E-Banking

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A Monthly Double-Blind Peer Reviewed Refereed Open Access International e-Journal - Included in the International Serial Directories

International Journal in IT and Engineering

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E-Banking

Dr. Vidhu Bansal (Assistant professor, SGTB Khalsa College, Delhi University)

INTRODUCTION

The world is changing at a staggering rate and technology is considered to be the key driver for these changes around us. An analysis of technology and its uses show that it has permeated in almost every aspect of our life. Many activities are handled electronically due to the acceptance of information technology at home as well as at workplace. Slowly but steadily, the Indian customer is moving towards the internet banking. The ATM and the Net transactions are becoming popular. But the customer is clear on one thing that he wants net-banking to be simple and the banking sector is matching its steps to the march of technology. E-banking or Online banking is a generic term for the delivery of banking services and products through the electronic channels such as the telephone, the internet, the cell phone etc. The concept and scope of e-banking is still evolving. It facilitates an effective payment and accounting system thereby enhancing the speed of delivery of banking services considerably. Several initiatives have been taken by the Government of India as well as the RBI(Reserve Bank of India); have facilitated the development of e-banking in India. The government of India enacted the IT Act, 2000, which provides legal recognition to electronic transactions and other means of electronic commerce. The RBI has been preparing to upgrade itself as regulator and supervisor of the technologically dominated financial system. It issued guidelines on the risks and controls in computer and telecommunication systems to all banks, advising them to evaluate the risks inherent in the systems and put in place adequate control mechanisms to address these risks.

WHAT IS E-BANKING?

Electronic banking is one of the truly widespread avatars of E-commerce the world over. Various authors define E-Banking differently but the most definition depicting the meaning and features of E-Banking are as follows:

1. Banking these days is a combination of two, Electronic technology and Banking.

2.Electronic Banking is a process by which a customer performs banking Transactions electronically without visiting a brick-and-mortar institutions i.e. physical branches.

3. E-Banking denotes the provision of banking and related service through Extensive use of information technology without direct recourse to the bank by the customer.

NEED FOR E-BANKING

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Bank, Information technology &Customer Relationship

HISTORY OF E- BANKING

The precursor for the modern home online banking services were the distance banking services over electronic media from the early '80s. The term online became popular in the late '80s and refers to the use of a terminal, keyboard and TV (or monitor) to access the banking system using a phone line. ‘Home banking’ can also refer to the use of a numeric keypad to send tones down a phone line with instructions to the bank. Online services started in New York in 1981 when four of the city’s major banks (Citibank, Chase Manhattan, Chemical and Manufacturers Hanover) offered home banking services using the videotext system. Because of the commercial failure of videotext these banking services never became popular except in France where the use of videotext (Minitel) was subsidized by the telecom provider and the UK, where the Prestel system was used.

The UK’s first home online banking services were set up by the Nottingham Building Society (NBS) in 1983 ("History of the Nottingham" Retrieved on 2007-12-14.). The system used was based on the UK's Prestel system and used a computer, such as the BBC Micro, or keyboard (Tan data Td1400) connected to the telephone system and television set. The system (known as 'Homelink') allowed on-line viewing of statements, bank transfers and bill payments. In order to make bank transfers and billpayments, a written instruction giving details of the intended recipient had to be sent to the NBS who set the details up on the Homelink system. Typical recipients whereas, electricity and telephone companies and accounts with other banks. Details of payments to be made were input into the NBS system by the account holder via Prestel. A cheque was then sent by NBS to the payee and an advice giving details of the payment was sent to the account holder. BACS was later used to transfer the payment directly. Stanford Federal Credit Union was the first financial institution to offer online internet banking services to all of its members in Oct, 1994.

BANKS

CUSTOMERS

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EVOLUTION OF E-BANKING

The story of technology in banking started with the use of punched card machines like Accounting Machines or Ledger Posting Machines. The use of technology, at that time, was limited to keeping books of the bank. It further developed with the birth of online real time system and vast improvement in telecommunications during late1970’s and 1980’s.it resulted in a revolution in the field of banking with “convenience banking” as a buzzword. Through Convenience banking, the bank is carried to the doorstep of the customer. The 1990’s saw the birth of distributed computing technologies and Relational Database Management System. The banking industry was simply waiting for these technologies. Now with distribution technologies, one could configure dedicated machines called front-end machines for customer service and risk control while communication in the batch mode without hampering the response time on the front-end machine.

Intense competition has forced banks to rethink the way they operated their business. They had to reinvent and improve their products and services to make them more beneficial and cost effective. Technology in the form of E-banking has made it possible to find alternate banking practices at lower costs.

More and more people are using electronic banking products and services because large section of the banks future customer base will be made up of computer literate customer, the banks must be able to offer these customer products and services that allow them to do their banking by electronic means. If they fail to do this will, simply, not survive. New products and services are emerging that are set to change the way we look at money and the monetary system.

USAGE OF E-BANKING

The rise in the e-commerce and the use of internet in its facilitation along with the enhanced online security of transactions and sensitive information has been the core reason for the penetration of online banking in everyday life. According to the latest official figures from the office of National Statistics ( ONS 2007) indicate that subscriptions to the internet has grown more than 50% from 25 million in 2005 to 45million in 2007 in India. It has also been estimated that 60% of the population in India use internet in their daily lives. The fundamental shift towards the involvement of the customer in the financial service provision with the help of the technology especially internet has helped to reduce the costs of financial institutions as well as helped client to use the service at anytime and from virtually anywhere

TRADITIONAL BANKING

GUN POWDER

Personalised service,Time

consuming,Limited access

VIRTUAL/E-BANKING

NUCLEAR CHARGED

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with access to an internet connection. The use of electronic banking has removed personnel that facilitate the transactions and has placed additional responsibilities on the customers to transact with the service. The computerization of the banking operations has made maximum impact on:-

1)Internal Accounting System 2)Customer service

3)Diversification of system

INTERNET BANKING VERSUS TRADITIONAL BANKING

In spite of so many facilities that Internet banking offers us, we still seem to trust our traditional method of banking and is reluctant to use online banking. But here are few cases where Internet banking will turn out to be a better option in terms of saving your money.

'Stop payment' done through Internet banking will not cost any extra fees but when done through the branch, the bank may charge you Rs 50 per cheque plus the service tax. Through Internet banking, you can check your transactions at any time of the day, and as many times as you want to. On the other hand, in a traditional method, you get quarterly statements from the bank and if you request for a statement at your required time, it may turn out to be an expensive affair. The branch may charge you Rs 25 per page, which includes only 30 transactions. Moreover, the bank branch would take eight days to deliver it at your doorstep. If the fund transfer has to be made outstation, where the bank does not have a branch, the bank would demand outstation charges. Whereas with the help of online banking, it will be absolutely free for you. As per the Internet and Mobile Association of India's report on online banking 2006, "There are many advantages of online banking. It is convenient, it isn't bound by operational timings, there are no geographical barriers and the services can be offered at a miniscule cost."

IMPACT OF E-BANKING ON TRADITIONAL SERVICES

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investment. There is of course another view which sees e-banking more as an evolution than a revolution. E-banking is just banking offered via a new delivery channel. It simply gives consumers another service (just as ATMs did). Like ATMs, e-banking will impact on the nature of branches but will not remove their value. Experience in Scandinavia (arguably the most advanced e-banking area in the world) appears to confirm that the future is clicks and mortar’ banking. Customers want full service banking via a number of delivery channels. The future is therefore ‘Martini Banking’ (any time, any place, anywhere, anyhow).Traditional banks are starting to fight back. The start-up costs of an e-bank are high. Establishing a trusted brand is very costly as it requires significant advertising expenditure in addition to the purchase of expensive technology (as security and privacy are key to gaining customer approval). E-banks have already found that retail banking only becomes profitable once a large critical mass is achieved. Consequently many e-banks are limiting themselves to providing a tailored service to the better off. Nobody really knows which of these versions will triumph. This is something that the market will determine. However, supervisors will need to pay close attention to the impact of e-banks on the traditional banks, for example by surveillance of:

• Strategy

• Customer levels • Earnings and costs • Advertising spending • Margins

• Funding costs

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E-BANKING PRODUCTS

1. Automated Teller Machine (ATM):

These are cash dispensing machine, which are frequently seen at banks and other locations such as shopping centers and building societies. Their main purpose is to allow customer to draw cash at any time and to provide banking services where it would not have been viable to open another branch e.g. on university campus.

Some of the advantages of ATM to customers are:- •Ability to draw cash after normal banking hours •Quicker than normal cashier service

•Complete security as only the card holder knows the PIN •Does not just operate as a medium of obtaining cash.

•Customer can sometimes use the services of other bank ATM’s 2. Tele banking or Phone Banking:

Telephone banking is relatively new Electroni cBanking Product. However it is fastly becoming one of the most popular products. Customer can perform a number of transactions from the convenience of their own home or office; in fact from anywhere they have access to phone. Customers can do following:- •Check balances and statement information

•Transfer funds from one account to another •Pay certain bills

•Order statements or cheque books

•Demand draft request .This facility is available with the help of Voice Response System (VRS). This system basically, accepts only TONE dialed input. Like the ATM customer has to follow particular process, initially account number and telephone PIN are fed for the process to start. Also the VRS system provides the users within additional facilities such as changing existing password with the new desired, information about new products, current interest rates etc.

3. Mobile Banking:

Mobile banking comes in as a part of the banks initiative to offer multiple channels banking providing convenience for its customer. A versatile multifunctional, free service that is accessible and viewable on the monitor of mobile phone. Mobile phones are playing great role in Indian banking- both directly and indirectly. They are being used both as banking and other channels.

4. Internet Banking:

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TYPES OF INTERNET BANKING OR E-BANKING

Understanding the various types of Internet banking will help examiners assess the risks involved. Currently, the following three basic kinds of Internet banking are being employed in the marketplace. •Informational-this is the basic level of Internet banking. Typically, the bank has marketing information about the bank’s products and services on a stand-alone server. The risk is relatively low, as informational systems typically have no path between the server and the bank’s internal network. This level of Internet banking can be provided by the banks or outsourced. While the risk toa bank is relatively low, the server or web site may be vulnerable to alteration. Appropriate controls therefore must be in place to prevent unauthorized alterations to the bank’s server or web site.

•Communicative-this type of Internet banking systems and the customer. The interaction between the bank’s system and the customer. The interaction maybe limited to electronic mail, account enquiry, loan applications, or static file updates (name and address change). Because these servers may have a path to the bank’s internal networks, the risk is higher with this configuration than with informational systems. Appropriate controls need to be in the place to prevent, monitor, and alert management of any unauthorized attempt to access the bank’s internal networks and computer systems. Virus controls also become much more critical in this environment.

•Transactional-this level of Internet banking allows customers to execute transactions. Since a path typically exists between the server and the bank or outsourcer’s internal network, this is the highest risk architecture and must have the strongest controls. Customer transactions can include accessing accounts, paying bills, transferring funds etc.

FEATURES OF E-BANKING

The common features fall broadly into several categories :-



A bank customer can perform non-transactional tasks through online banking, including :

(i) viewing account balances

(ii) viewing recent transactions

(iii) downloading bank statements, for example in PDF format

(iv) viewing images of paid cheques

(v) ordering cheque books

(vi) download periodic account statements

(vii) Downloading applications for M-banking, E-banking etc.



Bank customers can transact banking tasks through online banking, including -

(i) Funds transfers between the customer's linked accounts

(ii) Paying third parties, including bill payments (see, e.g., BPAY) and telegraphic/wire transfers

(iii) Investment purchase or sale

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(v) Register utility billers and make bill payments



Management of multiple users having varying levels of authority



Financial institution administration



Transaction approval process



the process of banking has become much faster



24/7 access to account

Some financial institutions offer unique Internet banking services, for example



Personal financial management support, such as importing data into personal accounting software. Some online banking platforms support account aggregation to allow the customers to monitor all of their accounts in one place whether they are with their main bank or with other institutions.

Advantages of Internet banking



Convenience – Banks that offer internet banking are open for business transactions anywhere a client might be as long as there is internet connection. Apart from periods of website maintenance, services are available 24 hours a day and 365 days round the year. In a scenario where internet connection is unavailable, customer services are provided round the clock via telephone.



At the touch of a button, actual time account balances and information are availed. This hastens the banking processes hence increasing their efficiency and effectiveness.



Online banking allows for easier updating and maintaining of direct accounts. The time for changing mailing address is greatly reduced, ordering of additional checks is availed and provision of actual time interest rates.



Friendlier rates – Lack of substantial support and overhead costs results to direct banks offering higher interest rates on savings and charge lower rates on mortgages and loans.



Some banks offer high yield certificate of deposits and don’t penalize withdrawals on certificate of deposits, opening of accounts without minimum deposits and no minimum balance.



Transfer services – Online banking allows automatic funding of accounts from long established bank accounts via electronic funds transfers.

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Ease of transaction – the speed of transaction is faster relative to use of ATM’s or customary banking.

Disadvantages of Internet banking



Banking relationship – Customary banking allows creation of a personal touch between a bank and its clients. A personal touch with a bank manager for example can enable the manager to change terms in your account since he/she has some discretion in case of any personal circumstantial change. It can include reversal of an undeserved service charge.



Security matters – Direct banks are governed by laws and regulations similar to those of customary banks. Accounts are protected by Federal Deposit Insurance Corporation (FDIC).



Complex encryption software is used to protect account information. However, there are no perfect systems. Accounts are prone to hacking attacks, phishing, malware and illegal activities.



Learning – Banks with complicated sites can be cumbersome to navigate and may require one to read through tutorials to navigate them.



Transaction problems – face to face meeting is better in handling complex transactions and problems. Customary banks may call for meetings and seek expert advice to solve issues.

HOW E-BANKING CAN EASE YOUR LIFE

Indian banks are trying to make your life easier. Not just bill payment, you can make investments, shop or buy tickets and plan a holiday at your fingertips. In fact, sources from ICICI Bank tell us, "Our Internet banking base has been growing at an exponential pace over the last few years. Currently around 78 per cent of the bank’s customer base is registered for Internet banking." To get started, all you need is a computer with a modem or other dial-up device, a checking account with a bank that offers online service and the patience to complete about a one-page application--which can usually be done online. You can avail the following services:

1.Bill payment service: Each bank has tie-ups with various utility companies, service providers and insurance companies, across the country. It facilitates the payment of electricity and telephone bills, mobile phone, credit card and insurance premium bills. To pay bills, a simple one-time registration for each biller is to be completed. Standing instructions can be set, online to pay recurring bills, automatically. One-time standing instruction will ensure that bill payments do not get delayed due to lack of time. Most interestingly, the bank does not charge customers for online bill payment.

2. Fund transfer: Any amount can be transferred from one account to another of the same or any another bank. Customers can send money anywhere in India. Payee’s account number, his bank and the branch is needed to be mentioned after logging in the account. The transfer will take place in a day or so, whereas in a traditional method, it takes about three working days. ICICI Bank says that online bill payment service and fund transfer facility have been their most popular online services.

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for an additional card, request a credit line increase and God forbid if you lose your credit card, you can report lost cardonline.

4. Railway pass: This is something that would interest all the aam janta. Indian Railways has tied up with ICICI bank and you can now make your railway pass forlocal trains online. The pass will be delivered to you at your doorstep. But the facility is limited to Mumbai, Thane, Nasik, Surat and Pune. The bank would just charge Rs10 + 12.24 percent of service tax.

5. Investing through Internet banking: Opening a fixed deposit account cannot get easier than this. An FD can be opened online through funds transfer. Online banking can also be a great friend for lazy investors. Now investors with interlinked demat account and bank account can easily trade in the stock market and the amount will be automatically debited from their respective bank accounts and the shares will be credited in their demat account. Moreover, some banks even give the facility to purchase mutual funds directly from the online banking system. So it removes the worry about filling those big forms for mutual funds, they will now be just a few clicks away. Nowadays, most leading banks offer both online banking and demat account. However if the customer have there demat account with independent share brokers, then need to sign a special form, which will link your two accounts.

6. Recharging your prepaid phone: Now there is no need to rush to the vendor to recharge the prepaid phone, every time the talk time runs out. Just top-up the prepaid mobile cards by logging in to Internet banking. By just selecting the operator's name, entering the mobile number and the amount for recharge, the phone is again back inaction within few minutes.

7. Shopping at your fingertips: Leading banks have tie ups with various shopping websites. With a range of all kind of products, one can shop online and the payment is also made conveniently through the account. One can also buy railway and air tickets through Internet banking.

RISKS ASSOCIATED WITH E-BANKING

The various types of risks associated with e-business can be classified as:-

LIQUIDITY, INTEREST RATE, PRICE/MARKET RISKS

TRANSACTION/OPERATIONS RISKS

STRATEGIC RISKS

BUSINESS RISKS

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 Strategic Risks

A financial institution’s board and management should understand the risks associated with E-banking services and evaluate the resulting risk management costs against the potential return on investment prior to offering E-banking services. Poor E-banking planning and investment decisions can increase a financial institution’s strategic risk. On strategic risk E-banking is relatively new and, as a result, there can be a lack of understanding among senior management about its potential and implications. People with technological, but not banking, skills can end updriving the initiatives. E-initiatives can spring up in an incoherent and piecemeal manner in firms. They can be expensive and can fail to recoup their cost. Furthermore, they are often positioned as loss leaders (to capture market share), but may not attract the types of customers that banks want or expect and may have unexpected implications on existing business lines. Banks should respond to these risks by having a clear strategy driven from the top and should ensure that this strategy takes account of the effects of E- banking, wherever relevant. Such a strategy should be clearly disseminated across the business, and supported by a clear business plan with an effective means of monitoring performance against it.

 Business Risks

Business risks are also significant. Given the newness of E-banking, nobody knows much about whether E-banking customers will have different characteristics from the traditional banking customers. They may well have different characteristics. This could render existing score card models inappropriate, this resulting in either higher rejection rates or inappropriate pricing to cover the risk. Banks may not be able to assess credit quality at a distance as effectively as they do in face to face circumstances. It could be more difficult to assess the nature and quality of collateral offered at a distance, especially if it is located in an area the bank is unfamiliar with (particularly if this is overseas). Furthermore as it is difficult to predict customer volumes and the stickiness of E-deposits (things which could lead either to rapid flows in or out of the bank) it could be very difficult to manage liquidity. Of course, these are old risks with which banks and supervisors have considerable experience but they need to be watchful of old risks in new guises. In particular risk models and even processes designed for traditional banking may not be appropriate.

 Transaction/Operations Risk

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become more significant requiring additional processes, tools, expertise, and testing. Institutions should determine the appropriate level of security controls based on their assessment of the sensitivity of the information to the customer and to the institution and on the institution’s established risk tolerance level.

 Credit risk

Generally, a financial institution’s credit risk is not increased by the mere fact that a loan is originated through an E-banking channel. However, management should consider additional precautions when originating and approving loans electronically, including assuring management information systems effectively track the performance of portfolios originated through E-banking channels. The following aspects of on-line loan origination and approval tend to make risk management of the lending process more challenging. If not properly managed, these aspects can significantly increase credit risk.

1. Verifying the customer’s identity for on-line credit applications and executing an enforceable contract.

2. Monitoring and controlling the growth, pricing, underwriting standards and ongoing credit quality of loans originated through E-banking channels.

3. Monitoring and oversight of third-parties doing business as agents or on behalf of the financial institution (for example, an Internet loan origination site or electronic payments processor) 4. Valuing collateral and perfecting liens over a potentially wider geographic area.

5. Collecting loans from individuals over a potentially wider geographic area.

6. Monitoring any increased volume of, and possible concentration in, out-of-area lending.

 Liquidity, interest rate, price/market risks

Funding and investment-related risks could increase with an institution’s E-banking initiatives depending on the volatility and pricing of the acquired deposits. The Internet provides institutions with the ability to market their products and services globally. Internet-based advertising programs can effectively match yield-focused investors with potentially high-yielding deposits. But Internet-originated deposits have the potential to attract customers who focus exclusively on rates and may provide a funding source with risk characteristics similar to brokered deposits. An institution can control this potential volatility and expanded geographic reach through its deposit contract and account opening practices, which might involve face-to-face meetings or the exchange of paper correspondence. The institution should modify its policies as necessary to address the following E-banking funding issues:

1. Potential increase independence on brokered funds or other highly rate-sensitive deposits.

2. Potential acquisition of funds from markets where the institution is not licensed to engage in banking, particularly if the institution does not establish, disclose, and enforce geographic restrictions.

3. Potential impact of loan or deposit growth from an expanded Internet market, including the impact of such growth on capital ratios.

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 Reputational Risks

This is considerably heightened for banks using the Internet. For example the Internet allows for the rapid dissemination of information which means that any incident, either good or bad, is common knowledge within a short space of time. The speed of the Internet considerably cuts the optimal response times for both banks and regulators to any incident. Any problems encountered by one firm in this new environment may affect the business of another, as it may affect confidence in the Internet as a whole. There is therefore a risk that one rogue E-bank could cause significant problems for all banks providing services via the Internet. This is a new type of systemic risk and is causing concern to E-banking providers. Overall, the Internet puts an emphasis on reputational risks. Banks need to be sure that customer’ rights and information needs are adequately safeguarded and provided for.

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 levelsof access granted.

They are:

• Information Only System:

General purpose information like interest rates, branch location, bank products and their features, loan and deposit calculations are provided in the banks 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 system, there is no possibility of any unauthorized person getting into production systems of the bank through internet.

• Electronic Information Transfer System:

The system provides customer-specific information in the form of account balances, transaction details, and 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 modeor off-line. The application systems cannot directly access through the internet.

• 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 technology covering computerization, networkingand

security,inter-bank payment gateway and legal infrastructure. It includes thefollowings:

 ATM

 DEBIT CARDS

 SMART CARDS

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THE INDIAN SCENARIO

DRIVERS OF CHANGE:

Advantages previously held by large financial institutions have shrunk considerably. The Internet has leveled the playing field and afforded open access to customers in the global marketplace. Internet banking is a cost-effective delivery channel for financial institutions. Consumers are embracing the many benefits of Internet banking. Access to one's accounts at anytime and from any location via the World Wide Web is a convenience unknown a short time ago. Thus, abank's Internet presence transforms from 'brouchreware' status to 'Internet banking status once the bank goes through a technology integration effort to enable the customer to access information about his or her specific account relationship. The six primary drivers of Internet banking includes, in order of primacy are:

•Improve customer access

• Facilitate the offering of more services •Increase customer loyalty

•Attract new customers

•Provide services offered by competitors •Reduce customer attrition

INDIAN BANKS ON WEB:

The banking industry in India is facing unprecedented competition from non-traditional banking institutions, which now offer banking and financial services overthe Internet. The deregulation of the banking industry coupled with the emergence of new technologies, are enabling new competitors to enter the financial services market quickly and efficiently.Indian banks are going for the retail banking in a big way. However, much is still tobe achieved. This study that was conducted by students of IIML shows some interesting facts:

•Throughout the country, the Internet Banking is in the nascent stage of development (more than 50 banks are offering varied kind of Internet banking services).

•In general, these Internet sites offer only the most basic services. 55% are socalled 'entry level' sites, offering little more than company information andbasic marketing materials. Only 8% offer 'advanced transactions' such asonline funds transfer, transactions & cash management services.

•Foreign & Private banks are much advanced in terms of the number of sites &their level of development.

EMERGING CHALLENGES

Information technology analyst firm, the Meta Group, recently reported "financial institutions who don't offer home banking by the year 2000 will become marginalized." By the year of 2002, a large sophisticated and highly competitive Internet Banking Market will develop which will be driven by: •Demand side pressure due to increasing access to low cost electronic services.

•Emergence of open standards for banking functionality. •Growing customer awareness and need of transparency. •Global players in the fray.

•Close integration of bank services with web based E-commerce or even disintermediation of services through direct electronic payments (E- Cash).

•More convenient international transactions due to the fact that the Internet along with general deregulation trends eliminates geographic boundaries.

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distribution opportunity. It will enable nimble players to leverage their brick and mortar presence to improve customer satisfaction and gain share. It will force lethargic players who are struck with legacy cost basis, out of business-since they are unable to bring to play in the new context.

E-BANKING WORLD WIDE

Since its inception, Internet banking has experienced strong and sustained growth. World Bank report on leapfrogging in e-finance pointed out that the three countries with impressive progress in information technology in this sense are Estonia, Republic of Korea and Brazil. Creation of the world’s leading electronic banking systems has been done at a remarkably low cost compared to other world-class internet banks.

In the European Union, 60 million people, representing 18 per cent of the adult population, use online banking In France, the number of online banking accounts is recording an annual growth rate of 75 per cent. However, Estonia is a country that has become a leader in Internet banking (which now reaches 18 per cent of the population), not only among Eastern European countries but in world rankings, through a combination of easy to- use software, free-of-charge transactions and behavior changes resulting from the influence of the Nordic countries’ IT culture on Estonia. A sector in which Latin America is seems to be performing better than in other industries is online retail banking. Growth in this area has been driven by traditional banks, which have used the online channel to generate customer loyalty and improve their operating margins. Two Brazilian banks, Bradesco and Banco do Brasil; have thus achieved more than 4 million online customers each. Mexico is another leader of Internet banking in Latin America. It adopted legislation providing for the development of both E-Commerce and e-finance. In Mexico, the number of online bank users more than tripled from 700,000 in 2000 to 2.4 million in 2001, and it couldreach 4.5 million in 2005 (E-Marketer 2002b). One reason for the success of Latin American banks’ online ventures seems to be the attention they have paid to providing retail customers with multiple ways to access their accounts (Internet, telephone, wireless). However, given that the share of the total population that actually has a bank account is relatively small, the expansion of Latin American online banking may be facing a bottleneck. Compared with overall Internet usage estimated at 4.4 million in Australia, the major banks together have attracted only 1.2 million to online banking. The Internet is a global phenomenon and so is e-finance. Its deployment is not limited to developed countries, and indeed some developing countries – such as India and the Republic of Korea – are experiencing particularly strong growth in E-Banking. In Asia one of the most impressive records has been achieved by the Republic of Korea. The Republic of Korea is leading in online brokerage and in mobile banking. In South-East Asia Internet banking is also developing rapidly in Thailand, Malaysia, and Singapore andto a lesser extent, in the Philippines.

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LITERATURE REVIEW

Malhotra,Pooja & Singh, B.(2010)

This study is an attempt to present the present status of Internet banking in India and the extent of Internet bankingservices offeredby Internet banks.

Inaddition, it seeks to examine the factors affecting the extent of Internet bankingservices. The data for this study are based on a survey of bank websites explored during July 2008. The sample consists of 82 banks operating in Indiaat 31 March 2007. Multiple regression technique is employed to explore thedeterminants of the extent of Internet bankingservices. The results show that theprivate and foreign Internet banks have performed well inoffering a wider range andmore advanced services of Internet banking incomparison with public sector banks.Among the determinants affecting the extent of Internet bankingservices, size of the bank, experience of the bank in offering Internet banking, financing pattern andownership of the bank are found to be significant. The primary limitation of the studyis the scope and size of its sample as well as other variables (e.g. market,environmental, regulatory etc) which may have an effect on the decision of the banksto offer a wide range of InternetBankingservices. The purpose of the study is to help fill significant gaps in knowledge about the Internet bankinglandscapein India. Thefindings are expected to be of great use to the government, regulators, commercialbanks, and other financial institutions, e.g. co-operative banks planning to offer Internet banking, bank customers and researchers. The bankers as well as society atlarge will come to know where the banks laginterms of adoption of Internetbanking andinproviding different products and services. An understanding of the factorsaffecting the extent of InternetBankingservices is essential both for economistsstudying the determinants of growth and for the creators and producers of suchtechnologies. Moreover, this paper contributes to the empirical literature on diffusionof financial innovations, particularly Internet banking, in a developing country, i.e. India.

Polaris Software Lab (2010)

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Azouzi, D. (2009)

This paper aims to check if the current and prompt technologicalrevolution altering the whole world has crucial impacts on the Tunisian bankingsector. Particularly, this study seeks some clues on which we can rely in order tounderstand the customers' behavior regarding the adoption of electronic banking. Toachieve this purpose, an empirical research is carried out in Tunisia and it reveals that panoply of factors is affecting the customers-attitude toward e-banking. For instance;age, gender and educational qualifications seem to be important and they split up thegroup into electronic banking adopters and traditional banking defenders and so, theyhave significant influence on the customers' adoption of e-banking. Furthermore, thisstudy shows that despite the presidential incentives and in spite of being fully awareof the e-banking's benefits, numerous respondents are still using the conventionalbanking. It is worthy to mention that the fear of loss because of transactions errors orhackers plays a significant role in alienating Tunisian customers from online banking.

B. Dizon, J.A. (2009)

In this study they have founded that while big banks stillconduct the bulk of their business in brick and mortar bank branches, the financesector has been increasingly investing on e-banking facilities to offer 24-hour, queue-free services to their regular clients, whether through ATM machines, mobile phonesor the Internet. "E- Banking's appeal is primarily its convenience. Clients nowadayswant instant results; they don't want to wait anymore," said Francisco M. Caparros,Jr., senior vice-president of Asia United Bank and president of Banc Net. It's alsoturned out to be a more efficient way to process transactions, as e-banking does awaywith most of the paperwork that clients have to accomplish. "A lot of people don't likefilling forms," Mr. Caparros added. "Online banking, in particular, relies on usernames and passwords which need to be protected," said Ferdinand G. La Chica, firstvice-president and marketing group head for Sterling Bank of Asia. These anti- theftbarriers are at times supplemented by transaction passwords and "tokens", often akeychain-like device that is issued to the client and generates random, one-timepasswords to enable him to log into his account online. Last year, the Rural Bank Association of the Philippines announced that its members are looking to appointlocal merchants like sari-sari stores as third party agents where consumers can opennew accounts and make large payments. Such informal outlets will enable banks toreach out to small-income businesses and individuals, particularly those in theagrarian sector, most of who are based outside the city center.

Uppal, R.K. & Chawla, R. (2009)

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Reeti, Sanjay, and Malhotra, A. (2009)

Stated about the Customers’ perspectivesregarding e-banking in an emerging economy. So that, the author determining variousfactors affecting customer perception and attitude towards and satisfaction with e-banking is an essential part of a bank's strategy formulation process in an emergingeconomy like India. To gain this understanding in respect of Indian customers, thestudy was conducted on respondents taken from the northern part of India. The majorfindings depict that customers are influenced in their usage of e-banking services bythe kind of account they hold, their age and profession, attach highest degree of usefulness to balance enquiry service among e-banking services, consider security &trust most important in affecting their satisfaction level and find slow transactionspeed the most frequently faced problem while using e-banking.

Hsun, K.S. (2008),

This study considers the coherence of the financial service sectorand adopts different observational variables to identify innovation capital (trainingand R&D density) and process capital (IT system sufficiency). The results show thathuman capital has a direct impact on both innovation capital and process capital,which in turn affect customer capital; while finally, customer capital affects businessperformance. In addition, there is a negative relationship between process capital andcustomer capital in the financial service sector. It suggests that in the financial servicesector, customer satisfaction relies on a sufficient degree of training and R&D density.Intemperate investment on the support of e-banking operation systems may not be agood answer.

Laukkanen, P., Sinkkonen, S. &Laukkanen, T. (2008)

The purpose of this paper isto further the understanding of innovation resistance by dividing internet bankingnon-adopters into three groups based on their intentions to use the innovation.Thereafter, the aim is to identify how the resistance differs in these customer groups.This study identifies three groups of internet banking non-adopters, namely Postponers, opponents and rejectors. The data were collected by conducting anextensive postal survey among the retail banking customers in Finland who had notadopted internet banking. The measurement development was based on consumerresistance theory and the earlier literature on internet banking. Principal componentanalysis was used to classify the resistance items into five adoption barriers derivedfrom the earlier literature. Thereafter, analysis of variance was used to analyze thestatistical differences in resistance to internet banking between the three groups.Significant differences were identified between the groups explored. The resistance of the rejectors is much more intense and diverse than that of the opponents, while thepostponers show only slight resistance. The results also indicate that psychologicalbarriers are even higher determinants of resistance than usage and value, which areconstructs related to ease-of-use and usefulness determining acceptance in thetraditional technology acceptance model. Moreover, the findings highlight the role of self-efficacy in bank customers' risk perceptions to internet banking. This studyprovides further understanding of what inhibits internet banking adoption bycomparing three non-adopter groups with respect to their resistance to internetbanking. It also has implications for management in overcoming non-adopters'resistance to the innovation.

Routray (2008),

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location management andhandover management. In this paper we have suggested and evaluated a technologicalframework for the m-banking application using wireless ATM which optimizes thebandwidth usage and provides an effective handover management. Simulation resultsshow that the resultant framework is very effective in handling the bandwidth and thehandover issue in wireless ATM and provides an effective WATM framework model.

Malhotra, P. & Singh, B. (2007)

stated about this research tells us that the largerbanks, banks with younger age, private ownership, higher expenses for fixed assets,higher deposits and lower branch intensity evidence a higher probability of adoptionof this new technology. Banks with lower market share also see the Internet bankingtechnology as a means to increase the market share by attracting more and morecustomers through this new channel of delivery. Further, the adoption of Internetbanking by other banks increases the probability that a decision to adopt will be made.An understanding of the factors affecting this choice is essential both for economistsstudying the determinants of growth and for the creators and producers of suchtechnologies. From this perspective, understanding the factors determining theadoption of technology becomes highly relevant from the policy point of view.Moreover, the studies on the adoption of financial innovations are related todeveloped markets, e.g. US or European banking markets. Hence, this papercontributes to the empirical literature on diffusion of financial innovations,particularly Internet banking, in a developing country.

Shah & Braganza (2007),