Internet Banking is the latest wave in information technology. It is another
electronic delivery channel. In simple terms
internet banking means any user with a personal computer and a browser can get connected to his bank’s website to perform any of the virtual banking functions. There is no human operator present in a remote location to respond to his needs such as in telephone banking, in a call centre. The bank has a centralized database that is web-enabled. All the services that the bank has permitted on the internet are displayed in menu. Any service can be selected and further interaction is dictated by the nature of service.
The basic goal of banks is to create connectivity between each and every branch of the bank. The network which connects the various locations and gives connectivity to the central office within the organization is called intranet. These networks are limited to organizations for which they are set up. These intranets can be connected to other intranets forming internet.
Intranet based online banking service is to aid dissemination and sharing of information in a closed group aiding better and faster flow. Intranet eliminates duplication of databases and inconsistencies thereof. There is centralized data which the users can download and find out what they want. SWIFT is a live example of intranet
application. The contribution of Indian banks to SWIFT is negligible.
The quality, range and price of these
electronic services decide a bank’s competitive position in industry. Technology banking helps banks in four major ways: 1) to handle a greatly expanded customer base, 2) to reduce the real cost of handling payments, 3) to liberate banks from the traditional constraints on time and place and 4) to introduce new products and services.
INTERNET BANKING IN INDIA:
The Reserve Bank of India constituted a working group on Internet Banking. The group divided the internet banking products in India into 3 types based on the levels of access granted. They are:
i) Information Only System – General purpose information like interest rates, branch location, bank products and their features, loan and deposit calculations are provided in the bank’s website. There exist facilities for downloading various types of application forms. The communication is normally done through e-mail. There is no interaction between the customer and bank’s application system. No identification of the customer is done. In this, there is no possibility of any unauthorized person getting into production systems of the bank through the internet.
ii) Electronic Information Transfer System – The system provides customer-specific information in the form of account balances, transaction details, statement of accounts. The information is still largely of the “read only” format. Identification and authentication of the customer is through password. The information is fetched from the bank’s application system either in batch mode or off-line. Here also, the application systems cannot directly access through the internet.
iii) Fully Electronic Transactional System – This system allows bi-directional capabilities. Transactions can be submitted by the customer for online update. This system requires high degree of security and control. In this environment, web server and application systems are linked over secure infrastructure. It comprises of the basic requirements in terms of technology covering computerization, networking and security, inter-bank payment gateway and legal infrastructure or introduction of internet banking.
Automated Teller Machine (ATM):
This machine is designed to perform the most important function of bank. It is operated by plastic card with its special features. The plastic card is replacing cheque, personal attendance of the customer, banking hour’s restrictions and paper based verification. There are debit cards. ATM’s used as spring board for Electronic Fund Transfer. ATM itself can provide information about customer’s account and also receive instructions from customers – ATM cardholders. An ATM is an Electronic Fund Transfer terminal capable of handling cash deposits, transfer between accounts, balance enquiries, cash withdrawals and pay bills. It may be on-line or 0ff-line. The on-line ATN enables the customer to avail banking facilities from anywhere. In off-line the facilities are confined to that particular ATM assigned. Any customer possessing ATM card issued by the Shared Payment Network System can go to any ATM linked to Shared Payment Networks and perform his transactions.
Credit Cards/Debit Cards:
The Credit Card holder is empowered to spend wherever and whenever he wants with his Credit Card within the limits fixed by his bank. Credit Card is a post paid card.
Debit Card, on the other hand, is a prepaid card with some stored value. Every time a person uses this card, the business house gets money transferred to its account from the bank of the buyer. The buyer’s account is debited with the exact amount of purchases.
Smart Card:
Banks are adding chips to their current magnetic stripe cards to enhance security and offer new service, called Smart Cards. Smart Cards allow thousands of times of information storable on magnetic stripe cards. In addition, these cards are highly secure, more reliable and perform multiple functions. They hold a large amount of personal information, from medical and health history to personal banking and personal preferences.