LG Telecom, South Korea
In terms of the evolution of services being offered on e-banking applications, South Korea is showing the way.
The big push came when LG Telecom Ltd., the smallest of Korea's three e-banking service providers teamed up with the Kookmin bank to launch the ‘Bank on' service. Under this scheme e-banking users were able to use smart chips embedded in cell phones for accessing all of the transaction and enquiry based services. The chip-based service automated the authentication of users when they accessed their bank's financial services to make the whole process much faster and convenient. The icing on the cake came with the ability of these chip enabled cell phones to be used simultaneously as cash cards. By October 2004 there were already about 100,000 infrared readers adapted to take payment directly from e-banking handsets in Korea.
Users can now use their cell phones to pay for everything, from restaurant bills, travel tickets, merchandise and even haircuts.
Reliance Infocomm, India
When Reliance Infocomm, India rolled out its CDMA network, (at the time the e-banking market in India was still in its infancy, and data services were almost never heard off) it made sure that all handsets supported Java. The Reliance application platform, also known as R-World brought Java compatibility even to the lower end phones.
Reliance used a novel way to overcome the memory limitations of lower-end e-banking which hampered deploying of multiple standalone J2ME based clients. Instead of storing applications statically on their cell phones, users access a single menu based application called R-World, which connects them to the Reliance servers. Using the menu based user interface, e-banking users select the application, which they want to run and download them over-the-air to their cell phones. These applications are then executed locally on the mobiles.
From mid-2004 Reliance tied up with two of the popular private sector banks, HDFC and ICICI, to provide a host of their enquiry and transaction based e-banking services through its R-World environment.
CONCLUSION
For service providers, E-banking offers the next surest way to achieve growth. Countries like Korea where e-banking penetration is
nearing saturation, e-banking is helping service providers increase revenues from the now static subscriber base. Also service providers are increasingly using the complexity of their supported e-banking services to attract new customers and retain old ones. For the fact is that one day, in most of the world emerging markets, more people will use e-banking telephones than use fixed telephone lines. Businesses that are based on e-banking financial serviced will thus be a natural fit for these economies. What is more, there is no need to wait for the next generation e-banking networks; these businesses can be built using today's technology. But to capture this significant opportunity, financial firms and telecommunications companies will have to forge partnerships with one another and, possibly, with merchants and retail chains as well.
While electronic banking can provide a number of benefits for customers and new business opportunities for banks, it exacerbates traditional banking risks. Even though considerable work has been done in some countries in adapting banking and supervision regulations, continuous vigilance and revisions will be essential as the scope of e-banking increases. In particular, there is still a need to establish greater harmonization and coordination at the international level. Moreover, the ease with which capital can potentially be moved between banks and across borders in an electronic environment creates a greater sensitivity to economic policy management. To understand the impact of e-banking on the conduct of economic policy, policymakers need a solid analytical foundation. Without one, the markets will provide the answer, possibly at a high economic cost.
Further research on policy-related issues in the period ahead is therefore critical.
In conclusion e-banking creates issues for banks and regulators alike. For their part, banks should: Have a clear and widely disseminated strategy that is driven from the top and takes into account the effects of e-banking, together with an effective process for measuring performance against it. Take into account the effect that e-provision will have upon their business risk exposures and manage these accordingly. Undertake market research, adopt systems with adequate capacity and scalability, undertake proportional advertising campaigns and ensure that they have adequate staff coverage and a suitable business continuity plan. Ensure they have adequate management information in a clear and comprehensible format. Take a strategic and proactive approach to information security, maintaining adequate staff expertise, building in best practice controls and testing and updating these as the market develops. Make active use of system based security management and monitoring tools. Ensure that crisis management processes are able to cope with Internet related incidents. One of the benefits that banks experience when using e-banking is increased customer satisfaction.
This due to that customers may access their accounts whenever, from anywhere, and they get involved more, this creating relationships with banks. Banks should provide their customers with convenience, meaning offering service through several distribution channels (ATM, Internet, physical branches) and have more functions available online. Other benefits are expanded product offerings and
extended geographic reach. This means that banks can offer a wider range and newer services online to even more customers than possible before. The benefit which is driving most of the banks toward e-banking is the reduction of overall costs. With e-e-banking banks can reduce their overall costs in two ways: cost of processing transactions is minimized and the numbers of branches that are required to service an equivalent number of customers are reduced. With all these benefits banks can obtain success on the financial market. But e-banking is a difficult business and banks face a lot of challenges. And so in conclusion e-banking creates issues for banks and regulators alike. For our part we will continue our work, both national and international, to identify and remove any unnecessary barriers to e-banking. For their part, banks should: Have a clear and widely disseminated strategy that is driven from the top and takes into account the effects of e-banking, together with an effective process for measuring performance against it. Take into account the effect that e-provision will have upon their business risk exposures and manage these accordingly. Undertake market research, adopt systems with adequate capacity and scalability, undertake proportional advertising campaigns and ensure that they have adequate staff coverage and a suitable business continuity plan. Ensure they have adequate management information in a clear and comprehensible format. Take a strategic and proactive approach to information security, maintaining adequate staff expertise, building in best practice controls and testing and updating these as the market develops. Make active use of system based security management and monitoring tools. Ensure that crisis management processes are able to cope with
Internet related incidents. I started my talk today by noting potential benefits as well as the risks in e-banking. I end in the same way.
Certainly there are risks. But there are also opportunities, and significant potential benefits for consumers, banks and regulators. We see no problems in principle with mitigating and managing the risks both for new entrants and existing players. As regulators we need to ensure that our approaches are adequate to deal with the risks without getting in the way of the innovations and benefits that E-banking brings to firms and consumers. We are very mindful of this as we develop our rules and guidance but will be looking also to you in the industry to help us to achieve the right balance
BIBLIOGRAPHY
http:/www.bis.org/pub/bcbs76.htm
http:/www.allbusiness.com/technology/technology-service/278931-1.html
E-banking in India – challenges and opportunities by Uppal, R.K and Jantana, Rimpi
Business objects learning solution to power e- business intelligence, editura business object 2001