Project Mcom PDF

Prahladrai Dalmia Lions College Of Commerce & Ecomnomics.
Chapter:-1 Introduction
Indian Bank is an Indian state-owned financial services company established in
1907 and headquartered in Chennai, India. It has 20,924 employees, 2900
branches with 2861 ATMs and 1014 cash deposit machines and is one of the top
performing public sector banks in India. Total business of the bank has touched
₹430,000 crore (US$62 billion) as on 31 March 2019. Bank's Information
Systems & Security processes certified with ISO27001:2013 standard and is
among very few Banks certified worldwide. It has overseas branches in
Colombo and Singapore including a Foreign Currency Banking Unit at
Colombo and Jaffna. It has 227 Overseas Correspondent banks in 75 countries.
Since 1969, the Government of India has owned the bank. As per the
announcement made by the Indian Finance Minister Nirmala Sitharaman on 30
August 2019, Indian Bank will be anchor bank for the Kolkata-based Allahabad
Bank, and this merger is expected to come on force from 1 April 2020, making
it the seventh largest bank in the country.
Online banking, also known as internet banking, is an electronic payment
system that enables customers of a bank or other financial institution to conduct
a range of financial transactions through the financial institution's website. The
online banking system will typically connect to or be part of the core banking
system operated by a bank and is in contrast to branch banking which was the
traditional way customers accessed banking services.
Some banks operate as a "direct bank" (or “virtual bank”), where they rely
completely on internet banking.
Internet banking software provides personal and corporate banking services
offering features such as viewing account balances, obtaining statements,
checking recent transaction and making payments.
Impact of internet banking system and technology on Indian banks.

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Chapter :-2 History Of Indian Banks.

Early formation and expansion
In the last quarter of 1906, Madras (now Chennai) was hit by the worst financial
crisis the city was ever to suffer. Of the three best-known British commercial
names in 19th century Madras, one crashed; a second had to be resurrected by a
distress sale; and the third had to be bailed out by a benevolent benefactor.
Arbuthnot & Co, which failed, was considered the soundest of the three. Parry's
(now EID Parry), may have been the earliest of them and Binny and Co.'s
founders may have had the oldest associations with Madras, but it was
Arbuthnot, established in 1810, that was the city's strongest commercial
organization in the 19th Century. A key figure in the bankruptcy case for
Arbuthnot's was the Madras lawyer, V. Krishnaswamy Iyer who founded the
Indian bank which was an offshoot of nationalistic fervor and the Swadeshi
movement, when the then British Arbuthnot Bank collapsed and the Indian
Bank emerged. Mr. V. Krishnaswamy Iyer solicited the support of the
Nagarathar Chettiars authored by Mr. Ramasamy Chettiar, who was Annamalai
Chettiar's elder brother. Sri V. Krishnaswamy Iyer and Mr. Ramasamy Chettiar
were one of the first directors of Indian Bank. Later on in 1915, Mr. Annamalai
Chettiar was inducted into the board of the Indian Bank. It commenced
operations on 15 August 1907 with its head office in Parry's Building, Parry
Corner, Madras.
In 1932 IB opened a branch in Colombo. It opened its second branch in Ceylon

in 1935 at Jaffna, but closed it in 1939.[4] IB next opened a branch in Rangoon,
Burma, in late 1940. Then in late 1941 IB opened branches in Singapore, Kuala
Lumpur, Ipoh, and Penang. The exigencies of war forced IB to close its
Singapore and Malayan branches with months. The closing of the Singapore
branch resulted in little loss to IB; the loss of the branches in Malaya was much
more costly.
World War II resulted in further financial problems for IB and it was forced in
1942 to close a number of its branches in India, and also its branch in Colombo.

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Post Independence of India

A 2017 stamp dedicated to the 111th anniversary of Indian Bank
A branch of Indian bank branch at Chettipet in Pondicherry
After the war, in 1947, it reopened its branch in Colombo. Indian Bank also
reopened its branches in Burma, Malayan and Singapore, the last in 1962. The
Burmese government nationalised all foreign banks, including Indian Bank's
branch, in 1963.
The 1960s saw IB expand domestically as it acquired Rayalaseema Bank (est.
1939), Mannargudi Bank (est. 1932), Bank of Alagapuri, Salem Bank (est.
1925), and Trichy United Bank. (Trichy United was the result of the 1965
merger of Woraiyur Commercial Bank (est. 1948), the Palakkarai Bank, and the
Tennur Bank (est. 3 March 1947.) These were all small banks with the result
that all the acquisitions added only about 38 branches to IB's network. Trichy
United had five branches and its acquisition in 1967 brought the number of IB
branches up to 210.
Then on 19 July 1969 the Government of India nationalised 14 top banks,
including Indian Bank. One consequence of the nationalisation was that the
Malaysian branches of nationalised Indian banks were forbidden to continue to
operate as branches of the parent. At the time, Indian Bank had three branches,
and Indian Overseas Bank, and United Commercial Bank had eight between
them. In 1973 the three established United Asian Bank Berhad to amalgamate
and take over their Malaysian operations. Post-nationalization, Indian Bank was
left with only two foreign branches, one in Colombo and the other in Singapore.
International expansion resumed in 1978 with IB becoming a technical adviser
to PT Bank Rama in Indonesia, the result of the merger of PT Bank Masyarakat
and PT Bank Ramayana. Two years later, IB, Bank of Baroda, and Union Bank
of India established IUB International Finance, a licensed deposit taker in Hong
Kong. Each of the three banks took an equal share in the joint venture; IB's
Chairman became the first Chairman of IUB International Finance. In May
1980, IB also opened a foreign currency unit at its branch in Colombo.
In 1981 IB set up its first Regional Rural Bank, Sri Venkateswara Grameena
Bank, in Chittoor.

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Post nationalisation
In 1983 ethnic sectarian violence in the form of anti-Tamil riots resulted in the
burning of Indian Overseas Bank's branch in Colombo. Indian Bank, which may
have had stronger ties to the Sinhalese population, escaped unscathed.
In 1990, Indian Bank rescued Bank of Tanjore (Bank of Thanjavur; est. 1901),
with its 157 branches, based in Tamil Nadu.
A multi-crore scam was exposed in 1992, when then chairman M.
Gopalakrishnan lent ₹13 billion to small corporates and exporters from the
south, which the borrowers never repaid.
Bank of Baroda bought out its partners in IUB International Finance in Hong
Kong in 1998. Apparently this was a response to regulatory changes following
Hong Kong's reversion to Chinese control. IUB became Bank of Baroda (Hong
Kong), a restricted licence bank.
In June 2015, business of the bank crossed the Milestone Target of ₹ 3,00,000
crore.
On 30 August 2019, Finance Minister Nirmala Sitharaman announced that

Allahabad Bank would be merged with Indian bank. The proposed merger
would create the seventh largest public sector bank in the country with assets of
₹8.08 lakh crore (US$120 billion).

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History Of Internet Banking and Technology.

Precursors
The precursor to the modern home banking services were the distance banking
services over electronic media from the early 1980s. The term 'online' became
popular in the late 1980s and referred to the use of a terminal, keyboard and TV
(or monitor) to access the banking system using a phone line. 'Home banking'
can also refer to the use of a numeric keypad to send tones down a phone line
with instructions to the bank.
Emergence of computer banking

The first known deployment of home computer banking to consumers came in
December 1980 at United American Bank, a community bank headquartered in
Knoxville, Tenn. United American partnered with Radio Shack to produce a
secure custom modem for its TRS-80 computer that would allow bank
customers to access account information securely. Services available in its first
year included bill pay, account balance checks, and loan applications, as well as
game access, budget and tax calculators and daily newspapers. Thousands of
customers paid $25–30 per month for the service.
Large banks, many working on parallel tracks to United American, followed in
1981 when four of New York's major banks (Citibank, Chase Manhattan,
Chemical and Manufacturers Hanover) offered home banking services. using
the videotex system. Because of the commercial failure of videotex, these
banking services never became popular except in France (where the use of
videotex (Minitel) was subsidized by the telecom provider) and the UK, where
the Prestel system was used.
The developers of United American Bank's first-to-market computer banking
system aimed to license it nationally, but they were overtaken by competitors
when United American failed in 1983 as a result of loan fraud on the part of
bank owner Jake Butcher, the 1978 Tennessee Democratic nominee for
governor and promoter of the 1982 Knoxville World's Fair. First Tennessee
Bank, which purchased the failed bank, did not attempt to develop or
commercialize the computer banking platform.

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Chapter:-3 How Internet Banking Introduced On Indian

Banks.
Online banking was first started in 80’s. The term online became famous in the
late ‘80s. Online banking during the formative years included usage at
terminal, keyboard and TV (or monitor) with an intention to approach the
banking system using a phone line. Online services started in New York in 1981
when four of the city’s major banks (Citibank, Chase Manhattan, Chemical and
Manufacturers Hanover) offered home banking services using the videotext
system. Later on, the concept of videotext became popular in France. In UK,
first home online banking services were set up by the Nottingham Building
Society (NBS) in the year 1983. It was based on the UK’s Prestel system and
used a computer, such as the BBC Micro, or keyboard (Tandata) connected to
the telephone system and television set. It provided customer an option to
make bill payment for gas, electricity and telephone companies and accounts
with other banks. It was Stanford Federal Credit Union which offered online
internet banking services to all of its customers .
Internet banking refers to the use of Internet as a remote delivery channel for
banking services such as opening a deposit account or transferring funds at
different accounts etc. Further, it is a desirable opportunity for banks where
the key to success is customer adoption . There is evolution in development of
internet banking. At the basic level, Internet banking includes the setting up of
a web page by a bank to give information about its product and services . At an
advance level, it involves provision of facilities such as accessing accounts,
funds transfer, enabling integrated sales of additional process and access to
other financial services such as investment and insurance . There is advantage
for customers as it provides opportunity to handle their banking transactions
without visiting bank tellers . The services through Internet banking are e-tax
payment; access the account to check balance, online trading of shares, online
remittance of money,electronic bill payment system, railway reservation,
transfer of funds from one customer’s account to other, application of loan,
etc. Internet banking channel is convenient compared to bank branch system
because stakeholders can access their account at any time . Banks leveraged
the advantage of the Internet by offering online services in recent years.
Thulani et al. identified three functional levels of Internet banking which are
informational, communicative and transactional. Under informational level, it

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has been identified that banks have the marketing information about the
bank’s products and services on a standalone server. The risk is very low as
informational systems have no path between the server and the bank’s
internal network. Communicative level of Internet banking allows some
interaction between the bank’s systems and the customer. This level of
interaction is limited to e-mail, account inquiry, loan application, static file
updates and it permits no fund transfer. Transactional level Internet banking
allows bank customers to electronically transfer funds to/from their accounts,
pay bills and conduct other banking transactions online. There are higher risk
levels in transaction levels as compared to that of other two levels.
In India, Reserve Bank of India outlined the mission to ensure that payment
and settlement systems are safe, efficient, interoperable, authorized,
accessible, inclusive and compliant with international standards. The Vision is
to proactively encourage electronic payment system for ushering in a less cash
society in India . Regulation is keen to promote innovation and competition
with an intention to help payment system achieve international standards.
Various initiatives by Reserve Bank of India, in mid-eighties and early-nineties,
resulted in offering technology based solutions. The need evolved to provide
costeffective alternative system.
Electronic Clearing Service (ECS) was launched in 1990s to cater to bulk and
repetitive payments. By September 2008, a new avatar in the form of National
Electronic Clearing cell was launched to handle multiple credits to beneficiary
accounts. National Electronic Clearing Service (NECS) rides on core banking
solution of member banks. The retail funds transfer system was introduced in
1990s to allow electronic transfer of fund for people to people payment. In
November 2005, a robust system was launched to allow one to one funds
transfer requirement of individuals and corporates. Prepaid instruments allow
transaction for goods and services against the value stored on payment
instrument. It may be in the form of smart cards, magnetic stripe cards,
internet wallets, mobile accounts, mobile wallets and paper vouchers.
Consequent to the guidelines in mobile banking, selected banks were
permitted to offer the service after receipt of necessary permission from
Reserve Bank of India. Indian Retail payments pose significant challenges and
opportunities. Based on Payment system vision document released by Reserve
Bank of India, the number of non-cash transactions, at 6 per person, is low in
India. It is estimated that Government subsidies alone constitute more than

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Rs.2.93 trillion and electronification has a potential to translate 4.13 billion

electronic transactions in a year. Based on the report of Internet and Mobile
Association of India (IAMAI), internet commerce is expected to reach Rs.465
billion by the year 2012.
To facilitate electronification, Reserve Bank of India established the umbrella
organization, National Payment Corporation of India. Many researches in the
past have laid importance on the significant developments that are taking
place in the banking industry due to the surge in information technology. Sahai
and Machiraju discussed how new technologies addressed different
requirements and how these technologies fit together to provide a ubiquitous
e-market place and e-service vision. While many new products are offered in
the area of electronic payment products, banks need to track the usage of
these products . Concerns have been raised over the great ‘digital divide’
between the rich and the poor on the demand side and different operational
environments in the private and public sector banks at the supply side. Dutta
and Roy studied internet growth from a developing country’s perspective and
developed a causal model using System Dynamics (SD) method that will help a
developing country like India to identify the pattern of Internet diffusion as a
result of various policy alternatives taken up to nurture internet diffusion in
the country.

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Chapter:-4 Positive Impact Of Internet Banking On

Indian Banks.
• The biggest revolution came in banks is Digitization.
• Banking process is faster than before and more reliable. Maintenance
and retrieval of documents and records have become much faster and
easier.
• Computerized banking also improves the core banking system. With CBS
(core banking system) all branches have access to common centralized
data and are interconnected.
• With the innovation of MICR cheque processing system, the processing
of cheques becomes more faster and efficient h than before.
• USSD (Unstructured supplementary service data) was launched by
Government, so people with no internet-connectivity too can access
their bank accounts without visiting the branch.
• With increasing internet reach, Internet Banking was developed and now
offered by almost every bank. Through this, every transaction details
and inquiries can be performed online without visiting the bank.
• It offered more transparency in transactions.
• The scope of frauds in banks is being minimized through the use of
passwords, double authentication in online banking.
• Technology also leads to competition among the banks which eventually
provides better services to people.

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• Issues of Technology in Banking

• Following are the important issues regarding e-banking:
• i. New business and new markets: The Indian banking sector is at an exciting point of
evolution. The opportunities to enter new business and new markets and to deliver higher
levels of customer service are immense.
• ii. Competition: As the Indian banks are positioning it as financial service provider, banking
businesses are getting redefined. Technology is unsettling the earlier business processes and
customer behaviour is also undergoing a change. These have enhanced the focus of
competition.
• iii. Competitive advantage: Competitive advantage can be achieved by harnessing the
potential of the employees by creating a positive work culture and enlisting the support of all
the employees to achieve the organizational goals.
• iv. Operational strategies: Indian banks have adopted better operational strategies upgraded
their skill to withstood challenges and have become adaptive to the changing environment.
• v. Data quality and consistency: Banks and financial institutions look at common data
standards and protocols to make the information systems truly interoperable and facilitate
easy data flow. Information governance is emerging as a distinct discipline and this deserves
much more attention.
• vi. IT infrastructure: Banks have accumulated lot of IT infrastructure over the years. They
should actively explore consolidation to improve efficiency and minimize costs.
• vii. IT governance: IT governance is an important component of corporate governance and
banks should put necessary processes and organizational structures to improve performance
as well as compliance.
• viii. IT Outsourcing: Banks should develop in-house IT skills, broad IT management and
leadership competencies. Banks have become increasingly dependent on third party IT
service providers for all technology needs, to the extent that in many cases service providers
are in control of the bank’s technology agenda.
• ix. IT-Business: IT-Business alignment needs special attention to derive better value from IT
investments.
• x. Issue of HRM: Training, development and retaining talented and committed staff is a
major emerging challenge before the public sector banks. Today, employee performance
review systems are neither objective nor transparent. They do not differentiate high
performers, risk takers and innovators lot from amongst the total staff. Time has come to
measure the value of human capital and take urgent steps to ensure it to its optimum level.
• xi. Lack of Actionable Planning: Lack of planning or ineffective planning is very relevant to
public sector banks. Though all the banks have established performance budgeting system and
created MIS, it does not meet the management’s present requirements. Basically, the entire
planning process is deposit and credit oriented. To tackle this challenge actionable strategic
plans which are systematically broken-up into annual plans and performance is strictly
reviewed in terms of the targets and accountability is fixed for non-performance.
• xii. Greater Customer-Orientation: Greater customer-orientation is the only way to retain
customer loyalty and to stay ahead of competition. In a market-driven strategy of
development, consumer preference is paramount. Gone are the days when customers come to
the doors of the banks and now banks are required to chase the customers. Thus, only banks
that are customer-centric and extremely focused on the needs of their clients will succeed and
there is need to change the mindset of banks at all levels on this issue. In fact, they must
realize that customer is the only profit centre and all others are overheads. Identification of
profitable customers, understanding their needs and preferences, improving the delivery
systems and reducing the transaction costs for them should become important strategic issues

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for banks, to survive in the fiercely competitive environment. Enhancing the customer base,
cross selling of products/services and strengthening the customer relationship management is
the most important aspect.
• xiii. Security aspects of banking transactions: Banks are developing alternative channels of
delivery like ATM, Tele-banking, remote access, internet banking etc. The primary issues
centre on the following aspects of information security are:
• a) Authentication and identity of user: The act of verifying the identity of a user.
• b) Confidentiality: The information transmitted has not been intercepted or viewed by any
other party in transit.
• c) Integrity: The information sent, received or stored has not been tampered with modified at
any time.
• d) Non-repudiation: A particular transaction or action taking place, hold the tests of court of
law.
• xiv. Fraud: The kind of fraud that can happen in the emerging banking scenario are as
follows:
• a) Mail Spoofing: Sending wrong information to bank customers as if it is from authentic
bank sources.
• b) Web Spoofing: Diverting the customers of a bank to an exactly duplicated forged web site
and impersonating those customers on real bank site.
• c) Attacking the user Computer: To take control of that machine.
• d) Attacking a Bank’s Server: To take control of that machine.
• e) Media tapping: Recording the whole transactions of a bank, or customer etc .and
replaying the same for their advantage.
• f) Denying Service: Though the server is available, making it not able to render service, by
poisoning the network Infrastructure.

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Pros and Cons of Online Banking

Advantages Disadvantages
An online account is simple to open and easy to Understanding the usage of internet banking
operate. might be difficult at the first. That said, there are
some sites which offer a demo on how to access
online accounts (not all banks offer this). So, a
person who is new to technology might face
some difficulty.
It's convenient, because you can easily pay your You cannot have access to online banking if you
bills and transfer your funds between accounts don’t have an internet connection; thus, without
from nearly anywhere in the world. the availability of internet access, it may not be
useful.
You do not have to stand in a queue to pay off Security of transactions is a big issue. Your
your bills. Also you do not have to keep receipts account information might get hacked by
of all of your bills, as you can now easily view unauthorized people over the internet.
your transactions.
It is available all the time. You can perform Password security is a must. After receiving
your tasks from anywhere and at any time, even your password, change it and memorize it.
at night or on holidays when the bank is closed. Otherwise, your account may be misused.
The only thing you need to have is an active
internet connection.
It is fast and efficient. Funds get transferred Your banking information may be spread out on
from one account to the other very fast. You can several devices, making it more at risk.
also manage several accounts easily through
internet banking.
You can keep an eye on your transactions and If the bank’s server is down, then you cannot
account balance all the time. access your accounts.
You can get to know about any fraudulent If the bank's server is down, due to the loss of
activity or threat to your account before it can net connectivity or a slow connection, then it
pose any severe damage. might be hard to know if your transaction went
through.
It's a great medium for the banks to endorse You might get overly marketed too and become
their products and services. annoyed by notifications. That said, these can
easily be turned off.
More online services include loans and You might become annoyed by constant emails
investment options. and updates.
Various Online Services

An online banking account is easy to open and operate. That said, the online services offered
might differ from bank to bank and from country to country. To learn about the various
services, always go through the welcome kit that you get at the time of opening the account.
Common Online Banking Services
Transactional activities like funds transfer, bill pay, loan applications and transactions.
Non-transactional activities like request for cheque book, stop payment, online statements,
updating your contact information.
Online Banking Around the Globe
Country Percentage of Online Bank Users
Norway 92%

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Denmark 90%
Finland 87%
Sweden 86%
U.K. 68%
U.S.A 67%
India 51%
China 42%
Greece 25%
Bulgaria 5%
Online Banks Around the Globe

Banking over the internet has made life easy for users by providing online access to various
banking services. But, choosing the right bank can be hard. Here are nine banks from around
the globe and a few pros and cons for each.
1. Simple
Simple is an American direct bank. It's based in Portland, Oregon. The company provides
FDIC-insured checking accounts to US Citizens only through a partnership with The Bancorp
and BBVA Compass and is part of the STAR network for surcharge-free access to around
55,000 ATMs.
Country of Origin: U.S.A
Type: Savings
Annual percentage yield (APY): 2.02% (changes overtime)
Pros and Cons of Using Simple Bank
Pros Cons
No monthly maintenance fees or minimum No way to deposit cash directly.
balances.
About 40,000 domestic ATMs available. Simple's bill-pay feature can't process some
payments, including taxes.
No overdraft fees. Not Available Internationally — Unlike
Chase or Schwab, Simple is only available
in the U.S. They're focusing on the basics
but they plan to expand internationally at
some point.
2. Citibank
Citibank is the consumer division of Citigroup. Citibank was founded in 1812 as the City Bank of
New York, and later became First National City Bank of New York. Citibank provides credit
cards, mortgages, personal loans, commercial loans, and lines of credit.
Type: Savings
Pros and Cons of Using Citi Bank

Pros Cons

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Citibank has a large network of ATMs that You can't open just a checking account or
you can use free of charge. just a savings account. You have to open a
"package," which includes both a checking
and savings account.
You can make mobile deposits with the The rates on their savings and CDs are on
Citibank app. the low side.
You don't need a minimum opening deposit Even if you link an eligible deposit account
to open any Citi checking account package. to cover overdrafts, it will still cost you
money.
3. PNC Bank
PNC is a bank holding company and financial services corporation based in Pittsburgh, PA. Its
banking subsidiary, PNC Bank, operates in 19 states and the District of Columbia with 2,459
branches and 9,051 ATMs.
Type: Savings
Pros and Cons of Using PNC Bank

Pros Cons
Strong online and mobile tools, and many $36 overdraft fee can be charged four times
customer service options. daily.
9,000 fee-free ATMs and 2,600 branches in PNC only operates in 19 states.
about 20 states and Washington, D.C.
College students don't pay monthly fees. You need at least $500 in your account to
avoid fees if you don't use direct deposit.
4. Goldman Sachs Bank USA

The Goldman Sachs Group, Inc. is an American multinational investment bank and financial
services company headquartered in New York City. It offers services in investment management,
securities, asset management, prime brokerage, and securities underwriting.
Type: Savings
Pros and Cons of Using Goldman Sachs

Pros Cons
Goldman Sachs has excellent rates on its There’s no checking account or ATM
savings account and CDs. network.
No overdraft fees. No goal-setting feature.
No minimum deposit to open account. You need an external account for
transferring money, so expect delays when
making any transaction.

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5. Capital One
Capital One is a bank holding company that specializes in credit cards, auto loans, and banking
and savings accounts. It's headquartered in McLean, Virginia. Capital One is ranked 10th on the
list of largest banks in the United States by assets.
Type: MMA
Pros and Cons of Using Capital One
Pros Cons
No annual fee on credit card. As the Platinum is geared toward people
with average credit, it offers relatively low
credit lines: its minimum credit line is $300.
When you pay your first 5 monthly The Platinum's high APR means carrying a
payments on time, you'll be eligible to balance on this card will result in having to
increase your line of credit. pay a lot of interest.
No foreign transaction fee and no balance In addition to having an "average" credit
transfer fee. score, your income will need to meet a
certain threshold.
6. Indianbank
Indian Bank is an Indian state-owned financial services company established in 1907 and
headquartered in Chennai, India. It has 20,924 employees, 2,900 branches with 2,861 ATMs and
1014 cash deposit machines. It is one of the top performing public sector banks in India.
Country of Origin: India
Type: Savings
Pros and Cons of Using Indianbank
Pros Cons
Knowledgeable agents Poorly designed website.
Reliable ATM card Less secure website.
Relatively high APY Customer service is hit or miss
7. State Bank India

The State Bank of India is an Indian multinational, public sector banking and financial services
statutory body. It is headquartered in Mumbai, Maharashtra. SBI is ranked as 216th in the Fortune
Global 500 list of the world's biggest corporations of 2018.
Country of Origin: India
Type: Savings

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Pros and Cons of Using State Bank India

Pros Cons
Qualified banking staff. Online customer service can be spotty.
High APY. Access to ATMs is more spread out.
8. Barclays
Barclays is a British multinational investment bank and financial services company. It is
headquartered in London, England. Apart from investment banking, Barclays is organized into
four core businesses: personal banking, corporate banking, wealth management, and investment
management.
Country of Origin: United Kingdom
Type: Savings
Pros and Cons of Using Barclays

Pros Cons
2.20% APY on savings, among the best No ATM network and only 5 branch
you'll find. locations for U.S. customers.
$5 nonsufficient funds fee; many banks No checking account.
charge $30 or more for similar fees.
High interest rates on CDs. No cash deposits or withdrawals from
ATMs.
9. HSBC China
HSBC Bank (China) was one of the first foreign banks to incorporate locally in mainland China
(back in 2007). It is part of the worldwide HSBC Group and is wholly owned by Hong Kong-
based The Hongkong and Shanghai Banking Corporation Limited.
Country of Origin: United Kingdom (China headquarters in Shanghai)
Type: Savings
Pros and Cons of Using HSBC China

Pros Cons
HSBC often offers high cash bonuses to HSBC's checking accounts come with some
new customers for opening a new checking pretty steep fees. There is a monthly service
account (and meeting certain requirements). fee, unless you can meet direct deposit
and/or balance requirements.
HSBC is a global bank operating in 67 If you have a lot of money to park in a bank,
countries. other online banks offer better deposit rates,
so your money can grow faster.

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No ATM withdrawal fees worldwide. Except for HSBC Direct's online savings
account, the other accounts offer low
interest rates.
10. E*Trade Bank

E-Trade offers an electronic trading platform to trade financial assets. These includ common
stocks, preferred stocks, futures contracts, exchange-traded funds, options, mutual funds, and
fixed income investments
Country of Origin: United Kingdom (China headquarters in Shanghai)
Type: Savings
Pros and Cons of Using E*Trade Bank

Pros Cons
E*TRADE fees are higher than many online E*TRADE's website is easy to navigate and
discount brokerages. has a great built-in investor education
center.
You need a minimum of $500 to open an You can open and maintain checking
account on E*TRADE. accounts and IRAs, and even apply for a
mortgage.
Fees are $6.95 per trade, which is more than All traders have access to the basic research
competitors like TradeKing (now Ally center, which features real-time quotes,
Invest). interactive charts, and even tax advice.

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Risks of online banking.

• Phishing: If you have an online bank account, you might fall victim to phishing. Phishing
generally involves tricking somebody into clicking a link in an email message. The link often
downloads software to a computer that can be used to gather sensitive information such as
usernames and passwords.
• Identity Theft: Even if hackers don't steal from your account, you can still have your identity
stolen. This includes information such as your social security number and other identifying
info. This info could be used to hack into your other accounts.
• Pharming: While pharming is harder for hackers to carry out, it's more common than you'd
think. Pharming occurs when hackers can hijack a bank’s URL. When you try to access your
bank’s website, you get redirected to a fake site that looks like the real thing, but actually
steals your information.

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COMPUTERIZATION
The process of computerisation marked the beginning of all technological initiatives in the banking
industry. Computerisation of bank branches had started with installation of simple computers to
automate the functioning of branches, especially at high traffic branches. Thereafter, Total Branch
Automation was in use, which did not involve bank level branch networking, and did not mean much
to the customer. Networking of branches are now undertaken to ensure better customer service. Core
Banking Solutions (CBS) is the networking of the branches of a bank, to enable the customers to
operate their accounts from any bank branch, regardless of which branch he opened the account with.
The networking of branches under CBS enables centralized data management and aids in the
implementation of internet and mobile banking. Besides, CBS helps in bringing the complete
operations of banks under a single technological platform. CBS implementation in the Indian banking
industry is still underway. The vast geographical spread of the branches in the country is the primary
reason for the inability of banks to attain complete CBS implementation.
SATELLITE BANKING
Satellite banking is also an upcoming technological innovation in the Indian banking industry, which
is expected to help in solving the problem of weak terrestrial communication links in many parts of
the country. The use of satellites for establishing connectivity between branches will help banks to
reach rural and hilly areas in a better way, and offer better facilities, particularly in relation to
electronic funds transfers. However, this involves very high costs to the banks. Hence, under the
proposal made by RBI, it would be bearing a part of the leased rentals for satellite connectivity, if the
banks use it for connecting the north eastern states and the under banked districts.

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DEVELOPMENT OF DISTRIBUTION CHANNELS

The major and upcoming channels of distribution in the banking industry, besides branches are
ATMs, internet banking, mobile and telephone banking and card-based delivery systems.
AUTOMATIC TELLER MACHINES

ATMs were introduced to the Indian banking industry in the early 1990s initiated by foreign
banks. Most foreign banks and some private sector players suffered from a serious handicap at
that time- lack of a strong branch network. ATM technology was used to partially overcome this
handicap by reaching out to the customers at a lower initial and transaction costs and offering
hassle free services. Since then, innovations in ATM technology have come a long way and
customer receptiveness has also increased manifold. Public sector banks have also now entered
the race for expansion of ATM networks. Development of ATM networks is not only leveraged
for lowering the transaction costs, but also as an effective marketing channel resource.
RTGS
The other payment and settlement systems deployed were mostly aimed at small value repetitive
transactions, largely for the retail transactions. The introduction of RTGS in 2004 was
instrumental in the development of infrastructure for Systemically Important Payment Systems
(SIPS).
The payment system in India largely followed a deferred net settlement regime, which meant that
the net amount was settled between banks on a deferred basis. This posed significant settlement
risks. RTGS was launched by RBI, which enabled a Realtime settlement on a gross basis. To
ensure that RTGS system is used only for large value transactions and retail transactions take an
alternate channel of electronic funds transfer, a mini-mum threshold of one lakh rupees was
prescribed for customer transactions under RTGS on January 1, 2007.
RTGS minimizes systemic risks too, in addition to settlement risks, as paper-based funds
settlement through the Interbank clearing are replaced by the electronic, credit transfer based
RTGS system. High systemic risks are posed by high value interbank transfers, so, it is considered
desirable that all major interbank transfers among commercial banks having accounts with RBI be
routed only through the RTGS system. The RTGS system had a membership of 107 participants
(96 banks, 8 primary dealers, the Reserve Bank and the Deposit Insurance, Credit Guarantee
Corporation and Clearing Corporation of India Ltd.) as at end-August 2009. The reach and
utilisation of the RTGS has witnessed a sustained increase since its introduction in 2004. The
bank/branch network coverage of the RTGS system increased to 58,720 branches at more than
10,000 centres facilitating the increased usage of this mode of funds transfer.
PLASTIC MONEY
Plastic money was a delicious gift to Indian market. Giving respite from carrying too much cash.
Now several new features added to plastic money to make it more attractive. It works on formula
purchase now repay later. There are different facts of plastic money credit card is synonyms of all.
Credit card is a financial instrument, which can be used more than once to borrow money or buy
products and services on credit. Banks, retail stores and other businesses generally issue these.
Based on their credit limit, they are of different kinds like classic, gold or silver.
Charged cards-these too carry almost same features as credit cards. The fundamental difference is
you cannot defer payments charged generally have higher credit limits or sometimes no credit
limits. Debit cards-this card is may be characterized as accountholder’s mobile ATM, for this you
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must have account with any bank offering credit card. Over the years, the banking sector in India
has seen a no. of changes. Most of the banks have begun to take an innovative approach towards
banking with the objective of creating more value for customers and consequently, the banks.
Some of the significant changes in the banking sector are discussed below.
MOBILE BANKING
Taking advantages of the booming market for mobile phones and cellular services, several banks
have introduced mobile banking which allows customers to perform banking transactions using
their mobile phones. For instances HDFC has introduced SMS services. Mobile banking has been
especially targeted at people who travel frequently and to keep track of their banking transaction.
RURAL BANKING
One of the innovative schemes to be launched in rural banking was the KISAN CREDIT CARD
(KCC) SCHMME started in fiscal 1998-1999 by NABARD. KCC mode it easier for framers to
purchase important agricultural inputs. In addition to regular agricultural loans, banks to offer
several other products geared to the needs of the rural people. Private sector Banks also realized
the potential in rural market. In the early 2000’s ICICI bank began setting up internet kiosks in
rural Tamilnadu along with ATM machines.
NRI SERVICES
With a substantial number of Indians having relatives abroad, banks have begun to offer service
that allows expatriate Indians to send money more conveniently to relatives India which is one of
the major improvements in money transfer.
E-BANKING
Technology has creating e-banking or electronic banking. E-Banking can be defined as the
automated delivery of new and traditional banking services and products directly to customers
through electronic, interactive communication channels. Technology has affected and changed
banking with the many benefits and convenience e-banking has created. It includes the system
that enables bank customers to access accounts, transact business or obtain information on
financial products and services. Customers can now quickly complete transactions such as 5-10-
minute deposits/withdrawals to 30-60secs ATM deposits/withdrawals, online checking accounts,
online transfers and many e-banking transactions. The accessibility of e-banking has been
possible due to the technological advancement in laptops or personal computers, kiosk, Touch
Tone phones, personal digital assistant (PDA) and automated teller machines (ATM).According
to industry analysts (BNET.com), electronic banking provides a variety of attractive possibilities
for remote account access, including: Availability of inquiry and transaction services around the
clock; worldwide connectivity; Easy access to transaction data, both recent and historical; and
“Direct customer control of international movement of funds without intermediation of financial
institutions in customer’s jurisdiction.
E-Banking is becoming increasingly popular among retail banking customers. E-Banking helps in
cutting costs by providing cheaper and faster ways of delivering products to customers. It also
helps the customer to choose the time, place and method by which he wants to use the services
and gives effect to multichannel delivery of service by the bank. This E-Banking is driven by twin
engine of “customer-pull and Bank-push”.
IMPACT OF TECHNOLOGY ON BANKING

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Technology has influenced all aspects of banking activities including storage, processing, and
collection of information. There are a few areas in banking that has been seriously influenced or
impacted which includes;
Tracking lending worthiness (Credit Scores)
Technology has created or led to the creation of the credit bureau. The system mathematically
tracks customer’s payment records to provide data which help banks make decisions on the
amount and who they should borrow money to. The advance technology available has developed
a scalable and resilient credit bureau platform that enables banks to track customer’s necessary
information. Technology has enabled software programs which has provided banks with input file
preparation tools, validation tools and data entry tools. Collecting data allows banks to deliver
credit reporting solutions in the form of credit reports, customer credit activity monitoring, fraud
prevention systems and debtor tracking services.
Today, the technologies in credit bureau infrastructures have enabled banks to collect, load,
validate, store and disseminate both the positive and negative data as well as supplementary data
(e.g. court judgments, legal issues etc). The development and management of the information
technology for the Credit Bureau has provided control over all processes involving the credit
bureau as it relates to the banking industry. Some of the systems used in the credit bureau
includes; C++, C Sharp and Java, Oracle& SQL. All these programs contribute significantly in the
whole operation of the credit bureau. The typical cycle and function of the credit bureau as it
relates to banks includes; storing information-credit histories, observing fraudulent behaviour,
previous enquires, validating data and many more.
The Economy and Economy of Scale
Competition has forced banks to lower the cost or interest rates. Bank mortgages have recently
Banks try to achieve economy of scale in banking procession instead of trying to be bigger banks
(acquiring more assets, taking more risk etc). The current state of the economy has also led banks
to tighten their lending and restrict their lending guidelines. Banks seek to secure the best and
most technologically advanced business structure and secure competitiveness of economy of
scales.
Banks Contestability
Technology is affecting the degree of contestability in banks. Due to the advancement of
technology, banks superiority in information is deteriorated. New competitors have emerged, and
the many barriers provided by banks have been declining and security breach is more imminent
today. Some financial products, services and commodities are becoming more transparent.
Due to the lowered entry and deconstruction of some banks, contestability in banking is rising
Technology Influence the Economics of delivery
The advancement of technology has influenced the methods banks use to deliver financial
products to its customers. Technology has created alternative delivery mechanisms such as the
internet, electronic transferred, ATMs, and many others which all reduce the dependence on the
network as a core delivery mechanism. Now, financial systems are substantially over-supplied
with delivery systems through a duplication of networks which allows or encourages the banks to
change their delivery strategy, rationalize their branch network strategy and provide or develop a
wide Varity of delivery options.
Internet Banking

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An internet bank can be defined as a bank that provides account balances and some transaction
capabilities to retail customers over the World Wide Web. Technology has created internet
banking, also called online banking. The creation of the internet through technology has led to
many banking transactions or activity options via the internet. Some of these activities includes;
paying bills, 24-hour view of accounts, transferring money and many others.
Customers access their banking information from a browser-software that runs the banking
programs on the World Wide Web (www). Customers can personally and privately access their
account information through the internet via a modem.
Technology has allowed us to dial into the bank via the modem system which allows us to
download date, and run programs that make us access a wide verify of banking information such
as; account balances, number and types of banking transactions, bank statements, among others.
On the downside, the internet has decreased operation and transaction at physical-brick and motor
banks as customer can basically conduct almost all the transaction possible in a real back. Today,
technology has helped create many banks which have no physical location or brick and mortar
branches.

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Technological developments in Banking

Over a decade Indian banking system witnessed metamorphosis. The main driver of
transformation has been the fast adoption of Information, Communication and Technology (ICT)
based system in the banks. The huge red ledgers, row of racks of ledger holders, cash scrolls,
registers, clearing cheque scrolls, totalling machines, long rolls of paper ribbons often gazing the
floor formed part of hardware in the branches. It was also common to see staff hiding behind the
tall branch counters, row of signature cabinets standing between the counters and supervisory
staff, customers eyeing frantically on movement of ledgers and cheques until their transactions
were done. But in the post bank reform era, more particularly after the ICT enablement there is
semantic changes and innovation in the quality of customer services. Moreover, the beeline of
customers standing in queue in bank branches staring anxiously at the staff, them eagerness to
catch up bank timings to log in transactions, searching for known employees to deposit/receive
payments late at the counters, receiving wads of currency notes in retail payments at the counters,
waiting for updating pass books, receiving drafts, grumbling over the bad handwriting of some of
the employees were also the common features of manual banking. They are now no more
relevant. The banking workspace has changed for good. Bank branches are now sporting a smart
look with refurbished interior, radiating corporate colour, well dressed bank logos, wide glass
doors, and plush interiors and well-developed customer lounges etc.
The well painted signage, clear guidance in the branch, customer information, display of product
information, enquiry kiosk, smiling relationship assistants in some banks add to the modern
branch set up. The low height counters handled by trained employees wearing inviting look,
customers having one to one interface with departments, banking halls buzzing with clicks of
mouse, laptops, computers, currency notes zipping through the counting machines form part of
modernized attire of bank branches at least in metro cities. The eerie silence of customers and
staff, an assured quick servicing system, provides an atmosphere for maintaining focused quality
of service in the branches. The onsite ATMs, teller counters, swipe machines / kiosks have speed
up standard transactions of every day need of consumers. With the onset of alternative delivery
channels, even the branch timings are not very significant. Phone and mobile banking, smart
cards, debit cards, rechargeable electronic purse are also some of the modern-day banking
facilities that allow round the clock access. With the profile and aptitude of bank consumers fast
changing toward the use of ICT facilities, the popularity of e-channels of banking are set to
assume more significance. Banks are fast gearing up to introduce add-on services to attract young
generation of customers.
It can further be observed that with most of the banks migrating to Core Banking Solutions
(CBS), the transaction platform has become common facilitating use of ATMs of any bank at the
ATMs of any other bank / institution so long as they are connected with a common payment
system like VISA/MasterCard. This connectivity has removed even the limitations in the use of
debit/credit cards.
The ICT driven value proposition has transformed the whole range of banking services to
customers. It has proved to be a great customer centric enabler for banks to induce innovation. It
has made the life of bank employees much better. The skill sets of employees can also be
diversified and synchronized with current needs. The rigors of reconciliation, matching of entries,
the time spent earlier on housekeeping are now better used for business development. Though
technology brought relief to both banks and consumers, its entry into banking system was initially
sluggish. The resistance to change is always a challenge. But the foundation for large-scale
induction of IT in the banking sector was provided on the recommendations of the committees
headed by Dr. C. Rangarajan, in 1984 and 1989. Subsequently, in 1994, the Reserve Bank
constituted a committee on 'Technology Up-gradation in the Banking Sector'. This committee too
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made several recommendations covering payment systems including setting up of an autonomous

centre for development and research in banking technology.
The Institute for Development and Research in Banking Technology (IDRBT), Hyderabad, was
created as a sequel. It has established Indian Financial Network (INFINET), to conduct research
in banking technology and provide consultancy services to banks apart from providing
educational and training facilities for the banking sector. It plays the role of an incubator for
bringing innovation in banking technology. It has expanded its scope to cover intense research in
technology to bring about better standard of technology and works on evolving suitable security
systems to protect the mass of bank data. It sets a framework for sustained scaling up of ICT
capabilities of the banking industry to move towards international standards.

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Emerging Challenges in the Banking Industry

i) Financial inclusion:
The key challenges faced by the banking Industry are as follows: Besides opening new branches
in potential centres, setting up large number of ATMs, massive expansion of Point of Sale (POS)
terminals etc., are needed to be planned to reach out to the hinterland. Banking system has the
agenda to initially expand presence to over 1, 09,000 villages with population of 2000 and above
by March 2012. Appointment of Banking Correspondents (BCs) on a large scale can be done only
if ICT model is scaled up to meet the larger requirements. The connectivity of base branch
operating on CBS with the Pops terminals available with BCs will be used by the customers.
Therefore, the entire success of implementation of Financial Inclusion Plan of banks will rest on
wider usage of ICT platform and innovation of low-cost delivery models.
ii) Risk Management:

Similarly, the up gradation of the risk management modules and for better ALM, technology
support needs to be strengthened. The credit risk management systems presently operating on
standardized approach under Basel-II in most banks are set to be migrated to Internal Risk Based
(IRB) module. Thereafter to advanced IRB module. These will require collection of historical
data of minimum five year. The increased use of technology will be able to hasten the process of
adopting higher modules of risk management. Moreover, ALM systems can also be further
refined to capture residual maturity profile of assets and liabilities on online basis. In view of
recent experience of global financial crisis, Bank for International Settlement (BIS) at the behest
of global regulators have come out with the concept of Basel-III framework that calls for more
fine-tuned risk management system. ICT can be better used to refine risk management systems.
iii) Customer Relationship Management (CRM):

Another big challenge is to develop customer data that can support cross selling. In India the
culture of cross selling is low. The average number of banking products sold to per customers in
India is significantly lesser than the global benchmark. It is a tough challenge to harness the
significant potential for cross selling. As of now the average products used by each bank customer
in India is 2.2 and 2.1 in PSBs. According to the global benchmark, the best practice range is 6.
That means each customer with the bank should possess six types of products. In that case the
cost of acquisition of customers will substantially come down. But the gap in the sales is wide.
One of the enablers could be collection and collation of CRM data from the customers. Given that
cross selling is the most cost-effective mechanism to develop business, an increased use of ICT
will be able to address this issue.
iv) Leveraging ICT:

The most challenging task will be to make customers use technology. The e-Banking, ATMs and
POS needs to be extensively used to reduce transaction cost. The procurement of ICT
infrastructure is huge. The marginal utility of it can be increased with greater number of
transactions. The basic purpose of using technology is two-fold. One is to enhance the quality of
service. The other is to reduce transaction cost. Banks would be in a better position to offer
affordable banking service to a larger number of customers. Imparting technology literacy among
customers for wider use of ICT delivery model will be one of the key lasting strategies of the
bank that will open new vistas of growth. Putting customers on technology mode is an
entrepreneurial task that requires a greater interface between bank and customers. As a part of
harnessing technology, wide publicity of benefits of ICT based products must reach consumers.
Spreading awareness among the customers about the benefits of technology is to be taken up

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along with financial literacy launched as part of Financial Inclusion. This needs to be done on a
mission mode to achieve optimum benefit of ICT. Innovations can be possible only if number of
users is substantially increased. The cost of per transactions in the branch on an average works out
to `40 while in ATM it is `17.Through a call centre the cost is still cheaper at `8. It comes down to
`2 per transaction in net banking and will be only 50 paisa in mobile banking. The transactions
limit in mobile is now limited to 5000 dues to security reasons. The more customers are migrated
to alternative delivery channels, the more will be the reduction in costs. Hence leveraging ICT
will be a critical differentiator for the banks to innovate and save costs.
v) Management of human capital:

Banking industry has an immense intellectual skill set which needs to be mapped to deploy them
in best fit assignments. ICT can be used as an effective tool to capture the skill sets of employees
and the data base can be used for optimum usage of human competence. In one of the recent
studies by McKinsey & Company in its publication (Aug 2010) “The Zhuman capital key:
unlocking a golden decade in Indian Banking”, He pointed out that “Over the decade, the Indian
Banking Industry is poised for unprecedented growth but only if it can dramatically strengthen its
human capital. For banks to realize their full potential, developing robust leadership capability
and improving productivity will be critical”. Mentoring, grooming, skill building, training and
upgrading human competence and leadership can be possible only if the various capabilities are
captured as part of HR function. In order to do so, ICT can be leveraged to parameterize and
capture the granular set of competence. Gap analysis can be done. Skill gaps can be identified.
Then the exercise of building up the missing skill sets will be possible. The ICT can be a good
enabler for such critical improvements. Following are the other challenges in Banking are:
i. Coverage: One of the biggest challenges relates to the extension of the coverage of banking
services to the remotest parts of the country and to the most vulnerable sections.
ii. Reliable and secure banking transactions.
iii. Proper understanding of the customer: proper identification of their needs and wants. For this a
massive survey must be undertaken may be in collaboration with other banks.
iv. There is need for transparency in offering services as customers awareness has grown
considerably.
v. Breach of privacy: online transactions enter straightaway into the records revealing the identity
of customer. Thus, black money cannot be transferred with ease.
vi. Bandwidth: Though companies claim to offer good speed and high bandwidth, still there are
problems in accessing high speed on net. Internet banking can go high only on the wings of
proper infrastructure comprising telecommunications and bandwidth.
vii. Computer literacy in India is still very low and that is a barrier in fast acceptance of Internet
banking.
viii. The mindset of the Indian customer needs to be changed.
ix. Customer must be protected against being "net-jacked" i.e. he needs to be protected from
fraud.
x. Cracking login and passwords is a common way of fiddling with the data.
xi. Denial of services: Directing millions of queries can block computer network.

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xii. Data Diddling: Data can be modified in an unauthorized manner. A customer can, therefore,
receive bills of higher amounts than the actual transactions
xiii. Session hijacking: Hijackers become unauthorized intermediaries between the server and the
client; they can then hijack the data and prevent it from reaching the destination.
xiv. Application for account opening can be accepted over Internet but account should be opened
only after proper introduction and physical verification of the customer. Security procedure
adopted by bank, for authenticating user, must be recognized by law as a substitute for signature,
from a legal perspective. Information technology Act, 2000 in section 3(2) provides for a
technology (asymmetric crypto system and hash function) as means of authenticating electronic
records. Any other method used by bank should be recognized as a source of legal risk.
xv. The secrecy and confidentiality of customers account must be maintained.
xvi. Consumer Protection Act is applicable to banking services as well.
vi) Customers expectations:

In the era of e-banking and severe competition, the expectations of the bank customers have
increased. Due to this bank should offer a broad range of deposits, investment and credit products
through diverse distribution channels including upgraded branches, ATMs, telephone and
Internet. All these changes require vision, determination and extensive communication across all
levels in the organization so that the vision and mission of the banks is communicated and
understood down the line and receiver unqualified support.
vii)Infrastructure:
The other challenge for e-banking is well developed infrastructure. For effective deployment of e-
banking services, it is necessary to have a reliable and cost-effective infrastructure that can be
accessible to most of the population. The base communication infrastructure for e-banking is
computer network with internet facility. Most of the transactions use internet to communicate
with the customers. Automating the banking services is another prerequisite for e-banking. Close
financial links between banks and other financial institutions are necessary. This link is used for
clearing and payment systems among these institutions.
viii) Heavy Investment Costs:

In order to offer e-banking services, banks must invest huge amount of money. They must incur
heavy maintenance costs also. This may not be the problem for well-established banks. But in
case of new and small banks, they must face financial problems at the initial stage. Banks in
developed countries have already deployed huge amount of investments for e-banking services.
ix) Socio-Cultural Challenges:

Normally customer’s confidence and trust in traditional banking system will make customers less
likely to adopt new technologies. New technologies will not be successful until customers are
satisfied with privacy and security aspects. It also requires some time to earn confidence among
the customers even it is easier and cheaper than the traditional methods.

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Changes in banking system and services.

The Indian banking sector is going through major changes because of economic reforms. The
changes affect the ownership pattern of banks, availability of funds, the cost of funds as well as
opportunities to earn, range of services (fee based and fund based), and management of priority
sector lending. The new rules of competition require recognition of the importance of consumers
and the necessity to address the needs through the innovative products supported by new
technology. Because of competition, the managerial challenges include market segmentation,
product positioning, innovative delivery channels and cross selling. The banks may have to
reorient their resources to form reorganize branch networks, reduced manpower, dramatic
reduction in establishment cost, improving the skills of the staff, and innovative ways of attracting
talented managerial pool. The Government of India and Reserve Bank of India on them part
would strengthen the existing norms in terms of governing and directing the functioning of these
banks.
As regard the banking sector, technology has completely changed the nature and pace of delivery
of banking services world over. Technology enables increased penetration of the banking system,
increases cost effectiveness and makes small value transaction viable. Besides making product
and services affordable and accessible, it simultaneously ensures viability and profitability to
providers. Increased penetration brings further reduction in costs, which in turn attract more
people to avail services. Technology has augmented the scope, reach and coverage of banking
through significant networking and the availability of a wide variety of new delivery channels to
such an extent that the death of the distances and death of identity has already been accomplished.
In addition, banking is poised to be omnipresent through facilities such as ‘anytime and anywhere
banking ‘Proliferation of services offer through ATM networks, IT enabled instant remittances
across banks, customer payments, mobile payments and many more.
The changing face of the banking sector, aided by technological innovations, can be seen from
various developments in the recent past. The most noteworthy has been the usage of ATM
technology. ATM started as a substitute of bank branch allowing their customers to withdraw
cash anytime and to extend their services wherever it would not be viable to operate a physical
branch. The delivery channel revolution can be said to have begun with ATMs. The phenomenal
success of ATMs has made the banking sector develop more innovative delivery channels to build
on cost and service efficiencies. Therefore, banks have begun to introduce tele-banking, call
centres, internet banking and mobile banking.
Tele-banking is a good medium for customers to make routine queries and an efficient tool for
bank to cut down on their manpower resources. The call centre is another channel that captured
by imagination of bank as well as customers. At these centre enormous amounts of information is
at the fingertips of trained customer service representative. A call centre not only cut down cost
but also improves customer satisfaction. Moreover, it facilitates 24*7 working and offers the
‘human touch’ that the customers’ seek. Mobile banking can be regarded as ‘the delivery channel
of the future’.
This is because it offers portability and convenience to the users. It is just like having a bank in
the pocket. It would not have been possible for banks to give full benefits of tele banking, mobile
banking, internet banking, and card banking to all its customers without an appropriate banking
solution. CBS is one of the developments that has revolutionize the banking sector. The
implementation of core banking system has proven to be a big boon in providing anywhere access
to banking services and the treatment of a customer as that of a bank not as a constituent of a
specific branch. Alongside the banking sector has made significant efforts to identify security
gaps in an IT enabled scenario and has addresses them effectively as well.

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Technology implementation has benefited the banks also due to the facilitation of the Reserve
Bank- both from the operational and legal perspective. In addition, the Reserve Bank had
provided the broad framework for many innovative technology-based systems. The guideline on
Internet banking and guideline for Information system security/audit in 2001 where early
initiatives aimed at ensuring safe and secure technology-based operations by banks. Keeping pace
with time and marshalling international practices, RBI has issued broad guidelines on mobile
banking and prepaid (store value cards). These along with sitting up of systematically important
payment and settlement systems such as RTGS and other retail payment system like ECS (credit
and debit clearing), NEFT, NECS, RTGS have transform the way of banking and today’s
customer have a wide array of options to choose from. All these have safety and security at the
heart of the respective system. In the area of payment and settlement system, where technologies
impact the customer transaction most, there have been significant advancements. The magnetic
Ink Character Recognition (MICR) cheque clearing system processes a staggering 4.5 million
cheques on a single day. The cheque transaction System (CTS) is another innovative solution that
has been developed to enhance the efficiency of paper-based clearing system. CTS have
eliminated the need for physical movements of cheques. Speed clearing has been introduced by
the reserve bank to reduce the time taken in clearing up country cheques and take advantage of
and leverage the core banking technology adopted by banks. The NECS (National Electronic
Clearing System), with its centralized processing capability coupled with the implementation of
CBS has brought down the clearing and settlement system to its current t+1 basis. A major area
where IT security assumes significant pertains to the transformation of information using IT for
communication. Traditionally paper-based system has been subject to certain controls to ensure
that the basic requirements pertaining to genuineness, authenticity etc, are meant with. In the IT
based scenario this aspect gains greater importance not only because of this speed with which IT
based electronic information flow but also on account of the potential havoc that could arise on
account of incorrect transaction.

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Growth of Banking and Computerization

The Indian Banking industry has witnessed and 38.8% growth in its assets in the fiscal year 2010-
2011. A sustainable overall economic growth has laid the foundation of a robust banking sector.
The Industry has been largely classified since its origin & ownership into Indian Public Sector
Banks, the Indian Private Sector Banks and the Foreign Banks.
The trend in growth of banking assets is as follows:
i. While new private sector banks and foreign banks have the edge when it comes to
computerization, public sector banks have not lagged in making investments to computerize their
operations. As of end-March 2010, 97.8 % of all the public sector bank branches have been fully
computerized. Of them, 90 % provide CBS. This figure was 79.4 % at the end of the previous
fiscal.
ii. In the past 10 years, public sector banks have spent close to Rs.22, 000 core on
computerization and IT upgrades. For the final half of the 2010 fiscal alone, spending on this
account stood at Rs.1, 370 crores.
iii. The total value of the paper-based clearing has been steadily declining, 59% in volume of
transactions and 10% in value terms in the 2010 fiscal year.
iv. Thanks to CBS technology, State Bank of India's capability to handle transactions went up
more than three times. As of April 2011, SBI could handle 35 million transactions a day as
against 10 million earlier.
v. The bank started the move towards CBS in early 2000, and the implementation was complete
by 2008. The entire project was handled by Tata Consultancy Services (TCS), which was the
systems integrator, while the other major technology partners in the project were Hewlett-Packard
(HP), Data craft, Cisco and Microsoft.
vi. CBS and computerization of its various branches helps in easier rectification of errors,
minimization of fraud and the elimination of human error.
vii. Bank of India has spent close to Rs.1, 500 crores on technological up gradation and
computerization of its branches since September 1999.
viii. ATMs have been a big success. It helps in reaching banking services to different parts of the
country,” said Kalyan Sundar. Almost 75 per cent of Banks of India cash advances are made
through ATMs. Off-site ATMs of public sector banks witnessed a 70% increase in the 2010 fiscal
from the previous fiscal. The number grew from 9,898 in end-March 2009 to 16,883 by end-
March 2010. For private sector banks, the growth in the number of off-site ATMs in the 2010
fiscal has been around 19%. The number stood at 9,844 in end-March 2010 as against 8,324 in the
previous year. The number of on-site ATMs for public sector banks showed a growth of 36%. The
number grew to 23,797 as of end-March 2010 from 17,379 in the previous fiscal.
ix. A better and safer environment for electronic transactions has resulted in a sharp increase in
the number of online transactions. The number of RTGS transactions in public sector banks more
than doubled from 6.8 million in the previous year to 16.4 million in 2009-10. The number of
RTGS transactions in the private sector grew to 11.3 million in the 2010 fiscal from 4.2 million in
the previous year.
x. In the private sector, NEFT transaction volumes jumped from 14.4 million in 2008-09 to 29.3
million in 2009-10.
xi. Almost 10 % of our total transactions take place via the electronic mode.
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xii. Axis Bank recently introduced the Instant Money Transfer (IMT) system. It is a remittance
facility that allows a withdrawer to get money from an ATM even if the person does not have a
bank account.
xiii. Bank of Maharashtra is already gearing up for the 3G revolution. The bank plans to set up
three 3G techno-savvy specialized branches in Mumbai, Delhi and Pune to cater to the younger
generation.

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Digital revolution in the Indian banking sector
The need for computerization was felt in the Indian banking sector in late 1980s, in order to
improve the customer service, book-keeping and MIS reporting. In 1988, Reserve Bank of India
set up a Committee on computerization in banks headed by Dr. C. Rangarajan.
Banks began using Information Technology initially with the introduction of standalone PCs and
migrated to Local Area Network (LAN) connectivity. With further advancement, banks adopted
the Core Banking platform. Thus branch banking changed to bank banking. Core Banking
Solution (CBS) enabled banks to increase the comfort feature to the customers as a promising step
towards enhancing customer convenience through Anywhere and Anytime Banking. Different
Core Banking platforms such as Finacle designed by Infosys, BaNCS by TCS, FLEXCUBE by i-
flex, gained popularity.
The process of Computerization gained pace with the opening of the economy in 1991-92. A
major driver for this change was propelled by rising competition from private and foreign banks.
Several commercial banks started moving towards digital customer services to remain
competitive and relevant in the race.
Banks have benefitted in several ways by adopting newer technologies. E-banking has resulted in
reducing costs drastically and has helped generate revenue through various channels. As per last
available information, the cost of a bank transaction on Branch Banking is estimated to be in a
range of Rs.70 to Rs.75 while it is around Rs.15 to Rs.16 on ATM, Rs.2 or less on Online
33 | P a g e
Banking and Rs.1 or less on Mobile Banking. The number of customer base has also increased
because of the convenience in 'Anywhere Banking'. Digitization has reduced human error. It is
possible to access and analyze the data anytime enabling a strong reporting system.
RBI has been a guiding force for the banks in forming regulations and giving recommendations to
achieve various objectives. Commercial Banks in India have moved towards technology by way
of Bank Mechanization and Automation with the introduction to MICR based cheque processing,
Electronic Funds transfer, Inter-connectivity among bank Branches and implementation of ATM
(Automated Teller Machine) Channel have resulted in the convenience of Anytime banking.
Strong initiatives have been taken by the Reserve Bank of India in strengthening the Payment and
Settlement systems in banks.
Technological Milestones in Indian Banks:
Current status in the Digital Space

Indian Government is aggressively promoting digital transactions. The launch of United Payments
Interface (UPI) and Bharat Interface for Money (BHIM) by National Payments Corporation of
India (NPCI) are significant steps for innovation in the Payment Systems domain. UPI is a mobile
interface where people can make instant funds transfer between accounts in different banks on the
basis of virtual address without mentioning the bank account.
Today banks aim to provide fast, accurate and quality banking experience to their customers.
Today, the topmost agenda for all the banks in India is digitization.

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According to the RBI Report in 2016-17 there are 2,22,475 Automated Teller Machines (ATMs)
and 25,29,141 Point of Sale devices (POS). Implementation of electronic payment system such as
NEFT (National Electronic Fund Transfer), ECS (Electronic Clearing Service), RTGS (Real Time
Gross Settlement), Cheque Truncation System, Mobile banking system, Debit cards, Credit Cards,
Prepaid cards have all gained wide acceptance in Indian banks. These are all remarkable
landmarks in the digital revolution in the banking sector. Online banking has changed the face of
banking and brought about a noteworthy transformation in the banking operations.
National Electronic Funds Transfer (NEFT) is the most commonly used electronic payment
method for transferring money from any bank branch to another bank in India. It operates in half
hourly batches. At present there are 23 settlements.
Real Time Gross Settlement (RTGS) is primarily used for high-value transactions which are
based on 'real time'. The minimum amount to be remitted through RTGS is Rupees Two Lakhs.
There is no upper limit.
Immediate Payment Service (IMPS) is an instant electronic funds transfer facility offered by
National Payments Corporation of India (NPCI) which is available 24 x 7.
The usage of Prepaid payment instruments (PPIs) for purchase of goods & services and funds
transfers has increased considerably in recent years. The value of transactions through PPI Cards
(which include mobile prepaid instruments, gift cards, foreign travel cards & corporate cards) &
mobile wallets have jumped drastically from Rs.105 billion and Rs. 82 billion respectively in
2014-15 to Rs. 277 billion and Rs. 532 billion respectively in 2016-17.

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Challenges
Security Risks - External threats such as hacking, sniffing and spoofing expose banks to security
risks. Banks are also exposed to internal risks especially frauds by employees / employees in
collusion with customers
Financial Literacy / Customer Awareness - Lack of knowledge amongst people to use e-
banking facilities is the major constraint in India.
Fear factor - One of the biggest hurdle in online banking is preference to conventional banking
method by older generation and mostly people from the rural areas. The fear of losing money in
the online transaction is a barrier to usage of e-banking.
Training - Lack of adequate knowledge and skills is a major deterrent for employees to deal with
the innovative and changing technologies in banks. Training at all levels on the changing trends in
IT is the requirement of the day for the banks.

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Review of Literature
Geetha and Ramanarayanan, in their study explored the impact of core banking solutions on select
consumers. Their research indicates that younger population (especially between the age group of
35-45) have annual income of more than Rs: 1,20,000 and were familiar and accustomed with the
internet banking. The customers, in the study area had opined that core banking solution saves
time and is more consumers friendly.
Manjushree, defines “core banking as the business conducted by a banking institution with its
retail and small business customers”. She defines core banking solutions as anywhere and anytime
banking. Core banking was considered as a paradigm shift. CORE refers to Centralized Online
Real time Exchange. She has carried out a study to ascertain the level of satisfaction among the
customers of core banking solutions of the State Bank of India and has made out an inference.
Manjushree [2] study reveals that 50 percent of the customers are happy about the core banking
solutions.
An analysis has been carried out by Rishi to determine the Vendor Managed System (VMI) in
banks. The VMI is popularized by Walmart and proctor in gamble in late 1980s. The vendor
decides the inventory levels of each product and the inventory policies. Vendor managed
inventory needs acceptance from the employee for any transaction and they will be communicated
about it. This requires an effective communication between the bank and customers that should be
done without any time delay.
A study conducted by Vinita et al., analyzed the improvement in value added services, quality and
convenience. Customer satisfaction is considered more important. The prices of most of the bank
products are raised and there should be a reason in pricing bank services. Reserve Bank of India
worked on this issue and revealed that there is unfairness and non-transparency in price hike by
the banks. The personal relationship between the bank employees and customers are considered to
be very important in customer satisfaction.
Ali and Hayat, investigated the factors influencing customer’s perception on mobile banking
adoption. The extended technology adoption model was adopted to measure its impact on mobile
banking adoption in Bahrain. The study revealed that the factors such as perceived usefulness and
ease of use were result of adoption of mobile banking. On the other hand, few factors such as
perceived cost and perceived risk did not reveal any effect on the customer’s intention to access
mobile banking services. This study has promoted managers to consider the above factors to
enforce mobile banking services.
Rakhi and Mala, carried out a study to accomplish two objectives – to test the functional
relationship between adoption readiness, perceived risk and usage intention for mobile payments
in India. This study investigated the constancy of proposed structural relationships across
different customer groups. The literature concerning major attributes of technology acceptance
was systematically reviewed to develop and construct the adoption of technology services. A
comprehensive model consisting of adoption readiness, personal innovativeness and perceived
risk was put together and the model was then empirically tested using structural equation
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modeling. On appraising the proposed model, five out of six hypotheses were fully supported
while one hypothesis was partially supported.
Nayak et al. discovered the factors that affect the adoption pattern of mobile banking services by
Indian consumers and several stages involved to increase mobile banking services based on user’s
database. The study found that trust, perceived ease of use and perceived cost are some of the
important factors that influence the adoption behaviour of mobile banking services by Indian
consumers. The study further recommended that banks should create awareness through mobile
banking services such as advertisements, pamphlets, demo fares, and campaigning etc., and the
study revealed that customers adopt mobile banking as they find it easy to use and comprehend.
Sharma and Sharma, investigated the effectiveness of data handling by the commercial banks.
They opined that it might take few more years for virtual banking to be established in India. The
trends witnessed in modern banking are computerization and outsourcing, and integration of
various IT products related to banking. They observed that the customers switching from one
bank to another has been reduced after the introduction of bank vendors.
Patel and Pithadia, explained in their study the various challenges faced by the Indian banking
sector. The infusion of technology and agreement of banks to Core Banking Services (CBS) have
not been smooth for traditional banks. Many large banks have converted only 20-30% of their
branches to CBS and they feel that this would cover 70-80% of the bank business. The technology
based delivery channels through bank vendors have helped in improving quality and standard.
They are of the opinion that outsourcings of bank duties entitle high risk because the vendors may
not have the requisite awareness about the banking domain.
Bishnoi, discussed about the different facilities provided by ATM, reasons to use ATM cards and
several problems encountered while using ATM card. Further the researcher examined the
relationship between various personal profile and ATM facilities offered by various banks. The
study found out that problems while using ATM services such as machine out of cash, poor
quality currency notes, machine out of order, internet failure, no printing of mini statement and
poor visibility of statement slip were the significant issues. The study concluded that ATM was
more comfortable at anytime and anywhere usage to their customers. ATM was increased day by
day and also customers increased. There is no significant difference between opinion of male and
female customers and public and private sector bank ATM customers concerning many problems
while using ATM facilities.
Chandio, examined the recent trend of ATM facilities and paper based transactions in customer
retail banking. The result showed that ATM was frequently used for cash withdrawals and to
check balance enquiry. Majority of the customers use ATM in their own banks and they
sometimes use ATM of other banks. The study revealed that customers were highly satisfied with
their own ATM facilities.

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Praful, studied customers’ perception towards products and services of State Bank of India (SBI).
The study determined that maximum of 99.27 percent of customers expressed their satisfaction
and a minimum of 0.73 percent of customers expressed dissatisfaction towards the service
provided by SBI. State Bank of India was the first bank in public sector to start the use innovative
technology for computerization and core banking and the bank used information technology based
products and services. This study reveals the impact of the information technology on customer
satisfaction in urban, semi- urban and rural branches of Yavatmal District.
Gulla and Gupta, have explained the role of information technology in commercial banks. The
physical banking has been replaced by technology aided banking. This reduced the cost and risk,
and enhanced profit. They have cited the example of Bank of India which was the first to use the
tool infrastructure outsourcing. Outsourcing has both short term and long term impact on the
banking services. The amount of risk that is faced from the vendors differs from one bank to
another.
Alsamydai et al., this study has been divided into five attributes such as Electronic Banking,
personal factors, perceived usefulness, customer satisfaction and continuity of dealing with
Electronic Banking services. The results revealed that there is a significant relationship between
all attributes and also the factors relating to Electronic Banking - perceived usefulness and service
quality. Particular reasons have an affect on customer satisfaction and continuation in dealing
with E-Banking services.
Shah, identified the customers’ perceptions towards electronic banking services in Thane city and
analyse “the customers’ perceptions, the problems faced by the bank customers and strategies to
enhance e-banking services”. This study revealed that public sector banks, private sector banks
and foreign banks are offering e-banking services even though customers have become more
challenging with the passage of time. Customers faced more problems like inadequate computer
knowledge, poor response of bank staff, and lack of internet banking facilities, forgetting ATM
PIN and language problem.
Kuchara, in her article titled “A study on customers’ perception towards internet banking at
Ahmedabad city”, analyzed results such as convenience, security, easy to maintain banking
facility, curiosity, better rate and low service charges as main factors. Half of the respondents
agreed that internet banking was more convenient and flexible. It has different transactions and
related advantages to customers. Banks offering internet banking was day by day increasing,
becoming a need to have than a nice to have service.
Sekar , has analyzed the status of adoption of banks to information technology. The private sector
banks were able to pursue technology based services much faster than the public sector banks.
Technology is able to provide the methodology by which the banks can deliver and manage
integrated problems. Sekar believes that the banks shall become technology companies offering
banking products. The developments of bank vendor’s technology include biometric ATM’s,
information kiosks with local language and voice facility, e-marketing of SHG products through
banks payment gateway. The vendor, face number of challenges like integrating several services,

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taking care of the requirement of enterprises and managing technical products which have lower
life cycle. Security is also considered as a major challenge for the vendors.
Subhashrao , discusses about the challenges faced by the banking industry, from the non-
traditional banking institutions. The new competitors are able to enter the financial service market
quickly and efficiently. The e-banking services are offered in much better way by the private
sector banks. Internet advertisement through banking services is yet another challenge faced by
the public sector banks.
Mermod , has analyzed the role of technology on banking industry. Due to competition in the
banking sector, the profit margin has reduced and so many banks have introduced internet based
banking. In Turkey there are 15 million registered users for retail banking and 1 million registered
users for corporate banking. This accounts for nearly 47 percent of the customers. The integrated
banking services enable the customers to increase market shares and the decision making by the
customer. The author feels that there should be more co-ordination among the vendors.
Sharma , has listed the advantages of e-banking. The vendors, being professionals, are able to
help in programming and storing the data. Core banking solution has resulted in less use of paper
money and more use of plastic money. The author had reviewed “the impact of e-banking on
customer relationship, performance of the bank, and adoptability of bank employees and public
for the banking”. Sharma [20] has given the opinion that there are shortcomings which need to be
set right.
Sawant , has observed that the banking sector supports economic growth by the introduction of
information technology. The Electronic Clearance Services (ECS) created in late 1990s,
Electronic Fund Transfer (EFT) presented in mid-2000, and RTGS presented in 2004, and NEFT
presented in 2005-06 with a specific end goal to build effectiveness of business banks. Nearly 90
percent of the banks have introduced core banking system by the end of 2010. The authors have
explored about SWIFT, Bank net, and NPCI and demat cards and concluded that the use of
technology has been helpful in providing facilities and services to the customers.
Jain and Natarajan, have outlined the usual factors that influence the outsourcing decisions. In any
industry outsourcing is taken up only when providing regular employment is costly for the
organization. The researcher states that in the Indian banking sector both the banks and the agency
outsourcing the labour (vendor) draw from the same labour pool and pay more or less the same
wage. So outsourcing in Indian commercial banks is not for cost reduction. But when technical
labours are outsourced it becomes easier for the commercial banks to manage their traditional
functions. However outsourcing results in greater risk for the commercial banks and lesser
accountability for the vendor.
Sanda and Arhin , investigated the provision of ATMs and customer service centre. The study
showed that most of the bank customers who used the ATM services perceived that ATM was a

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convenient, reliable and suitable tool for banking transactions. Therefore, the author suggests that
an investigation should be undertaken to find the satisfaction level of ATM users in Tamil Nadu.
Kumbhar, identified key factors that influence customers’ level of satisfaction in ATM service
offered by public and private sector banks. Customer perception is classified into seven
dimensions such as system availability, fulfillment and efficiency, security and responsiveness,
easiness, convenience, cost effectiveness, problem handling and contact and overall satisfaction.
The result found that cost effectiveness of ATM service was the core service quality dimension
and it affected the overall customer satisfaction in ATM service, offered in public and private
sectors bank. However, factor analysis showed that easy to use, cost effectiveness and security
and responsiveness influences customer level of satisfaction at 36 per cent variance.
Girdhar and Bhardwaj, identified the awareness level of mobile banking services among working
professionals and whether or not they are using mobile banking. The study concluded that
awareness level of mobile banking services among working professionals was very less. The
reasons for its usage by the recent users and of those who were presently non-users strongly
consider on two major factors, such as, secured and easy accessibility and uninterrupted mobility
to exist mobile banking services. The banks should educate their customers by communicating
benefit of mobile banking services by considering upon the above stated two major factors.
According to Safeena et al., the important determinants of online banking adoption are the
usefulness of the system, the ease at which the online banking is done, customer awareness and
knowledge about the possible risk. The online banking system is adopted due to its positive effect
on the customers. Most of the online customers are aware of the risk involved in online banking.
Antony, observed that in western countries banks are engaged dependent on technology vendors
to help the commercial banks. The vendors have to undergo a diligent process while serving the
bank. The author has reviewed the process by which the front office system is integrated to the
point of sale. The banks are more concerned with security and the complaints by the customers.
The process of signing the bank vendor to provide technology takes longer period of time.
Singh and Komal , analysed the current ATM facilities offered by State Bank of India, ICICI bank
and HDFC bank and also examined the factors affecting the preference of ATM. It’s a
comparative study of three public and private sectors, namely, State Bank of India, ICICI bank
and HDFC bank. The study concluded that majority of the respondents were highly satisfied in
SBI ATM facilities, then second was ICICI bank and third was HDFC bank. Goodwill, years of
establishment and size of the banks are the reasons for customer satisfaction. Customer
satisfaction i.e. in terms of good organization, quick services and performance, HDFC Bank was
at first place followed by ICICI Bank and SBI respectively.
Kamakodi and Khan , have observed that the New Private Sector Banks (NPSB) started after
1993 where able to make information technology revolution in the banks. The adoption of internet
technology leads to competition between NPSB and Public Sector Banks and Old Private Sector

41 | P a g e
Banks. The banking operations using internet was able to produce lot of new products like
internet banking, ATMs, phone banking, debit card, credit card and online banking. A survey was
conducted by the authors on a comfort level of customers with regard to CBS. The survey results
shows that more than 50 percent are adaptable for internet banking, nearly 40 percent have
expressed concern over risk.
Singh and Malhotra , have analyzed the role of information technology and internet banking in
Indian banking sector. They feel that the electronic fund transfer has been very effective and
number of users is rapidly increasing. They have observed that all the commercial banks and
number of foreign banks are providing almost identical services to the customers. In their opinion
the demat accounts, carrying out of standing instructions and foreign transactions are not up to
expectation. The internet banking has a lot of security risks which need to be addressed. There are
some non-internet banks with non-transactional websites.
Kumra and Mittal , have analyzed the motivating factors behind the development of trust on a
particular bank. The service delivery system and greater online information are the factors
responsible for development of trust. The customers take decisions on the basis of social risk and
psychological risk. The online banking can survive only by generating trust. The formal and
informal communication and quick decisions and disputes are able to provide more trust on
banking. The vendors have a big role to play on the creation of trust.
Kolodinsky , explored factors that effect the implementation to three e-banking technologies such
as automatic bill payment, phone banking and personal computer banking. The researcher
recognized six issues, and they are “relative advantage, complexity/simplicity, compatibility,
observability, risk tolerance and product involvement. The study concluded that the relative
advantage and compatibility are significant with e-banking technologies, and trial-ability,
simplicity, observe-ability, risk, and security” are not significant with e-banking technologies.
De Sarkar et al., have analyzed the development of internet banking in India and have discussed
about various aspects of the supply chain in commercial banks. The bank vendors have been
playing a very important role in this supply chain of commercial banks. The bank computerization
and many low risk data are outsourced to external vendors. ICICI has been using the vendors in
non-banking finance investor servicing brokerage, capital financing and infrastructural financing.

42 | P a g e
Case Study.
A broad review of the existing literature on the subject has been found useful in getting an
insight into the topic of study. However, the review made cannot be claimed to be an
exhaustive one.
• The study of Ramayah T Muhamad Jantan, Mohad Nasser Mohd Noor and Koay Pei Ling
(2003) examines the receptiveness of the IB by Malaysian Consumers. The study found that
although the awareness is high, this has not translated into actual use as only 23 per cent have
had IB experience. Security, availability of infrastructure and complexity of technology were
the main concerns reported by the respondents which is hindering the migration from
traditional banking to the IB. Perceived ease of use (PEU), perceived usefulness (PU) have
been found to be significantly related to intension to use the IB and perceived usefulness is
the driver of the intension to use.
• The study of Muniruddeen Lallmahamood (2007) explores the impact of perceived security
and privacy on the intension to use internet banking. The study found that perceived
usefulness is a critical factor in explaining users’ intension to use internet banking. The study
also found that convenience, ease and time saving are the main reasons for the adoption of the
IB, whereas security, trust and privacy appear to be the top main concerns for non internet
banking users. The use of local language did not contribute to the ease of use of IB.
• The study by Hanuddin Amin (2007) examines the acceptance of the IB among undergraduate
students in Malaysia and explains the factors influencing their choice. The study uses
extended technology acceptance model with perceived credibility (PC), PU, PEU and
computer self efficacy constructs. The study found that PU, PEU, and PC had a significant
relationship with the behavioral intension for acceptance of the IB.
• Murali Raman et al. (2008) in their study investigated customer perceptions on quality of
Eservices and internet banking in Malaysia. It was found that 72 per cent of the respondents
mentioned that they have already adopted the IB and 50 per cent of the respondents pictured
themselves as occasional users of the IB. The IB is perceived by the users as a quite useful
tool to manage their financial matters. In a comparative study of the Punjab National Bank
(PNB) and the HDFC bank Sonal Chawla (2004) investigated internet banking and its
adoption and implementation and found that many of the services which were offered online
by the HDFC bank are not offered by the PNB; and therefore, the HDFC bank has a
competitive edge over the PNB.
• The study on internet banking by Geethika, Tanuj Nandan and Ashwini Kr. Upadhyaya
(2008) analyses the concept of internet banking, perception of internet bank customers’ and
non-customers and issues and major concerns in internet banking in Allahabad. The analysis
found that there is not much difference in the basic internet banking services offered by
various banks. The analysis of the websites of various banks revealed that the design of the
website, technological up-gradation, security features, consumer friendliness and value added
services vary from bank to bank. The users weigh different reasons before choosing a
particular banking service and the users of e-baking give utmost importance to excellent
services. There is greater concern for security among non-users.
• In a study Sofri Yahya, Harshid and Thakur Rajendar Singh (2009) found that computer
proficiency, education and banking literacy have a positive impact on the acceptance of
internet banking in the city of Hyderabad. The analysis showed that various facilities
provided by the banks, apart from security, have a very strong positive relationship with the

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acceptance of IB and banks themselves have a major role in ensuring that more customers
adopt IB.
•
• Khan, M.S., Mahapatra, S.S. and Sreekumar (2009) in a study evaluated the quality of
internet banking services in India from customers’ perspective. The analysis showed that the
customers are satisfied with the quality of service on four dimensions such as reliability,
accessibility, privacy and responsiveness, but least satisfied with user friendliness. The study
provides guidelines to bankers to focus on user friendliness to improve upon internet banking.
• Gunajith Sarma and Pranav Kumar Singh (2010) in their joint study on the applicability of
biometric technology for authentication in internet banking observed that technologically
implementing web based banking to customers is challenging. The focus of the study was on
providing banking services to customers using web with highly secured technology. The
study found that bio-metric technology has played an important role in controlling the risk
factors through authentication system. The study argues that careful planning is a prerequisite
for technology implementation if full benefits are to be realized.
• Vijay M. Kumbhar (2011) in a study of the determinants of internet banking adoption in
Indian banking showed that demographic characteristics, internet access, awareness, customer
education, cost effectiveness and service quality were the most important factors in the
adoption of internet banking. The study identified the attitudinal, cost, service quality and
awareness factors that are significant in explaining the intensions to adopt internet banking
services in India. This empirical investigation was undertaken on public and private sector
banks in Satara and Khollapur city of Maharashtra.
• Rahmath Safeena, Hema Date and Abdullah Kammani (2011) in a study of the factors
influencing the consumers’ adoption of IB in India investigated the influence of Perceived
Usefulness (PU), Perceived Ease of Use (PEU) and Perceived Risk (PR) on the use of IB. The
study examines the Indian consumers’ perspective of IB adoption and observed that PU, PEU
and PR were found to be the influential factors in explaining the use of on-line banking
services. PU and PEU are positively related and PR is negatively related with IB use. The
benefit of large scale adoption of the ICT in banking is efficiency in providing banking
services on the one hand and the reduction in cost on the other.

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Safest Online Banks.

Bank # of Stars
Synchrony Bank 5 stars
Capital One 360 5 stars
FNBO Direct 4 stars
Barclays 4 stars
HSBC Direct 4 stars
E*Trade Bank 4 stars
EverBank 3 stars.
• Is the Interface Easy to Use?

• The user interface for online banks is usually super easy to use. Banking online means not
worrying about trying to get to a building during bank hours of having to wait in line.
• Do Online Banks Have Fees?

• Most online banks don’t have a minimum deposit to start a checking account. Also, they
usually don’t have maintenance fees. That said, you may run into some fees if you overdraft.
• Is There a Limit to How Much I Can Deposit at Once?

• In most cases, if your check is bigger than $5,000, you won’t be able to send it via picture.
Unfortunately, that’s not very good news for small business owners or freelancers who make
large sums of money in a single check. Direct deposit services work great, but they’re not
always available. Sometimes, a traditional bank account is better for your deposits.
• Can I Do Cash Deposits Through My Online Bank?

• If your bank does not have a physical location, and you get tips or are paid in cash, depositing
that money can be complicated. There are sometimes deposit-accepting ATMs that you could
use, but if there are none near you, you’ll have to use a money order. You can also use a
reloadable prepaid debit card.

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Prahladrai Dalmia Lions College Of Commerce & Ecomnomics.

Impact of internet banking system and technology on Indian banks.

Chapter :-2 History Of Indian Banks.

In 1932 IB opened a branch in Colombo. It opened its second branch in Ceylon

Impact of internet banking system and technology on Indian banks.

Post Independence of India

Impact of internet banking system and technology on Indian banks.

On 30 August 2019, Finance Minister Nirmala Sitharaman announced that

Impact of internet banking system and technology on Indian banks.

History Of Internet Banking and Technology.

Emergence of computer banking

Impact of internet banking system and technology on Indian banks.

Chapter:-3 How Internet Banking Introduced On Indian

Impact of internet banking system and technology on Indian banks.

Impact of internet banking system and technology on Indian banks.

Rs.2.93 trillion and electronification has a potential to translate 4.13 billion

Impact of internet banking system and technology on Indian banks.

Chapter:-4 Positive Impact Of Internet Banking On

Impact of internet banking system and technology on Indian banks.

• Issues of Technology in Banking

Impact of internet banking system and technology on Indian banks.

Impact of internet banking system and technology on Indian banks.

Pros and Cons of Online Banking

Various Online Services

Common Online Banking Services

Impact of internet banking system and technology on Indian banks.

Online Banks Around the Globe

Pros and Cons of Using Citi Bank

Impact of internet banking system and technology on Indian banks.

Pros and Cons of Using PNC Bank

4. Goldman Sachs Bank USA

Pros and Cons of Using Goldman Sachs

Impact of internet banking system and technology on Indian banks.

7. State Bank India

Impact of internet banking system and technology on Indian banks.

Annual percentage yield (APY): 2.75% (changes overtime)

Pros and Cons of Using State Bank India

Pros and Cons of Using Barclays

Pros and Cons of Using HSBC China

Impact of internet banking system and technology on Indian banks.

10. E*Trade Bank

Pros and Cons of Using E*Trade Bank

Impact of internet banking system and technology on Indian banks.

Risks of online banking.

Impact of internet banking system and technology on Indian banks.

Impact of internet banking system and technology on Indian banks.

DEVELOPMENT OF DISTRIBUTION CHANNELS

AUTOMATIC TELLER MACHINES

IMPACT OF TECHNOLOGY ON BANKING

Impact of internet banking system and technology on Indian banks.

Impact of internet banking system and technology on Indian banks.

Impact of internet banking system and technology on Indian banks.

Technological developments in Banking

made several recommendations covering payment systems including setting up of an autonomous

Impact of internet banking system and technology on Indian banks.

Emerging Challenges in the Banking Industry

ii) Risk Management:

iii) Customer Relationship Management (CRM):