Académique Documents
Professionnel Documents
Culture Documents
UNIVERSITY OF MUMBAI
HADKAR HOUSE, NR.PINTO CHAWL, MULGAON DONGRI, ANDHERI-KURLA ROAD, ANDHERI (E), MUMBAI - 400093.
PROJECT GUIDE: PROF. S KANNAN
SUBMISSION DATE:
ACKNOWLEDGEMENT
With great pleasure I would like to thank Prof. S. Kannan, of Tolani College of Commerce, for giving me the opportunity to do this project on INFROMATION TECHNOLOGY IN BANKING SECTOR. I would also like to thank her for being an inspiration in the completion of this project. He gave me his valuable advice and help without which this project would not have materialized.
CERTIFICATE
I, Prof. S Kannan, Tolani College of Commerce, hereby certify that Mr. Hadkar Dinesh Shrikant student of T. Y. Banking and Insurance, 5th Semester, has completed his project on _________________ in the academic year 2011 - 12. This information submitted is true and original copy to the best of my knowledge.
Signature
(Prof. S. Kannan)
DECLARATION
I, Mr. Hadkar Dinesh Shrikant, student of Tolani College of Commerce, T. Y. Banking and Insurance, 5th semester, hereby declare that I have completed this project on ________________ in the academic year 2011 - 12. This project submitted is true and original copy to the best of my knowledge.
SIGNATURE OF STUDENT
SUMMARY
Information technology has basically been used under two different avenues in banking. One is Communication and Connectivity and other is Business Process Reengineering. Information technology enables sophisticated product development, better market infrastructure, and implementation of reliable techniques for control of risks and helps the financial intermediaries to reach geographically distant and diversified markets. In view of this, technology has changed the contours of 3 major functions performed by a bank that is Access to liquidity, Transformation of assets and Monitoring of risks. Further, information technology and the communication networking systems have a crucial bearing on the efficiency of money, capital and foreign exchange markets. Information technology has benefited the banking sector to a significant extent so far and holds forth further potential. According to top officials in the banking sector, technology is the engine, which is driving the banking industry towards the path of growth.
CONTENTS NO. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14 REMARK INTRODUCTION ROLE OF EXPERTS SYSTEM IN BANKING CORE BANKING SOLUTIONS FUNCTIONAL OVERVIEW RETAIL BANKING CORPORATE BANKING TRADE FINANCE MOBILE BANKING REGULATORY AND SUPERVISORY ISSUES REGISTRATION OF CUSTOMERS FOR MOBILE SERVICES CLEARING AND SETTLEMENT FOR INTERBANK FUNDS TRANSFER TRANSACTION CUSTOMER COMPLAINTS AND GRIVANCE REDRESSAL MECHANISM LIST OF ABBREVIATIONS ANNEX: I. INTERNATIONAL EXPERIENCE II. TECHNOLOGY AND STANDARDS III. CUSTOMER PROTECTION ISSUES COMMON MODULES ROLE OF EXPERT SYSTEMS IN BANKS AUTOMATIC TELLER MACHINES
Page 6
18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33.
ELECTRONIC BANKING ELECTRONIC BANKING WORKS ELECTRONIC-BANKING FUNCTIONALLY SMART CARDS CREDIT CARD GOING GLOBAL DEBIT CARD TWO TYPES OF DEBIT CARDS DIFFERENCE BETWEEN DC AND CC ELECTRONIC WALLET ELECTRONIC COMMERCE INTERNET MERCHANT ACCOUNT INDIAN BANKS ON WEB MAIN CONCERNS IN INTERNET BANKING CONCLUSION BIBLIOGRAPHY
INTRODUCTION
Banks and financial institutions are the backbone of the economy of the country. Implementation of Information Technology and communication networking has brought revolution in the functioning of the banks and the financial institutions. For the sound implementation of Information Technology in banks and financial institutions, necessary legal support is a must. Legal issue relating to electronic transactions processing at banks is very much and there was a need to address them by amending some of the existing Acts and introduction to new act.
TOLANI COLLEGE OF COMMERCE Page 7
Necessary legislative support is essential to protect the interests as much of the customers as of the banks in several areas relating to electronic banking and payment system. This is specially required to establish the credibility of Electronic Clearing System and Electronic Funds Transfer schemes based on the electronic massage transfer.
Financial Institutions and Banks are continuously searching for new ways to use technology to deliver increasing number of products and services to their customers on one hand, on the other putting technology in use for problem solving and decision support. Expert system represent in the major areas that have found promising and strategic role in majority of the banks and financial institutions. Banks in the USA and Canada are developing or investing expert system for commercial applications although there are few known expert system currently in
TOLANI COLLEGE OF COMMERCE Page 8
use but the future will see emergence of expert system in to the computing environment of the corporate world. Expert system is a computer program designed to model the knowledge and experience of human experts. This expertise is the key ingredient used for solving complicated problems or assessing or evaluating a plan or proposal. Thus expert systems are well suited to services organizations. They can emulate the intricate through process of experts and make the expertise available to less performing the type of tasks of highly aid experts. Experts system does not replace people but assists them to be more effective typically they are advice giving or decision support systems. The finance domain can clearly benefit from the application of experts system technology. The benefits thus derived could be listed as follows: Increase in speed of complex task accomplishment. System reduced a 3-hour system configuration task to 15 minutes. Increased quantity Reduced errors Decrease personnel required Canons Optex camera lens designed system has made scarce highly skilled lens designers, 12 times more productive. Reduced cost Reduced training time Improved decisions
TOLANI COLLEGE OF COMMERCE Page 9
recent scalability audited by Ernst and young, core banking solution also emerged as one of the worlds most scalable core banking solution by achieving an unparallel performance of over 11,180 TPS (transaction per second) translating into 40 million transaction per hour.
FUNCTIONAL OVERVIEW
Core banking solution offers comprehensive retail, corporate and trade finance features-all in a highly secure and reliable environment.
RETAIL BANKING
Core banking solution supports product management and account management for the full range of retail banking products such as savings,
current/checking, overdraft, revolving overdraft, term deposits and all types of retail loans [personal loans, auto loans and mortgages].
CORPORATE BANKING
Core banking solution provides comprehensive product management and account management for corporate banking products such as commercial loans, syndications [participation], securitization, term loans, demand loans, overdrafts, non performing asset management, limit management, debt consolidation through replacements, collateral management, interest rate management and loan modeling.
TRADE FINANCE
Core banking solution offers powerful trade finance features covering business areas like bills (foreign and inland), documentary credits/letter credit, preshipment credits, bank guarantees, forward contracts and foreign remittances among others.
MOBILE BANKING
Mobile phones as a delivery channel for extending banking services have off-late been attaining greater significance. The rapid growth in users and wider coverage of mobile phone networks have made this channel an important platform for extending banking services to customers. With the rapid growth in the number of mobile phone subscribers in India (about 261 million as at the end of March 2008 and growing at about 8 million a month), banks have been exploring the feasibility of using mobile phones as an alternative channel of delivery of banking services. Some banks have started offering information based services like balance enquiry, stop payment instruction of cheques, transactions enquiry, location of the nearest ATM/branch etc. Acceptance of transfer of funds instruction for credit to
TOLANI COLLEGE OF COMMERCE Page 12
beneficiaries of same/or another bank in favor of pre-registered beneficiaries have also commenced in a few banks. In order to ensure a level playing field and considering that the technology is relatively new, Reserve Bank has brought out a set of operating guidelines for adoption by banks. For the purpose of these Guidelines, mobile banking transactions is undertaking banking transactions using mobile phones by bank customers that involve credit/debit to their accounts. It also covers accessing the bank accounts by customers for non-monetary transactions like balance enquiry etc.
6. The RBI guidelines on Know Your Customer (KYC) and Anti Money Laundering (AML) as prescribed by RBI from time to time would be would be applicable to customers opting for mobile based banking service.
The technology used for mobile payments must be secure and should ensure confidentiality, integrity, authenticity and non-repudiability.
2. The Information Security Policy of the banks may be suitably updated and enforced to take care of the security controls required specially for mobile phone based delivery channel.
INTER-OPERABILITY
1.
When a bank offers mobile payments service, it may be ensured that customers having mobile phones of any network operator should be in a position to request for service. Restriction, if any, to the customers of particular mobile operator(s) may be only during the pilot phase.
2.
To ensure inter-operability between banks and between their mobile payments service providers, it is recommended that banks may adopt the message formats being developed by Mobile Payments Forum of India (MPFI). Message formats such as ISO 8583 , which is already being used by banks for switching of ATM transactions , may be suitably adapted for communication between switches where the source and destination are credit card/ debit cards/pre-paid cards.
The long term goal of mobile payment framework in India would be to enable funds transfer from account in one bank to any other account in the same or any other bank on a real time basis irrespective of mobile network a customer has subscribed to. This would require inter-operability between mobile payments service providers and banks and development of a host of message formats. Banks may keep this objective while developing solution or entering into arrangements with mobile payments solution providers.
banks who have already started offering mobile payment service may review the position and comply to these guidelines within a period of three months from issuance of these guidelines.
LIST OF ABBREVIATIONS
AML CDMA GPRS GSM IDS IRDA ISO IVR KYC MNO MPIN MPFI NFC OTP PCI-DSS PIN RFID SIM SMS USSD Anti Money Laundering Code Division Multiple Access General Packet Radio Service Global System for Mobile Intruder Detection System Infrared Data Association International Standards Organization Integrated Voice Response Know Your Customer Mobile Network Operator Mobile Personal Identification Number Mobile Payment Forum of India Near Field communication. One Time Password Payment Card Industry Data Security Standard Personal Identification Number Radio Frequency Identification Subscriber Identity Module Short Messaging Service Unstructured Supplementary Service Data
available, they refer to the practices available rather than regulatory guidelines. Efforts to collect specific regulatory guidelines, from a few countries where person to person remittance through mobile channel has been implemented, have not been a success. Mobile payment framework in most countries is covered under the General Electronic Banking Guidelines. However, on the website of Consultative Group for Assisting the Poor(CGAP), there are several discussion papers on mobile payments. Examples of Kenya, Philippines, South Africa and Tanzania have been described in great detail. In these countries, cash-in and cash-out for the purpose of remittance is permitted to be done by the distributors of mobile companies. State Bank of Pakistan has also placed a 'Draft policy paper on Regulatory Framework for Mobile Payments in Pakistan' on their website for public comments.
based, IVR, voice, etc) and non MNO based proximity or contactless channels (IRDA, RFID, Optical, NFC, etc) and these various mobile channels offer various degrees of security and interaction capability. While the objective of the RBI is to have a fully functional digital certificate based inquiry/transaction capabilities to ensure the authenticity and non-repudiability, given the complexities involved in getting this through all the channels and given the need for enabling mobile payments to facilitate financial inclusion objectives, it is suggested that the banks evaluate each of these channels in terms of security and risks involved and offer appropriate services and transactions. Banks are also advised to provide appropriate risk mitigation measures like transaction limit (per transaction, daily, weekly, monthly), transaction velocity limit, fraud checks, AML checks etc. per channel depending on the nature of the security features, risk perception by the bank offering the services and interaction capabilities. It is suggested that the banks issue a new mobile pin (mPIN). To facilitate the mobile payments mPIN may be issued and authenticated by the bank or by a mobile payment application service provider appointed by the bank. Banks and the various service providers involved in the m-banking should comply with the following security principles and practices with respect to mPIN : a) Implement a minimum of 4 digit customer mPIN (6 digit mPIN may be the desirablegoal) b) Protect the mPIN using end to end encryption c) Do not allow the mPIN to be in clear text anywhere in the network or the system
TOLANI COLLEGE OF COMMERCE Page 20
d) Authenticate the mPIN in tamper-resistant hardware such as HSM (hardware security modules) e) Store the PIN in a secure environment f) In case of offline authentication, the banks should ensure that a proper process is put in place to positively identify the customer the first time when the service is being enabled. An offline PIN may be used as the authentication parameter with security levels being as strong as in the case of online authentication. The bank may choose to issue its own offline PIN or adopt a customer-defined PIN. g) A second factor of authentication may be built-in for additional security and as such the second factor can be of the choosing of the bank All transactions that affect an account (those that result in to an account being debited or credited, including scheduling of such activity, stop payments, etc) should be allowed only after authentication of the mobile number and the mPIN associated with it in case of MNO based payment service. In case of Non-MNO based mobile proximity payment, specific static or dynamic identifier should be used as second factor authentication along with mPIN.. Two factor authentication may be adopted even for transactions of information nature such as balance enquiry, mini statements, registered payee details. , Proper system of verification of the mobile phone number should be implemented, wherever possible. This is to guard against spoofing of the phone numbers as mobile phones would be used as the second factor authentication. It may also be
suggested but not mandatory, that either card number or OTP (one time passwords) be used as the second factor authentication rather than the phone number. Proper level of encryption should be implemented for communicating from the mobile handset to the banks server or the server of the mobile payments service provider, if any. Proper security levels should be maintained for transmission of information between the bank and the mobile payments service provider. The following guidelines with respect to network and system security should be adhered to: a) Use strong encryption for protecting the sensitive and confidential information of bank and customers in transit
b) Implement application level encryption over network and transport layer encryption wherever possible.
c) Establish proper firewalls, intruder detection systems ( IDS), data file and system integrity checking, surveillance and incident response procedures and containment procedures.
d) Conduct periodic risk management analysis, security vulnerability assessment of the application and network etc at least once in a year.
e) Maintain proper and full documentation of security practices, guidelines, methods and procedures used in mobile payments and payment systems and keep them up to date based on the periodic risk management, analysis and vulnerability assessment
TOLANI COLLEGE OF COMMERCE Page 22
carried
out.
f) Implement appropriate physical security measures to protect the system gateways, network equipments, servers, host computers, and other hardware/software used from unauthorized access and tampering. The Data Centre of the Bank and Service Providers should have proper wired and wireless data network protection mechanisms. The dependence of banks on mobile payments service providers may place knowledge of bank systems and customers in a public domain. Mobile payment system may also make the banks dependent on small firms ( i.e mobile payment service providers) with high employee turnover. It is therefore imperative that sensitive customer data, and security and integrity of transactions are protected. It is necessary that the mobile payments servers at the banks end or at the mobile payments service providers end, if any, should be certified appropriately, say through a PCI DSS certification or in compliance with each participant banks security guidelines. In addition, banks should conduct regular information security audits on the mobile payments systems to ensure complete security. Further, if a mobile payments service provider aggregates and processes transaction, including verification of mPINs, additional security measures such as a Hardware Security Module (HSM) must be deployed over and above link encryption to ensure that mPIN data is protected adequately. It is recommended that for channels such as WAP and WEB which do not contain the phone number as identity, a separate login ID and password be provided as distinct from the internet banking either by bank or the payment service provider. It is recommended that Internet Banking login ids and passwords may not be allowed to be used through the mobile phones. Allowing Internet banking login id
TOLANI COLLEGE OF COMMERCE Page 23
and password usage on the mobile phone may compromise their usage on the Internet banking channel. This restriction may be communicated to the customers while offering mobile payments service. However, Internet Banking login ids and passwords can allowed to be used through the mobile phones provided a) https connectivity through GPRS is used and b) end to end encryption of the password and customer sensitive information happens. Plain text SMS is the simplest form of communication through mobile phones, but is vulnerable to tampering. As long as there is a second level of check on the details of the transaction so as to guard against data tampering this mode of communication can be used for financial messages of micro payment transactions (say about rupees One thousand five hundred) and repetitive utility bill payment transactions (say not exceeding rupees two thousand five hundred).
reputation of the prospective customer. Therefore, even though request for opening a savings / current account can be accepted over Mobile Telecommunication, these should be opened only after proper introduction and physical verification of the identity of the customer using prevalent KYC norms. From a legal perspective, security procedure adopted by banks for authenticating users needs to be recognized by law as a substitute for signature. In India, the Information Technology Act, 2000, provides for a particular technology as a means of authenticating electronic record. Any other method used by banks for authentication should be recognized as a source of legal risk. Customers must be made aware of the said legal risk prior to sign up. Under the present regime there is an obligation on banks to maintain secrecy and confidentiality of customers accounts. In the mobile payments scenario, the risk of banks not meeting the above obligation is high on account of several factors. Despite all reasonable precautions, banks may be exposed to enhanced risk of liability to customers on account of breach of secrecy, denial of service etc., because of hacking/ other technological failures. The banks should, therefore, institute adequate risk control measures to manage such risks. As in an Internet banking scenario, in the mobile payments scenario too, there is very limited or no stop-payment privileges for mobile payments transactions since it becomes impossible for the banks to stop payment in spite of receipt of stop payment instruction as the transactions are completely instantaneous and are incapable of being reversed. Hence, banks offering mobile payments should clearly notify the customers the timeframe and the circumstances in which any stoppayment instructions could be accepted.
TOLANI COLLEGE OF COMMERCE Page 25
The Consumer Protection Act, 1986 defines the rights of consumers in India and is applicable to banking services as well. Currently, the rights and liabilities of customers availing of mobile payments services are being determined by bilateral agreements between the banks and customers. Considering the banking practice and rights enjoyed by customers in traditional banking, banks liability to the customers on account of unauthorized transfer through hacking, denial of service on account of technological failure etc. needs to be assessed and banks providing Mobile payments should consider insuring themselves against such risks, as is the case with Internet Banking. Bilateral contracts between the payee and payees bank, the participating banks and service provider and the banks themselves will form the legal basis for mobile transactions. The rights and obligations of each party must be clearly defined and should be valid in a court of law. It is likely that there will be two sets of contracts; one would be a commercial contract between service providers and the second, a contract between the customer and the bank, to provide a particular service/ s. At all time, legal obligations of each party must be made clear through these contracts. Banks must make mandatory disclosures of risks, responsibilities and liabilities of the customers in doing business through Mobile phone, through a disclosure template on their websites and/or through printed material. The existing mechanism for handling customer complaints / grievances may be used for mobile payment transactions as well. However, the technology is relatively new, banks offering mobile payment service should set up a help desk and make the details of the help desk and escalation procedure for lodging the
complaints, if any public on their websites. Such details should also be made available to the customer at the time of sign up. In cases where the customer files a complaint with the bank disputing a transaction, it would be the responsibility of the service providing bank, to address the customer grievance. Banks may formulate chargeback procedures for addressing such customer grievances. Banks may also consider covering the risks arising out of fraudulent/disputed transactions through appropriate insurance schemes. The jurisdiction of legal settlement would be within India.
COMMON MODULES
Core banking solutions offers extensive common modules which include support for clearing (including electronic and RTGS), standing instructions, general ledger, signature display and management, document tracking, limits and collateral management, delinquency management and the whole range of day to day and year end reports. Core banking solution has the capability of interfacing with various payment gateways, anti money laundering solutions, regulatory reporting systems, statements management and distribution systems and consolidation packages.
and decision support. Expert system represent in the major areas that have found promising and strategic role in majority of the banks and financial institutions. Banks in the USA and CANADA are actively developing or investing expert system for commercial applications although there are few known expert system currently in use but the future will see emergence of expert system in to the computing environment of the corporate world. Expert system is a computer program designed to model the knowledge and experience of human experts. This expertise is the key ingredient used for solving complicated problems or assessing or evaluating a plan or proposal. Thus expert systems are well suited to service organization. They can emulate the intricate through process of experts and make the expertise available to less performing the type of task of highly aid experts. Experts system does not replace people but assist them to be more effective typically they are advice giving or decision support system.
E-CHEQUE SYSTEM
A Cheque is a signed paper document that orders the signers bank to pay an amount of money to a person specified in the cheque or a bearer from the signers account on or after a specified date. Cheque has the advantage that payers (drawer)
TOLANI COLLEGE OF COMMERCE Page 28
and payees can be individuals, small businesses, brokerages, corporations, governments or almost any other type of organization. They pass directly from the payer to the payee, so that the timing and the purpose of the payment are clear to the payee. While cheques are usually very simple, business cheques can require multiple signatures and can be accompanied by list of invoices been paid. The payee can deposit a cheque in an account of his choice or cash it. Banks operate extensive facilities to accept cheque for deposit, process them initially and clear and settle between banks. The electronic cheque, or e-cheque based on the idea that electronic documents can be substituted for paper and public key cryptographic signatures can be substituted for handwritten signatures. There fore the e-cheques can replace paper cheques without the need to create a new payment instrument, along with the commercial practice changes that a new payment instrument would imply. Instead the e-cheque is designed to fit into current cheque practices and systems with minimum impact on payers, payees, banks and the financial systems. The payer writes an e-cheque by structuring an electronic document with the information legally required to be in a cheque and cryptographically signs it. The payee receives the e-cheque, verifies the payers signature, writes out a deposit, and signs the deposit. The payees bank verifies the payers and payees signature, credits the payees account forward the cheque for clearing and settlement. This credit will not be a clear credit; it will be a float or temporary credit, to be confirmed only after it has been cleared by the paying bank, in the settlement process. The payers bank verifies the payers signature and debits the payers account. The advantage of e-cheque is that cryptographic signatures on every e-cheque can be verified at all points, while in paper cheques handwritten signatures are rarely verified.
The electronic cheque is designed to perform the payment and other financial functions of paper cheques, by using cryptographic signatures and secure messaging over the Internet. The electronic cheque system is designed with message integrity, authentication and non-repudiation properties sufficient to prevent fraud against their banks and their customers. It is compatible with either interactive web transactions or with electronic mail. Since the electronic cheque does not depend on real-time interactions or on third party authorizations, electronic cheques are better able to survive outages of network links and computing nodes. The result is highly efficient electronic payments system, with a technology base that is extensible to a variety of financial instruments and other high integrity document processing applications needed by the financial industry.
ATM is a device; that allows customers who have an ATM card to perform routine banking transactions without interacting with a human teller. ATMs are currently becoming popular in India that enables the customer to withdraw their money 24 hours a day, 7 days in a week. The simplest ATM allows a customer to withdraw cash up to specified amount by operating the machine via a magnetic card to a host computer. Updating of operations can be either off-line or on-line. In addition to cash withdraws, ATMs can handle deposits and enquiries, arrange loans and insurance, arrange the buying and selling of stocks and customers on different savings and investment schemes. Terminals can be special task terminals such as cash deposit terminal or statement printer terminal or full function terminals which can perform all the tasks. An ATM is operated through the customers magnetic card. A personal identification code allotted to a customer is magnetically needed by the ATM.
TOLANI COLLEGE OF COMMERCE Page 31
When this identity is established, he is allowed to carry out the operations. Generally 3 tracks are used for transaction processing: Track 1 for account code any bank code Track 2 for credit card (shop centers) Track 3 for debit cards purchaser/ATM card) In the case of cash deposits, ATMs can issue a receipt to the customer acknowledgement receipt of the cash. Cash withdraws can be made only in specified denominations. An ATM could handle as many 5000 cash transactions without needing replenishment of notes or journal paper.
ATMs also called 24-hours tellers are electronic terminals which gives consumer the opportunity to bank at almost any time, like withdraw cash, make deposits or transfer funds accounts, a personal identification number. Some ATM charge a usage fee for these services, with a higher fee for consumer, who has an account at their institution. If a fee is charged, it must be revealed on the terminal screen or on a sign next to the screen. In addition to cash with drawls, ATMs can handle deposits and enquiries, arrange loans and insurance and arrange the buying and selling of stocks and advice customers on different savings and investment schemes. The invention of the Automated Teller Machines or ATMs have made banking more convenient as people would not have to go inside the bank and wait for tellers to help them. In addition to this, people can also access these ATMs all day long and they are located in various locations such as the mall or parks, which saves time since people would not have to go to the bank incase they run out of cash. However, using these machines has some risks. People who use them are not
TOLANI COLLEGE OF COMMERCE Page 33
given the same security they would usually get when they are inside a bank. Fortunately, there are some steps people can take which can give them a certain level of security as they withdraw their hard earned money.
ELECTRONIC BANKING
The growth of internet and e-commerce is dramatically changing everyday life with the world-wide-web and e-commerce transforming the world into a digital global village. Customers and users have become netizen, and these are people who expect every thing to happen at the click of the mouse. In this new digital marketplace banks and financial institutions are not lagging behind and have started providing service electronically over the Internet. These types of service provided by the banks on Internet, called e-banking, lower the transaction cost, add value to the banking relationship and empower customers. The study investigated the response of the bank customers regarding the working of e-banking as compared to manual banking system. Electronic Banking is an integrated Internet Banking that empowers the financial organization to extend the existing bouquet of services and process in to the Internet age. E-Banking presents a single face to the customer by consolidating multiple services on to a common platform, thus doing away with the need to maintain diverse online applications. E-Banking is the result of systematic analysis of the business and technology needs of financial institution and has evolved in to a truly global institutions in providing a secure online platform, capable of integrating with multiple back end process systems.
E-Banking utilizes a Single Platform Multiple-Components framework and comes packaged with a ready suite of web components for servicing banking needs across.
seamlessly interface with multiple back office systems and enable banks to offer single point access to various products and services.
ELECTRONIC-BANKING FUNCTIONALLY
E-Banking the Internet Banking solution empowers financial institutions to address complex challenges through a ready suite of web applications in various banking areas.
Corporate: International and domestic fund transfers, account transfers Trade finance; Documentary credits/Letters of credit, bank guarantees Cash management: single/bulk payments, collections, cash pooling Forex requests
Retail:Electronic bill presentment and payments (EBPP): Bill reception, Bill payments (online and scheduled)
Loan: Application and status monitoring Account services: Cheque book request, card re-issue request
Information services: Customer statements Alerts News Reports These powerful business services are designed to meet the requirements of any virtual bank. E-Banking provides a comprehensive set of functionality that enables financial institutions to deliver to their customers, products and services that traditionally were only available by visiting the branch in person. E-Banking has been developed on point and click Internet standard, which relieves the bank from the process of client training and frees the bank resources to do what they do best.
SMART CARDS
It is a standard plastic card, except that it contains a micro processor and a storage unit. It can hold a lot of information about the card holder, including digital certificates. It can be used in all banking transactions. It can also be used as an Electronic Purse in to which monetary value has been loaded. Bank of America [5] has recently launched a new security and encryption process for corporate clients who use WANDA electronic service to transfer funds, initiate payments and manage global accounts. The smart card given to WANDA users offers encryption and authentication capabilities. Full range of cash management and foreign exchange services are available over the Net to corporate users through the use of smart cards. Smart Card sometimes called stored-value, have a specific amount of credit embedded electronically in the card. A credit card with a built in microprocessor and memory use for identification or financial transaction. When inserted into a reader, it transfers data to and from a central computer. It is more secure than a magnetic stripe card and can be programmed to self-destruct if the wrong password is entered too many times. As a financial transaction card, it can be loaded with digital money and used like a travelers cheque, except that variable amounts of money can be spent until the balance is zero. These cards make the transaction fast, easy and convenient.
CREDIT CARD
Credit is a privilege and a convenience. Credit lets you charge a meal on a credit card, pay for an appliance on an installment plan, and take out a loan to buy a house, or pay for schooling. Credit allows you to make a purchase without ready cash. A credit card enables you to buy things now and pay for them later. You get credit by promising to pay in the future for something you receive in the present. Credit usually costs something, and what is borrowed must be paid back. Credit can be defined as a small plastic card that allows its holder to buy goods and services on credit to pay at fixed intervals through the cards issuing agency. Carrying a lot of cash on you can be cumbersome, risky and sometimes, you run short of it, just when you most need it. Credit card is the smart solution to these problems. It is a convenient and safe alternative for cash. Besides, it says things about you. Most people associate a credit card with a prestige, which it most certainly bestows on you, but more importantly, it says that you have taken the onus of being responsible-to be extended credit! So During
TOLANI COLLEGE OF COMMERCE Page 39
1914, oil companies in the USA issued the first credit card to their customers to purchase gas, oil, accessories, etc at the gas stations. Thereafter, local department stores, airlines and railway companies also started issuing their own credit cards.
Emergency help:
blanket. They can get you through nearly any emergency situation.
Easier budgeting: With a credit card, you can make purchases and pay
them off on a schedule that fits your budget. Credit cards also allow you to take advantages of sales and special offers.
Security: if you lose cash, it can be used by anyone. If you lose a credit
card and report the loss to the cards issuer before it is used, the issuer cannot hold you responsible for any responsible for any unauthorized charges. If a thief uses your card before you report it missing, the most you will owe is $50.
Travel expenses: youll find that a credit card is almost essential for
renting a car, purchasing an airplane ticket, or booking a hotel room. Whether youre across town or on another continent, a credit card is the universal guarantee of your good financial standing. And if you need cash, you can get it at ATMs or bank around the World that accepts your credit card.
TOLANI COLLEGE OF COMMERCE Page 40
DRAWBACKS Greed: Just because you have credit being extended to you doesnt mean
that you should go on a rampage! Use your card with discretion and caution. Remember, it is an extremely expensive way to borrow money! View it as a convenient and safe way to carry cash, a timely help in an emergency or taking advantage of an opportunity that you would have otherwise lost out on, like an investment!
Tendency to overspend.
Cardholder responsible for loss and misuse of his card till after 24 hours of reporting loss. Might lead to profligacy which ends up in huge debts.
GOING GLOBAL
A credit card which can be used to pay for products and services worldwidea global card- makes travel abroad, whether on business or vacation, a pleasure. There is no need to carry travelers cheques or foreign currency any more. Guidelines recently introduced in India allow institutions to issue a single credit card that can be used to pay for products and services all over the world (over 200 countries at present) and to settle the accounts in Indian rupees. This is a vast improvement over the previous system which allowed a few select cardholders to repay the outstanding amount in dollars only, while the regular credit cards were valid additionally only in NEPAL and BHUTAN. However, the use of global cards is still governed by RBI guidelines on Foreign Exchange permitted for official and personal trips. These rules remain the
TOLANI COLLEGE OF COMMERCE Page 41
same irrespective of whether you choose to pay by travelers cheques, cash or the new global credit cards.
DEBIT CARD
Debit cards are also known as check cards. Debit cards look like credit cards or ATM (automated teller machine) cards, but operate like cash or personal cheques. Debit cards are different from credit cards. While a credit card is a way to pay later, an debit card is a way to pay now. When you use a debit card, your money is quickly deducted from your checking or savings account. Debit cards are accepted at many locations, including grocery stores, retail stores, gasoline stations, and restaurants. You can use your card any where merchants display your cards brand name or logo. They offer an alternative to carrying a chequebook or cash.
Debit card
Credit card
(automated teller machine) cards which work the same as they would in an ATM transaction. It is an immediate electronic transfer of money from your bank account to the merchants bank account. To access your account at a store terminal, you must punch in your personal identification number (PIN), as you would at an ATM. The system checks your account to see if it has enough money available to cover the transaction.
and resemble a credit card transaction. The merchants terminal reads your card, identifies it as a debit rather than a credit card and creates a debit against your bank account. However, instead of debiting your account immediately, it stores the debit for processing laterusually within 2-3 days.
Most, but not all, transactions are verified to see if there are adequate funds. Instead, of using a PIN number, the customer must sign a receipt, as he or she would be with a credit card. The On-Line and Off-Line distinction may not matter to you unless: Your financial institution charges transactions or monthly fees. You prefer the security of a PIN required transaction.
ELECTRONIC WALLET
With the growth of banking business on internet, new electronic payment methods are evolving. As the new payment methods are evolving quite rapidly, it is becoming highly difficult for the end user to manage his payment instruments. Internet wallet helps the user in managing his payment instruments. A number of electronic commerce applications allow end-users to purchase goods and services using electronic wallets. The importance of internet wallets is growing as buyers shift their purchases to the internet. Wallets benefit each participant of an online transaction. The core function is to enable consumers (business or individual) to pay online more conveniently and accurately than is otherwise possible. This is done by storing the users payment instruments
TOLANI COLLEGE OF COMMERCE Page 47
(typically e-cheques, credit or debit card, addresses, etc.) securely within the wallet for easy use. In addition, they can also provide transaction management for users. In response to the needs of the electronic commerce community, the Electronic Wallet (EW) has been developed to support nearly unlimited variety of payment mechanisms, protocols, and electronic commerce operations for secure online banking transactions. Once a user decides to make an online purchase, EW guides the user through the transactions by helping him to choose a payment method and hide the complexity of how the payment is executed. EW developed using the java programming language, and runs on any computer platform, realizing the java credo write once, run anywhere. EW is extensible, providing a framework into which new payment methods can be integrated easily. It provides an easy-to-use graphical user interface to add new payment methods. EW works with popular web browsers and holds payment card accounts and digital certificates. It is robust and easy to use, reducing support costs and increasing customer satisfaction. It makes web shopping more convenient for consumers and much more efficient for merchants and financial institutions.
FEATURES
Works with all popular web browsers (which support JAWA 2.0). Allows consumers to make purchases on the web quickly, conveniently, and with greater security. Features an easy-to-use graphical user interface. Supports multiple users with protected individual accounts. Supports multiple payment types and brands. Provides for easy installation of new payment protocols. Supports electronic commerce modeling language, a standard defined for maintaining user information such as his billing and shipping addresses.
ELECTRONIC COMMERCE
Electronic commerce, commonly knows as e-commerce or e-commerce, consists of the buying and selling of products or services over electronic systems such as internet and other computer networks. The amount of trade conducted electronically has grown dramatically since the wide introduction of the internet. A wide variety of commerce is conducted in this way, including things such as electronic funds transfer, supply chain management; e-marketing, online transaction processing, electronic data interchange (EDI), automated inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at some point in the transactions lifecycle, although it can encompass a wider range of technologies such as e-mail as well. A small percentage of electronic commerce is conducted entirely electronically for virtual items such as access to premium content on website, but most e-commerce eventually involves physical items and their transportation in at least some way. E-commerce is generally considered to be the sales aspect of e-business.
merchant/business like your self cant wait indefinitely until they receive the proceeds from sales. Therefore banks (for a fee) take on the responsibility of collection and transfer of funds to your account. This is the function of an Internet Merchant Account.
institutions rated security as the most important issue of online banking. There is a dual requirement to protect customers privacy and protect against fraud. Banking securely: Online Banking via the World Wide Web provides an overview of internet commerce and how one company handles secure Banking for its Financial Institution clients and their customers. A multi layered security architecture comprising firewalls, filtering routers, encryption and digital certification ensures that your account information is protected from unauthorized access: Firewalls and filtering routers ensures that only the legitimate Internet users are allowed to access the system. Encryption techniques used by the Bank (including the sophisticated public key encryption) would ensure that privacy of data flowing between the browser and the infinity system is protected. Digital certification procedures provide the assurance that the data you receive is from the infinity system.
CONCLUSION
On the basis of the above survey we can conclude that as an Indian scenario on the basis of a sample of these 60 participants or members we can conclude that the Indian customers as compared to the western trend do not relay more on the innovative services through electronic medium or we can say services related to Banking and IT. But the trend shows that as and when these kind of services are getting more and more popular, they are gradually being accepted by the Indian customers who otherwise do not prefer to use extra services with a myth of paying more or some say its hard getting adjusted with new changes so they prefer to go on with t e same trends for years but the coming generation is surely not going to accept the same trends. Now a day we see more and more teenagers using Debit Cards thus making them more popular as it is a kind of card which will offer services only till you have balance in your Bank account So finally I would like to conclude that in India, as a developing economy these kinds of innovative IT and Banking Services will be welcomed by more and more people, they get educated about the new products and their utilities. The IT and Banking products which are expected to hit the Indian market in the coming years, are like Advanced Core Banking Solutions, Centralized Data Monitoring System (partly existing), Storage Area Management, Innovative Software for Banking assistance and security, etc and as far as customers are concerned products like payments through mobile phones, any where and everywhere Banking, and other customer friendly services.
BIBLIOGRAPHY
ROLE OF INFORMATION SYSTEM IN INDIAN BANKING BANK QUEST-MAGAZINE INDIAN BANKING INDUSTRY AND INFORMATION TECHNOLOGY