E - BANKING

Onkar Sule Roll no: - 54

What is E - BANKING

Electronic banking, also known as electronic funds transfer (EFT), it is simply the use of electronic means to transfer funds directly from one account to another, rather than by cheque or cash.

Technology Commencement in Banking

In 70s, banks started to establish centralized data processing centers. Essentially the roles of these data processing centers are: Collect the handwritten documents from branches Compile the documents Manual data entry by the operators Generate reports for the bank staff and the central bank Execute some banking transactions

Branch Automation

In 80s, banks started technology investments for the branches. The first step is offline branches. Terminals connected to local branch computer Second step is online branches connected centrally. Most of the transactions started to be performed in the central mainframe.

Uses of EFT

Have your check deposited directly into your bank or credit union checking account.

Withdrawal of money at your convenience using your PIN

Online Bill Payment

Buy goods using plastic money instead of cash

Various forms of E Banking.

Plastic Money TELE BANKING ATMs

ECheque

Internet Banking

Process of all forms of E Banking

Internet Banking

ATMs

TELE Banking

Plastic Money

ECheque

Internet Banking
More and more banks are coming to realize that internet is a part of banks' alternative delivery channel strategies activities concentrated in the businessto-consumer segment, focused on retaining clients In Internet banking, security is a primary concern. Security concerns have been addressed from every angle within the architecture of the Internet banking application. Sample Internet Banking Architecture

ATM.....

In the mid-1980s, that cash dispensers truly became a worldwide phenomenon.

It took 16 years for the first 100,000 cash dispensers to be installed, but only four years more for the next 100,000 and 3 months for the next 100,000.
Now, ATM became the electronic face of banking for most customers. Beside cash withdrawal, there exist various transaction options from transfer to fund buying/selling. Now there are 1217463 ATM installed in and around Mumbai

ATM and POS Application Architecture

Debit Card Authorization

Switch System

Credit Card Authorization

Point of Sale

New habits in shopping Increased the use of plastic cards Now there are 313140 POS installed in India (Ref: www.moneylife.in)

Main components Switch IVR CTI(Computer Telephony Integration) Manage each call using the computer Pop up the user information while transferring the call Agent Desktop Application Win32,ActiveX, HTML Host Application

Telephone Banking Infrastructure

Telecom

IVR

CTI

HOST

IVR

Interactive Voice Response (IVR) is a software application that accepts a combination of voice telephone input and touch-tone keypad selection and provides appropriate responses in the form of voice IVR has come into our life at the beginnings of 90s. First step in Telephone Banking Peak transaction volume in salary payment days for balance inquiry

Plastic Cards

The plastic card usage grown enormously in last 2 decade. Plastic card became the main media for bank customers. Number of credit card in India:
Total 82,44,538 53,09,846 50,483 1,36,04,867

Credit Card Type National Cards International Cards Visa 12,00,704 70,43,834 MasterCard 4,88,881 48,20,965 Other 13,599 36,884 total 17,03,184 1,19,01,683

Mobile Banking

Current Mobile Banking Applications:

SMS Banking WAP Banking STK (Sim Toolkit) Banking

SMS Banking

Basic banking inquiry transactions(balance inquiry, funds, exchange rate inquiry) are performed by the cooperation of bank and the GSM operator Security is the main problem

GSM Network

GSM Operator Application Server

Leased line Bank SMS Gateway

GSM Operator SMS DB

Bank SMS DB

Bank Host

WAP Banking

Wireless application protocol (WAP) is an application environment and set of communication protocols for wireless devices designed to enable manufacturer-, vendor-, and technology-independent access to the Internet and advanced telephony services. WAP is a global standard and is not controlled by any single company Various banking transactions offered in WAP environment by banks.

Similar architecture with SMS banking

SIM Toolkit

SIM card enables to keep and load different applications. SIM Application Toolkit has been agreed as a GSM standard

SIM Application Toolkit is independent of phone manufacturers and designs.

SIM Application Toolkit allows the flexibility to update the SIM to alter the services and download new services over the air SIM Application Toolkit is designed as a client-server application. On the server side, SimCard platform and the client side, phone that supports the SIM Application Toolkit

In the near future, banks will start to offer banking transactions in this platform.

Banking Application Architecture

Relationship Management
CIF
ATM I N F O

Product Factory

Portfolio Management

POS

Deposit (TD,DD)

FBS

Securities

Promissory Notes

FX Import / Export

Delivery Services

Teletel

NBS

EFT

Cheques

Merchant

Telerom

Sales Support System

CMS

Treasury

Payments

YKB HR

Teller (Branch)

Corporate Tables DAL

Internet Banking

GL / Accounting

Settlement Phone Banking

Batch Operations

Reporting

Internet Shopping PCM Campaign Management Credit Risk Management Productivity

Management & Control

Information Delivery

Loans&Credits

C E N T E R

Data Warehouse

Electronic repositories of summarized historical data The main idea behind data warehouse is get all company data working together so users can see more,learn more, and make the organization work better Data Warehouse helps users to identify trends, find answers to business questions and derive meaning from historical and operational data. Data access is easier and less costly Decision support solutions run faster and are more accurate.

Data Warehouse Process

Life Cycle
Design
Transaction Data Extraction

Transform

Extract

Deliver

Data Scrubbing and Cleansing

Partial Solution s

Load, index and Aggregate

Publish and Subscribe

Data Mapping

Data Replication

Data Histories and Summaries

Data Access Tools

Complete Integrated Solution

Integrated Data Warehouse Infrastructure

Channel Costs
2

1.5

0.5

0 Web ATM Call Center Branch

Channel Integration Evolution

Channel Integration evolution

Reuse Efficiencies of Scale Reduction of Redundancies

The Role of Banks in the New Economy

Internet and mobile devices have brought new rules to economy and shaped the way to do business Banks has also evolved according to the new economy and took their places in this new world to add value to their customer The new ways to do business are : e-commerce (B2C) m-commerce B2B

E-commerce - B2C

E-commerce is the buying and selling of goods and services on the Internet. Main feature of e-commerce

24-hour availability a global reach the ability to interact provide custom information and ordering and multimedia prospects,

The Web is rapidly becoming a multibillion dollar source of revenue for the world's businesses. Banks provide secure payments infrastructure - virtual POS

M-commerce

Mobile commerce applications involve using a mobile phone to carry out financial transactions- this usually means making a payment for goods or transferring funds electronically. As content delivery over wireless devices becomes faster, more secure, and scalable, there is wide speculation that m-commerce will surpass wireline ecommerce as the method of choice for digital commerce transactions.

B2B

A housands of companies that sell products to other companies have discovered that the Web provides not only a 24-hour-a-day showcase for their products but a quick way to reach the right people in a company for more information. In the B2B, the bank role is to provide a reliable payment infrastructure that add value to corporate business This infrastructure should cover: Bill presentment Bill payment Different payment types(credit card, deposit account, loan) Information after payment

E-Security

To improve the e-business, all the users should feel secure to perform the transaction this environment The main concepts in e-security are:

PKI (public key infrastructure) enables users of a basically unsecure public network such as the Internet to securely and privately exchange data and money through the use of a public and a private cryptographic key pair that is obtained and shared through a trusted authority. Public key is a value provided by some designated authority as a key that, combined with a private key derived from the public key, can be used to effectively encryption messages and digital signature. Private or secret key is an encryption/decryption key known only to the party or parties that exchange secret messages. Public key is used together with a private key

E-Security - continued

Digital certificate is an electronic "credit card" that establishes your credentials when doing business or other transactions on the Web. It is issued by a certification authority (CA).

CA (certificate authority) is an authority in a network that issues and manages security credentials and public key for message encryption. As part of a public key infrastructure, a CA checks with a registration authority to verify information provided by the requestor of a digital certificate
An RA (registration authority) is an authority in a network that verifies user requests for a digital certificate and tells the certificate authority to issue it.

Advantages of E-banking

Benefits for Banks

Benefits for Small to Medium Businesses

Benefits for Customers

Benefits for Banks

Larger customer coverage

Reducing the costs of operations

Promoting their services and products internationally Increasing the customer satisfaction and providing a personalized relationship with customers

Benefits for Small to Medium Businesses

To run its operations more effectively Lower cost than traditional financial management mechanisms

Benefits for Customers

Convenience - 24 hours a day, seven days a week

-

Cost Reducing transfer fees Speed Faster circulation of assets

Competitiveness - Fostering competition in financial market

Benefits for Customers

Communication - communicate easily Environmental Abolishing the uses of paper

Others - Offering one-stop-shop solutions

Disadvantages OF E-banking
A need

for customer skill to deal with computers and browsers. E.g. Elderly, Housewives Inconvenient

Site

change it will make the customer have some confusion or delay. Security Risk

Security Risk

Increasing number of fraudulent bank websites

Fake emails purporting to be sent from banks

Use of Trojan Horse programs to capture user IDs and passwords

Fraudulent Bank Websites

A suspicious bank website: www.sbionline.com Original bank website www.onlinesbi.com These website are believed to aim to trick persons into disclosing their sensitive personal information

Fake e-mails Email send from Fraudulent bank Verify the personal information Guide customer enter the fraud link Disclosing their ATM card numbers and their passwords

Viruses and Worms-Trojan Horse Program

When we open some suspicious websites or email Trojan Horse Program will install our computer secretly Hidden in the computer When you access bank websites Capture our account and the password

Case From Newspaper

Dont use the hyperlink to login to the website of banks Should deeply check the postscript of the website Observe that is it have the encryption and compare the login account of encryption cert is equal to the bank.

Precautionary Measures
For Bank:

Should provide specific guidance to their customers

For Customers : Should not disclose their customer IDs (e.g., account numbers) or PIN to anyone else. Periodically change their PIN Should promptly log out from the service Should regularly check their account balances and statements to identify unusual transactions.

Do not access Corporate Cyber banking through public terminals. To safeguard your computer from any other hacker attack, install anti-virus and anti-spyware software on your computer and update it regularly.

Alternative Delivery Channels

Anytime, anywhere banking Telephone Banking Internet Banking Mobile Banking Television banking Next ???

What is the Next channel

Microwave Banking ???

THANK YOU