E- BANKING – A CONCEPTUAL
STUDY
Mr. M. SANKARA
NARAYANAN,
Assistant Professor
of Corporate Secretaryship,
Gurunanak College,
Velachery,
ABSTRACT
Due to
globalization, not only nations are coming closer to each other but also
different sector undergoes into significant changes, especially in banking
sector. In current scenario, one can’t think about the success of any service
industry including banking industry without information technology. E-banking
is a more information based, speedy and boundary less due to the impact of E-
revolution. Its speedy changes in technology, huge cost, security and privacy
issues, new rules & regulations and lack of skilled human resources are
some challenges faced by commercial bank in India. The main views of this paper
is to explore concept of e-banking, the advantages & disadvantages of
e-banking and also focused on the opportunities of e-banking in India.
Key words: E-banking, technology, advantages & disadvantages,
opportunities.
INTRODUCTION
In
the era of globalization internet plays a significant role in all spheres of life
and industries. Today, E-banking is the banking of new era. “As banks position
themselves to deal with a “new mediocre” era of low growth, they will have to
continue to adapt to a post financial crisis environment, where an often
divergent global regulatory reform agenda shows no signs of abating and
customer trust must be regained”
The
term E-Banking or “Online Banking” or “Virtual Banking” are used as supplement.
E-banking is the outcome of technological innovations and competition. It
implies operating banking transaction by customer round the clock globally
through electronic media. Making banking products and other services available
to wholesale and retail customers, through an electronic distribution channel
is called e-banking.
In
other words E-Banking refers to the banking operations, which is done over
World Wide Web. The concept and scope of e-banking is still in the transitional
stage. E-banking has broken the barriers of branch banking.
In India e-banking is of fairly
recent origin. The traditional model for banking has been through branch
banking. Only in the early 1990s there has been start of non-branch banking
services. The good old manual systems on which Indian Banking depended upon for
centuries seem to have no place today. Indian banks offer to their customer
following popular services:
Ø Automated Teller
Machine (ATM)
Ø Mobile Banking
Ø Electronic clearing
Services (ECS)
Ø Electronic Funds
Transfer (EFT) System
Ø Door Step Banking
Ø Smart Cards
Ø Tele Banking
Ø Electronic Clearing
Cards
Ø Phone Banking
OBJECTIVES OF THE
STUDY:
ü
To trace out the meaning of E-BANKING
ü
To analyze the advantages and disadvantages
of E-BANKING
ü
To estimate the opportunities of E-BANKING.
ADVANTAGES OF
E-BANKING:
A)
BENEFITS TO BANKER:
Ø Competitive Advantage:
It provides competitive advantage among their peers.
Ø Better Customer Relationship: Reduces
customer visits to the branch and thereby human intervention. This impact tells
upon establishment costs of the bank. It helps in establishing better customer
relationship and retaining and attracting customer.
Ø Reduction in Cost of Banking Operations:
it
helps in reducing the cost of delivering the services to the customers and it
reduces the use of paper money that helps the central bank in printing less
paper notes.
Ø Reduced Fraud:
Inter-branch reconciliation is immediate thereby reducing chances of fraud and
misappropriation. On- line banking – an effective medium of promotion of
various schemes of the bank, a marketing tool indeed.
Ø Quick Remittance of Funds: the
interbank and inter branch transfers through drafts and other methods have not
only speeded up but have benefited different centers in getting funds at most
earlier.
B)
BENEFITS TO CORPORATE:
Ø Competition:
Banks feel the need to offer e-banking services today just to keep up with the
competitors and to be able to retain their existing customers of the concern.
Ø Customer Service:
It offers banks an opportunity to improve on their customer service by
collecting and managing information pertaining to their customers and their
individualistic preferences.
Ø New Markets:
The Internet is not only a low cost approach to determine new distribution
channels but also to establish a presence in new and upcoming markets.
Ø Revenue Potential: it also provides an opportunity to build on
their relationships with their existing potential customers.
Ø Reduced Cost: it
is an opportunity for banks to reduce their overhead costs as the need for
physical braches is drastically cut down.
C)
BENEFITS
TO CUSTOMERS:
Ø Any
Where Banking: It no matter wherever the customer in the
world, e-banking is just a web-site away. Balance enquiry, request for any
services, issuing instructions etc., form anywhere in the world are possible.
Its more convenience in transacting business.
Ø Any
Time Banking: ATM or 24 –
hours Telles are the electronic terminals that allow Round –The- Clock Banking,
i.e. 24 x 7. It is possible for a customer to withdraw cash, make deposit, or
transfer fund between accounts by ATM & online.
Ø Easy
Monitor: customer can keep an eye
on their transaction and account balance all the time. This helps to keep
accounts safe. This means that easy monitoring their account at anytime, they
can get to know about any fraudulent activity or threat to their account before
it can pose their account to severe damage.
Ø E-Trading:
Online
purchase of goods and services through online. It has wider range of products
or services available to customer. Online
payment for the same provided by e-banking is a boon to the customer.
DISADVANTAGES OF
E-BANKING:
Ø Resist Changing: The
mindset of bank employees information technology revolution changes are
creating challenges for them have to adapt to changing conditions. They resist
to change and the seller market mindset is yet to be born . These problems, in addition
to fear of uncertainty and control orientation is adding more problems for the
banks.
Ø Language Barrier: understanding
of usage of e-banking might be difficult for a beginner at the first go. Mostly
unfamiliar language and illiteracy could be barriers in using e-banking
service. At present, all the websites of banks providing internet banking
service are mostly in English language. It is difficult to be operated by those
individuals who are do not know English language.
Ø Dishonest Bank Employee:
Most of the employees of the banks are familiar with different systems and
their loopholes and their weaknesses. Thus they become possible threat to valuable
customers and banker. Some of the employees can manage to acquire the private
and confidential data of customers to access their accounts causing losses to
customers as well as to the bank.
Ø Skimming:
Skim the information off the Debit or credit cards is another method of
accessing customers private information. It is a most commonly used method to
obtain illegally any consumer’s card information. Skimmers are electronic
device that is used by the criminals to capture the data stored on the magnetic
strip of the ATM card while customer swipe the cards.
Ø Lack of Trusted: the
use of e-banking service depends much on the trust reposed by the customer of a
bank on the internet banking initiative of the bank. It becomes an imperative
that internet starts ups gain the trust of depositors before they will make
deposits.
Ø Safety and Security Issues: security threats on the internet leads to
perception of e-banking as an unsafe channel one. This dissuades the customers
in making popular use of the internet banking.
OPPORTUNITIES OF E-BANKING:
Ø Network
Facilities: It provides an ever-growing market both
in terms of number of potential customers and geographical reach. New
Technology and productive development has made access to Web both cheaper and
faster. More no of people across the world are using the net either through PCs
or any devices.
Ø Costs:
Cost is an important issue in an e-commerce. It is generally accepted that the
cost of overhead, servicing and distribution, etc. through online is less
compared to the normal course of traditional business.
Ø Training
of Bank Employees: The uses of
e-banking also help greater level of computer awareness among the bank
employees by means of training through their own training establishments and
from professional technical organizations.
Ø The
Emerging Service. It is a key factor of any e-venture. The
ability to sell one's product or services at anytime and anywhere to the higher
satisfaction of potential customer is important for e-business to succeed. It
offers such opportunity, since the business presence is not restricted by time
zone and geographical limitations.
Ø Cost
of Communication: Cost of communication through Web is
the cheapest compared to any other medium. Many times one's presence in the
online may bring in international business dealing, which the business might not
have targeted. The business should have proper plans to address such
opportunities.
REVIEW:
Amato-McCoy,D.
Studied that achieving consumers trust
regarding transaction is the key to expand e-banking. Customers are more
worried about their password and ID. Customers give less importance to service and rules and are more
concerned about transactions.
Harnandez,J.M.
concluded that loyalty of e-banking customers
is directly affected by satisfaction and trust in an online bank, which in turn
are determined by web site quality and service quality. Moderating variables exert a significant influence on
some of the proposed relationships.
CONCLUSION:
The
next decade in banking will see both evolution and revolution. Banks must
reinvent themselves, not just to respond to the pressures of today, but to be
flexible enough to adapt to the world of tomorrow in India, E-banking is
in a nascent stage in India. Banker should create awareness among the people
about online banking products and services. Customer should be made literate
about the use of e-banking products and services. Bankers are making sincere
efforts to popularise the e-banking service and products. In the next few years
e-banking in India will be strengthen even further.
REFERENCES:
1.
E.Gordon, Dr.K.Natarajan, Banking
theory, Law & Practice (Himalaya Publishing
House)
2.
R.K.Uppal, Rimpi Jatana, E-Bankingnin
India –challenges opportunitites
(Western books corporation )
3.
Global banking outlook 2015:
Transforming Banking for the Next Generation.
4.
Auto-McCoy, D. (2005) ‘ Creating
Virtual vallue’, Bank systems and Technology, Vo.1.
