E-Banking Challenges and Opportunities

E-BANKING CHALLENGES
AND OPPORTUNITIES
VARGHEES PRABHU.S,
KSR COLLEGE OF ENGINEERING,
TIRUCHENGODE.
INTRODUCTION:
• Now-a-days the banking is more information-based,
speedy and boundary less due to the impact of e-
revolution.
• The number of visits of a customer to the bank can
be minimized largely by operating the account
through internet
• E-banking is used to access the customer’s bank
account and to undertake the banking
transactions.
• The number of individuals using the internet is
increasing considerably and it can be seen with the
following table
Internet Penetration in India
Year Users Population % penetration
1998 1,400,000 1,094,870,677 0.1 %

1999 2,800,000 1,094,870,677 0.3 %
2000 5,500,000 1,094,870,677 0.5 %
2001 7,000,000 1,094,870,677 0.7 %
2002 16,500,000 1,094,870,677 1.6 %
2003 22,500,000 1,094,870,677 2.1 %
2004 39,200,000 1,094,870,677 3.6 %
2005 50,600,000 1,112,225,812 4.5 %
2006 40,000,000 1,112,225,812 3.6 %
2007 42,000,000 1,129,667,528 3.7 %
Source: www.internetworldstats.com
Internet usage in Asia
TRADITIONAL BANKING AND
INTERNET BANKING
• In traditional banking, the customer has to visit the

branch of the bank in person to perform the basic
banking operations such as enquiry, funds transfer,
cash withdrawal, etc.
• E-banking is called any time, any where
banking because, the customer can
perform the banking transactions by sitting
at their homes round the clock globally
through electronic media
TECHNOLOGY IN INDIAN
BANKING
• 1960 - Mechanized banking introduced
• 1970 - Introduction of computer based banking
industry
• 1980 - Introduction of computer-linked
communication based banking
• In 1970s, SBI installed a ledger-posting machine
along with a mainframe computer at selected
branches
• A committee on computerization and
mechanization was appointed by RBI in 1983 under
chairmanship of Dr. C. Rangrajan
TECHNOLOGY IN INDIAN
BANKING
• Technology was the rational for bank
introducing ATM and POS (Point of sales)
in 1970s, telephone banking in 1980s and
internet banking in 1990s
INTERNET BANKING IN INDIA
• Information Only System

• Electronic Information Transfer System
• Fully Electronic Transactional System
SERVICES CAN BE OBTAINED
WITH THE HELP OF E-BANKING
• Bill Payment Service

• Fund Transfer
• Credit Card Customers
• Railway pass
• Investment through Internet Banking
• Recharging the Prepaid Phone account
• Shopping
BENEFITS OF E-BANKING
BENEFITS TO CONSUMERS:
• Customer’s account is extremely
accessible to an online account.
• Customer can withdraw the cash at any
time through ATMs that are now widely
available throughout the country.
• Besides withdrawing cash customers can
also have mini banks statements, balance
inquiry at the ATMs
• Customers can operate their accounts
while sitting in their offices or homes.
There is no need to go to the bank in
person for such matter.
• E-banking helps for the payment of utility
bill.
• All services that are usually available from the
local bank can be found on a single website.
• The Growth of Credit Card usage also owes
greatly to E-banking.
• Banking is available throughout the day
without holidays.
• Services can be offered at a very low cost. As
the chart shows results of a survey, cost per
transaction through internet banking is the
least among all the other modes
Cost Per Transaction In The US: Money Transfer (units in US $)
Type Branch Cheque Phone ATM PC Internet
Cost Per 1.07 0.95 0.45 0.27 0.15 0.01

Transacti
on
Source: Furst, Lang & Nolle (1998), Booz, Allen & Hamilton (Apr.1997)
TO BANKING INDUSTRY
• controlling banks operating cost

• Increase efficiency, better time usage and
enhanced control.
• E-banking has made banks more
competitive. It has also led to the
expansion of the banking industry, opening
of new avenues for banking operations.
• Electronic banking reduce paper work,
thus helping them to move the paperless
environment.
• proper documentation of their records and
transactions.
• The reach and delivery capabilities of
computer networks like the internet are far
better than any branch network.
TO GENERAL ECONOMY
• E-banking gives tangible benefits in the

form of reduction of cost, reduced delivery
time, increased efficiency, reduced
wastage
• E-banking electronically controlled and
thoroughly monitored environment
discourage many illegal and illegitimate
practices
• E-banking has also helped in
documentation of the economic activities
of the masses
DISADVANTAGES OF E-BANKING
• Compelled to have Computers with

Internet Access.
• Phone bills can increase.
• Hackers may intercept data and defraud
customers.
• If the bank's server is down, we can't use
it.
• Many banks don't show us how to use
online banking.
• Our internet connection must be working
properly so that customers can have
access
CONSTRAINTS IN INTERNET
BANKING
• Start-up cost
• Training and Maintenance
• Lack of skilled personnel
• Security
• Legal Issues
• Restricted Clientele and Technical
Problems
SECURITY MEASURES
• Authenticity controls
• Accuracy control
• Completeness control
• Redundancy controls
• Privacy controls
• Audit Trail Controls
• Existence controls
• Efficient
• Fire wall controls
• Encryption controls
CONCLUSION
• E-Banking is becoming immensely popular
globally and India is no exception to it.
• The declining Internet rates, falling PC prices,
broad bandwidth access through cable and
digital subscriber lines, accessing the NET
through cable TV etc., would definitely
encourage the boom in E Banking in India.
• In true E-banking, any inquiry or transaction is
processed online without any reference to the
branch (anywhere banking) at any time.
• E-Banking Providing a 'need to have' than a
'nice to have' services.

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E-BANKING CHALLENGES

1998 1,400,000 1,094,870,677 0.1 %

2000 5,500,000 1,094,870,677 0.5 %

2001 7,000,000 1,094,870,677 0.7 %

2002 16,500,000 1,094,870,677 1.6 %

2003 22,500,000 1,094,870,677 2.1 %

2004 39,200,000 1,094,870,677 3.6 %

2005 50,600,000 1,112,225,812 4.5 %

2006 40,000,000 1,112,225,812 3.6 %

2007 42,000,000 1,129,667,528 3.7 %

• In traditional banking, the customer has to visit the

• Information Only System

• Bill Payment Service

Cost Per Transaction In The US: Money Transfer (units in US $)

Type Branch Cheque Phone ATM PC Internet

Cost Per 1.07 0.95 0.45 0.27 0.15 0.01

• controlling banks operating cost

• E-banking gives tangible benefits in the

• Compelled to have Computers with

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