Key Concepts Of Electronic Banking

Convenience way of operating banking transactions: Online banking is a highly profitable channel for financial institutions. It provides customers convenience and elasticity and can be provided at a lower cost than traditional branch banking (Williamson, 2006). The convenience of online banking is helping people gain greater control of their finances and contributing to changing patterns in cash withdrawal and day to day money management. (Beer, 2006)

As their name suggests, they only execute their operations online. Customers can only be in contact with their money over the internet since they do not have any physical branches. Because online-only banks require lower overhead costs, they have the capability to offer more free services and higher interest rates compared to a traditional bank. Online banking provides many customers the convenience of handling their business at any physical location as long as they have access to internet. This is possible because of the variety of services that online banks provide despite limiting interaction to only the internet. Some of their services include applying for loans online, transferring funds and paying bills online. While the convenience of being able to access banking through the internet is worthwhile, there are limits to it. For example, making large deposits to the bank is limited and can only be made through the mail, they don’t service cashier checks for transactions, and withdrawing money from the account is very inconvenient. Luckily, the role of the internet in financial transactions is becoming increasingly prominent so that spending money online is more accessible, but it is important to understand both the benefits as well as restraints of online banking. Nowadays, many large brick-and-mortar banks have caught on and provide some online services in attempts to

Banks that offer financial products and services through the Internet must be able to meet their customers’ expectations. Banks must also ensure they have the right product mix and capacity to deliver accurate, timely, and reliable services to develop a high level of confidence in the customers. Customers who do business over the Internet are likely to have little tolerance for errors or omissions from financial institutions that do not have sophisticated internal controls to manage their Internet banking business. Likewise, customers will expect continuous availability of the product and Web pages that are easy to navigate.

By the mid 1990’s most of the major banks now offered online Bill Pay to all of its customers for a small monthly fee (6). By this time, online banking has begun to grow rapidly, along with the concerns for customer security. Like with many changing technologies, many customers of online banking become skeptical of how well the technology could protect them. With growing concerns from customers, banks began increasing their security with online accounts (7).

The use, acceptance, adoption and application of internet technology to businesses to boast their performances are not something new. Saffu et al., (2008), states that there has been a significant increase in the use and application of e-commerce in businesses in the past decade. E-commerce has benefits such as reduction in costs, increased business opportunities, reduced lead time and providing more personalized service to the customers (Turban et al., 2008). Internet banking or e-banking is one of the many tools of e-commerce adopted by the banking industry. Tools of information technology such as internet banking have significantly improved the quality of services offered by the banking

Although, electronic banking provides many opportunities for the banks, it is also the case that the current banking services provided through internet are limited due to security concerns, complexity and technological problems (Sathye, 1999 & Mols, 1999). According to Financial Services Authority (FSA) 2010, banks face several risks but notably are; Safety situations around ATMs, abuse of bank cards by fraudsters at ATMs and the danger of giving your card number when buying on line. Security risk is a major source of concern for both customer and the bank. Since E- banking services are offered using network, it is exposed to risk environments hence leading to security breaches. The consequences of security threats are potential financial, legal and reputational implications.

Electronic commerce, commonly known as e-commerce, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. (Seybold, 2001)

The Online banking and financial services have revolutionised the consumer and corporate banking industry in the last few decades or so by giving customers the power to conduct their banking anytime, anywhere and without all kinds of paperwork and branch visits. This has been possible with the help of massive investments in information technology, systems and communication infrastructure linking the banking industry network with their universe of customers. This empowerment has also given the financial services industry a platform to create financial products with which to woo the marketplace to grow market share, revenue and profits at rates not seen

Regardless of the large distribution of customer internet banking in various countries to date, banks look for more develop market. Now, market trends expansion are tentative. For example, customer insist of internet banking services in North America stuck in 2005, probably because of amplified security concerns related to increasing deceit character,

Due to the nature of the online environment it is difficult for banks to build trust and relationships with their customers. The Internet is extremely impersonal due to its global audience, the bricks and mortar location of the local branch with a smiling advisor is much more inviting in comparison to a cold lifeless computer screen. Also the learning process involved in using e-banking can be daunting, customers must invest their time and effort into learning more to use and navigate their way around the sites. Internet banking can also be time consuming to set up and registration numbers and access codes can be misplaced, stolen or forgotten. Although

* Has created new financial needs that in many cases cannot be effectively fulfilled by the traditional payment systems. * Variety of payment cards * Micropayments * Online cash storage * Electronic Cash Systems * Internet Technologies and the Banking Industry

In this 21st century the Internet has made revolutionary impact on all aspects of human life. Out of all, banking operations have greater impact of ICT on its day-today happenings. An e-cash payment system is one of the evidence of impact of internet and information Communication technology jargons. In this process a consumer/client opens an account with the banking organization or other which could give and receive money in the digital coins form. In the case client 's account is deposited in the form of real money, as it is attached to the client 's checking account in reality.

Internet banking products and services can include wholesale products for corporate customers as well as retail and fiduciary products for consumers. Ultimately, the products and services obtained through Internet banking may mirror products and services offered through other bank delivery channels.

(Joseph; Stone, 2003) have said that the internet deals with a huge number of various financial transactions like customer payments, securities transactions applications for insurance acquisitions or loans. The result of the intention of the internet is to be an open network which means a high security risks are implicated with financial transactions. Today, different techniques and standards are presented in order to control these risks. Basic requirements are as follows: customer and financial institution have to trust each other; private data have to be encoded. No third party can be able to quickly get access to the private information such as financial transactions; It necessary to be guaranteed that the receiver and the sender have the same intentions. Gautam and Khare (2014) also reference about security issues in online banking by saying “Security violation can be categorized as Violation with serious criminal intention, Violation by 'casual hackers ' or Flaws in systems design and/ or set up leading to a security violation. E-banking system users still face the security risks with unauthorized access” (Gautam and Khare, 2014). (Mohammad, 2008) has a study about the emerging gap between banks’ expectations (or at least what their written customer policy agreements imply) and users’ actions related to the security requirements of online banking, the study discussed the issue about using online banking

According to BBA (2014), if Alvin Toffler, author of the renowned “Future Shock”, was to have examined the evolution of banking services in the last decade, even he would have fallen far short in terms of his forecast of customer delight in the present era of online banking. When Toffler wrote his bestseller there were no credit cards, direct debits or unsecured personal loans. The only way to withdraw your money from the bank was to write cheques and spend time in long queues at the bank branches.