Page 238 - DCOM208_BANKING_THEORY_AND_PRACTICE

Unit 14: Core Banking Solution

14.7 E-Banking Notes

E-banking is the automated delivery of new and traditional banking products and services
directly to customers through electronic and interactive communication channels.

Example: Personal Computer (PC) banking, Internet banking, home banking, virtual
banking, phone banking, online banking and remote electronic banking.
Electronic banking, or e-banking, is the term which describes the transactions taking place
among companies, organizations, and individuals and their banking institutions. It was first
conceptualized in the mid-1970s and some banks offered their customers electronic banking in
1985. The Internet explosion in the late-1990s made people more comfortable with making
transactions over the web and despite the dot-com crash, e-banking grew alongside the Internet.
Electronic banking is a term combinedly used for the processes by which a customer may
perform banking transactions electronically without visiting a brick-and-mortar institution.
E-banking comprises of the systems that enable banks’ customers — individuals or businesses,
to check accounts, do business transactions, or fetch information on financial products and
services through a public or private network, including the internet.
Customers can avail e-banking services by using electronic devices, such as a Personal Computer
(PC), Personal Digital Assistant (PDA), Automated Teller Machine (ATM) and Kiosk, etc.

Benefits of e-Banking

The greatest advantage of e- banking lies in the fact that customers are not required to wait in
long and tiring lines of the banks for financial transactions or statements. Opening of accounts
is quite easy now, there is flexibility while closing of accounts and bank loans can also be
availed without having to visit any bank.

Banking has been made faster and convenient as compared to conventional banking since
e-banking has tremendously reduced the time required for processing banking transactions.
E-banking is cost-effective and caters to need of thousands of customers simultaneously. These
factors have considerably raised the profit margins of the banks which enable them to offer
acceptable interest rates on savings account and credit cards.
In addition to availing banking facilities for 24 hours a day, important information regarding
banking policies, rates of interest offered and formalities required in various transactions can
also be received.
While availing the facilities of internet banking, one needs to be very careful so as not to become
a victim of computer hacking which may lead to unauthorized use of your account by computer
hackers. Though banks have come up with several security measures, the customers are also
required to be a bit careful to ensure security and safety of Internet banking.
Disadvantages of e-banking

E-Banking presents potential disadvantages:
1. Security: Although banks generally offer secure web pages to carry out your business
transactions, this doesn’t guarantee complete safety. Even secure websites may be
susceptible to internet criminals who try to hack into your account and gain access to your
financial information. This may lead to deceitful use of your business’s identity and
potentially cost you thousands of dollars.

LOVELY PROFESSIONAL UNIVERSITY 233