E - Banking

By Amir

June 4, 2011

Contents

Contents
1. 2. 3. 4. 5. 6. 7.

Page Number Objectives Background Introduction Discussion Future of Banking Conclusion References 3 3 4 5 12 13 14

Objectives of study The objectives of this study are as follows: 1. 2. 3. Discuss the background of ebanking Discuss and review literature on Ebanking services Point out future of Ebanking and Banking services

Background This paper sheds light on the banking practice in general and on ebanking in particular. The banking has been in practice since last one century and the banks have continuously evolved through a successive process of growth and phasing into the mainstream business. It is essentially a service industry and offers services to its customers. Todays bank is very much a part and parcel of the life of every individual and it is also a part of the business circles of every size whether small, medium or large enterprise. It is also found in every part of the world whether developed or under developed. And it is well connected worldwide and is serving the business world as well as individuals in every part of the world. Banking has been adopted by individuals and corporations alike in the history of banking. The facilities and services offered by the banks have always been welcome by the business and residential customers alike. The banking services are hallmark of a modern lifestyle and they tend to be seen and recognized by the

individuals and corporations as a stand by support for financial and transactional needs and it also serves them as a support, mentor and guide for how to better manage their finances and how and where to invest and where and how to steer their investment decisions and how to improve their investment portfolio and how to where and how

much to invest and divest so that they can optimize on their financial assets and minimize their financial liabilities. The entire system is built around and on the basis of interest or Riba which is Haram in Islam. Islam offers its own banking and financial system which is free of interest or Riba. Modern day Islamic countries have failed to evolve their own interest free banking and financial system and instead adopted the western non-islamic interest based banking system which has already been globalized. The irony is that the modern day Islamic world is no exception to the global coverage provided by the interest based banking system. While banking has been growing leaps and bounds in the economic life of every society, it has become an integral part of the financial and economic structure of every modern society.

Introduction The term ebanking refers to the banking practices via electronic means. In an ebanking environment the bank and the customer deal via electronic means rather than face to face and they tend to transact electronically. The ebanking has facilitated the banking practice so such an extent that it has caught on very quickly with the customers. The customers of ebanking can do their transactions online and from a remote distance, therefore the ebanking is a one of the most preferred banking modes of a modern banking customer. Banking in general has been very popular and ebanking has caught on fairly quickly and it is still phasing in the modern banking practices. The art of ebanking is simple and helps the customers to perform many of their jobs relate to banking while they are on the go. A student can check his bank account while he is traveling to his university. An n executive can access his account and check his account

balance and even make their transactions or send the money electronically while he is in his office, a housewife can check her account balance while she is at home. Ebanking has many different way, shapes and forms, There is SMS banking, there is tale-banking and then there is proper internet banking, All of these are soft banking practices and they all refer to the ebanking practice, The SMS banking refers to banking services that banks are offering Via SMS service. The short messaging service of mobile phones is linked and adopted by several banks to transact with their customers. Via SMS one can deposit their utility bills can be paid , School fees can be deposited , one can check his account balance and one can send money to another account and can also perform many ebanking services.

Discussion A modern customer does not have the luxury of time and his time is money. He wants to invest his time as much cautiously as money. He knows that if he mismanages his time, he will loose money, therefore time is money. The ebanking is an answer to many of his needs on this perspective. He can perform many of his jobs and day to day banking activities which ate into his precious time, He can deal with all financial activities by means of ebanking. A modern customer is an ebanker. He prefers not to visit a bank branch as long as he can meet his banking need via one of the available ebanking means and ways. Therefore, ebanking is considered as an answer to many of the problems of the customer of modern day baking market.

Telebanking is also considered as part of the internet banking. In the telebanking services by dialing the given Telebanking number from anywhere, the customer can access their accounts and by following the user-friendly menu, entire banking set up can be conducted through Interactive Voice Response (IVR) system which is purpose built and designed to serve the customer. There are sufficient numbers of hunting lines available with this system and the customer calls never fail or go un attended. The system is built around in several local languages and acts to the usage ability of the customer. The modern day organization is highly interactive and dependent on the ebanking services. The accounts department is functional on ebanking system and it can check its daily cash balance and issue checks and make payments and transfer the funds through ebanking and tele-banking services alone. It saves on the time and effort of the organisation.

In Pakistan the ebanking growth has been gradual and the usage has been accelerated by an adoption rate much quicker and faster as the consumer awareness and internet usage is becoming wide spread in the country. Initially the internet banking was a matter of few services to be launched in the private sector business especially those that had the foreign operations and needed quick and easy transactions to be made via internet. But with the passage of time and with the growing use of the internet and the awareness of the security issues that have been overcome by the banks, the usage and adoption of the ebanking facilities has been accelerated to a great extent by the users in Pakistan.

While ebanking is easy for the customers to adopt and it has a very fast adoption amongst the yonger and modern urban customer, what are the sensitivities of the banking sector. The Ebanking has been the built around and structured on the IT platforms, Internet connectivity and mobile technology. Many of the internet connectivity platforms support and enhance the ebanking functionality. The IT platforms combined with internet connectivity forge the possibilities of ebanking services. There are many security issues involved with respect to safety of and security and confidentiality of customer financial data and accounts when it comes to internet banking. The internet after all it is not a very safe place to show ones financial data. Especially data and transactions about credit cards and funds transfer are very much prone to theft and hacking. Many hackers are surfing the net with their hacking tools to steel important customer information for illegitimate use.

Ebanking has its origins in the US and UK in earlier and later parts of the 20th century. The web based transactions started to take roots in the European continent ion the 1980. The ebanking was thought of as sceptical by the business world for quite some time in the early stages of its development. But the user-friendly means and easy to operate technology has made it possible for the customers to believe in ebanking and start actually doing it well. No many secured banking deals are performed via ebanking means.

The ATM is another form of electronic transaction whereby the customer has access to his account and his funds via the electronic means. He can deposit and withdraw money

and in fact perform many of his transactions via the TAM machine in a 24/7 fashion without the need to go to his particular branch or where he has his account. He can do all of these transactions anywhere on any ATM machine and his account becomes accessible to him via the widespread network of ATM machines.

Credit cards are a very popular means of the modern banking where a customer is allowed by his bank to spend more than his actual balance in his account. He actually does not have to worry about the balance in his account because credit card is a post paid card and he can purchase things from outlets and does not need to worry about the balance in his account as his bank will pay for the transactions wand he can spend the money within a certain limit . After he purchases something, the merchant contacts the bank electronically and seeks permission for the funds and after getting the permission, he can release the shopping goods of the buyer. On similar grounds there is a debit card which is a prepaid card. Here the account holder can use his debit card to make shopping and pay his bills electronically via debit card through the balance he already has on his bank account. These two electronic and plastic cards also called the plastic money are very popular and many of the business private and business customers us them regularly.

For the corporate customers banks have another safer facility called corporate banking terminal where the large corporate customers can login into the bank's database and be connected to and have access to their accounts and transactional records of their

business house. This facility has still not been started for the individual private customers.

All the private and international banks have offered ebanking facilities to their clients and their websites have special portals that deal with ebanking facilities and the consumers can access the ebanking facilities and make the transactions online to smoothly run their business and meet the financial needs of the day. While ebanking is easy for the customers to adopt and it has a very fast adoption amongst the yonger and modern urban customer, what are the sensitivities of the banking sector. The Ebanking has been the built around and structured on the IT platforms, Internet connectivity and mobile technology. Many of the internet connectivity platforms support and enhance the ebanking functionality.

Atta reports that the significant growth in e-banking trends in Pakistan is due to widespread use of internet, especially high speed internet DSL and ADSL in Pakistan. Alongside the factors that the increasing number of free lance workers in the country who work for overseas companies tend to use E-Banking instead of paper banking and the internationalization and globalization trends are forging the use of e banking from the macro environment. The expatriate community in different parts of the world are inclined to use ebanking facilities because they can access their accounts back home in Pakistan via internet at the click of a button. They also need to transfer money to their relatives back home and they can accomplish that via internet and ebanking. The reliability and confidentiality of ebanking services is an issue that is of paramount

concern to the users of ebanking services, but still individual residential consumers, SMEs, mid scale companies and the corporate business houses are equally inclined to use the internet banking and other ebanking services because they offer flexibility and ease of convenience and making the transactions at the touch of a button.

Kondabagil (2007) report there are now branchless banks in operation which do not have a physical branch location. They serve their customers via internet and the ebanking services. All of their services are provided via internet and ebanking services.

As regards the fees and charges by the banks on ebanking services, the banks are in stiff competition to reduce the charges of the ebanking services. As Edhi puts it: The banks should ensure that the services offered by them are customer friendly and convenient. Fees and charges on e-banking services should be kept at a minimum so as to encourage the usage. Customer awareness should also be increased to encourage use of services such as ATM, credit cards and internet banking. The ebanking charges are in direct competition with many other kinds of services also and the value added that they offer is tremendous when seen from a customers perspective. The ebanking is of tremendous value to the customer because it helps them in conducting their business more smoothly and also helps them with their financial needs on a day to day basis. While ebanking seems easy, in some sense it is very expensive and it costs a lot of money to the users and also generates huge amount of income for the banks. The banks are by no means offering these ebanking services free of charge. They are charging huge sums of money on these services as they are generally charging fees and costs on a per transaction

basis. This raoises huge sum of msoney for the banks via ebanking services. Since consumers see their convenience as paramount, they tend to use these eService soften enough to make huge sum of money for the banks

The ebanking has some major challenges and obstacles to meet before it can reach every nook and corner of every society like paper banking. It needs to overcome the issue of security of information and security of transactional information and adapt while the customers put on the internet while using ebanking. The usage the internet service is wide spread it is subject to information theft and hacking. There are several security checks and measures taken and being adopted by the IT platform and they are being adopted by and integrated into the platform being so developed for the ebanking services in order to ensure the safety and security of the ebanking and customers data and information. The reliability and confidentiality of ebanking services is an issue that is of paramount concern to the users of ebanking services, but still individual residential consumers, SMEs, mid scale companies and the corporate business houses are equally inclined to use the internet banking and other ebanking services because they offer flexibility and ease of convenience and making the transactions at the touch of a button.

While the ebanking is a need of the hour and it has already integrated well into the lifestyle of individual residential customers and the business segments alike, they can not think if living without it now since it helps them and facilitates them in their daily tasks and responsibilities. They can rely on it for the sake of the financial transaction accuracy, speed and reliability. The speed and reliability accompanied by a sense of

convenience that sis offered by the ebanking is deeply embedded in the value that is seen to be added by the ebanking services. This attracts the customers from the perspective of being a user friendly and use of service at the touch of a button or the click is the essential attraction that the customers are attracted to.

Future of Banking & Ebanking While the banking sector has evolved through successive phases of growth and development, it has achieved tremendous growth in terms of financial strength and offered several services that add value to the life of a common residential customer and to the business man and organizations of every size. Lately, the launch of ebanking services side by side paper banking services has introduced the banking services in a new and a softer side of the banking with a high level of functional efficiency. The future of banking seems to be in branchless banking as most of the banks are moving to launch their services via internet which is promoting branchless banking.

Conclusion From the foregoing discussion e can conclude that the banking has been a part of the human life on earth since he last one or to centuries. It has taken care of the financial and economic side of humanity in terms of offering services that add value to the financial and economic benefit of the individual and organization. While banking has evolved through several successive phases of growth and development, it has reached a mature phase in the modern times and has become an integral part of the life style of common individuals and the businessmen alike. The facilities and services offered by the banks have always been welcome by the business and residential customers alike. The banking services are hallmark of a modern

lifestyle and they tend to be seen and recognized by the individuals and corporations as a stand by support for financial and transactional needs and it also serves them as a support, mentor and guide for how to better manage their finances and how and where to invest and where and how to steer their investment decisions and how to improve their investment portfolio and how to where and how much to invest and divest so that they can optimize on their financial assets and minimize their financial liabilities. It has been growing to this stage on a stepwise process with equal amount of adoption and growth adopted by individuals and the organizations alike. The ebanking services have been launched in the last two decades which have offered tremendous amount of convenience and facilitation to the common individual and also added high value to the lifestyle of individual residential consumers and the business customers alike. The business customers have adopted the high value ebanking services because they offer high level of functional efficiency.

References
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Amir

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(2011)Web.

http://propakistani.pk/2008/09/14/ebanking-trends-in-pakistan-on-rise/ [Accessed:4.June.2011]
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http://www.pakistanbanks.org/events_highlights/interviews/ebanking_now_more_sophist icated.html [Accessed:4.June.12011]

3. Jayaram Kondabagil. Risk management in electronic banking: concepts and best

practices.(2007)web.http://books.google.com.pk/books? id=niDYdutzsnEC&printsec=frontcover#v=onepage&q&f=false [Accessed:4.June.12011] [accessed: