CHAPTER IV THE HISTORICAL PERSPECTIVE OF...
Transcript of CHAPTER IV THE HISTORICAL PERSPECTIVE OF...
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CHAPTER IV
THE HISTORICAL PERSPECTIVE OF ATM
INTRODUCTION
An ATM allows a bank customer to conduct their banking
transactions from almost every other ATM machine in the world. DON
Wetzel was the co-patentee and chief conceptualist of the ATM. The
concept of the ATM first began in 1968, a working prototype came about
in 1969 and Docutel was issued a patent in 1973. The first working ATM
was installed in a New York based Chemical Bank.
The World's first ATM was installed in Enfield Town in the London
Borough of Enfield, London on June 27-1 967 by Barclays Banks. This
instance of the invention is credited to john Sheoherd-Barron although
George Simjian registered patents in New York, USA in the 1930.
The First Voucher Based cash dispensing machine was installed in
1967 by Barclay's Bank in London. And then the next version was going
to be the total teller created in 1971, which is the ATM we all know today.
ATM Networks
Most ATMs are connected to authorization of a transaction by the
card issuer or other authorizing institution via the communications
network. Networking technologies are playing a pivotal role in
`networking' our World.
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Among the networking technologies that are relevant today, ATM is
one of the most popular and pervasive as it seamlessly integrates LAN
and WAN networks.
Further, as it provides a single platform for Voice, video and data, it
facilitates convergence.
Hardware and Software
ATMs contain Secure Crypto processors, generally within an IBM
PC compatible host computer in a secure enclosure. The sedulity of the
machine relies mostly on the integrity of the secure crypto processor: the
host software often runs on a commodity operating system.
Alternate uses
Although ATMs were originally developed as cash dispensers, they
have evolved to include many other bank-related frictions:
o Paying routine bills, fees and taxes (utilities. phone bills, social
security, legal fees, taxes, etc.)
o Loading monetary value into pre-paid cards (cell phones, tolls,
multi-purpose stored value cards, etc.)
o Ticket purchase (train, concert, etc.)
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ATM Applications
There are many ATM applications are provided for customers besides
cash transactions. ATM machine today can also perform the following:
o Sell Gift Cards.
o Sell Wireless Minutes.
o Western Union Transfers.
o Sell prepaid Debit Cards.
o Bank Deposits.
o Cash Checking.
o Bill Payments.
ATM Accessing Points
o Hotels and Motels.
o Convenience Stores.
o Shopping Centers.
o Restaurants. Bars and Pubs.
o Banks.
o Commercial Areas.
o Residential localities.
o Major Petrol Pumps.
o Airports
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o Near Railway Stations, etc.
ATM Features
Cash withdrawal
Normally allowing up to Rs.25000/- per day from Customers
account (50,000/- for HNI's)
Balance Enquiry
Know our ledger balance and available balance.
Mini Statement
Get a printout of our last 8-10 transaction on our Current Account.
Deposit Cash/Cheque
Avails at all full function ATMs customer can deposit both cash and
cheques. Cash deposited in ATMs will be credited to the account on
the same day (providing cash in deposited before the clearing) and
cheques are sent for clearing on the next working day.
Fund Transfer
Transfers funds form one account to another linked account in the
same branch and in different bank account.
PIN Change
Change the Personal Identification Number of ATM.
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Payments
The latest feature of ATMs is used for payment of bills, making
donations to temples/ trusts, buying internet packs, airtime
recharges for prepaid mobile phones, and much more.
Others
Request for a cheque book from ATMs and our concerned branch
will dispatch in such that it reaches you within 10 working days.
ATM Services
1. Mobile Prepaid Card Recharge
Use your ATM Card at any of the Bank availing this service: we can
purchase mobile re-charge cards.
2. Internet Packs (ATN - Any Time Net)
We can purchase new internet connection or buy or renewal packs
by bank ATMs.
3. Donations (Anytime Blessing)
Offers Donations and ask for a Monorath / Rajbhog to be done.
4. Mutual Funds Transactions
Buy or Sell Mutual Funds through Various Bank ATMs.
5. Bill Payments
Pay your day-to-day bills through Banks ATMs and enjoy the
convenience of Banking.72
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6. Flexi Top up
All Bank Debit / ATM Cardholders can now refill their prepaid phone
cards through their bank ATMs or through SMS. This facility is available
for all circles of the following operators:
a) Hutch/ Orange
b) Airtel
c) Idea.
7. Charity
Through this facility we can donate for charity against any of the
following heads:
a) Child Welfare.
b) Education.
c) Health & Sanitation.
d) Livelihoods & Poverty.
e) Service for the disabled.
8. Calling Cards
Calling cards enable a user to make a call either through the
normal phone or through the Internet protocol. There are two kinds of
cards available.
a) India on All Cards
b) Hello World Cards73
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Benefits of ATM Cards
The Cardholder or the customer can access cash, make payments
at Merchant Establishments, ascertain information about his Account
Balance through the use of the Cards at ATMs devices (whether of the
Bank or Shared Network) for viewing Account information through
Corporate Interest Banking/for using Corporate Care Services or any
such services as specified by the Bank from time to time. The card is valid
for use at ATMs and Merchant Establishments in India and abroad.
However, the Card is not valid for payment in foreign exchange at
Merchant Establishments in India. The Card is valid up to the last working
day of the month indicated on the Card.
The advantage of almost universal acceptability of a debit card
comes with a subtle disadvantage of indulging in extravagance without
thought of prudence. The ATM card, while ensuring that you do not spend
beyond limits also comes with the inconvenience of hunting for an ATM
Center every time you need cash.
Consumer Benefits
All the convenience of a bank card for persons currently having no
banking relationships.
Accepted at gas stations, supermarkets, department stores,
restaurants and places of entertainment.
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Benefits of not carrying cash with the convenience associated with
bank account
Security of PIN.
Balance recovery by cardholder in case of lost card.
Convenience, easy to use and easier to carry than cash.
Immediate anytime access to account information.
Technological developments
India's first rural automated teller machine to serve remote areas of
the subcontinent.
It can process the worn notes in small denominations that are the
main currency in Indian villages, and at $800, or about 650, the machine
costs less than one-twentieth the price of a regular ATM.
India's ICICI Bank Ltd., with the help of the institute in Chennai
formerly Madras-and others, has developed the village ATM from
inexpensive homemade parts and programming. Despite its low price tag,
the machine is built to survive extreme weather and power outages. It can
tell when two ragged notes get stuck together and can scan fingerprints to
identify rural savers who are illiterate or are reluctant to use a personal-
identification number. The ATM will be tested at an ICICI branch in
Chennai, this month. If it works, the Wigged ATM eventually could be
used at hundreds of Interest Kiosks remote areas of India.
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India's First Bio-ATM from Axis
A Pune based technology company has developed Bio-ATM, a
biometric based automated teller machine for banks and financial
institutions which leverages sophisticated biometric technology to allow
secure ATM transactions. This is the first time that any Indian company
has developed such an ATM machine. The Bio ATM provides alternative
to the regular card and pin based ATM transaction systems. In order to
access accounts users need to give their biometric to the machine that
will verify and authenticate it with the biometric records available in the
database. The machine uses fingerprints for the verification purpose and
hence customers will need to register their fingerprint with the bank.
The trick, they say, is technology. In a country where most potential
savers make less than $100 a month, the banks have mastered ways of
attracting small customers, even when they hold accounts with a
minimum balance of $100. Setting up a national network of full-fledged
branches was too expensive, so the banks expanded using ATMs, phone
banking and the Interest to reach new customers inexpensively.
The challenge is that the transaction sizes are very small by
international standards, says Neeraj Swaroop, country head of retail
banking at HDFC in Bombay. We were able to do it in an economically
viable manner by investing in the right kind of technology.
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Thanks to affordable technologies, the most advanced banks in India
say more than 70% of transactions are done outside branches- They are
aggressively targeting the customer like never before," says Gurunath
Mudlapur head of research at Khandwala Securities in Bombay. "They are
using a lot of innovation for the Indian context."
HDFC Bank on the other hand, with around 200 ATM all over India
and offering a host of information through its Web presence
www.hdfcbank.com in among the forerunners in corporate banking.
Working on the concept of anytime, anywhere banking, distant banking on
HDFC enables one to make requests for stop payment, banker's cheque
and demand draft. Besides, the banks wide area network (WAN)
facilitates transfer of funds from one branch to another.
Banking functions dont stop there. C.S. Suresh, Manager, IT,
HDFC, says the bank also has opened salary accounts for corporate
customers at their respective offices. The 24x7, 365-day banking also
enables HDFC to take minimum turn around time for deliverables like
cheque book requests, fixed deposit request and ATM cards. Its ATM
facilities are a banking exercise in itself and offer services like cash
withdrawals, balance inquiry, PIN change, product information, deposits,
mini statements, cheque book/ statement requests, mail facility and funds
transfer.
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Today, banks are looking for solutions that can help them turn data
captured at every touch point like call center. ATM facilities, the Web
customer services and advertising into a knowledge base necessary to
provide customer behaviour, thereby providing them with opportunities for
cross-selling and determining the risk involved with respect to issues like
fraud, default and so forth. And this is where CRM implementation can
prove decisive, says Hosangady.
Next generation Consumer
Technology has become a symbol of status. This is not necessarily
a cultural attribute; it is also a function of generation.
SBI, ICICI, HDFC to share ATM network
In a two-way tie up with two leading private sector banks, State
Bank of India has forged one of the biggest alliances to share ATM
networks.
Following the signing of a memorandum of understanding the
customers of countrys largest commercial bank and ICICI Bank can
access each others ATM network for a small fee, an SBI release said in
Mumbai on Tuesday adding that its customers will also enjoy similar
benefits on a reciprocal basis with HDFC bank.
We are forming this alliance, which will herald its ahead of all such
partnerships with a shared ATM network of around 4,500 ATMs in the
country," a senior SBI official had said.
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SBI has its own network of 2,000 ATMs, which would be increased
to 3,000 by the end of the year, he added.
The signing ceremony for the ATM partnership took place at the SBI
headquarters in the presence of SBI Chairman A.K Purwar, HDFC
Chairman Deepak Parekh, HDFC Bank Chairman Jagdish Capoor and
ICICI Bank Managing Director and CEO K V Kamath.
ICICI Bank Executive Director Chanda Kochhar in a statement said
the ATM network sharing alliance reiterates the banks commitment
towards maximizing customer convenience.
ICICI Bank has seen sharp usage of ATMs and other electronic
channels in the recent past with 70 percent transactions routed through
these channels, the bank said.
ICICI Banks ATM network was pegged at over 2,725, while that of
HDFC Bank was in excess of 800.
The initiative by SBI with ICICI Bank and HDFC Bank conies in the
wake of other public and private sector banks forming ATM sharing
consortium.
Recently, Canara Bank, Central Bank of India, Indian Overseas
Bank; UCO Bank and Union Bank of India launched their co-branded ATM
network `Cash Online. There was also a consortium of banks under Cash
Tree, which includes Bank of India, Union Bank, Indian Bank and
Syndicate Bank.
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Table 4.1
Transaction Charges, Center and Withdrawing Limit
Bank NameCharges
(Rs.)Own ATMNetwork(Center)
Limit ofWithdrawing (Per
day)
ICICI 25 2727 25000HDFC 15 200 10000HSBC 15 435 5000SBI 50 3000 Subject to the daily
transaction limit
UTI 50 1850 30000
EMERGING ROLE OF AN ATM
NET BANKING
If you are tired to stand in a long queue waiting for a passbook to
be updated or wait for the next day for a demand draft to be prepared,
take hearts. Internet technology has invaded the portals of our banking
institutions and as the cliche goes everything will just be a click away. No
doubt- innovations like tele-banking and automated teller machines
(ATMs) have considerably put customers at ease in the recent past.
This development has been acknowledged by the latest Online
Banking Report, which features listing for ICICI Bank. Some others like
Citibank, HDFC Bank reality before this century closes.
One can intimate about the loss of an ATM card over the net when
using Infinity. Moreover, corporate can issue of letters of credit and make80
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enquiry's regarding bills sent for collection via this service. A special
feature on Infinity is the facility for nicknaming all accounts to avoid.
Remembering lengthy account numbers, In terms of safety, HDFC
Bank allows one to have three login attempts after which a new password is
given while ICICI Bank will disable the password after five login attempts.
Latest Entrant
There are others who also have the facility like Global Trust Bank,
which is the latest entrant in the bandwagon. Others like ABN Amro and
Times Bank are also set to hit the net by next year.
Personal Banking Segment
The Bank continued its thrust on personal banking. Relationship
banking; International Photo Cum Signature ATM cards with higher cash
withdrawal limits are the main features of SBI Vishesh Scheme whereas
Core Power facilities inter branch banking transactions within core
banking branches
Core Banking Solutions (CBS)
Implementation of CBS would substantially enhance the Banks
capability in introduction of new and innovative products at very short
intervals across branches and other Value Added Services to customers
on a 24X7 basis, tone up internal efficiency through straight-through
transaction processing capabilities on a centralized database and improve
operational effectiveness in the areas, such as integration of multiple81
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delivery channels, single window for meeting all needs of a customer,
better MIS and improved Security. This will take the Bank to a superior
technology platform leading to near-zero branch level system
administration.
Value Added Services
"College/Hostel Fee Payment' through ATMs-Covered more than 67
institutions.
Topping up of Mobile Phones of Idea, Orange and Airtel
transactions.
ATM is increasingly used as cash point.
Issue of monthly/quarterly season tickets for suburban trains of
Central Railway at CST Mumbai.
Cash as well as Cheque Deposit on ATM - Facility has been made
Operational on a pilot basis.
Temple trust Donation facility now available for Vaishnodevi, Sim
Sal Sansthan, Shirdi and Gurudwara Sahib, Nanded Devotees can
now offer their donation to these Temples through ATM.
Online collection of Application fees for GATE & JMET 2006. MTNL,
Mumbai Bill payment through ATM.
No Fuel Surcharge Programme at BPCL Petrol Pumps.
A promotional Campaign for ATM card usage has been launched in
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association with MCL and BPCL. Customers using ATM card at select
outlets of BPC will not have to pay surcharge of 2.5% on these
transactions. The campaign is on in 10 cities since August 2006.
Saving safe at the ATM
Keep your PIN a secret.
Keep it in your head, do not writ; it down.
If you think your PIN might be known to any one else, the very best
thing that you can do is cancel your card or change you PIN.
If you feel unsafe at an ATM or you are suspicious of individuals
loitering around, go away and come back later.
Follow the instructions on the ATM screen only put in your PIN
when the ATM tells you to do so.
Stand close to the ATM and block the view with your hand.
Never write your PIN on your card. This is like handling all your
money to a stranger on the street.
Always check it is your card you get back from the ATM.
Never give out your PIN to another person or let them stand near
you when you key it in. Sometimes someone might say he or she is
a bank official and will help you. No bank employee will ever ask
you for your PIN, or stand too close. If anyone does be instantly
suspicious, cancel the transaction and move away.
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Do no count your cash in front of the ATM.
Avoid using ATMs in secluded areas after dark.
Possible Remedy
There are many types of card frauds like the application fraud;
counterfeiting, impersonation during account takeover, cu d stealing and
other forms' The remedies include algorithm testing, propel
documentation, effective primary investigations, police investigations, etc
Also an effective legal framework and trained law enforcement agencies
could act as deterrents
The Future Outlook
Banks everywhere are using technology not merely as a frill but as a
dire necessity. Technology has become a key business enabler in six
critical areas of banking namely augmenting profits, operational efficiency,
customer management, product innovation, distribution and reach- and
lastly efficient payment and settlement system.
ATM Security Tips
Because of the variety of ATMs, the unique characteristics of each
installation, and crime considerations at each location, no single formula
can guarantee the security of ATM customers. Therefore it is necessary
for ATM customers to consider the environment around each ATM and
various procedures for remaining safe when using an ATM.
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Criminals select their victims and targets, focusing on the unaware
or unprepared. Criminals are also drawn to environmental conditions that
enhance the opportunity to successfully complete their crime. The attitude
and demeanor you convey can have a tremendous effect on potential
assailants. There are a number of things you can do to increase you
personal security and reduce you risk of becoming an ATM crime victim.
The following crime prevention tips can help the use of ATM's sager
for everyone:
Walk purposefully and with confidence. Give the appearance that
you are totally aware of your surroundings.
Be aware of your total environment and what is going on around
you. Criminals tend to avoid people who have this type of
demeanor.
Perform mental exercises and thing out what you would do in
different crime or personal security situations.
Follow your instincts. If you feel you are in danger, respond
immediately. Remember that your personal safety is the first
priority.
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MODE OF UTILIZATION
ATM Selection Considerations
The law set minimum standards for ATM lighting, procedures for
evaluating the safety of ATMs and requires notices to ATM users outlining
basic safety precautions for using ATMs. Although ATM environmental
design issues are covered in the law, there are other considerations that
an ATM customer needs to consider prior to selecting and using an ATM.
Do not select an ATM at the corner of a building Corners create a
area in close proximity to the customer's transaction. Select an ATM
located near the center of a building. An ATM farther from the
corner reduces the element of surprise by an assailant and
increases effective reaction time by the user.
Identify an ATM with maximum natural surveillance and visibility
from the surrounding area. This will create a perceived notion of
detection by a criminal and increases the potential for witnesses.
Select an ATM at a location void of barriers blocking the line of sight
of the ATM. This includes shrubbery, landscaping, signs and
decorative partitions or dividers. Barriers provide hiding areas for
would be assailants.
Select an ATM that is in a well-lighted location.
Whenever possible, select an ATM that is monitored or patrolled by
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a security officer.
Select an ATM with a wide-angle transaction camera and/or a
continuous transaction surveillance camera. Consult the bank or
location management for the ATM site and surrounding
neighbourhood.
Avoid ATM locations with large perimeter parking lots and
numerous ingress and egress points.
RELIABILITY
ATMs are generally reliable, but if thy do go wrong customers will
be left without cash until the following morning or whenever they can get
to the bank during opening hours. Of course, not all errors are to the
detriment of customers. there have been cases of machines giving out
money without debiting the account, or giving out higher value notes as a
result of incorrect denomination of banknote being loaded in the money
cassettes. Errors that can occur may be mechanical (such as card
transport mechanisms; keypads; hard disk failures); software (such as
operating system; device driver; application), communications; or purely
down to operator error.
SECURITY
Early ATM security focused on making the ATMs invulnerable to
physical attack. They were effectively safes with dispenser mechanisms.
A number of attacks on ATMs resulted, with thieves attempting to steal
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entire ATMs by ram raiding.
Modern ATM physical security concentrates on denying the use of
the money inside the machine to a thief, by means of techniques such as
dye markers and smoke canisters. This change in emphasis has meant
that ATMs are now frequently found free-standing in places like shops,
rather than mounted into walls.
Another trend in ATM security leverages the existing security of a
retail establishment. In this scenario, the fortified cash dispenser is
replaced with nothing more than a paper-tape printer. The customer
requests a withdrawal from the machine, which dispenses no money, but
merely prints a receipt. The customer then takes this receipt to a nearby
sales clerk, who then exchanges it for cash from the till.
There have also been a number of incidents of fraud where
criminals have used fake machines or have attached fake keypads or
card readers to existing machines. These have then been used to record
customer's PINs and bank account details in order to gain unauthorized
accessed to their accounts.
A bank is always liable when a customer's money is stolen from an
ATM, but there have been complaints that banks have made it difficult to
recover money lost in this way. In some cases, bank fraud occurs at ATMs
whereby the bank accidentally stocks the ATM with dispensed. Individuals
who unknowingly use such ATMs are probably never tried, but those who
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withdraw a second time are usually prosecuted.
Fraud Considerations
Memorize your Personal Identification Number (PIN). Do not write it
down or keep it in your wallet or- purse. Do not tell anyone else
your PIN ANYONE (including bank employees, the police, etc.)
Shield the ATM keypad from anyone who may be standing or
parked nearby or anyone crowding you in an attempt to view you
PIN and/or transaction. Use your body as a shield if necessary
while you enter your access code.
Make sure you retain your transaction receipt. Do not throw the
receipt away at the ATM site.
The National Consumers League has opened a toll-free number to
provide information on ATM frauds and scans. The National Fraud
Information Centre at 1-800-876-7060 employs counselors who will
refer consumers to the proper agency for reporting a fraud or scam.
Immediately report any stolen or lost ATM Card to the proper
entities.
As far as your security is concerned; you can never be too careful,
too prepared or too aware. Share this information with family and
friends. Schedule family discussions and practice regularly to
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ensure that everyone you know is safe and informed.
ATMs in India
There are number of Bank ATMs are functioning in India, this study
covers ICICI, HDFC, SBI, UTI and few other banks ATMs.
ATMs are equipped with all the state of the art services required by
an ATM user. The general publics can obtain the services of various
banks and other financial institutions from an ATM by getting an ATM
Card. ATM Card members can enjoy financial services like withdrawals;
deposits, transfer, inquiries etc. from an ATM on a daily basis.
Due to competition, many financial institutions in India proved
various discounts and some don't' even charge for their ATM services.
Moreover networking between various banks facilitates an ATM user to
actually use an ATM anywhere and at anytime.
ATMs are very convenient. Daily withdrawals, deposits, transfers
and other services can be done in seconds without wasting any time.
Cheques don't need to be used to withdraw money and time will not be
wasted standing in queue for hours at the bank.
ATMs are known throughout the world for their 24 hour quick
services. ATMs are now becoming a need in everyone's life. Being
accessible even at odd hours, it is the popular choice of many people
wanting instant access to their bank accounts. Various banks offer
different facilities are services. Hence, one should choose between the
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alternatives provided by various ATM service providers.
ATMs provide different service options as well as various measures
for security. Computer viruses may infect ATM machines. These viruses,
which sometimes get installed by computer hackers are continuously
filtered in the ATMs in India using various security measures such as
keeping patches up to date and installing all new ATMs with firewall
software.
Customers should be aware of the safety measures they can take
while using an ATM in local places where there arent security cameras;
the number of ATM frauds seems to be rising. Various steps to prohibit
such frauds have been taken, but without making the citizens more
vigilant, it is impossible to completely eradicate ATM fraud.
Some of the banks permit customers to interact with them and
transaction electronically with them. Such services include request for
opening of accounts; requisition for cheque books, stop payment of
Cheques, viewing and printing statements of accounts, movement of
funds between accounts within the same bank, querying on status of
requests, instructions for opening of Letters of Credit and Bank
Guarantees etc. These services are being initiated by banks like ICICI
Bank Ltd., HDFC Bank Ltd., Citibank, Global Trust Bank Ltd., UTI Bank
Ltd., Bank of Madura Ltd., Federal Bank Ltd., etc. Recent entrants in
Internet Banking are Allahabad bank (for its corporate customers through
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its All Net service) and bank of Punjab Ltd. State Bank of India has
announced that it will be providing such services soon. Certain banks like
ICICI Bank Ltd., have gone a step further within the transactional stage of
Internet Banking by allowing transfer of funds by an account holder to any
other account holder to any other account holder of the bank.
As consumer adoption of some of these technologies makes there
ubiquitous; bankers and technologists are in a position to extend the
infrastructure that supports the self-service channel. New opportunities to
extend the reach of ATMs become available.
Some of the fastest-growing areas for ATM deployment are in
emerging such as China and India. Countries such as these any not
benefit from a robust fixed-line infrastructure, especially in rural areas.
For more than 300 years, banking was a simple branch operation.
However the introduction of the ATM in 1967 and the introduction of
online teller terminal systems have completely changed customer
expectations the ATM displacing the cashier/teller.
Technology, Payment and Settlement System
The information technology revolution has brought about a
fundamental transformation ushering in, as Alvin Toffler describes it, the
fourth wave. Perhaps no other sector has been affected by advances in
technology as much as banking and finance. It has become the most
important factor for dealing with the intensifying competition and the rapid
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proliferation of financial innovations. It has enabled, in general, raising the
efficiency of financial intermediation in the face of ever-rising volumes of
transactions, falling margins and more empowered customer
expectations. In particular, there are four or five key areas in which the
financial system has experienced the benefits of the technology
revolution: product development- market infrastructure, risk control nod
market reach. The interaction of technology with globalization has
contributed to the expansion of financial markets beyond national borders,
heralding the end of geography. In the process, technology has changed
the contours of three major functions of financial intermediaries: access to
liquidity, transformation of assets and monitoring of risks.
The Indian financial system is quickly adapting itself to these
developments and is acquiring a customer-centric focus. The proliferation
of Automated Teller Machines (ATMs), networking of these ATMs and
Shared Payment Network based ATMs is a feature that has been
welcomed by the banking public. Other innovations already within the
domain of banks and financial systems in India include Internet Banking,
Electronic Funds Transfer and Anywhere/ Anytime Banking, all of which
have a high level of technology embedded in the systems offering these
services. Many of the older banks are migrating towards the
implementation of Core Banking or Clustered Solutions which would
contribute significantly towards increasing customer satisfaction. In all
this, business process re-engineering becomes an essential concomitant
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to ensure best results in technology up gradation.
In recent years, the Reserve Bank has assigned priority to the up
gradation of technological infrastructure in the Indian financial system.
Efforts have been made to modernize clearing and payment through
MICR based cheque clearing, Electronic Clearing Services and Funds
Transfer (ECS and EFT) and the Centralized Funds Management
System.
Adequate security is a prerequisite for a modern, technology-
intensive payment and settlement system, especially one functioning in a
highly networked environment.
The future of banking and finance hinges around exploiting the
opportunities thrown up by the technology explosion. This requires the
combined efforts of all participants in the financial system. In December
2005 the Reserve Bank set out its vision of the road ahead in the
document Payments System in India to share this vision with all
participants and the nature and direction of reforms needed to achieve it.
The collective goal should be to take use of synergies between
technology and finance to maximize the benefits to society.
COMPLAINTS
Changes in the Usage
With IT becoming an integral part, has banking really changed"94
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Most customers feel IT has made a vast difference in the way banks are
conducting business. However- there are many who have been left high
and dry by the bank's use of technology
1. Suresh, and HDFC account holder, complains that ATMs are not
all that efficient. "Most of the time we face some problem or the other with
these machines. I think it is because of lack of maintenance".
2. Another customer, P.V.Ramana Rao, complains, "At one branch
of Andhra Bank the network failed and they were unable to check the
balance in any account. This forced them to stop functioning and
everyone had to wait till the next day to transaction business",
3. Seshadrinathan of SSI makes a point, `Despite public sector
banks having woken up to competition posed by foreign and private
banks and recognized the need to adopt IT, a cautious approach, lack of
resoluteness and a clear strategy to translate intent into practice are
acting as the biggest handicap. A classic case of the spirit is willing but
the flesh is weak.
SBI, however, is now leaving all these factors behind the attempting
to provide anytime, anywhere cash to its customers by taking up the
installation of ATMs aggressively. Following the governments approval,
SBI has also computerized 40000 PPF accounts using Bandmaster,
software developed by Spanish company Kindle and later improvised in-
house. It is also in the process of switching to 500 MHz severs from its
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current 200 MHz EoD (end of the day) transactions-conducted after public
hours and checked at the end of the day-could be better managed with
faster processing power Contends the bank official. The bank also has
introduced net banking, albeit on a very small scale. Those subscribing to
the facility have the advantage of checking their balance amount, issuing
instructions for drafts and getting information on loans.
Customers also complained about the non-availability of envelopes
to stuff cash at ATMs. While the ATM usage is on the rise, customers
have some problems in using these machines. Waiting in long queues at
ATMs remains a bugbear. This indicates the need to install additional
machines at high-demand areas.
The limit on daily cash withdrawal is another major problem that
ATM users often complain about. Perhaps the lack of wide acceptance of
debit cards at many shops and outlets makes people to resort to cash
withdrawal for their needs, the survey said. About 95% of the respondents
preferred banking through ATMs to conventional branch banking. Over
two-thirds of persons used ATMs more than once in fifteen days. People
are now less hesitant towards the use of ATMs for usual services.
RISK OF NEW TECHNOLOGY
Technology and Frauds
With banks deciding on setting up networks and computerizing the
whole banking process, and providing services through multiple channels,
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they face many risks. Mail spoofing (e-mail forgery), web spoofing
(Website forgery), attacking the user computer, attacking the banks
server, media tapping, services denial etc., are some of them.
All frauds generally happen due to impersonation, sniffing
information and hacking. The impersonation can be for an individual, a
website a computer, a router etc. Frauds of this nature may be prevented
by adopting public key infrastructure (PKI). Other frauds may be
minimized through firewalls and intrusion detection system (IDS).
Cyber money laundering aims to conceal the origin of illicit or illegal
money. By laundering the money, the criminals are trying to close their
track. Money laundering is normally accomplished by using a three-stage
process, namely placement, layering and integration. The banks are the
most important intermediaries in the money laundering chain.
This illegal activity could de-stabilize economies and result in lack
of public trust in the banking system. To fight this evil, there is evidently a
need for collective action by all the nations. It needs to be tackled at
organizational, national and international level. Many banks in the world
now adopt what are called 'know-your-customer' principles, which
essentially require the banks to exhaustively check the bonafides of the
customers, especially before entertaining high value transactions.
ATM crimes and frauds are rising throughout the world. Some of the
popular techniques employed to carry out these crimes are,
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Card Jamming: The card reader is tampered with, in order to
trap a customer's card. Later on, the criminal removes the card.
Card Skimming: It is the illegal way of stealing the card's
security information from the card's magnetic stripe.
Card Swapping: Through this method, the customer's card is
swapped for another card, without the knowledge of the
cardholder.
Website Spoofing: A new fictitious site is made, which looks
authentic to the user and customers are asked to give their card
number, PIN and other information, which are used to reproduce
the card for use as an ATM.
Physical Attack. ATM machines are physically attacked for
removing the cash. The Global ATM Security Alliance (GASA j',
which was formed in June 2003, has issued certain guidelines to
the customers to prevent the ATM frauds.
In India, where the total number of ATMs is not very significant- the
ATM related frauds are very few, as of now.
Fraud Victim Advice/Assistance for Consumer/Scares and
Investment Frauds
Ethical views reflect beliefs about right and wrong and define broad
standards of behaviour, which help shape, the rules we use to live
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together in society. Fairness and freedom are two ethical views that are
violated by fraud in an environment of dishonesty. Greed and laziness,
fraud deceives a person by unfairly misrepresenting truth. It also restricts
the freedom of its victims as it robs them of their money.
Financial Effect of Fraud
Of successful fraud attempts, respondents to a study conducted by
the National Institute of Justice indicated that of those respondents who
fell prey to a fraud scheme, 85% lost money or property; 20% suffered
financial or personal credit problems; 14% suffered health or emotional
problems directly related to their victimization and 14% of fraud victims
lost time from work.
Younger people who are ripped off by swindlers are fortune to the
extent that they have the opportunity to pick themselves up and restore
some or all of their loses through new earnings. If you are elderly,
disabled, or on a fixed income and you lack opportunities to recover your
losses you may face additional trauma. In some instances, an elderly or
disabled victim's very independence is jeopardized, particularly if family
members react to the loss by having the victim declared incompetent to
handle his or her own financial affairs.
Psychological Effect of Fraud
Fraud crime is a personal violation. Although there is no serious
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physical injury many victims of common men speak of the betrayal as the
psychological equivalent of rape. Some victims find it helpful to seek the
services of a counseling professional, clergy member, or advocacy
organization, but most suffer alone.
Your trust in your own judgement, and youre trust in others, is often
shattered. You may have hesitated to tell family members, friends, or
colleagues about your victimization for fear of criticism. Family and
business associates may even have been financially exploited at your
urging, resulting in increased feelings of guilt and blame.
RECENT TRENDS OF ATM USAGE IN INDIA
ATM networks and their expansion has been one of the areas in
financial services that have received maximum attention in the
recent past. So far this has been viewed as a numbers game,
with both SBI and ICICI putting up over 1000 installations each.
SBI ATM network includes 5479 ATMs in India, which is the
largest ATM network in the country. The bank continues to
expand this network rapidly. Customers can transact free of cost
at the ATMs of their Bank. The agreement with VISA and Master
Card International for acquitting ATM transactions has resulted
in another revenue generation stream.
There is a trend for public information to be based o Web
technologies and there is also a trend for ATMs to provide more
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than just cash to the user. These two trends are likely, in time, to
result in internet-based machines which can offer a range of
financial services, and which will be more easily adapted to the
specific preferences of the user.
At present in India vast majority of ATMs are owned or leased by
banks and financial institutions. Trends overseas and
progressively in India are leading to more low-cost limited
function ATMs being installed by shopping centres, clubs, public
sporting venues and the like.
An ATM has an impact on accessibility and consistence of user
interface. Growing use of ATMs for advertising and promotion of
goods and services. Using ATMs for advertising is the key theme
of this years ATMs industry.
NEW INITIATIVES
1. Mobile ATMs
Access your bank accounts through mobile ATMs. Banks now
provides Standard ATM facilities through ATM vans.
2. Bulk Deposits
Now we can deposit any amount of money through Bank Bulk
Deposit ATMs giving us the convenience of depositing huge amount at
one time.
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3. ATM for visually challenged
Various Banks has launched ATMs with special voice guided
systems which guides a visually challenged person to access out ATMs
without any help.
4. Full Fledged Statement Printer
Now we can print Detailed Account Statements anytime through
Full Fledged Statements Printers, which may available only in few banks
ATMs.
5. Insurance Benefits
The Cardholder may, under the Card- be offered various insurance
benefits from time to time by the Bank through a tie-up with an insurance
company, the Cardholder specifically acknowledges that they shall not
held the Bank responsible for and matter arising out of or in conjunction
with such insurance cover, whether for or in respect of any deficiency or
defect in insurance cover, recovery or payment of compensation,
processing or settlement of claims otherwise howsoever- and all such
matters shall be addressed to and sorted out directly with the insurance
company. The insurance company will be solely liable for settlement of
the claim. Further, the Cardholder also agrees that the Bank may at any
time (in its sole discretion and without giving any notice thereof to the
Cardholder or assigns g any reason thereof) suspend, withdraw or cancel
the benefit of such insurance cover, and there will be no binding obligation
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on the Bank to continue this benefit.
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