Internet Banking – A Global Way to banks in India
Today we are in an era of globalization. Multinational organizations worldwide have adopted globalization as their first strategic choice. Advancement in technology has facilitated the globalization also. There has been a marked improvement especially in the maintenance, storage, accessibility and transfer of data. The world has literally been reduced to becoming a "global village".
The banks have transformed themselves and offer services over the Internet. From computer to create networks of ATMs, and now E-Banking, banks have moved up the value chain. Internet banking refers to the use of the Internet as a remote delivery channel for banking. That means any user with a personal computer and a browser can connect to their bank's website to perform any of the virtual banking. The number of visits the bank can be minimized effectively by operating from the Internet account. Thus the number of contacts needed to perform a transaction and to solve a problem has been reduced through online banking. The usual branches of banks has culminated in the PC network where consumers can enjoy all benefits and services of the bank on a single mouse click. When departments by the bank are interconnected through terrestrial or satellite links, there would be no physical identity of any business. It would be a borderless entity permits when any time, anywhere and still bank. A customer can log on to the banks website and access their account.
The development of technology in Indian banking
Technological development4 in banking can be traced as follows: –
1960 – Mechanised bank introduced.
1970 – The introduction of computerized banking.
1980 – The introduction of computer-linked communication based bank.
Advent of computer technology has created a major impact on working for banks. Computerization and subsequent development in the history of Indian banks can be traced back to 1966 when the Indian Banks Association (IBA) along with exchange banks associationsigned first wage settlements with the unions, which accounted for the use of ICT or IBM accounting machines of industry associations reconciliation etc. A committee on computerization and mechanization were appointed by RBI in 1983, led by Dr. C. Rangrajan recommended that computer and installation of Advanced Ledger Posting Machines (ALPM) on branch level, regional and headquarters in the banks would bring about a new era in banking. Narsimhan committee in 1991 paved the way for reform phase in the banking sector. Saraf Committee was constituted by RBI in 1994 that recommended the use of Electronic Fund Transfer System (EFT), introduction of electronic clearing services and expansion of Magnetic Ink Character Recognition (MICR) beyond the metropolitan area cities and branches.
The rate of adoption of IT and foreign private sector bank in the country has been significantly over the last five years, reflecting tough competition and Internet phenomena in the world. The arrival of private and multinational banks with their superior state of art technology based services pushed the Indian banks to follow suit by going to the newest technologies to counter the threat from competitors and retain their customer base. "The last four years have seen dramatic changes, which makes customer convenience critical aspect of banking." Indian metros are strongly growing up in online banking usage. day delivery channel by banks include direct dial-up connections, private networks, public networks, etc. and devices include telephones, PCs including the Automated Teller Machines, etc.
Impact of on-line banking
It has been noticed that customers who adopt online banking are typically more profitable to the bank, stay with the bank longer and use more products strengthen the bank client relationship. Computing and Internet banking has bridge the information gap, which was interesting because of human interference. Banks may make the information on products and services available in their site, which is an advantageous proposition.
Prospective customer can gather all information from the website, and thus if he comes to the branch office with questions will be very specific and will take less time for workers. Customer can visit these websites and compare the services offered by a bank with one another. The customer can get all the information by saving money and time. The trend so new addition is the virtual corporate system where the human role is minimized to the maximum effect.
The total bank size and structure have increased significantly. It can also be accredited to the current market situation characteristics. More private sector and multinational banks to establish their base in India. Earlier nationalized bank-dominated scenario. Now, after deregulation, private banks have emerged as a strong force. As a result, there is strong competition between these players to capture the savings of individuals and current accounts of organizations. This has been stated by liberalization in the insurance industry. insurance industry offers strong competition through their offer of various policies. This sudden growth has necessitated the use of technology in providing better services at competitive. Most banks have switched the with their bid to add value.
Several banks have been positioning themselves as a one-stop-shop financial services provider with a fairly comprehensive range products, including deposit products, loans, credit cards, debit cards, depository (custody services), investment advice, bill payments and various transactional services. These apart, banks have also entered the business of selling third party products such as mutual funds and insurance companies to retail customers. offer their customers a greater flexibility and convenience and to reduce service costs, banks have been investing in computer and their branches in new channels such as ATMs, telephone banking, Internet banking and mobile banking.
Online banking in India
The Reserve Bank of India constituted a Working Group on Internet Banking. The group shared Internet banking products in India in 3 types based on the levels of access granted. They are:
Information Only System General Purpose information like interest rates, branch location, bank products and their characteristics, loan and deposit calculations, the banks website. There Facilities are available for downloading different types of application forms. Communication is usually done via email. There is no interaction between the customer and the bank's application system. No identification the customer is finished. In this system there is no opportunity for unauthorized persons to enter production for the bank via the Internet.
Electronic Information Transfer System The system allows customer-specific information in the form of account balances, transaction information and financial statements. Information is still largely on "read only "format. Identification and authentication of customers is through password. Information is taken from the bank's application system, either in batch mode or off-line. Applications systems do not have direct access via the Internet.
Fully Electronic transactional System This system allows for bi-directional capabilities. Transactions may be submitted by the client for the online update. This system requires a high degree of security and control. In this environment, the Web server and application that is connected via a secure infrastructure. It consists of technology, covering computing, networking and security, inter-bank payment gateway and legal infrastructure.
Online banking can be categorized into the following stages:
Information Kiosks: Information on traditional banking products and services are available on the website of the bank.
Basic I-Banking: This bank establish infrastructure for Internet banking and access to basic services such as opening an account, pay utility bills and control of balance.
Virtual medium: This web is taken as an official medium of financial transactions. Buying and selling activities can be carried out through banks payment gateway technology. Today, most banks have their own functional website, through which banks serve customers.
Unique features of internet bank
Online banking solutions have many features and capabilities in common, but traditionally also have some that are application specific.
- Support Account aggregation to monitor accounts in one place
- Make money transfers between own accounts and third party accounts
- Interbank transfers
- Maintenance of future remittances
- Maintenance of beneficiaries
- Make payment of bills for service
- Maintenance of scheduled payment of bills
- Manage our investments with placement in our General Investment Account
- Withdrawals, indicating Investment history
- Initiate standing instructions and delete them
- Manage financial accounts payment facility financing details
- Manage card account
- Manage control status examination
- Stop check facility
- Release of stop-check facility
- Check book request
- Check back examination
- Check deposit investigation
- Current Account statement request
- Profit rates survey
- FOREX rates survey
- Update profile
- Change Account correspondence address
- Change Password
- Send message to Internet Banking customer care
- Delete ATM card in case of loss or unauthorized use.
Services via e-banking
Bill Payment It facilitates payment of electricity and telephone bills, mobile phone, credit cards and insurance premium bills as each bank has tie-ups with various utility companies, service providers and insurance companies across the country. To pay our bills, we all have to do is complete a simple one-time registration for each billing agent. We can also create standing instructions online to pay our recurring bills automatically. Bank charges not customers for online payment of bills.
Fund Transfer We can transfer funds from one account to another of the same or any other bank. When we log into your account, we have to mention recipients' account number, his bank and branch. The transfer takes place in a day or so, whereas in a traditional method, it takes around three working days. ICICI Bank says that online bill payment service and fund transfer facility has been their most popular online services.
Credit Card Customers with internet banking, customers can not only pay their credit card bills online but also get a loan on their cards. If we lose our credit, we can report lost card online.
Rail Pass Indian Railways has tied up with ICICI bank and we can now make our rail pass for local trains online. The pass will be delivered to us on our doorstep. But the facility is limited to Mumbai, Thane, Nasik, Surat and Pune.
Investing through online banking, we can now open an FD online through transfer of funds. Now investors with demat account and bank account can easily trade in the stock market and the amount will automatically be debited from their bank accounts and shares will be credited in their demat account. Moreover, some banks even give us the opportunity to buy mutual funds directly from online banking.
Recharging prepaid phone cards Now we just top up our prepaid mobile cards by logging into online banking. By simply choosing our operator name into our mobile number and the amount of infiltration, our phone again back in action within a few minutes.
Shopping With a range of all sorts of products, we can shop online and pay too easily via our account. We can also buy railway and air tickets through Internet banking.
Benefits of online banking
The advantages of online banking can be encapsulated as:
– Practical
-Unaffected by boundation operational times.
-No geographical barriers
– Services can be offered at very low cost
-Cost per transaction via Internet banking is very low.
Challenges in Internet banking
Internet banking in India is in its earliest stage of development. Most of them are offering basic services. Liberalisation of the banking sector together with the emergence of new banking technology makes it possible for new competitors to enter the financial services market quickly and efficiently.
Indian internet face the following challenges:
Proper understanding of the customer for this massive study will be conducted, may be in cooperation with other banks.
Need for transparency in offering services that customers' awareness has grown significantly.
Delinquency privacy online transactions enter immediately into reports that reveal the identity of the customer. Thus dirty money can not be transferred with ease.
Bandwidth Although companies claim to offer good speed and high bandwidth, there are still problems in accessing high speed on the network. Netbank can go high only at wings of a proper infrastructure, including telecommunications and bandwidth.
Computer skills in India is still very low and it is a barrier in rapid acceptance of online banking.
The mindset of the Indian customers' needs change.
Blast login and passwords is a common way to fiddle with the data.
Denial of Services Management millions of queries can clog computer networks.
Data Diddling Data can be changed in an unauthorized manner. A customer can receive bills higher than the actual transactions
Session hijacking Hijackers be unauthorized intermediaries between server and client, they can then hijack data and prevent it from reaching its destination. Most online transactions involving disclosure a credit or debit card number. Hackers can very easily track down those numbers. They can thus take full advantage of the map without being an actual cardholder. RBI has issued some guidelines for Internet banking for the safety of customers and banks. Some of them are:
Application for account opening can be accepted over the Internet, but there should only be opened after proper introduction and physical verification of the customer.
Security procedures adopted by the Bank for authenticating user must be recognized by law as a substitute for signature from a legal perspective. the secrecy and confidentiality of customer account must be maintained.
Consumer Protection Act applies to banking as well.
Information Technology Act 2000 has given legal recognition for creating, transmitting and storing an electronic (magnetic) data to be treated as evidence in court, except in those areas still subject to the provisions of negotiable instruments Act 1881st
Safety precautions
Customers should Never share personal information such as PIN, passwords etc with anyone, including employees of the bank. It is important that documents containing confidential information. PIN or password mailers should not be stored, the PIN and / or passwords should be changed immediately and remembered before destroying the mailers.
Customers are advised not to provide sensitive account information over unsecured e-mail or by phone. Take simple precautions like changing ATM PIN and online login and transaction passwords on a regular basis. Also ensure that the logged in session is correct. Netbank changing banking sector and has the greatest impact on the bankers out.
Security Token devices
Protection through single password authentication, as is the case in most secure Internet shopping sites are not considered secure enough for personal online banking in some countries. Basically there are two different security methods for online banking.
The PIN / TAN system PIN represents a password that is used to login and TAN represents one time passwords to authenticate transactions. TANS can be distributed in different ways, the most popular one is to send a list of TANS for online banking user by postal mail. The safest way to use TANS is to create them using using a security token. These token generated TANS depend on the time and a unique secret, stored in the security token, called two-factor authentication or 2FA.Usually online banking with PIN / TAN is done via a web browser using SSL secured connections, so there is no additional encryption needs. Signature-based bank, where all transactions are signed and encrypted digitally. The Keys to the signature generation and encryption can be stored on smart cards or memory medium, depending on the actual implementation.
Attacks
Most of attacks on online banking use today is based on fooling the user to steal login data and valid tan. Two well known examples of these attacks are phishing and pharming. Cross-site scripting and keylogger / trojan horses can also be used to steal login information.
One method of attack signature based online banking methods is to manipulate the applied software in a way that the correct transaction is displayed on the screen and faked transactions are logged in the background.
Countermeasures
There exist several defenses to try to prevent attacks. Digital certificates are used against phishing and pharming, use of class-3 card readers is a measure to avoid manipulation of transactions of the software in signature-based online banking variants. To protect their systems against Trojan horses, users should use virus scanners and be careful with downloaded software or e-mail attachments. '
Conclusion
Internet Banking amends the banking sector and has the greatest impact on banking relationships. The network bank, so "now is more the norm rather than an exception in many developed countries" due to the fact that it is economic way to deliver banking services. Banking is no longer limited to traditional brick and mortar branches. There is a need to scan and analyze market and respond to the needs of customers and create awareness about the benefits of Internet banking. Providing Internet banking is increasingly a "need-to-have 'than a' nice to garden 'services.
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