PROJECT REPORT

(Submitted for the Degree of B.Com Honours in Accounting& Finance under the University of
Calcutta)

TITLE OF THE PROJECT

ON-LINE BANKING: An analysis from various perspectives.

Submitted by
Name of the Candidate: SUBHASHISH CHOWDHURY

Registration no :

Roll no :

Name of the College : KHUDIRAM BOSE CENTRAL COLLEGE

Supervised by
Name of the supervisor:PROF(s)TAPAN KUMAR DUTTA & ARABINDA MRIDHA

Name of the College : KHUDIRAM BOSE CENTRAL COLLEGE

MONTH& YEAR OF SUBMISSION

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 TABLE OF CONTENT

SL NO. CHAPTER NAME PAGE NO.

1) INTRODUCTION 3-13
1.1-E BANKING 3
1.2-EVOLUTION OF E BANKING (WORLD) 3
1.3-EVOLUTION OF E BANKING (INDIA) 4
1.4-HISTORY OF E BANKING 4
1.5-OBJECTIVE OF STUDY 5
1.6-LIMITATION OF STUDY 5
1.7-LITERATURE REVIEW 6
1.8-IT ADOPTION 7
1.9-FEATURES OF E BANKING 7
1.10-TYPES OF ONLINE BANKING 7-11
1.11-ACCESS OF E-BANKING 11-13

2) CONCEPTUAL FRAMEWORK/NATIONAL 14-19

& INTERNATIONAL SCENARIO
2.1 PROCESS OF ATM USE 14-15
2.2 INDIAN SCENARIO 16
2.3 INTERNATIONAL SCENARIO 16-18
2.4 TYPES OF RISKS 19

3) DATA ANALYSIS & FINDINGS 20-29

3.1 METHODOLOGY 20
3.2 ONLINE BANKING DATA 21-24
3.3 ANALYSIS OF DATA COLLECTION 25-28

4) CONCLUSION 29

5) BIBLIOGRAPHY& REFERENCES 30

6) ANNEXURES 1 31

7) ANNEXURES 2 32
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 ONLINE BANKING: An analysis from various [Yea
perspectives with a real life example r]
CHAPTER 1: INTRODUCTION
1.1 What is online banking all about?

Online banking in simple terms means, it does not involve any physical exchange of money, but it
is all done electronically, from one account to another, using the internet. Online banking is just like
normal banking with one big exception. You don’t have to go the bank for transaction. Instead, you
can access your account any time and from any part of the world, and do so when you have the
time, and not when the bank is open. For busy executives, student, home markers, online banking is
virtual blessing. Not more talking precious time off from work to get a demand draft or a cheque
book issued.Banks offer online banking in two main ways. An existing bank with physical offices
can established and offer online banking to its customers in addition to its traditional delivery
channels.

A second alternative is to established a ‘virtual’, ‘branchless’, or ‘internet-only’ bank. The

computer server that lies at the heart of a virtual bank may be housed in an office that serves as the
legal address of such banks or at some other location. Virtual bank may offer their customer the
ability to make deposits and withdraw fund via Automated Teller Machine (ATMs) or other remote
delivery channels owned by other institutions. Online system allow customers to plug into a host of
banking services from a personal computer by connecting with the bank computer over telephone
wires the convenience can be compelling. Not only is trouble time reduce, but ATM machines,
telephone banking or banking by mail are often unnecessary. And, technology continues to make
online banking once attempted only by computer enthusiastic easier for the average consumer. Bank
use a variety of names for online banking services such as PC banking, home banking, electronic
banking or internet banking.

1.2 Evolution of online banking

The story of technology in banking started with the use of punch card machines like accounting
machines or ledger posting machines. The use of technology, at that time, was limited to keeping
books of the bank. It further develops with the birth of online real time system and vast
improvement in Telecommunication during late 1970’s and 1980’s. It is a resulted in a revolution in
the field of banking with the convenience as a buzzword. Through convenience banking, the bank is
carried to the desktop of the customer. The 1990’s saw the distributed computing technologies and
relational database management system. The banking industry was simply waiting for these
technologies. Now with distribution technologies, one could configure dedicated machines called
front-end machine for customers service and risk control while communication in the batch mode
without hampering the response time on the front-end machine.
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 1.3 Evolution of online banking in INDIA

In India online banking is of fairly recent origin. The traditional model for banking has been
through Branch Banking. Only in the early 1990’s there has been start of non branch banking
services. Thegood old manual system on which Indian banking dependent upon for centuries seem
to have no place today. ICICI was the first bank initiates the online banking revolution in INDIA as
early as 1997 under the brand name INFINITY. Citibank & HDFC bank followed with online
banking services in 1999.several initiatives have been taken by the government of INDIA as well as
RBI to facilitate the development of E-banking in INDIA. The government of INDIA in acted the
IT Act, 2000 with effect from October 17 th 2000 which provided legal recognition to electronic
transactions & other means of electronic commerce. The RBI is monitoring & reviewing the legal &
other requirements of online banking on a continuous basis to ensure that online banking would
develop on sound lines and online banking related challenges would not pose a threat to financial
stability.Traditionally the relationship between the bank and its customer has been on a one-to-one
level via the branch network. This was put into operation with clearing and decision making
responsibility for the overall clearing network, the size of branch network and the training of staff in
the branch network.
To cope with the presser of growing competition, Indian commercial banks have adopted
several initiatives and E-banking is one of them especially for the public sector bank, as the newly
established private sector and foreign bank are leader in adaptation of E-banking. Indian banks offer
to their customers following e-banking products and services:
 Automated Teller Machines (ATMs)
 Internet Banking
 Mobile Banking
 Tele Banking
 Electronic Clearing Services
 Electronic Clearing Cards
 Smart Cards
 Door Step Banking
 Electronic Fund Transfer
The three board facilities that e-banking offers are:
 Convenience- Complete your banking at your convenience in the comfort of your home.
 No more Qs- There are no queues at an online bank.
 24x7 service- Bank online services are provided 24 hours a day. 7 days a week and 52
weeks a year.

1.4 Historyof online banking through world

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 Online banking came into being in UK & USA in 1920’s.The concept of online banking has been
Simultaneously evolving with development of World Wide Web, It become prominently
popularduring 1960’s through electronic fund transfer and credit cards the web based banking came
into existenceIn Europe and USA in the beginning of 1980’s.

1.5 OBJECTIVE OF STUDY

Primary Objective:
 The main objective of this study is to do an in-depth analysis of the total online Banking by
taking sample comparing it with others.
Secondary Objectives:
 To study online banking
 To study benefit of online banking
 To study scope of online banking
 To study opportunities of online banking
 To study features of online banking
 To study the history and growth of the Indian online banking system.
 To explore the recent developments in online banking system.
 To discuss about the market trends of online banking.
 To give an idea about online banking system in real life.
 To make necessary recommendations as applicable.

1.6 LIMITATION OF STUDY

 The study is conducted only in Kolkata.
 The time constraint was one of the major problems because of which the sample size is limited
to only 50 respondents for primary research.
 Banking sector was quite similar in offering and products and because of that it was very
difficult to discriminate between our product and products of the competitors.
 Target customers and respondents were too busy persons that to get their time and view for
specific questions was very difficult.

 Sensitivity of the industry was also a very frequent factor, which was very important to
measure correctly.

 Area covered for the project while doing job also was very large and it was very difficult to
correlate two different customers/respondents views in a one.

 Every financial customer has his/her own need and according to the requirements of the
customer product customization was not possible.
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1.7 LITERATURE REVIEW

Author/Year Title Purpose Findings

Srivastava Customer’s perception To know consumer’s Education, gender, income&
Rajesh kumar on usage of online perception about training play an important role in
(2007) banking online banking and usage of online banking. Inhibitory
drivers that drive factors like trust, culture, security
consumer towards & price can have minimal effect on
better perception. consumer mind set towards online
banking.
Maenpaa Consumer perception To examine the effect Consumers perception differed in
katarlina of online banking in of expertise on four of seven dimensions of
et.al, (2008) Finland perceptions of internet internet bank services when
bank services. examined along the criterion of
expertise. Result revealed that
security was not a concern for any
of the user groups.
Singhal A study on customer To explore the major Major factors responsible for
Divya & perception towards factors responsible for internet banking were ‘utility
padmanabha internet banking: internet banking based request’, ‘security’, ‘ticket
n V, (2008) identifying major on respondent’s booking’ and ‘fund transfer’. More
contributing factors perception on various than 50% of total respondents
internet applications. agreed that internet banking is
convenient and flexible ways of
banking & it also have various
transaction related benefits.
Mohammed Customer perception To evaluate the Customer’s perception was highest
hossain & on service quality in service quality in retail in tangibles area lowest in the
Shirley Leo, retail banking in banking in middle east competence area.
(2008) middle east: the case (Qatar) customers
of Qatar. perception regarding
service quality.
Nana Adams Customer perceived To examine customer Banks need to promote internet
Abigail & value in internet value perceptions in banking by having an active stake
odartey banking in Ghana. internet banking in in the development of internet
lamptey Ghana. infrastructure and offering more
adnan (2009) incentives to customers.
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 1.8 On IT adoption
The Indian banking sector woke up to the world of technology in early 90’s. The banking sector in
India has been denominated by public sector banks, whole between them more than 80% of total
asset based. New private sector banks and foreign banks have tended to concentred their effort more
on the 23 centre on the top 23 centres which house the cream of countries urban customer. These
banks have taken the house which the cream of the countries urban customers.

1.9 Features of online banking:-

Online banking solutions have many features & capability in common, but traditionally also have some
that are application specific. The common features fall broadly into several categories.
 Transactional ( e.g. account to account transfer, paying a bill, apply for a loan etc)
 Payments to third parties, including bill payments and telegraphic/wire transfers.
 Fund transfer between a consumers own transactional account and savings account.
 Investment purchase or sale.
 Loan applications and transactions, such as repayment of enrolments.
 Non-transactional (e.g. online statements, cheque links, co browsing, chat).
 Viewing recent transactions.
 Downloading bank statements, for e.g. PDF format.
 Financial institution administration.
 Management of multiple users having varying levels of authority.
1.10 Type of online banking
 ATM (automatic teller machine)
 Tele banking/ phone banking
 Mobile banking
 PC banking
 Internet banking
 Wireless/PDA banking
1.10.1Automated teller machine (ATM)
Automated teller machine is seen everywhere. These machines brought innovation in banking
sector all over the world. The advent of ATM has made the concept of the clock banking a reality.
The ATM has been helpful to both the bankers and customer. The load crowd of customer in the
banking hall of a branch waiting for their turn to collect cash is disappearing.
The ATM is the device use by the bank customer to process account transaction. These systems
are known as “any time money” because with services the person having the ATM card can
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withdraw cash any time he want. Since the ATM machine can be built anywhere like near market
& railway station etc., so one can easily withdraw money from it.
Advantages of ATM
To bank
 less space required
 Capital expenditure is lower as compare to branch.
 Bank’s staffs get more time to do marketing.
 Lower transaction cost.
 One more means for advertising bank’s products.

To customer
 Convenience of shopping no need to carry cash.
 No need to visit bank for transaction.
 Banking anytime, anywhere, anyhow.
 Fast & efficient service.
 Good currency notes.
Disadvantages of ATM

 Flexible to efficiency’s expenses, at present, for any one application it is

usually possible to find a more optimized technology.
 Cost, although it will decrease with time.
 New customer premises hardware and software are required competition
from other technologies- 100 Mbps Ethernet and fast Ethernet.

1.10.2 Tele banking or phone banking

The customer interacts with the bank for various services over phone. There will no charge for
dialling to the toll free number provided by banks Tele banking, also known as “voice over phone”
is consider under anywhere banking. The customer indentifies himself to the system by entering
his pin number and is guided by a voice response for each banking services namely:

 Balance in the account.

 Transaction status, e.g. whether cheque deposited is cleared or not
 Request for issue of cheque book is registered
 Request for issue of bank statement is registered

Advantage of Tele-banking

 You may not have time to visit your bank every week and if our business
is located out of town, getting to a branch can be time consuming and
expensive. With telephone banking, your bank is on the other end of the
line whenever you need it.
 You can manage your business account at any time, which is ideal if you
are busy during the day with running your business.
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  As well as the basics of running your business account-paying a bill,
transferring money, and setting up a direct debit and so on-you may also
be able to appointment with your bank manager.
 Making payment by phone can simplify your banking-you don’t need to
confirm the payments in writing, and you can check all your transactions
against your statement when it arrives.

Disadvantage of Tele-banking: The most common one would have to be the fact that
not all banks and building societies offer 24 hour telephone banking. They may if is
simply a case of checking your balance or recent transaction but for anything more
involved in that in case cause a problem. Also telephone banking is not active usually
over bank holidays such as Christmas day of New Year day.

1.10.3 Mobile Banking

Mobile banking comes in as a part of the bank initiative to offer multiple channels banking
providing convenience for its customer. A versatile multi functional, free service that is accessible
and viewable the monitor of mobile phone. Mobile phones are playing great role in banking and
other channels. Mobile banking can be divided into two broad categories of facilities:

 Alert facility: Mobile banking alert facility keeps you informed about the
significant transaction in your account. It keeps you update where ever you go.
 Request facility: Mobile banking request facility enables you to enables you to
query for your account balance.

Advantages of Mobile banking

Mobile banking through cell phone offer many advantages for customers as well as banks. Some
of them are as follows:

 Mobile banking has an edge over internet banking. In case of online

banking you must have an internet connection and computer. This is a
problem in developments countries. However, with mobile banking,
connectivity is not a problem. You can find connectively is a problem.
 You can make transaction or pay bills anytime. It saves a lot of time.
Mobile banking through cell phone is user friendly. The interface is also
very simple. You just need to follows the instruction to make the
transaction.
 Cell phone banking is cost effective. Various banks provide the facility at
a lower cost as compared to banking by self.
 Banking through mobile reduces the risk of fraud. You will get an SMS
whenever there is an activity in your account.
 Banks can be in touch with their clients with mobile banking.
 Bank can also promote and sell their products and services like credit
cards, loans etc to a specific group of customers.
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  Various banking services like Account Balance Enquiry, Credit/Debit
alerts, Bill payment alerts, transaction History, Fund transfer facilities &
minimum balance alerts etc can be accessed from your mobile.

1.10.4 PC Banking
PC banking allows the customer to access the information regarding to their bank accounts
through a dial up connection. They can also download the information and process it in their own
manners. It is different from the internet banking in the sense that internet banking is done over a
highly accessible public networks, where as PC banking is accessible just to bank’s customers.

Advantages of PC banking

 PC banking enables you round-the-clock access.

 You usually do not think to stand a queue as a way to perform important
banking transaction. The PC banking enables you to do just that suitable
from the ultimate comfort and privacy of your homes.
 In comparison towards the online banking program, the PC banking
provides you increased security..

Disadvantages of PC banking

 There is no personal interaction between yourself and the bank

(employee/advisor).
 You can access your account from the PC that you originally installed the
software.
 You cannot deposit physical cash using internet banking i.e. cheques,
cash in hand. This would require a personal visit to the bank.

1.10.5 Internet banking

Internet banking let you handle many banking transaction via your personal computer. For instance,
you may use your computer to view your account balance, request between accounts, and pay bills
electronically. Internet banking system and method in which a personal computer is connected by a
network service provider directly to a host computer system of a bank such that customer service
requests can be processed automatically.

Type of Internet Banking:

There are three basic type of internet banking that is being employed in the marketplace:
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  Information
thisis most basic level of internet banking. The bank has marketing information about its
product and services on a stand-alone server. This level of internet banking services can be
provided by the bank itself or by sourcing it out, since the server and website may be
vulnerable to alteration, control must therefore be in place to prevent unauthorised
alterations to data the server or website.
 Communication
This type of internet banking allows the transaction between the bank’s system and
customer. It may be limited to electronic mail, account inquiry, loan application, or static
file update, this is higher with these configurations that with the earlier system and therefore
appropriate control need to be in place to prevent, monitor, and alert management of any
unauthorised attempt to access bank’s internal network and computer system.
 Transaction
Under this system of internet banking customers are allowed to execute transaction. Relative
the information and communication type of internet banking, this system process the highest
level of risk architecture & must have the strongest control.

Advantages of internet banking

 An internet banking account is simple to use and open. You just answer
the few question in a form while sitting comfortably in your home or
office, to access your account, you established security measure such as
username & passwords. To complete the set up of your account, you just
print, sign and send in a form.
 Internet banking cost less. Because there are fewer building maintain and
less involvement by salaried employees, there is a much lower overhead
while with online banking. They saving allow them to offer higher
interest rates on savings account and lower lending rates & service
charges.
 Comparing internet banking to get the best deal is easy. In a short time
you can visit several online banking to compare what they offer resaving
and checking account deals as well as their interest rate.

Disadvantages of internet banking

 Identity confirmation
Federal regulation required that financial institutions confirm each
customer’s identity. This may present a logistical issue, as coping & faxing
documents is some time necessary.
 Security concerns
With hacking & identity theft on the rise internet banking customer have to
place a certain amount of trust in the bank that their account information &
personal information are safe.
 Customers services
If you bank or a traditional bank, you can go to the bank and speak
someone face to face about your problem but, with an internet bank, you
will likely spend and lot of time on the phone being passed around and
placed on hold.
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 1.11How to access Online Banking:-

 Before you can access your account online, you’ll need

to register with your bank for internet banking.
 Your bank will give you a registration number or login
ID. You’ll also need a password (IPIN). Your internet
password is different
from the PIN you use
with your debit card.
 Once your bank
approved your
registration, you’re
able to access your
accounts online.

STEP
1:

Make
sure your
computer
is connected to the internet.

STEP 2:

Go to your bank website. For security reasons, don’t click on a

link to your Bank Sent to you in An Email emails with Links
To fake website Is a Classic ploy of Criminals trying to steal
Your Identity.
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 STEP 3:

Once you’re on your bank’s website you’ll see a button

or other icon labelled ‘log on to internet banking’ or
something similar (the terminology varies from bank to
bank)
Click on this icon
It will take you to a login page

STEP 4:

Login to your online accountit generally requires you to

enteryour registration number or login ID.You will also
have to enter yourPassword- either by typing it in, orby
clicking on letters and numbersOnscreen.

STEP 5:

Some banks have a two stage authentication process –

an additional security measure to protect customer’s
accounts and personal data.If a two-stage process,
you’ll then have to enter another code. The code may
be generated by a security token the bank gives you
when you register for internet banking, or it could be
contained in an SMS message the bank sends to your
mobile phone.

STEP 6:

If you’ve entered the correct information at all these

stages, you’ll gain access to your accounts and be able
to begin your internet banking.

STEP 7:
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 Once you’ve got online access to your accounts you’ll see
the different types of transactions that you can
perform. Usually on the left side of the screen there will
be a list of functions. Click on a function to open it.
For example, if you want to transfer funds, click on the
button or icon labelled ‘transfers’ or something
similar. You’ll need to complete the required data.
Remember—make sure that you have the right BSB (bank
state branch) code and account number for the
beneficiary of the transfer, as this the information that the bank will use to process the transfer.

STEP 8:

Once you’ve finished your online

banking, be sure to log out from your
account.Most banks also have in place
a ‘time-out’ feature, which means that
if you’re inactive for a certain
period in your online banking session, you’ll automatically be
logged on.

ONLINE BANKING: An analysis from various

[Yea
perspectives with a real life example
r]
CHAPTER 2: CONCEPTUAL FRAMEWORK
2.1ATM PROCESS TO USE:

ATMs, standing for “Automated Teller Machines”, are an easy, convenient way to access your
account from almost anywhere. If you’re new to them, don’t worry. It’s easy. Instruction given below:

a. Be alert. As you approach the ATM, look around other people. If it is night time, pick an ATM in
a well-lit location. If using a drive-up ATM, pull up close to it so no one can see you enter your
PIN.
If you are uncomfortable with the area or the other people around your machine, find a different
machine or use the machine some other time.
b. Take an envelope and prepare any deposits you will make ahead of time.
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c. Insert your ATM card into the machine.

d. Select a language. Note that this option often only comes up

where your card is registered as being from another country, unless you live in a country or
region with languages other than English are in major use.
e. Enter your PIN. Then press enter.Make sure you enter correct
pin.

f. Select a transaction. Whatever you want.

g. Deposit money. If you want to deposit (put in) money.

 Enter the amount you will deposit. Confirm the amount.

 Insert the envelope into the deposit slot when the

machine opens it. Note that some ATMs will not
allow you to deposit money. In this case, you need find
one at a branch.
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h. Withdraw money. If you want to withdraw money, select or enter the amount to withdraw.
 Most machines dispense money in fixed amounts. You may be given a choice
between common amounts or you may be asked to enter a number that is a multiple
of 20 (20, 40, 60, 80, etc.)
 Take the cash when the door opens. Put it directly into your wallet.

i. Choose whether to do an additional transaction. Select yes or no.

j. Choose whether you want a receipt, select yes or no. Take the receipt if you requested it.
k. Wait while the system processes your transactions.
l. Use the receipt to record the transaction in yourcheck registeror passbook.

2.2 INDIANSCENARIO IN ONLINE BANKING SYSTEM

a. Online banking, both as medium of delivery of banking

services and as a strategic tool for business development, has
gained wide acceptance internationally and is fast catching
up in INDIA with more and more banks entering the fray,
INDIA can be said to be on the threshold of a major banking
revolution with online banking having already been unveiled. A
recent questionnaire to which 46 banks responded, has revealed that at present, 11 banks in
INDIA are providing internet banking services at different level, 22 banks proposed to offer
internet banking in future while the remaining 13banks have no immediate plans to offer such
facility.
b. At present, the total internet users in country are estimated at 30 cr. However this is expected to
grow exponent to 60 cr. by 2017. Only about 1% of internet user deed banking online in
1998.this increased to 30% in March,2012. The growth potential is, there for, immense. Further
incentives provided by banks would dissuade customers from
visiting physical branches, and thus get ‘hooked’ to the
convenience of arm-chair banking. The facility of accessing
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 their accounts from anywhere in the world by using a home computer with internet connection,
is particularly fascinating to non residents INDIANS and high net worth individual having
multiple bank accounts.
c. Cost of banking service to the internet from a fraction of cost through convincible
method. Rough estimates assumes teller costs at rs.1 per transaction, ATM transaction cost at 45
paisa, phone banking at 35 paisa, debit card at 20 paisa and online banking at 10 paisa per
transaction. The cost conscious banks in the country have there for actively consider use of
internet as a channel for providing services.
2.3 INTERNATIONAL SCENARIO IN ONLINE BANKING
Online banking has presented regulators and supervisors worldwide with new challenges. The
internet, by its very nature, reaches across borders and is for this reason, engaging the attention
of regulatory and supervisory authorities all over the world the experience of various countries as
far as internet banking is concerned, is outlined following.
a. U.S.A:
In the USA, the number of thrift institution and commercial banks with transactional web-
sites is 1275 or 12% of the all banks and thrifts. Approximately 78% of all commercial banks
with more than $5 billion in asset, 43% of banks with $500 million to $5 billion in asset, and
10% of the banks under $500 million in asset have transactional web-sites. Of the 1275
commercial banks offering transactional internet banking, 7 could be considered ‘virtual
banks’. 10traditional banks have established internet branches or division that operate under a
unique brand name. Several new business process such as electronic bills presentment and
payment, handheld access devices such as personal digital assistance, internet telephone and
wireless communication channels and phones are emerging in the US market. For retail e-
commerce in the US most payment made over the internet are currently completed with a
credit cards and are cleared and settled through existing credit card clearing and settlement
system. Effort under way to make it easier to use debit cards cheques and automated clearing
house (ACH) to make payments over the internet. Versions of e-money, smart cards, e-
cheques and other innovation are being experimented with to support retail payments over the
internet.

b. U.K.:
Most banks in U.K. are offering transactional services through a wider range of channels
including Wireless Application Protocol (WAP), mobile phone &T.V. a number of non-banks
have approached the Financial Services Authority (FSA) about charters for virtual banks or
‘clicks and mortar’ operations. There is a move towards banks establishing portals.

c. SCANDINAVIA:
Swedish & Finnish markets lead the world in terms of internet penetration and the range and
quality of their online services. Mertia Nordbanken (MRB) ( now Nordic bank holding, a
merger between Finland’s Merita and Nordbanker of Sweden) leads in ‘log-ins per month’ with
2 million internet customer and its penetration rate in Finland(around 60%) is among the
highest in the world for a bank of ‘brick and mortar’ origin. Standinaviska Easkilda Banked
(SEB) was Sweden first internet bank, having gone on-line in December 1996. It has 1000
corporate clients for its trading station – an internet based trading mechanism for forex dealing,
34
 stock index future and Swedish Treasury bill and government bonds. Swedbank is another
large-sized internet bank. Almost all of the approximately 150 banks operating in Norway have
established ‘net banks’. In Denmark, the internet banking services of Den Danske offers funds
transfers, bill payment, etc.

 The basic on-line activity is paying bills. Swedbank was the first bank in the world to
introduce Electronic Bill Presentment and Payment (EBPP) and now handles4 million
bill payments a month. E-shopping is another major online banking service. MNB has an
on-line ‘mall’ of, more than 1800 shops, which accept its ‘solo’ payment system.
Swedbank has a similar system called ‘direct’. Besides using advanced encryption
technology, the Scandinavian banks have adopted a basic but effective system known as
‘challenge response logic’, which involves a list of code numbers sent to every online
client and use in sequence, in combination with their password and PIN. This gives each
transaction a unique code, and has so far proved safe. Some bank use even more
sophisticated versions of the same technique. It is not a common practice to use third
party vendor for services.
 In Sweden, no formal guidance has been given to examiners by the sverigesbank on e-
banking. General guidelines apply equally to online banking activities. Contractual
regularization between customers and the bank is a concern for regulation and is being
looked into by the authorities.
 The role of the bank of Finland (Suomen parkki) has been, as part of general oversight
of financial markets in Finland, mainly to monitor the ongoing development of online
banking without active participation. Numerous issues concerning online banking have,
however, been examined by the bank of Finland.

d. AUSTRALIA:
Online banking in Australia is offered in two forms: web-based and through the provision of
proprietary software. Initial web-based products have focused on personal banking whereas the
provision of proprietary software has been targeted at the business/corporate sector. Most
Australian-owned banks and some foreign subsidiaries of banks have transactional or interactive
web-sites. Online banking services range from Fls’ websites providing information on financial
products to enabling account management and financial transactions. Customer services offered
online include account monitoring (electronic statements, real-time account balances), account
management (bill payments, fund transfers, applying for products on-line) and financial
transaction (securities trading, foreign currency transactions). Electronic bill presentment and
payment (EBPP)is at an early stage. Features offered proprietary software products (enabling
business and corporation customers to connect to the financial institutions via dial-up/leased
line/extranet) include account reporting, improved reconciliation, direct payments, payroll
functionality and funds transfer between accounts held at their own or other banks. Apart from
34
 closed payments systems (involving a single payment-provider), online banking and e-
commerce transaction in Australia are conducted using long-standing payment instruments and
are cleared and settled through existing clearing and settlement system. Banks rely on third
party vendors or are involved with outside providers for a range of products and services
including e-banking. Generally, there are no ‘virtual’ banks licensed to operate in Australia.

e. NEW ZEALAND:
Major Banks offer online banking service to customers, operate as a division of the bank rather
than as a separate legal entity.
 Reserve bank of New Zealand applies the same approach to the regulation of both
internet banking activities and traditional banking activities. There are however, banking
supervision is based on public disclosure of information rather than application of detailed
prudential rules. These disclosures apply to online banking activity also.

f. SINGAPORE:
The monetary authority of Singapore (MAS) has reviewed its current framework for licensing,
and for prudential regulation and supervision of bank, to ensure its relevance in the light of
developments in online banking, either as an additional channel or in the form of a specialized
division, or as stand-alone entities (Internet Only Banks), owned either by existing banks or by
new players entering the bank industry. The existing policy of MAS already all banks licensed
in Singapore to use the internet to provide banking services. MAS are subjecting online
banking. Including IOBs to the same prudential standards as traditional banking.

2.4 TYPE OF RISK ASSOCIATED WITH ONLINE BANKING:

A major driving force behind the rapid spread of online banking all over the world is its
acceptance as an extremely cost effective delivery channel of banking services as compared to other
existing channels. However, internet is not an unmixed blessing to the banking sector. Along with
reduction in cost of transactions, it has also brought about a new orientation to risks and even new
forms of risks to which banks conducting online banking expose themselves. In the following
paragraph a generic set of risks are discussed s the basis for formulating general risk control
guidelines, which this group will addressed.
Operational risk:
Operational risk, also referred to as transactional risk is the most common form of risk associated
with online banking. It takes the form of inaccurate processing of transaction, non enforceability of
contracts,compromises in data integrity, data privacy and confidentiality, UN authorised
access/intrusion to bank’s system and transaction etc. Such risks can arise out of weaknesses in
design,implementation and monitoring of banks’ information system. Besides inadequacies in
34
technology, human factor like negligence by customers and employees, fraudulent activity of
employees and cracker/ hackers etc. Can become potential source of operational risk and security
risk and both terminologies are used interchangeably. Nowadays a large number of fraudulent
websites are coming up which aim to trick persons into disclosing their sensitive personal
information.
Fake Emails method is also known as phishing. In the field of Computer security, Phishing is a
criminally process of attempting to acquire sensitive information such as usernames, passwords and
credit card details by masquerading as a trustworthy entity in an electronic communication.

 Emails are sending by fraudulent bank.

 Customers verify the personal information.
 These Emails guide customers and make them enter the fraud links.
 Thereby disclosing the customers ATM card number and their passwords.

ONLINE BANKING: An analysis from various [Yea

perspectives with a real life example r]
CHAPTER 3: DATA ANALYSIS & FINDINGS
3.1 METHODOLOGY

Methodology Adopted
Methodology basically means the selection of the various methods and techniques in the research-
conducted. The various steps include:

1. Selection of Sample
2. Application of various tools and techniques to obtain relevant information related to the case.
3. Collection of relevant data
34
 4. Analysis and interpretation of data
5. Generation of final report

Collection of data

The data is collected both from the primary and secondary sources.

Primary Source

 Questionnaire Survey.

Secondary Source

 Internet
 Business Newspapers
 Annual Report
 Books

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 3.2 ONLINE BANKING DATA

Chart 1, shows the

total user of online
banking over
the world in 2011

Chart 2, shows the

area wise user’s of e
banking in INDIA

Chart 3, shows the

total paper & electronic
transaction based on
value in INDIA
34
 Chart 4, shows the total paper & electronic transaction in volume in INDIA

Chart 5, shows the

total no of ATM in INDIA

Chart 6, shows the e banking through different media

34
 DATA -State bank of india

Net banking transactions have steadily been rising among State Bank of India customers. The
numbers of transactions using Net Banking in November 2012 were 66.47% higher than in
November 2011, while the amount transacted was higher by 46.77% for the same two months. With
an increase in number of transactions, though, the average amount transacted in November 2012 was
11.83% lower than the amount transacted in November 2011.

Some observations:

In the following table number of transaction (in lakhs), amount of transaction (in crores) & growth
rate of transaction (in %) by online banking shown:-

- We can see that in Sep, 2011 no. Of transactions were 202.33 lakhs & in Oct, 2011 no. Of
transaction were 218.07, the growth in no. Of transaction were (218.07-202.33) =15.74 lakhs, in
percentage the growth rate was 7.78%.

- InFeb, 2012 amount of transaction was 143845.63 cr. and it was increase to 225029.81cr.In mar,
2012. The growth rate was 56.44% & it was also decrease in apr, 2012 was 137590.39cr. The decline
rate was 38.86%.

- In Mar 2012, the growth in number of transactions grew by 19.76% month, a substantial rise.
- The growth in number of transactions has been on a steady rise except for in September 2012 where
it declined by -1.47%

MONTH NO OF GROWTH AMOUNT GROWTH AVG AMOUNT PER

TRANSACTION (IN (%) TRANSACTED (%) TRANSACTION(Rs)
LAKHS) (Rs. CRORE)
Sep-11 202.33 - 133467.34 - 65969.62
Oct-11 218.07 7.78% 116080.82 -13.03% 53230.99
Nov-11 205.48 -5.77% 124487.77 7.24% 60583.89
Dec-11 237.09 15.38% 164366.79 32.03% 69326.75
Jan-12 235.05 -0.86% 143538.03 -12.67% 61067.02
Feb-12 240.2 2.19% 143845.63 0.21% 59885.77
Mar-12 287.66 19.76% 225029.81 56.44% 78227.7
Apr-12 269.32 -6.38% 137590.39 -38.86% 51088.07
May-12 281.88 4.66% 155751.26 13.20% 55254.46
Jun-12 293.55 4.14% 168515.84 8.20% 57406.18
Jul-12 309.58 5.46% 160639.69 -4.67% 51889.56
Aug-12 322.06 4.03% 162578.98 1.21% 50840.96
Sep-12 317.33 -1.47% 182977.41 12.55% 57661.55
34

Oct-12 334.2 5.32% 182525.47 -0.25% 54615.64

Nov-12 342.08 2.36% 182716.43 0.10% 53413.36
 As on November 2012, the total number of internet banking transactions stood at 342.08 lakh
while the amount transacted was at Rs 182716.43 crore.
 March 2012 saw Rs 225029.81 crore being transacted – a month-on-month growth of 56.43%
while October 2011 saw Rs 116080.82 crore being transacted – the lowest in the given time
period.
34
  Note that the numbers of transactions in March 2012 are not even close to the number of
transactions in November 2012, indicating that transactions worth large amounts were made
during March 2012 through Net Banking.

ONLINE BANKING: An analysis from various [Yea

perspectives with a real life example r]

QUESTIONNAIRE SURVEY AND ANALYSIS

3.3 ANALYSIS OF DATA COLLECTION
SAMPLE SIZE OF POPULATION:-
According to the data collection method adopted, the sample size of the population is 50.
Thus, N=50
After collecting the data the following facts were found out:-
34
 1) Which type of banking would you like?

Mode of banking online banking Traditional banking both

Percentage 29 36 35

Analysis & interpretation:

In the above chart it is seen that online banking is developed but not very good, result is not notable.
Percentage of use of online banking
is only 29 and at the age of 21st
century 36% people use traditional
banking.
2) Which bank is better for online
banking?
Name of banks S.B.I ICICI ALLAHABAD AXIS HDFC OTHER
Percentage 35 17 9 10 11 18

3) Which gender prefers

online banking?
Gender Male Female
Percentage 56 44
34
Analysis & interpretation:
It has been found that out of 100 respondents, 56 respondents are male and 44respondents are female
who use online banking system. The reason for this is only because more number of males is the money
earners in the society as compared to females.

4) Which age group prefer online banking?

Age group Below25 26-35 36-45 Above 45
Percentage 22 50 23 5

Analysis & interpretation:

Abovechart it will be notable that
26-35 age groups were mostly
user’s of online banking and
above 45 age groups were lower
users of online banking.

5) Income group?
Income Below 10000 10001-15000 15001-20000 20001-30000 Above 30000
Percentage 8 15 20 23 34
34
6) Reason of use?
Reason of use Cheapest Effective Fast Safe to use other
Percentage 20 22 30 14 14

7) Reason of don’t
use?
Reason Slow service Difficult Unsafe No knowledge other
Percentage 15 17 14 36 18

8) Satisfaction level?
Satisfaction Better Good Bad Don’t know
percentage 40 28 18 14
34
9) Period of
banking?
Period of use Daily Weekly Fortnight Month
Percentage 22 24 36 18

10) Security risk?

Security responses Yes No Don’t know
Percentage 52 27 21

ONLINE BANKING: An analysis from various [Yea

perspectives with a real life example r]
CHAPTER
4:
conclusion
34
E banking is an umbrella system which is easy to understand, easy to define. There is no perfect
definition given by any author or any bank because day by day its nature changing. Now a days IT
technology and its instrument are developing rapidly. It is beneficial for bank to stay in a
competition. At present bank customer are increases hence e banking placed very important role to
handle this customer effectively and to reduce the work burden to staff. Its result is less mistake and
perfection in work of members give productive work to bank to increase the business of bank.
Ebanking software used by bank is tested under RBI expert’s observation so it is 99.99% safe. There
is no chance to become fraud or hacking or net robbery in transaction. Nationalised banks mainly
concentrate on customer hence consistency in development e banking service is good for these banks
having bright future. Successful introduction of the e banking will expedite the economic and social
progress the country. Government should, therefore, establish for facilitated the establishment of the
required educational institution and favourable legal and environmental framework for the e banking.
In brief the study leads to conclude that in view of technology transfer, the world could not be
divided according to the development status of developed and developing countries. Just on contrary,
modernisation of the economy true transfer adaptation even of the most developed technology help
ultimately expediting the economic progress and removing the development gap between developed
and under developed countries.

CHAPTER 5: Bibliography& REFERENCES

WEBSITE:
www.google .com
34
 www.sbi.co.in
www.medianama.com
www.rbi.org.in
www.businesslink.gov.uk
www.en.wikibooks.org
www.en.wikipedia.org
REFERENCES

BOOKS: -

a. BhaskarBharat , electronic commerce

TMH, 3rd edition, 2010
b. MurtiC.V.S , e commerce concepts,
Himalaya publication house.
c. Singh Yatindra, cyber laws
Universal publishing company 2005
d. Kotler & Kevin Lane Kellar, Marketing management
Philip pearson prentice hall, first Indian reprint 2006
e. Laudon & Travellar e-business, technology, society
Pearson 2008.
f. Margherita pagani, encyclopedia of multimedia technology and networking
Volume 1, pp278.
g. P.T. Joseph electronic commerce – An Indian prospective.
P.H.I, 3rd edition, july 2009.
h. Pandey, Srivastava & shukla, e-commerce and its application.
S. Chand, revised edition 2010.

JOURNALS: -
a. Global journal of international business research volume 2. No. 2. 2009.
Singh Sumanjeet 17 emergence of payments systems in the age of e-commerce.
b. Saibal Sen the Times of India (Times City), Kolkata.
c. Lavasani K, Movahei B. Kumar V. (2009) international journal of knowledge.

Annexure-I

Supervisor’s Certificate

This is to certify that Mr. SUBHASHISH CHOWDHURY a student of B.Com.

Honours in Accounting & finance of KHUDIRAM BOSE CENTRAL COLLEGE
34
under the University of Calcutta has worked under my supervision and guidance for
his project work and prepared a project report with the title on-line banking which he
is submitting, is his genuine and original work to the best of my knowledge.

Place: KOLKATA Signature

Date: Name: SUBHASHISH CHOWDHURY
DIVISION: B.COM HONS. PART-III
Name of college: KHUDIRAM BOSE CENTRAL COLLEGE

Annexure-II

Student’s Declaration

I hereby declare that the project work with the title ON-LINE BANKING submitted
by me for the partial fulfilment of the degree of B.com. Honours in Accounting&
finance under the university/institution of Calcutta is my original work and has not
34
been submitted earlier to any other university for the fulfilment of the requirement for
any other course of study.

I also declare that no chapter of this manuscript in whole or in part has been
incorporated in this report from any earlier work done by others or by me. However,
extracts of any literature which has been used for this report has been duly
acknowledged providing details of such literature in the references.

Place: KOLKATA

Date :

Name: SUBHASHISH CHOWDHURY

Address: 195/B, SHYAMNAGAR ROAD

KOLKATA-700055

REGISTRATION NO:

ROLL:

34