Page 28 - Banking Finance December 2016

ARTICLE

banks have been very reluctant to provide their customers
with banking via Internet due to security concerns.

However, advances in networking technology have enabled
banks to streamline their transactions with customers
through the electronic exchange of information. Now, banks
are taking steps to expand the use of networking technology
in their all business operations. Now a day,s banks have started
using Internet to deliver traditional banking products in more
efficient ways. Some banks have taken the further step of
developing new products designed specifically to facilitate e-
commerce participation by their customers.

E-commerce is creating new forms of competition and com- many parts of finance, the emergence of new banking insti-
pelling the banks to make choices about the services they tutions and basic economic restructuring. Given these envi-
offer, the size of their branch networks, regulatory issues and ronmental changes, banks are reassessing their cost and
the extent of their support for interbank payment networks. profit structures. Now a days all banks promoting e-bank-
Indian banks have been very successful in adopting EC and ing in a big way. The first reason is because of the improved
EDI technologies to provide customer with real time account security and encryption methods developed on the Internet.
status, transfer of funds between accounts, account opening. The second reason is that banks do not want to lose a po-
tential market share to the banks that are quick to offer
Banking as a business can be sub-divided into their services on the Internet. Almost all the banks like SBI,
five types - ICICI, HDFC, IndusInd, IDBI, Citibank and UTI are offering
i) Retail (Domestic) E-banking services.
ii) Corporate (Domestic)
Banks have established an Internet presence with various
iii) International objectives
iv) Investment and i) Most of them are using the Internet as a new distribu-
v) Trust tion channel
ii) To market information
Of all these types, retail and investment banking are most iii) To deliver banking products and services
affected by online technological innovations and are the iv) To improve customer relationship
ones that stand to profit most from electronic commerce.
Higher usage of credit and debit cards, mobile banking,
Payment Options internet banking and other electronic payment products make
Most of the payment options for Indian online users would the economy more efficient, yielding a meaningful boost to
fall into the following categories: economic growth. As banks venture into the electronic arena,
i) Net Banking they are finding that new opportunities bring new operational
ii) Credit Card and strategic risks. Many companies are embracing "e-com-
iii) Debit Card merce," or business conducted on-line over computer net-
works, as a means of expanding markets, improving customer
iv) Cash on Delivery
service, reducing costs, and enhancing productivity.
v) Cash Cards
vi) Pre-paid Cards RBI wants banks to build a robust mechanism to prevent
vii) Virtual Cards incidents of fraud in areas of mobile / Net banking and elec-
tronic fund transfer. "With greater infusion of technology,
The role of electronic commerce in banking is multifaceted the incidence of frauds in Internet banking has increased in
impacted by changes in technology, rapid deregulation of recent times. Banks need to improve customer awareness

28 | 2016 | DECEMBER | BANKING FINANCE

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