ONLINE BANKING

ITT BATCH NO.134By-Rajat Goyal(CRO547615)

What is online banking? Online banking, also known as internet banking, e-banking or virtual banking

It is an electronic payment system that enables customers of a bank or other financial institution to conduct a range of financial institution through the financial institution's website.

Why Online Banking:Internet banking is becoming more and more popular among the masses.

To provide more Quality Information on Internet Banking.

Make the concept and procedure more familiar.

To warn against its negative effects.

History

Citibank

Chase Manhattan Chemical

Manufacturers Hanover

Offered home banking using the video text system.

Online Banking Started in 1981 when four of the city’sMajor banks:

History in IndiaICICI Was the first bank to initiate the internet banking

Revolution as early as 1997 under the brand name “infinity”.

ICICI bank kicked off online banking way back in1996. But even for the internet as a whole ,1996 to 1998 marked the adoption phase ,while usage increase only in 1999 due To lower ISP charges ,increase PC penetration and a Technology friendly atmosphere.

Facility Providers

A bank customer can perform some non- transactionaltask through online banking including-

Viewing account balance Viewing recent transaction Downloading bank statement Viewing image of paid cheques. Ordering cheque books Downloading application for M-banking ,E-banking.

Features

Bank Customer can transact banking tasks through online banking, including-

Fund transfer between the customer’s linked account

Paying third parties, including bill payment

Investment Purchase or sale

Loan application and transaction, such as repayments of enrollments.

Features

NEFT Any sum of Money can be transferred using the NEFT system with a

maximum Cap of Rs.10,00,000

NEFT transaction can be ordered anytime you want , even on holidays except for Sundays which are designated bank holidays.

There are 12 settlement batches operating at present between the time slot of 8 A.M to 7 P.M. on week days and from 8 A.M. to 1 P.M. On Saturday with 6 settlement batches.

RTGS as the name suggests is a real time fund transfer system which facilities You to transfer funds from on bank to another in real time on gross basis.

The transaction is not put on a waiting list and cleared out instantly.

The minimum value that can be transferred using RTGS is Rs. 2 lac and above.

The RTGS payment gateway, maintained by RBI make transaction between banks electronically.

RTGS

IMPS is offered on all the cellular device via mobile banking or through SMS facility.

To be able to transfer money via IMPS route you must register for IMPS with your bank

On obtaining the mobile phone Identifier and MPIN from the bank you can login Or make the request via SMS to transfer a certain amount to a beneficiary. meanwhile the beneficiary must link his/her mobile number with his /her respective A/c and obtain the MMID from the bank to be able to receive money.

IMPS

Informational Transactional

Communicative

Types of Online Banking

Informational

This is the basic level of Internet banking

In this level, bank has marketing information about the banking productsand services on stand alone server

This level of internet banking can be provided by the banks or outsourced.

This is meant for marketing purposes only ,and there is no connection to theBank’s main computer systems.

CommunicativeThis type of internet banking system allows some information betweenThe bank’s system and the customer.

The interaction may be limited to electronic mail ,account inquiry, loan application , or static file update(name and address change).

Communicative online banking may connect with the bank’s main computerSystem.

Transactional

This level of internet banking allows customer to execute transaction.

Customer transaction can include accessing accounts, paying bills, Transforming Fund etc.

Since a path typically exist between the server and the banks or outsourced internal network ,this is the highest risk architecture and must have the Strongest controls.

Advantages of Online Banking

Mobility- Internet banking also includes mobile capabilities. New applications are continually being created to expand and improvethis capability or smart-phones and other mobile device

Convenience- Unlike Your Corner bank ,online banking sites neverclose; they're available 24 hours a day, seven days a week, and they’reOnly a mouse click away.

Ubiquity: If you’re out of state or even out of the country when a Money problem arises, you can log on instantly to you online bank and take care Of business,24/7.

Advantages of Online Banking

Transaction speed: Online bank sites generally execute and confirm transaction at or quicker than ATM processing speed.

Efficiency: You can access and manage all of your bank accounts,Including IRAs, CDs, even securities, from one secure site.

Effectiveness: Many online banking sites now offer sophisticated tools,including account aggregation ,stock quotes ,rates alert and portfolio managing program to help you manage all of your assets more effectively.

Customer Service-If you bank at a traditional bank, you can go to the bank and speak to someone face to face about your problem but, with an internet bank, you will likely to spend a lot of time on the phone being passer around and placed on hold.

Accessibility-If the Internet goes down in your area or the area of the banking office ,you will be unable to access your accounts. This includes being unable to withdraw Money from ATMs or to use your debit card.

Learning Curve: Banking sites can be difficult to navigate at first. Plan to invest Some time and/or read the tutorials in order to become comfortable in your virtual body.

DISADVANTAGES OF ONLINE BANKING

Setting-up an account-In order to register for your online bank program, you will Probably have to provide ID and sign a format at a bank branch.

Site Changes and upgrades-Even the largest bank periodically upgrade their Online program, added new feature in unfamiliar places.

Security Concern-Even Through E-Banking heavily encrypted, through developing Technology, it’s hard to rule out hacker who may access your bank accounts.

DISADVANTAGES OF ONLINE BANKING

Security Control

1-Authentication-This means ensuring customers are verified and their identifies Established before conducting business over the internet.

2-Non-repudiation-Bank should make certain that customer who transact on the Internet cannot later deny having originated the transaction.3-Privacy-Bank should articulate a privacy policy and should communicate This to customer. Customers must be allowed opt-out options, and great care must be Exercised before sharing Customer information with outside entities.

4-Availability- Bank should have business continuity and contingency Planning process to help ensure continuous availability of internet banking

5-Services-This is challenging because of the potential for high transaction volume and the demand for 24 hours , seven days a week availability.

Security Control

Online banking is changing the banking industry and is having the major effects on banking relationship.

Online banking , thus, ” now is more of a norm rather than an exception in many developed Countries” due to the fact that it is economical way of providing banking services.

Banking is now no longer confined to the traditional brick and mortar branches, where one has to be at the branch in person, to withdraw cash or deposit a cheque or request a statement of accounts. Providing online banking is increasingly becoming a “need to have” than a ”nice to have ” services.

Conclusion

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