Online banking

Online banking can simply be defined as the process of entering into transactions by a particular client and the bank using modern technology. With the various capabilities of the computer and other technological developments, online banking is one of the many businesses that benefited from it. Since banking plays a very important role in the economy of a nation, then there is truly a need to maximize and improve its features to be client friendly and easy to access. There are of course the advantages and disadvantages of online banking. Among the advantages of online banking include the following:y

y y

y y

Very convenient. Online banking is a totally easy thing to do. In the comfort of your home or offices, you can do whatever monetary transactions you wish to do with your bank. Unlimited service day and night.The services and various features of your bank are always available seven days a week and 24 hours daily.The most interesting thing here is that, everything can happen at just one click of your mouse. No time constraint. Online banking is also stress free because it never closes unlike the traditional banking that has cut-off time. Easy to access via PC. Using your personal computer, you can easily do various transactions with your bank in view of your business or any other personal or financial matters. Easy way of payment. Bill payments can also be handled properly and smartly. Instead of waiting for certain due dates, you can easily pay all your transactions using your computer and in coordination with your bank. Smart. Online banking is also ubiquitous or simply put smart. This enables you to do troubleshooting regarding any problem that may arise from your business. Higher interest rate. Another great advantage of online banking is the interest rates which basically range between 5% to 3.40% annually. Unlike the traditional banking, online banking can earn you a better interest or return of investment both in your savings and checking account. Easy transaction.Another advantage is the speed of every transaction. Online transactions, compared to ATM or traditional banking, works faster. Thus business matters could benefit so much from this speed feature. Banking online is both efficient and effective. With just one secure site, all your financial transactions can be managed orderly.

On the other hand, the following are the disadvantages of online banking:y

First is the slow processing from the moment you entered a financial transaction with your bank via the computer. Usually the bank will require you to submit certain documents like an identification card, signature and the like. Not only will the bank online require you to submit documents but also to provide special power of attorney in cases where you want to do transactions together with your spouse. A concrete example is when you want to manage all your wealth and resources together as a couple and you

y y y

wish to view it online. Certain technical procedures regarding online banking may be taxing too and complicated. Another disadvantage is the so-called learning curve. This means, banking online especially in locating the sites may be complicated and hard to find. Another disadvantage is bank site changes. If this occurs, the bank will require you to re-enter all your information again and other related data. Finally is the trust aspect. Online banking should be entered very carefully if you wish to enjoy your financial life.

Mobile banking
Mobile banking (also known as M-Banking, mbanking, SMS Banking) is a term used for performing balance checks, account transactions, payments, credit applications and other banking transactions through a mobile device such as a mobile phone or Personal Digital Assistant (PDA). The earliest mobile banking services were offered over SMS. With the introduction of the first primitive smart phones with WAP support enabling the use of the mobile web in 1999, the first European banks started to offer mobile banking on this platform to their customers[1]. Mobile banking has until recently (2010) most often been performed via SMS or the Mobile Web. Apple's initial success with iPhone and the rapid growth of phones based on Google's Android (operating system) have led to increasing use of special client programs, called apps, downloaded to the mobile device.

Mobile banking is used in many parts of the world with little or no infrastructure, especially remote and rural areas. This aspect of mobile commerce is also popular in countries where most of their population is unbanked. In most of these places, banks can only be found in big cities, and customers have to travel hundreds of miles to the nearest bank. By 2012, it is estimated that there will be 1.7 billion people with a mobile phone but not a bank account and as many as 364 million unbanked people could be reached by agent-networked banking through mobile phones.[8] In Iran, banks such as Parsian, Tejarat, Mellat, Saderat, Sepah, Edbi, and Bankmelli offer the service. Banco Industrial provides the service in Guatemala. Citizens of Mexico can access mobile banking with Omnilife, Bancomer and MPower Venture. Kenya's Safaricom (part of the Vodafone Group) has the M-Pesa Service, which is mainly used to transfer limited amounts of money, but increasingly used to pay utility bills as well. In 2009, Zain launched their own mobile money transfer business, known as ZAP, in Kenya and other African countries. In Somalia, the many telecom companies provide mobile banking, the most prominent being Hormuud Telecom and its ZAAD service.

Telenor Pakistan has also launched a mobile banking solution, in coordination with Taameer Bank, under the label Easy Paisa, which was begun in Q4 2009. Eko India Financial Services, the business correspondent of State Bank of India (SBI) and ICICI Bank, provides bank accounts, deposit, withdrawal and remittance services, micro-insurance, and micro-finance facilities to its customers (nearly 80% of whom are migrants or the unbanked section of the population) through mobile banking.

Mobile Banking Services

Mobile banking can offer services such as the following:

Account Information
1. Mini-statements and checking of account history 2. Alerts on account activity or passing of set thresholds 3. Monitoring of term deposits 4. Access to loan statements 5. Access to card statements 6. Mutual funds / equity statements 7. Insurance policy management 8. Pension plan management 9. Status on cheque, stop payment on cheque 10. Ordering cheque books 11. Balance checking in the account 12. Recent transactions 13. Due date of payment (functionality for stop, change and deleting of payments) 14. PIN provision, Change of PIN and reminder over the Internet 15. Blocking of (lost, stolen) cards

Payments, Deposits, Withdrawals, and Transfers

1. 2. 3. 4. 5. 6. 7. 8. Domestic and international fund transfers Micro-payment handling Mobile recharging Commercial payment processing Bill payment processing Peer to Peer payments Withdrawal at banking agent Deposit at banking agent

A specific sequence of SMS messages will enable the system to verify if the client has sufficient funds in his or her wallet and authorize a deposit or withdrawal transaction at the agent. When depositing money, the merchant receives cash and the system credits the client's bank account or mobile wallet. In the same way the client can also withdraw money at the merchant: through

exchanging sms to provide authorization, the merchant hands the client cash and debits the merchant's account. Kenya's M-PESA mobile banking service, for example, allows customers of the mobile phone operator Safaricom to hold cash balances which are recorded on their SIM cards. Cash may be deposited or withdrawn from M-PESA accounts at Safaricom retail outlets located throughout the country, and may be transferred electronically from person to person as well as used to pay bills to companies. One of the most innovative applications of mobile banking technology is Zidisha, a US-based nonprofit microlending platform that allows residents of developing countries to raise small business loans from web users worldwide. Zidisha uses mobile banking for loan disbursements and repayments, transferring funds from lenders in the United States to the borrowers in rural Africa using nothing but the internet and mobile phones.

Investments
1. Portfolio management services 2. Real-time stock quotes 3. Personalized alerts and notifications on security prices

Security
Security of financial transactions, being executed from some remote location and transmission of financial information over the air, are the most complicated challenges that need to be addressed jointly by mobile application developers, wireless network service providers and the banks' IT departments. The following aspects need to be addressed to offer a secure infrastructure for financial transaction over wireless network : 1. Physical part of the hand-held device. If the bank is offering smart-card based security, the physical security of the device is more important. 2. Security of any thick-client application running on the device. In case the device is stolen, the hacker should require at least an ID/Password to access the application. 3. Authentication of the device with service provider before initiating a transaction. This would ensure that unauthorized devices are not connected to perform financial transactions. 4. User ID / Password authentication of banks customer. 5. Encryption of the data being transmitted over the air. 6. Encryption of the data that will be stored in device for later / off-line analysis by the custome
One-time password (OTPs) are the latest tool used by financial and banking service providers in the fight against cyber fraud[7]. Instead of relying on traditional memorized passwords, OTPs are requested by consumers each time they want to perform transactions using the online or mobile banking interface. When the request is received the password is sent to the consumer s phone via SMS. The password is expired once it has been used or once its scheduled life-cycle has expired.

E-BANKING
DEFINITION OF E-BANKING Electronic banking, also known as electronic funds transfer (EFT),i s s i mp l y t h e u s e o f e l e c t r o n i c m e a n s t o t r a n s f er f u n d s d i r e c t l y from one account to another, rather than by cheque or cash. Youcan use electronic funds transfer to: H a v e y o u r p a y c h e c k d e p o s i t e d d i r e c t l y i n t o y o u r b a n k o r credit union checking account. Withdraw money fr om your checking account from an ATMma c h i n e w i t h a p er s o n a l i d e n t i f i c a t i o n n u m b er ( P I N ) , a t y o u r convenience, day or night. Instruct your bank or credit union to automatically pay certainmonthly bills from your account, such as your auto loan or your mortgage payment. H a v e t h e b a n k o r c r e d i t u n i o n t r a n s f er f u n d s ea c h m o n t h f r o m y o u r c h e c k i n g account to your mutua l fund a ccount. Have your government social security benefits check or your t a x r e f u n d d e p o s i t e d directly into your checking account. Buy groceries, gasoline and other purchases at the point-of-sale, using a check card rather than cash, credit or a personal check.

Various forms of e banking: AUTOMATED TELLER MACHINES (ATM):

An unattended electronic machine in a public place, connected toa d a t a s y s t e m a n d r e l a t e d e q u i p m e n t a n d a c t i v a t e d b y a b a n k customer to obtain cash withdrawals and other banking services.Also called automatic teller machine , cash machine ; Als o called money machine .An a u t o ma t e d t e l l er m a c h i n e or a u t o ma t i c t e l l er ma c h i n e (ATM) is an electronic computer ized telecommunications devicet h a t a l l o w s a financial institution' s c u s t o m e r s t o d i r e c t l y u s e a secure method of communication to access their bank accounts,order or makecashwithdrawals (or cash advances using a creditc a r d ) a n d c h e c k t h e i r a c c o u n t b a l a n c es w i t h o u t t h e n e e d f o r a humanbank teller (or cashier in theUK). Many ATMs also allowpeople to deposit cash or cheques, transfer money between their bank accounts, top up their mobile phones' pre-paid accounts or even buypostage stamps.On most moder n ATMs, the customer identifies him or herself byi n s e r t i n g a

p l a s t i c c a r d w i t h a ma g n e t i c s t r i p e o r a p l a s t i c smartcardw i t h a c h i p , t h a t c o n t a i n s h i s o r h er a c c o u n t n u m b e r . The customer then verifies their identity by enter ing apasscode,often referred to as a PIN ( P ersonal I dentification N umber) of four o r m o r e d i g i t s . U p o n s u c c e s s f u l e n t r y o f t h e P I N , t h e c u s t o m er may perform a transaction.If the number is entered incorrectly several times in a row (usuallythr ee attempts per card insertion), some ATMs will attempt retainthe card as a security pr ecaution to prevent an unauthor ised user from discovering the PIN by guesswork. Captured cards are oftendestroyed if the ATM owner is not the card issuing bank, as non-customer's identities cannot be reliably confirmed.T h e I n d i a n m a r k e t t o d a y h a s a p p r o x i m a t e l y m o r e t h a n 1 7 , 0 0 0 ATMs. TELE BANKING: Undertaking a host of banking related ser vices including financialt r a n s a c t i o n s f r o m t h e c o n v e n i e n c e o f c u s t o m e r s c h o s e n p l a c eanywher e acr oss the GLOBE and any time of date and night hasn o w b e e n m a d e p o s s i b l e b y i n t r o d u c i n g o n - l i n e Telebankingservices. By dialing the given T elebanking number t h r o u g h a landline or a mobile from anywher e, the customer can access hisaccount and by following the user-friendly menu, entir e bankingc a n b e d o n e t h r o u g h I n t er a c t i v e V o i c e R e s p o n s e ( I V R ) s y s t e m . With sufficient numbers of hunting lines made available, customer c a l l w i l l h a r d l y f a i l . T h e s y s t e m i s b i - l i n g u a l a n d h a s f o l l o w i n g facilities offered. 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 T r a ns f er of f u nds wit h C BS whic h is a u t oma t ic a n d instantaneous Utility Bill Payments R e n e w a l o f t e r m d e p o s i t w h i c h i s a u t o m a t i c a n d instantaneous Voice out of last five transactions.

SMART CARD:

A smart card usually contains an embedded 8-bit micr oprocessor (a kind of computer chip). The micr oprocessor is under a contactp a d o n o n e s i d e o f t h e c a r d . T h i n k o f t h e m i c r o p r o c e s s o r a s r ep l a c i n g t h e u s u a l ma g n e t i c s t r i p e p r es e n t o n a c r e d i t c a r d o r debit card.The micr oprocessor on the smart card is ther e for security. Theh o s t c o m p u t e r a n d c a r d r e a d e r a c t u a l l y " t a l k " t o t h e micr opr ocessor. The micr oprocessor enforces access to the dataon the card.T h e c h i p s i n t h e s e c a r d s a r e c a p a b l e o f m a n y k i n d s o f transactions. For example, a person could make purchases fromtheir cr edit account, debit account or from a stored account valuethat's reload able. The enhanced memory and processing capacityof the smart card is many times that of traditional magnetic-stripecards and can accommodate several differ ent applications on as i n g l e c a r d . I t c a n a l s o h o l d i d e n t i f i c a t i o n i n f o r m a t i o n , w h i c h mea ns no mor e s h u f f l i n g t h r o u g h c a r d s i n t h e w a l l e t t o f i n d t h eright one -- the Smart Card will be the only one needed.Smart cards can also be used with a smart card reader attachmentto a personal computer to authenticate a user.Smart cards are much more popular in Europe than in the U.S. InE u r o p e t h e h ea l t h i n s u r a n c e a n d b a n k i n g i n d u s t r i e s u s e s ma r t c a r d s e x t e n s i v e l y . E v e r y G e r m a n c i t i z e n h a s a s m a r t c a r d f o r health insurance. Even though smart cards have been around intheir moder n for m for at least a decade, they are just starting totake off in the U.S. DEBIT CARD: Debit cards are also known as check cards. Debit cards look likecredit cards or ATM (automated teller machine) cards, but operatelike cash or a personal check. Debit cards are different from credit cards. While a cr edit card is a way to "pay later," a debit card is aw a y t o " p a y n o w . " W h e n y o u u s e a d e b i t c a r d , y o u r m o n e y i s quickly deducted from your checking or savings account.D eb i t c a r d s a r e a c c e p t e d a t ma n y l o c a t i o n s , i n c l u d i n g g r o c e r y stores, retail stor es, gasoline stations, and restaurants. You canu s e y o u r c a r d a n y w h e r e m e r c h a n t s d i s p l a y y o u r c a r d ' s b r a n d name or logo. They offer an alternative to carrying a checkbook or cash.

E-CHEQUE:
An e-Cheque is the electr onic version or repr esentation of paper cheque. The Infor mation and Legal Framewor k on the E-Cheque isthe same as that of the paper cheques. It can now be used in place of paper cheques to do any andall remote transactions. An E-cheque work the same way a cheque does, the chequew r i t e r " w r i t e s " t h e e C h e q u e u s i n g o n e o f m a n y t y p e s o f electronic devices and "gives" t h e e - C h e q u e t o t h e p a y e e elec tr onica lly. T he pa yee "dep os its " t he E l e c t r o n i c C h e q u er eceives cr edit, and the payee's bank "clears" the e-Cheque to the paying bank. The paying bank validates the e-Cheque andthen "charges" the check writer's account for the check

OTHER FORMS OF ELECTRONIC BANKING

Direct Deposit Electronic Bill Payment Electronic Check Conversion Cash Value Stored, Etc.

ATM
AUTOMATED TELLER MACHINES (ATM):
An unattended electronic machine in a public place, connected toa d a t a s y s t e m a n d r e l a t e d e q u i p m e n t a n d a c t i v a t e d b y a b a n k customer to obtain cash withdrawals and other banking services.Also called automatic teller machine , cash machine ; Als o called money machine .An a u t o ma t e d t e l l er m a c h i n e or a u t o ma t i c t e l l er ma c h i n e (ATM) is an electronic computer ized telecommunications devicet h a t a l l o w s a financial institution' s c u s t o m e r s t o d i r e c t l y u s e a secure method of communication to access their bank accounts,order or makecashwithdrawals (or cash advances using a creditc a r d ) a n d c h e c k t h e i r a c c o u n t b a l a n c es w i t h o u t t h e n e e d f o r a humanbank teller (or cashier in theUK). Many ATMs also allowpeople to deposit cash or cheques, transfer money between their bank accounts, top up their mobile phones' pre-paid accounts or even buypostage stamps.On most moder n ATMs, the customer identifies him or herself byi n s e r t i n g a p l a s t i c c a r d w i t h a ma g n e t i c s t r i p e o r a p l a s t i c smartcardw i t h a c h i p , t h a t c o n t a i n s h i s o r h er a c c o u n t n u m b e r . The customer then verifies their identity by enter ing apasscode,often referred to as a PIN ( Personal Identification Number) of four o r m o r e d i g i t s . U p o n s u c c es s f u l e n t r y o f t h e P I N , t h e c u s t o m er may perform a transaction.If the number is entered incorrectly several times in a row (usuallythree attempts per card insertion), some ATMs will attempt retainthe card as a security pr ecaution to prevent an unauthorised user from discovering the PIN by guesswork. Captured cards are oftendestroyed if the ATM owner is not the card issuing bank, as non-

customer's identities cannot be reliably confirmed.T h e I n d i a n m a r k e t t o d a y h a s a p p r o x i m a t e l y m o r e t h a n 1 7 , 0 0 0 ATMs.

ADVANTAGES & DISADVANTAGES OF AN ATM

11.1 Advantages of an ATM :

1. An automated teller machine increases existing business: The typical ATM customer will spend 20-25% more than a non-ATM customer, according to research conducted by AT&T Global Information Solutions.

2. An automated teller machine generates new business: Customers are more likely to seek out a location with an automated teller machine; in addition to convenience, there are a number of safety benefits associated with an in-store automated teller machine.

3. An automated teller machine provides additional revenue streams : Each atm withdrawal transaction generates surcharge income for the owner of the automated teller machine. Additionally, an automated teller machine can provide revenue from on-screen advertising, couponing, and alternative media (e.g., prepaid phonecards, postage stamps) dispensing opportunities.

4. An automated teller machine reduces risk and lowers costs: Having an automated teller machine on the premises can reduce the number of bad checks and cut credit card expenses because customers have the option of withdrawing cash instead.

11.2 Disadvantages : Not available in remote places. Cannot avoid illegal use in case of stolen card.