What is E banking?

The
use
ofcomputersto
carry
outbankingtransactionssuch
as
withdrawals
throughcashdispensers
ortransferoffundsatpoint of sale
For many people, electronic banking means 24hour access to cash through an automated teller
machine (ATM) or Direct Deposit of paychecks into
checking or savings accounts. But electronic
banking
involves many
different
types
of
transactions,
rights,
responsibilities

and
sometimes, fees.
Electronic banking, also known as electronic
funds transfer (EFT), is simply the use of
electronic means to transfer funds directly from
one account to another, rather than by cheque or
cash.

Objectives of E-Banking
From bankers point of view

Detailed service at
reduced cost
Reduction of
Administrative
expenses
Reduction of
volume of paper
work
Increasing income
Strengthening the
position in
competitive
environment

From Clients point of view

HISTORY AND
DEVELOPMENT OF EBANKING

Structure Of EB

In
front
Servic
es
Count
Back
er of
Offic
EB
e
EB

Primitive stage
Disbursement
Intermediate stageCash
strategy
Telephone bills, POS,
Modern stage
Cheque verification etc
Home banking, EFT,
Internet banking, AOFT,
EDD etc.

Primitive stage
Intermediate
stage
Modern stage

Ledger, Cash management

ans Head office-MIS
Fund transfer, automated
clearing house, offline
transaction processing etc.
Online transaction processing,
Internet banking, Intra banking
transaction

Basic component of E
Banking
1
2
3
4

Type of E-Banking
POS
Retail
Debit
ATM
Credit
Cheque
ACH
Card
EB
Truncation
Service
HomeCard
Banking

Cash
Wire
ACH
Transfer
Management
Wholesale
EB

ATM- Automated Teller

Machin

An electronic banking outlet, which

allows customers to complete basic
transactions without the aid of a
branch representative or teller.
There are two primary types of
automated teller machines, or
ATMs. The basic units allow the
customer to only withdraw cash and
receive a report of the account's
balance.
The
more
complex
machines will accept deposits,
facilitate credit card payments and
report account information.

Objectives:
Increase profit
Reduce internal
operational expenses
Creating market in
domestic and foreign
countries
Highly efficient
services
Ensuring the
computational

How does a customer operates

ATM?

Securities of
ATM
Fraudulent
Authorization
Violation of data
link
Dishonest
Personnel
Physical

Components of ATM
1. Speaker
2. Display
Screen
3. Receipt
Printer
4. Cash
Dispenser

Debit Card

An electronic card issued by a bank which allows bank

clients access to their account to withdraw cash or pay for
goods and services. This removes the need for bank clients
to go to the bank to remove cash from their account as
they can now just go to an ATM or pay electronically at
merchant locations.

 The debit card system was invented by

Frenchman Roland Moreno in 1974. He was
only 29 years old when he introduced the
debit card system and today the debit
cards are world wide used.
The First National Bank of Seattle issued
the first debit card to business executives
with large savings accounts in 1978.

Credit card

A card issued by a financial company giving the

holder an option to borrow funds, usually at point
of sale. Credit cards charge interest and are
primarily used for short-term financing. Interest
usually begins one month after a purchase is
made and borrowing limits are pre-set according

 According to Encyclopedia Britannica, "the use of

credit cards originated in the United States during
the 1920s, when individual firms, such as oil
companies and hotel chains, began issuing them to
customers." However, references to credit cards
have been made as far back as 1890 in Europe.

Point of sales
The place where sales are made. On a macro
level, a point of sale may be a mall, market or
city. On a micro-level, retailers consider a point
of sale to be the area surrounding the counter
where customers pay.
Also known as "point of purchase".

Check truncation.
To process payments faster and more efficiently,
many banks no longer transport paper checks, but
replace them with digital images -called substitute
checks -- that can be transferred electronically, in
a system called check truncation.
Cheque truncation is the conversion of a
physicalchequeinto asubstitute electronic
formfor transmission to the paying bank. Cheque
truncation eliminates cumbersome physical
presentation of the cheque and saves time and
processing costs.

Retail Automated Clearing House

Services
An electronic funds-transfer system run by the National
Automated Clearing House Association. This payment system
deals with payroll, direct deposit, tax refunds, consumer bills,
tax payments and many more payment services.

Three types of transactions occus

through ACH
1. Credit Entry
2. Debit Entry
3. Pre-notification Entry

Home Banking

The practice of conducting banking transactions from home rather

than at branch locations. Home banking generally refers to either
banking over the telephone or on the internet. The first experiments
with internet banking started in the early 1980s, but it did not
become popular until the mid 1990s when home internet access was
widespread. Today, a variety of internet banks exist which maintain
few, if any, physical branches.

Wholesale Electronic
Banking
Cash Management
Cheque
Collection

1.Mail float
2.Processing float
3.Collection float

Disbursement

The act of paying out or disbursing money.

Disbursements can include money paid out to run
a business, spending cash, dividend payments,
and/or the amounts that a lawyer might have to
pay out on a person's behalf in connection with a
transaction.

Controlled Disbursement
A technique commonly employed in corporate cash
management. Controlled disbursement is used to
regulate the flow of checks through the banking
system on a daily basis, usually by mandating oncedaily distributions of checks (usually early in the day.)
This is done in order to meet certain investment or
fund management objectives.
Important Internal Controls for Cash
Disbursements

Segregate duties.
Review authorized signors
Consider requiring dual signatures
Remember the wire transfers
Reconcile bank accounts in a timely manner

Wire Transfer
An electronic transfer of funds across a network
administered by hundreds of banks around the world.
Wire transfers allow for individualized transfer of funds
from single individuals or entities to other individuals or
entities, while still maintaining efficiencies of fast and
secure movement of funds.

Fed wire
Areal-time gross settlement system that enables
participants to initiate funds transfer that are
immediate, final, and irrevocable once processed.

How it
works?

Bank Wire
An electronic message system allowing major banks to
communicate various actions or occurrences regarding
client accounts. The wire represents a secure
computerized messaging system that sends account
information, notifications and transaction requests
between banks.

Online or internet Banking

The performance of banking activities via the Internet.
Online banking is also known as "Internet banking" or
"Web banking." A good online bank will offer customers
just about every service traditionally available through
a local branch, including accepting deposits (which is
done online or through the mail), paying interest on
savings and providing an online bill payment system.

Risk in Electronic Banking

Operational Security risk

Legal risk
Reputation Risk
Traditional Banking Risk

Handling Risk In EB
Human resources
Policy and Procedures
External threats, security and
technology
Regulatory and Legal compliance
Uses and Transaction