up by 2013. Banks going into a self service model can

havehuge potential savings and increase the convenience for the customers.

The ³HCL Nautilus´ range of ATMs will offer products that have been customized to thevarious requirements of the Indian market. Combining ATM design and manufacturingstrengths of Nautilus Hyosung and the experience of HCL in designing products for the

Indian market, this ATM incorporates technology designed to meet the implicitchallenges of India.

Looking ahead HCL and Nautilus will launch rural ATMs meant for deployment by banksinlocations with relatively low transaction volumes and also help in the Financial Inclusioninitiatives of banks. This solution is thus the ideal vehicle to offer cost-effective ATMconvenience to the largely untapped rural areas taking the power of banking to everyIndian.With the global expertise of Nautilus Hyosung and the System Integration and pan Indiasupport strengths of HCL Infosystems; the Indian banking industry will have a provenstate

of art end to end ATM product and solution partner.Majority of people over 55 now us e internet banking Tue, 15 Feb 2011

A new report by market research company One Poll has found that 70 per cent of over-55snow use the internet to manage their finances . The findings, into the onlinepreferences of

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Wed, 02 Feb 2011

Last year one in 20 people fell victim to scams, with most losing money as a result of

givingout their bank account details or paying upfront fees.

According to statistics from the Office of Fair Trading (OFT), 39 per cent of those wholostmoney were hit by two specific scams which dupe people into handing over their bankaccount details or paying upfront fees "assuming they are entitled to an inheritance ordonating to charity ".

The OFT wants to raise awareness of the issue and has launched a campaign as partof its2011 Scams Awareness Month. The campaign will ask people to drop any scam mailtheyreceive into designated bins or boxes at local libraries and public areas nationwide

We want people to recognise the warning signs and feel confident enough to seekadvicefrom friends and family or from Consumer Direct," said Michele Sham brook,operationsmanager for the OFT's Consumer Direct serviceProblems remain with fast payments in online banking

Wed, 19 Jan 2011

With speed of online payments now seen as a necessity of modern banking, there arestill

concerns over many banks¶ ability to offer the type of service the customer nowexpects. Itappears that high street bank Santander is the worst offender for failing to providesame-daycash transfers online using the faster payments system.Although Santander customers can access their telephone banking service, this has aGBP300maximum for faster payments, and does not allow people to make electronic paymentsbyphone or internet as quickly as many of their competitors.With the amount of annual cash transfers in the UK doubling from about 100 million to200million in the last couple of years, and around 22 million people in the UK using internetbanking, other main high street banks such as RBS, Barclays, Lloyds and Bank of Scotland

now use the faster payments system in both telephone and online banking . In fact, theonlyexceptions are Santander, owner of Abbey, and Alliance and Leicester, with the Spanishbankbeing the only one that does not have the online faster payment service

The GBP300 restriction on faster payments by Santander is also below the limits placedbythe other banks, and can be a problem when customers want to transfer big chunks of money,such as to a share-trading account

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Online banking still ignored by millions, according to report

Thu, 06 Jan 2011

A survey by consumer organisation Which? has found that the growing popularity of onlinebanking and electronic finance methods has still to make inroads into how millionscarry outtheir personal finance . The survey revealed that 76 per cent of people in the UK used cheques during 2010,despitethe belief that this payment method was supposed to be much less popular than it was.Aswell as over three quarters of us using a cheque last year, it was also shown that about50 percent of us had written one in the last month.It was revealed that around 41 per cent of people used cheques to pay suppliers ortradespeople, while 23 per cent gave them as a gift to friends and family and 14 percentwrote them to pay for outings or the cost of school dinners. The findings seem toconfirm thatmany people are still concerned about the safety of using electronic banking .However, the results of the Which? survey come as the Payments Council say that theyexpect the cheque clearing system to be phased out within the next eight years,leaving manywary of electronic banking needing advice about managing their money They survey also found that consumers would be most happy with cash, internetbanking ordirect debits once cheques were not available, but were less comfortable with methodssuchas mobile phone banking and contactless payment cards

New online budgeting tool claims to be the future of banking

Mon, 24 Jan 2011

A website which claims to 'take the hassle out of budgeting' hopes to revolutioniseonlinebanking in the UK.

The recently launched Moneydashboard.com grabs all online bank account and creditcard

ins and outs and displays them in one place. A user will be able to see an all-encompassingsnapshot of their financial health and the website also has tools which can dissectspendinghabits.Users can 'tag' certain types of outgoings to see where all their cash is going, set andtrackbudgets and create email alerts that are triggered when a balance falls into dangerousterritoryor an overdraft limit is imminent. According to the company, around 95 per cent of allonline

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bank accounts available in the UK are covered by MoneyDashboard.

Currently, Money Dashboard can only load current accounts and credit card datato itssystem, but investments, loans and mortgages are in the pipeline for futureintegration

Secondary data:www.e-banking.co.uk/news/index.htmlwww.wikipedia.org

www.economictimes.com

Features of E-banking

E-Banking provide exceptional rates on Savings, CDs, and IRAsChecking with no monthly fee, free bill payment and rebates on ATMsurchargescredit cards with low ratesEasy online applications for all accounts, including personal loans andmortgages24 hour account accessIt provides Quality customer service with personal attentionIt provides the quick services to their customers.Enables transfer of funds from one place to another(banks).Exchange of statisticals information amongs banks.Enables foreign exchange operations.

Inter-bank applications like settlement of funds between banks.Provides facilities like demat operation,ATM operation,online banking. Transfer of funds between accounts;It brings efficiency in CRM(Customer relationship management)Make Payment of billsIntroduces new & innovative products &services.View balance and statements;Brings door to door services.Create, view and maintain Standing OrdersHave evolutionary trend at a globle scenario.Customer can View Direct Debits.

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VARIOUS FORMS OF E-BANKING

Internet Banking

Internet banking, sometimes called online banking, is an outgrowth of PC banking.

Internetbanking uses the Internet as the delivery channel by which to conduct banking activity,forexample, transferring funds, paying bills, viewing checking and savings accountbalances,paying mortgages, and purchasing financial instruments(insurance, mutual funds) andcertificates of deposit. An Internet banking customer accesses his or her accounts fromabrowser² software that runs Internet banking programs resident on the bank¶s WorldWideWeb server, not on the user¶s PC. Net Banker defines a ³ true Internet bank´ as onethatprovides account balances and some transactional capabilities to retail customers over

theWorld Wide Web. Internet banks are also known as virtual, cyber, net, interactive, orwebbanks. MAIN CONCERNS IN INTERNET BANKING

In a survey conducted by the Online Banking Association, memberinstitutionsrated security as the most important issue of online banking. There is a dualrequirement to protect customers' privacy and protect against fraud.BankingSecurely: Online Banking via the World Wide Web provides an overview of Internet commerce and how one company handles secure banking for itsfinancial institution clients and their customers. Some basic information on

thetransmission of confidential data is presented in Security and Encryption ontheWeb. PC Magazine Online also offers a primer: How Encryption Works. Amulti-layered security architecture comprising firewalls, filtering routers,encryption and digital certification ensures that your account information isprotected from unauthorized access.

.

DRIVERS OF CHANGE

Advantages previously held by large financial institutions have shrunkconsiderably. The Internet has leveled the playing field and afforded openaccess to customers in the global marketplace. Internet banking is a cost-effective delivery channel for financial institutions. Consumers areembracingthe many benefits of Internet banking. Access to one's accounts at anytimeandfrom any location via the World Wide Web is a convenience unknown ashort 18

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time ago. The six primary drivers of Internet banking includes, in orderof primacy are:

Improve customer accessFacilitate the offering of more servicesIncrease customer loyalty

Attract new customersProvide services offered by competitorsReduce customer attrition

The banking industry in India is facing unprecedented competition fromnon-traditional banking institutions, which now offer banking and financialservicesover the Internet. The deregulation of the banking industry coupled with theemergence of new technologies, are enabling new competitors to enter the

financial services market quickly and efficiently.

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Features of Internet banking

The features available from an on-line bank account are similar to those which areavailablevia 'phone banking or visiting the local branch. On-line banking features do differ

betweenthe banks, but usually include:Advantages of Internet Banking

Refers to conducting banking transactions through internet. theyare,

Opening & closing of accountesMake the payments of merchandise transaction through Debit & Creditcards.It gives reliefs to their customer from carrying heavy cash.Enables prompt & speedy operation to clients.It saves lot of time to their customers &convenient to access.

Disadvantages of Internet Banking

Customer may have to face risky transaction & fraud.Failure of power supply cause to break down of system.Loss of heavy income at times of settlement of higher magnitude.Cost involved in training staff may not be profitable specially in times of attrition.Development of an attitude of lethargy.

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Mobile banking use cases

DefinitionMobile banking (also known as M-Banking, m banking, SMS Banking) is a term used forperforming balance checks, account transactions, payments, credit applications andotherbanking transactions through a mobile device such as a mobile phone or Personal DigitalAssistant (PDA). The earliest mobile banking services were offered over SMS. With theintroduction of the first primitive smart phones with WAP support enabling the use of themobile web in 1999, the first European banks started to offer mobile banking on thisplatformto their customers.Mobile banking has until recently (2010) most often been performed via SMS or theMobile

Web. Apple's initial success with iPhone and the rapid growth of phones based onGoogle'sAndroid (operating system) have led to increasing use of special client programs, calledapps,downloaded to the mobile device.ExplainationA mobile user has to be seen from his context when using the application. Needs andexpectations are not generic, but bound to this context.As a typical mobile banking user, we consider someone who already is an electronicbankinguser shows significant affinity to technology and often finds himself in situations wherehecan not (or does not want to) rely an infrastructure necessary for electronic banking.In the following, we introduce four use cases. These have been developed in the course

of two group discussions; each group consisted of mobile banking users and mobilecommerceexperts. The groups focused on identifying real-life situations in which the use of mobilebanking provides an informational added value. The resulting situations have beenaggregated to the use cases The use cases are not exhaustive, but representative: Eachcasestands for a series of cases, which are similar in the depth of the desired informationand/orthe conditions of the usage. For each use case we identify the most important, concreteneedthat the user has in this particular situation.

Use case 1: Request of account balance .

The user is in a mobile situation (e.g. in a department store) and intends to know hisaccount balance, e.g. to verify his account before realizing a spontaneous purchase.Resultingneed: Quick obtainment of account balance.Use case 2: Control of account movements.

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The user is waiting for an important cash receipt on his account. He intends to havethe exact details of the cash receipt. Resulting need: Continuous control overmovements onthe account.

Use case 3: Instant payment.

The user is in a mobile situation and intends to make a payment by bank transferfrom

his account. Resulting need: Instant execution of a bank transfer.

Use case 4: Administration of the account.

The user intends to use spare time (e.g. using a train or waiting on the airport) toadministrate his account. Resulting need: Quick and easy-to-use execution of transactions andadministration is possible.

business models and new ways to interact with customers. The ability to performbanking transactions online has created new players in the financial industry, such asonlinebanks and brokers who offer personalized services through their Web portals. Thisincreasedcompetition is driving traditional financial institutions to find new ways to add the valuetotheir products and services, gain competitive advantage and increase customer loyaltywhilealso attracting new, high-value clients.

Mobile and wireless technology, combined with the wide variety of portable devicesavailable today, enables new revenue opportunities for financial services organizations. Thisprovides a new channel that can be used to refresh and expand the customer base,

attractprime customers and enhance loyalty. With mobile and wireless technology, banks canoffera wide possibilities of services to their customers, from the freedom of paying bills whilestuck in traffic, to receiving notification of a change in stock price while having lunch, theconvenience and time saving benefits of wireless financial services are huge. Thechallenge,then, is how to turn these possibilities into a reality for the customers.

Benefits Description

Developing wireless applications and services targeted at theGrownew

mobile mass market will allow attracting new, high-valuecustomer base

customers into mobile banking portal and expanding theand markets

reach to global markets.

The convenience of having personalized wireless access tocritical financial information is an invaluable service forcustomers on the move. Enabling the execution of time-

Increase share of sensitive financial transactions anywhere, anytime,providescustomer wallet the opportunity to strengthen the relationships with existing

customers. This ultimately results in an increased share of the customers' transactions--preventing them from taking aportion of their financial business elsewhere.

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Growassets,numberof transactions and Granting customers flexible access to financialinformationfeesand accounts enables them to perform transactions when it's

most convenient for them. As a result, they have the

opportunity to conduct transactions more frequently, drivingincreased revenue from fees.

Brand and reputation for convenience, service andinnovation will be strengthened and enhanced each timecustomers on the move stop to check their stock portfolio orto pay bills wirelessly. This also offers significant potentialto grow the market awareness through word-of-mouth.

Expand andenhance brandpresence

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MOBILE NETWORKS PROVIDECOMPETITIVE ADVANTAGES

1. Always ± on 24 ×7 access:

THE FOLLOWING

Mobile networks will provide the ability for consumers to be transaction- ready ,

much in the way cable access has facilitated online pc access and reduced consumerdial updelays 3555.

2. Advanced penetration of mobile networks:2G (second generation) networks already cover more than 90 percent of the

population in the western world, and this number is growing steadily.

3. Personalization:Through SIM (Subscriber Identity Module) cards, mobile customers have a specific

profile that enables customized functionality that directly reflects the way they want totransact business over mobile devices. Through the convenient addition of a multi-

applicationrelationship card, mobile customers will also have a built in platform for a host of otherapplication services, including security keys, virtual credits cards, and other customizedpayment instruments.

4. Rapid evolution of global protocols such as WAP (wireless application

protocol ):This enables the communication channel between computers and mobile devices.

TheWAP component essentially provides the facility for reformatting data for display onwirelesshandsets.5. Faster Data Processing Speeds :

Increases in bandwidth and data transmission a speed makes mobile data servicesefficient and cost - effective in a real time environment.

6. Security:Effectively, the mobile banking transaction can be protected by a private key stored

on SIM card and hence mobile phone can become a wireless wallet to protect proprietaryandfinancial information

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General conditions of mobile banking

Electronic banking is one of the most successful business- to-consumer applications inelectronic commerce (EC).Banks greatly support this not only because they could meet their customers¶ need forconvenience but also because of the enormous economic impacts in replacing a high-costchannel (bank clerks) through a low-cost channel (a central web server) for simpletransactions, with the additional benefit of eliminating the necessity for a mediaconversion.Since users considered their mobile phone as a personal trusted devicemaking itto an integral part of their lives and more and more of these devices became Internet-enabled, the regular conclusion was the transformation of banking applications to mobiledevices as the next step of electronic banking development.For mobile banking, the advantages even go much further than for electronic banking: Thehigh penetration of mobile phones reaches all social levels; mobile applications disbandthelimitations of electronic banking as they allow for a use anytime-anywhere and thesubjectiveand objective security of the device is higher than that of a personal computer. Despiteall of this, more than four years after the start of the first mobile banking applicationscustomerssimply do not use them and utilization figures stay very far behind all expectations.Mobilebanking as an established channel still seems to be a distant prospect.

The reasons for this great disappointment are to be analyzed. Doing so in the followingsections, we do not intend to start with current applications (which could mean biased)butfrom scratch, with an analysis of the customer requirements to such applications.

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AUTOMATED TELLER MACHINES (ATM):

An unattended electronic machine in a public place, connected to a data system andrelatedequipment and activated by a bank customer to obtain cash withdrawals and other

bankingservices. Also called automatic teller machine, cash machine; Also called moneymachine.

An automated teller machine or automatic teller machine (ATM) is an electronic

computerized telecommunications device that allows a financial institution's customerstodirectly use a secure method of communication to access their bank accounts, order ormakecash withdrawals (or cash advances using a credit card) and check their accountbalanceswithout the need for a human bank teller (or cashier in the UK). Many ATMs also allow

people to deposit cash or cheques, transfer money between their bank accounts, top uptheir

mobile phones' pre-paid accounts or even buy postagestamps.

On most modern ATMs, the customer identifies him or herself by inserting a plastic card

with a magnetic stripe or a plastic smartcard with a chip, that contains his or heraccountnumber. The customer then verifies their identity by entering a passcode, often referredto asa PIN (Personal Identification Number) of four or more digits. Upon successful entry of thePIN, the customer may perform a transaction.

If the number is entered incorrectly several times in a row (usually three attempts per

cardinsertion), some ATMs will attempt retain the card as a security precaution to prevent an

unauthorised user from discovering the PIN by guesswork. Captured cards are often

destroyed if the ATM owner is not the card issuing bank, as non-customer's identitiescannotbe reliably confirmed.

TELE BANKING:

Undertaking a host of banking related services including financial transactions from the

convenience of customers chosen place anywhere across the GLOBE and any time of dateand night has now been made possible by introducing on-line Telebanking services. By

dialing the given Telebanking number through a landline or a mobile from anywhere, the

customer can access his account and by following the user-friendly menu, entirebanking canbe done through Interactive Voice Response (IVR) system. With sufficient numbers of

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hunting lines made available, customer call will hardly fail. The system is bi-lingual andhasfollowing facilities offered

y

y

y

y

y

y

y

y

y

y

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 andinstantaneous

Utility Bill Payments

Renewal of term deposit which is automatic andinstantaneous

Voice out of last five transactions.

SMART CARD:

A smart card usually contains an embedded 8-bit microprocessor (a kind of computerchip). The microprocessor is under a contact pad on one side of the card. Think of the

microprocessor as replacing the usual magnetic stripe present on a credit card or debitcard. The microprocessor on the smart card is there for security. The host computer and card

reader actually "talk" to the microprocessor. The microprocessor enforces access to thedataon the card. The chips in these cards are capable of many kinds of transactions. Forexample,a person could make purchases from their credit account, debit account or from a stored

account value that's reload able. The enhanced memory and processing capacity of thesmartcard is many times that of traditional magnetic-stripe cards and can accommodateseveraldifferent applications on a single card. It can also hold identification information, which

means no more shuffling through cards in the wallet to find the right one -- the SmartCardwill be the only one needed.

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Smart cards can also be used with a smart card reader attachment to a personalcomputer toauthenticate a user. Smart cards are much more popular in Europe than in the U.S. InEuropethe health insurance and banking industries use smart cards extensively. Every German

citizen has a smart card for health insurance. Even though smart cards have beenaround intheir modern form for at least a decade, they are just starting to take off in theU.S.

DEBIT CARD:

Debit cards are also known as check cards. Debit cards look like credit cards or ATM

(automated teller machine) cards, but operate like cash or a personal check. Debit cardsare

different from credit cards. While a credit card is a way to "pay later," a debit card is away to"pay now." When you use a debit card, your money is quickly deducted from yourcheckingor savings account.

Debit cards are accepted at many locations, including grocery stores, retail stores,gasolinestations, and restaurants. You can use your card anywhere merchants display yourcard'sbrand name or logo. They offer an alternative to carrying a checkbook orcash.

E-CHEQUE:

y

y

An e-Cheque is the electronic version or representation of papercheque. The Information and Legal Framework on the E-Cheque is the same as that of thepapercheque¶s.

y

y

It can now be used in place of paper cheques to do any and all remotetransactions.An E-cheque work the same way a cheque does, the cheque writer "writes" the e-

Chequeusing one of many types of electronic devices and "gives" the e-Cheque to the payee

electronically. The payee "deposits" the Electronic Cheque receives credit, and the

payee's bank "clears" the e-Cheque to the paying bank. The paying bank validatesthe e-Cheque and then "charges" the check writer's account for thecheck

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BENEFITS/CONCERNS OF E-BANKING

BENEFITS OF E-BANKING

For Banks:

Price- In the long run a bank can save on money by not paying for tellers or formanagingbranches. Plus, it's cheaper to make transactions over theInternet.

Customer Base- The Internet allows banks to reach a whole new market- and a well off onetoo, because there are no geographic boundaries with the Internet. The Internet alsoprovidesa level playing field for small banks who want to add to their customerbase.

Efficiency- Banks can become more efficient than they already are by providing Internet

access for their customers. The Internet provides the bank with an almost paper lesssystem.

Customer Service and Satisfaction- Banking on the Internet not only allow the customerto

have a full range of services available to them but it also allows them some services notoffered at any of the branches. The person does not have to go to a branch where thatservicemay or may not be offer. A person can print of information, forms, and applications viatheInternet and be able to search for information efficiently instead of waiting in line andaskinga teller. With more better and faster options a bank will surly be able to create better

customer relations and satisfaction.

Image- A bank seems more state of the art to a customer if they offer Internet access. A

person may not want to use Internet banking but having the service available gives apersonthe feeling that their bank is on the cuttingimage.

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For Customers:

Bill Pay: Bill Pay is a service offered through Internet banking that allows the customerto setup bill payments to just about anyone. Customer can select the person or company

whom hewants to make a payment and Bill Pay will withdraw the money from his account andsendthe payee a paper check or an electronicpayment

Other Important Facilities: E- banking gives customer the control over nearly everyaspect of managing his bank accounts. Besides the Customers can, Buy and Sell Securities, Check

Stock Market Information, Check Currency Rates, Check Balances, See which checks are

cleared, Transfer Money, View Transaction History and avoid going to an actual bank. Thebest benefit is that Internet banking is free. At many banks the customer doesn't have to

maintain a required minimum balance. The second big benefit is better interest rates forthecustomer.

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CONCERNS WITH E-BANKING

As with any new technology new problems are faced.

Customer support - banks will have to create a whole new customer relationsdepartment tohelp customers. Banks have to make sure that the customers receive assistance quicklyif they need help. Any major problems or disastrous can destroy the banks reputationquicklyan easily. By showing the customer that the Internet is reliable you are able to get the

customer to trust online banking more and more.

Laws - While Internet banking does not have national or state boundaries, the law does.

Companies will have to make sure that they have software in place software market,creatinga monopoly.

Security: customer always worries about their protection and security or accuracy. Therearealways question whether or not something tookplace.

Other challenges: lack of knowledge from customers end, sit changes by thebanks, etc

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Dangers of E-Banking

Technology has its advantages and disadvantages. While we tend toconcentrate onthe benefits, we also need to worry about the perils that are in store for us. For

thetime being, we will concentrate on internet banking. Banking through theinternet orinternet banking is one of the most commonly practiced procedures. The nicheisprevalent in many countries - even the banks that operate in the third worldnationshave a streamlined online banking system.

User account= In simpler terms, as an internet banking user, you will beprovided aunique customer ID and a password to access the banking portal. If someoneelse hasadmittance to this information, he or she can easily log on into your online bankaccount. Subsequently, they can wreak havoc - by emptying your account.Usuallyhackers (people who use nefarious means and methods to gain entry into your

account) will transfer the amount to their bank accounts or use it to purchaseconsumables and gadgets on the internet. In order to get a hold of your logininformation, the hackers will devise elaborate schemes!I would like to introduce the readers to certain methodologies often practiced byhackers - sometimes very close to the things threathening the safety of all e-commerce.Phishing emails= You will be asked to furnish your online account information -unknowingly, the ignorant will fall into the trap that has been laid for them. Theunawareness of webmasters who take care of online banking websites is also adangerous situation. Always look out for secure logins while assessing yourinternetbanking account. The underlying notion is simple - the encryption mechanismswill

ensure that you are browsing through the genuine website set up by your bank.

The online banking services of a reputed real world bank = It is imperative to seek the

online banking services of a reputed real world bank. Since the entire operation iscomputerized, the probabilities of errors creeping into the scenario are slim. Yet, due topoorprogramming practices, the banking portal might take time to reflect the actualaccountbalance. You will be unaware of the situation until it is too late to rectify the mistake.Spendsome time on the internet and you will come across plenty of so-called internet bankswhowill be willing to offer you ridiculous interest rates. Everything will seem normal;however,within days you will realize that you have been conned. Such situations are increasingat an

alarming rate in several parts of the country.

Special characters and numerals =While creating passwords for your internet bankingaccount, please include. The longer the length of the password, the tougher it will befor a

hacker to hack it. Always keep the relevant banking documents at a secure place - farawayfrom prying eyes. A good share of internet banking frauds occurs when the familymembersdecide to play spoilsport. You cannot regain the reputation levels once it is lost. Hence,it isbetter to play safe than be sorry later.

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Theories/Speculation

y According to the "The National Data Center and Personal Privacy," an articlepublished in the Atlantic in November, 1967, the electronic banking system of databases poses a great threat to personal privacy and freedom. A centralcomputerelectronic database is capable of becoming the heart of a government

surveillancesystem that would be a means for government observers and even casualinquisitors tolook into someone's personal information.

Time Frame

y Arthur Miller, the writer of the article "The National Data Center and PersonalPrivacy," also believed that the continual increase of consumer's recorded dataandinformation is sure to increase the risk of errors in indexing and recording.Information is also capable of being distorted by the malfunctioning of computers.Effects

y Employees and others who have access to consumers' data and information canmisuse information or commit identity theft. Many consumers believe that

computersare infallible and are less likely to verify computer recorded data or check forerrors.Because of this money laundering is also a great concern for many due to thegrowthof electronic banking and the increase in financial transfers between states.

Warning

y According to an ABC News article "Criminals Target Electronic Banking," ATMshave been tampered with and some have special electronic readers to stealconsumers'bank card information. Therefore, even in a routine cash withdrawal, data can bestolen. Thieves and criminals today are equipped with various hi-tech methods tostealby electronic means from banks and their unsuspecting customers.Expert Insight

y According to the Anti-Phishing Working Group, an industry association of banksandInternet businesses that monitor this trend, phishing scams are continuallygrowing.On a month to month basis, they've increased by 50 percent. According to anationalsurvey performed by Mail Frontier, a computer security firm, although phishingscams may seem easy to detect, 28 percent of U.S. adults were not able to know

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Securities of E-Banking

One of the main concerns with on-line banking is that of security. Fraudulent andaccidentalsecurity breaches are a rare occurrence. Banks employ many procedures and systems

in orderto prevent these incidents. As a result they invest a considerable amount of time andmoneyin developing systems which will prevent fraud and unauthorized access. If a securitybreachis discovered, the bank is liable for all money stolen, and, as a result, insures themagainst thepossibility.

The security used in on-line banking is a combination of technology and userauthentication. The bank will use a 128 bit Secure Session Layer (SSL) encryption protocol, between itsserver and the user's browser. The user's browser will show a padlock when the sessionissecure. Using SSL can be thought of as preventing eavesdropping. If a hacker were toattemptto listen to the data transmission, they would have to guess the decryption key - which

is a 1in 3.4 x10 to the power of 38 chances, making it infinitely secure.From a technology point of view, on-line banking is secure.

The weakest link of on-line banking is user authentication. Typically, a user has to supplyaset of answers to questions, which they have previously entered upon registration, aswell as ausername and password. The banks place the responsibility of keeping these answerssecurewith the user. If any are disclosed and money is stolen, the liability lies solely with theaccount holder, not the bank. With this in mind the following is sound advice to users:y

yy

yyyyyy

y

yy

y

Make sure the Web Address starts https:\\ rather than http:\\, this shows that thesession is encrypted;Look for the closed padlock in the browser;Do not use simple or easily guessable passwords (use a combination of letters

andnumbers) and change it frequently;Do not write down any username, password or any other information required;Always empty the cache of the browser after banking;Always sign-off when you are finished;Do not leave the PC unattended while banking;Do not use the "Auto Complete" feature within the browser;Check the Terms and Conditions for any notes on where you can and cannotaccessthe on-line accounts. (e.g. an Internet café is not as secure as your home PC);Use additional software that your bank might recommend (firewall or anti-virussoftware)Keep your Web browser up-to-date with the latest patches and versions;

Never send any account information in an email as this is insecure. Be wary of any e-Mail¶s from your bank which ask you to send details via email, banks will not dothis;Also, be wary of emails from banks which ask you to log into a Web site andresubmityour details. These fake Web sites have been set-up by fraudsters. If you areunsure of an email play it safe and contact your bank to verify the email.34

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Global E-banking industry is covered by the following four

sections:

y E-banking Scenario: It discusses the actual state, prospects, and issues related to E-

banking in Asia with a focus on India, US and Europe. It also deals with the impact of E-banking on the banking industry structure.

y E-banking Strategies: It reveals the key strategies that banks must implement toderivemaximum value through the online channel. It also brings guidance for those banks,

which are planning to build online businesses.

y E-banking Transactions: It discusses how Internet has radically transformed banking

transactions. The section focuses on cross border transactions, B2B transactions,

electronic bill payment and presentment and mobile payments. In spite of all the

hype, E-banking has been a non-starter in severalcountries.

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E-BANKING SCENARIO:

The banking industry is expected to be a leading player in E-business. While the banksindeveloped countries are working primarily via Internet as non-branch banks, banks inthe

developing countries use the Internet as an information delivery tool to improverelationshipwith customers.

In early 2001, approximately 60 percent of E-business in UK was concentrated in the

financial services sector, and with the expected 10-fold increase of the British E-businessmarket by 2005, the share of the financial services will further increase. Around one fifthof Finish and Swedish bank customers are banking online, while in US, according toUNCTAD,online banking is growing at an annual rate of 60 percent and the number of onlineaccountshas approximately reached 15 million by 2006.

Banks have established an Internet presence with various objectives. Most of them areusingthe Internet as a new distribution channel. Financial services, with the use of Internet,may beoffered in an equivalent quantity with lower costs to the more potential customers. Theremay be contacts from each corner of the world at any time of day or night. This meansthatbanks may enlarge their market without opening new branches. The banks in US areusingthe Web to reach opportunities in three different categories i.e., to market information,todeliver banking products and services, and to improve customer

relationship.

In Asia, the major factor restricting growth of E-banking is security, in spite of several

countries being well connected via Internet. Access to high-quality E-banking products isanissue as well. Majority of the banks in Asia are just offering basic services compared with

those of developed countries. Still, E-banking seems to have a future in Asia. It isconsideredthat E-banking will succeed if the basic features, especially bill payment, are handledwell.Bill payment was the most popular feature, cited by 40 percent of respondents of thesurvey.However, providing this service would be difficult for banks in Asia because it requires a

high level of security and involves arranging transactions with a variety of players.

In 2001, over 50 percent of the banks in the US were offering E-banking services.However,large banks appeared to have a clear advantage over small banks in the range of services they

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offered. Some banks in US were targeting their Internet strategies towards business

customers. Apart from affecting the way customers received banking services; E-bankingwas expected to influence the banking industry structure. The economics of E-bankingwasexpected to favor large banks because of economies of scale and scope, and the ability

toadvertise heavily. Moreover, E-banking offered entry and expansion opportunities thatsmallbanks traditionally lacked.

In Europe, the Internet is accelerating the reconfiguration of the banking industry intothreeseparate businesses: production, distribution and advice. This reconfiguration is beingfurtherdriven by the Internet, due to the combined impactof:

y

y

The emergence of new and more focused businessmodelsNew technological capabilities that reduces the banking relationship and transaction

costs.

y High degree of uncertainty over the impact that new entrants will have on current

business models.

Though E-banking in Europe is still in the evolutionary stage, it is very clear that it ishavinga significant impact on traditional banking activities. Unlike in the US, though largebanks inthe Europe have a competitive edge due to their ability to invest heavily in newtechnologies,they are still not ready to embrace E-banking. Hence, medium-sized banks and start-upshavean important role to play on the E-banking front if they can take concrete measuresquicklyand effectively.

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E-BANKING STRATEGIES:

Though E-banking offers vast opportunities, yet even less than one in three banks havean E-banking strategy in place. According to a study, less than 15 percent of banks with

transactional websites will realize profits directly attributable to those sites. Hence,banksmust recognize the seriousness of the challenge ahead and develop a strategy that willenablethem to leverage the opportunities presented by theInternet.

No single E-banking strategy is right for every banking company. But whether theyadopt anoffensive or a defensive posture, they must constantly re-evaluate their strategy. In thefast-paced e-economy, banks have to keep up with the constantly evolving business modelsandtechnology innovations of the Internet space. Early e-business adopter like Wells Fargonotonly entered the E-banking industry first but also showed flexibility to change as themarketdeveloped. Not many banks have been as e-business-savvy. But the pressure is nowbuildingfor all banks to develop sound e-business strategies that will attract and retainincreasinglydiscriminating customers.

The major problem with the banks, which have already invested huge amounts in theironlineinitiatives, is that their online offerings remain unprofitable. Though banks have enrolled

some existing customers in their online programs, they are not getting customers inlargenumbers. This has made banks wonder whether there is any value in the online channel.

Justenrolling customers for online banking may not be sufficient until and unless they usethe siteactively. Banks must make efforts to increase their site usage by customers andeffectivelyco-ordinate the online channel with branches and call centers. Then only they will beable toderive maximum value that includes cost reduction, cross-selling opportunities, andhighercustomer retention.

Customers have some rational reasons for staying offline. Some of these reasons include

usability features of the site, concerns about security and frequent complaints that

signing upis complicated and time-consuming. Banks can solve these problems by refocusing

investment on improving the site's basic functionality and user-friendliness, andavoidingadvanced features that most customers neither understand nor value. Developingadvancedfeatures that appeal to a relatively small numbers of customers, creates far less valuethan

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strengthening core capabilities and getting customers to use them. Banks must makeeffortsto familiarize customers with their sites and show them how easy and efficient theonlinechannel is to use.

Integrating the online channel with the rest of the bank is another important issue thatbanksmust focus upon. This is important because nearly all the value of the online channel is

realized offline _ in cross sales completed in other channels and in cost reductions. An

actively used online channel should also serve as a medium to sell banking services forthebranch staff, the call center, and the relationship manager. Integrated channels working

together are far more effective than a group of channels working without anycoordination.

To facilitate this integration, banks must formulate paths that people in variouscustomersegments are likely to take among the channels. The interactions in each channel canthen beworked around these paths. For example, a call center representative must work outwhichchannel(s) the customer used before coming to her, and which channel(s) the customerislikely to visit next. Each channel must have entry and exit points that must welcome

customers and then send to other channels. Hence, the overall goal of banks is to createaseamless multichannel experience.

On the other hand, those banks that are planning to build their online businesses willhave tounderstand several strategic issues like do they have the right business model for E-

banking?How should they price their E-banking products and services? Bankers planning to moveintoE-banking have to explore different options, make investments and have to develop avarietyof partnerships. They have to put their time and efforts to identify the bestopportunities. Inthe case of traditional banks, if they are too aggressive in using price incentives to buildtheire-business, they risk the profitability of their traditional business. However, if they donotoffer sufficient price incentives for customers to bank online, their efforts to build asound e-banking business may not fructify.

Banks have to be creative in rethinking organizational structures and managementprocesses. Traditional banks that are conservative in nature may find it difficult to attract and retain

online talent. Moreover, getting people in the traditional business to help build an e -

enterprise would not be an easy task. To make all this happen, requires a major revisionof

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incentive systems, planning and budgeting processes, and management roles. Bankscanexploit the opportunities provided by the Internet if they demonstrate courage, use their

imagination, and take decisive action.

While most of the banks have started focusing on E-banking activities, a new challengeinthe form of mobile banking has emerged. M-Banking is both an additional opportunityforbanks to offer their online services and an additional channel from which to access new

customers and cross-sell to existing customers. Rapidly changing lifestyles of customersandtheir demand for more speed and convenience has subdued the role of branch bankingto acertain extent. With the proliferation of new technologies, disintermediation of traditionalchannels is being witnessed. Banks can go beyond their traditional role as a channel for

banking/financial services and can become providers of personalized information. Theycan

successfully leverage m-banking to:

y Provide personalized products and services to specific customers and thus increase

customer loyalty.

y Exploit additional sources of revenue from subscriptions, transactions and third-party

referrals.

M-Banking gives banks the opportunity to significantly expand their customerrelationshipsprovided they position themselves effectively. To leverage these opportunities, they

mustform structured alliances with service affiliates, and acquire competitive advantage in

collecting, processing and deploying customerinformation

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E-BANKING TRANSACTIONS:

The introduction of new technologies has radically transformed banking transactions. Inthepast, customers had to come physically into the bank branch to do banking transactions

including transfers, deposits and withdrawals. Banks had to employ several tellers tophysically make all those transactions. Automatic Teller Machines (ATMs) were then

introduced which allowed people to do their banking on their own, practically anytimeandanywhere. This helped the banks cut down on the number of tellers and focus onmanagingmoney. The Internet then brought another venue with which customers could dobanking,reducing the need for ATMs. Online banking allowed customers to do financialtransactionsfrom their PCs at home via Internet. Now, with the emergence of Wireless Application

Protocol (WAP) technology, banks can use the infrastructure and applications developedfor

the Internet and move it to mobile phones. Now people no longer have to be tied to adesktopPC to do their banking. The WAP interface is much faster and convenient than theInternet,allowing customers to see account details, transaction details, make bill payments, andevencheck credit card balance.

The cost of the average payment transaction on the Internet is minimum. Severalstudiesfound that the estimated transaction cost through mobile phone is16 cents, a fully

computerized bank using its own software is 26 cents, a telephone bank is 54 cents, abank

branch, $1.27, an ATM, 27 cents, and on the Internet it costs just 13 cents. As a result,theuse of the Internet for commercial transactions started to gain momentum in 1995. Morethan2,000 banks in the world now have transactional websites and the growth of onlinelendingsolutions is making them more cost efficient. Recent developments are nowencouragingbanks to target small businesses as a separate lending categoryonline.

Banks are increasingly building payment infrastructure with various securitymechanisms(SSL, SET) because there is tremendous potential for profit, as more and more paymentswillpass through the Internet. However, the challenge for banks is to offer a paymentsback-bonesystem that will be open enough to support multiple payment instruments (credit cards,debitcards, direct debit to accounts, e-checks, digital money etc.) and scalable enough toallow fora stable service regardless of the workload.

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The market for Electronic Bill Presentment and Payment (EBPP) is growing. According toastudy, 18 million households in the US are expected to pay their bills online by 2003

compared to 2 million households in 2001. As more number of bill payers are gettingonline,several banks are making efforts to find ways to meet the growing needs of EBPP.

Established banks can emerge as key online integrators of customer bills and cancapitalizeon this high potential market. Growing with the popularity of EBPP is also the paying of

multiple bills at a single site known as bill aggregation. Offering online bill payment and

aggregation will increase the competitiveness and attractiveness of E-banking servicesandwill allow banks to generate service-fee income from thebillers.

In the B2B segment, the customer value proposition for online bill payment is more

compelling. B2B e-commerce is expected to grow from $406 bn in 2000 to $2.7 tn by2004,

and more than half of all transactions will be routed through online B2B marketplaces. Thereis a need for automated payment systems to reduce cost and human error, andenhance cash-flow management. To meet this need, a group of banks and non-financial institutions ledbyCitibank and Wells Fargo have formed a company called FinancialSettlementsMatrix

(FSMx). It provides business buyers and sellers with access to secure paymentprocessing,invoicing and other services that participating financial services firmsoffer.

A B2B marketplace would provide minimum value to its customers if it just matchesbuyers

and sellers, leaving the financial aspects of transactions to be handled throughtraditionalnon-Internet channels. Hence, the marketplace must be capable of providing thepaymentsprocessing, treasury management services, payables/receivables data flows, and credit

solutions to complete the full cycle of a commercial transaction on the Internet. Theweb-based B2B e-commerce offers tremendous opportunities for banks, payment technology

vendors and e-commerce companies to form strategic alliances. This new form of

collaboration between partners with complementary core competencies may prove to beaneffective business model for e-business.

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Research Methodology:

Primary Data:

In this research with a sample size of nearly 20 customer¶s

datawill be available in form of questionnaire collected in terms of different questions influencing the use of internet banking.

Internet banking is considered as dependent on awarenessamong customers which will be studied with help of differentindependent variable.

Methodology

Once the findings are finalized by a research, suggestionsshould

be made for the betterment of enterprise. The data collected from questionnaire will be tabulated andanalyzed so that The result can be presented as simple as possible. There are anumber of ways like

o Pie-charto Graphs

Questionnaire:-

1. Name of the customer:-2) Do you like E-banking

a. Yesb. No

3)Tick which bank you preferred«

a. Icicib. Sbic. Sbh

d. Axise. Union bankf. Hdfcg. UTI Bank Ltdh. Bank of Punjab Ltd

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4. Why this bankA) Service is goodB). They provide securityC) Cheaper service fees.

Which type of service mostly you use?Balance and transaction history search

b. Transfer fund onlinec. Card to card fund transfer d. Open FDe. Lock / activate debit cards /ATMf. Request a cheque bookg. Stop paymenth) Railway pass / ticketi. Shopping

j. Share payment

5)a)

6). Services of the bank are«.a. poor b. goodc. Very good

Are you satisfied with the using of E-banking?a. Yes

b. No

7)

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Data analysis

1) Users of E-banking

Yes 65%No 35%

2) No. of user of the banks

IciciSbiSbh

20%30%20%

AxisUnionHdfc

10%8%12%

3)PREFERENCE FOR ONLINE BILL PAYMENT SERVICES

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YesNo

60%40%

4)

PREFERENCE FOR ONLINE SHOPPING Yes70%No30%

5) PREFERENCE FOR ONLINE FUND TRANSFAR

35%65%

YesNo

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6) SATISFIED CUSTOMERS

YesNo

65%35%

7) PERFERRED MODE OF PAYMENT (TO BANK)

CHEQUE 50CASH 25E-BANKING 25

8) SPEND PER BILL FOR ON LINE BILL PAYMENT

ABOVE Rs.10BETWEEN RS.5-10BELOW RS.5NOTHING

21113236

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Conclusions & Findings

1)E ±banking makes the whole banking transaction fast & convienent.2)Though E-banking has its many advantages, at the same time it has some darkerparts also.

3)One should be very careful while using E ±banking services.4). In the users ratio of internet banking 65% of customers areusing this service.5). More banks are connecting to the any software co. torunning the E-banking service. In these services the Sbibanks is top in service of E-banking.6) The services that are mostly used by maximum customersare transactions, online trading, bill payment, shopping etc.7). The mode of the cash deposit in bank is for use to online Truncation cash, cheque & e-banking.8) Different banks different charge for online service.9) The future of E-banking is very bright.

Suggestions

1) One should must have the desired knowledge of E-banking pros & cons. beforegettingaccess to it.2) To prevent online banking from remaining customers to

prompt this service through advertising co.3). After repairing this basic deficiency, banks must ensure that

there services is competitive.4) Banks is not taking more charge from their customers.

52497764-final-project (2)

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