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CHAPTER-1
INTRODUCTION
(1.1) INTRODUCTION TO ONLINE BANKING
Online banking is an electronic payment system that enables customers of a financial
institution to conduct financial transactions on a website operated by the institution,
such as a retail bank, virtual bank, credit union or building society. Online banking is
also referred as Internet banking, e-banking, virtual banking and by other terms.
To access a financial institution's online banking facility, a customer with Internet
access would need to register with the institution for the service, and set up some
password (under various names) for customer verification. The password for online
banking is normally not the same as for telephone banking. Financial institutions
now routinely allocate customers numbers (also under various names), whether or
not customers have indicated an intention to access their online banking facility.
Customers' numbers are normally not the same as account numbers, because a
number of customer accounts can be linked to the one customer number. The
customer can link to the customer number any account which the customer controls,
which may be cheque, savings, loan, credit card and other accounts. Customer
numbers will also not be the same as any debit or credit card issued by the financial
institution to the customer.
To access online banking, a customer would go to the financial institution's secured
website, and enter the online banking facility using the customer number and
password previously setup. Some financial institutions have set up additional
security steps for access to online banking, but there is no consistency to the
approach adopted.
commerce,
commonly
known
as e-commerce, ecommerce or e-
commerce, refers to the buying and selling of products or services over electronic
systems such as the Internet and other computer networks. However, the term may
refer to more than just buying and selling products online. It also includes the entire
online process of developing, marketing, selling, delivering, servicing and paying for
products and services. The amount of trade conducted electronically has grown
extraordinarily with widespread Internet usage. The use of commerce is conducted
in this way, spurring and drawing on innovations in electronic funds transfer, supply
chain management, Internet marketing, online transaction processing, electronic data
interchange (EDI), inventory management systems, and automated data collection
systems. Modern electronic commerce typically uses the World Wide Web at least at
one point in the transaction's life-cycle, although it may encompass a wider range of
technologies such as e-mail, mobile devices and telephones as well.
A large percentage of electronic commerce is conducted entirely in electronic form
for virtual items such as access to premium content on a website, but mostly
electronic commerce involves the transportation of physical items in some way.
Online retailers are sometimes known as e-tailors and online retail is sometimes
known as e-tail. Almost all big retailers are now electronically present on the World
Wide Web.
Electronic commerce that takes place between businesses is referred to as businessto-business or B2B. B2B can be open to all interested parties (e.g. commodity
exchange) or limited to specific, pre-qualified participants (private electronic
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CHAPTER-2
ONLINE BANKING CHALLENGES & OPPORTUNITIES
(2.1)ONLINE BANING FEATURES
We need to be able to manage our finances from anywhere in the world. Rich online
banking services are much more important than a physical location. Since I have
been doing all of my banking online with quite a few different online banks as I
looked for the best solution, Ive had a chance to really experiment with what works
and what doesnt work for us.
Here is a checklist of things to look for in an online bank. Some items you may be
familiar with. Others might be new to you if it isnt something your current bank
offers.
1. Bill Pay Service - One of the biggest reasons for going with an online bank is to
get really good bill payment services. Different banks handle bill payment different
ways. Here are some things to think about:
A. How many bills are you allowed to pay per month?
B. What are the fees for going over the limit?
C. Can the bill payment send physical checks to merchants who arent set up to take
electronic payments?
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6. Linked Accounts Can you link your bank account with a brokerage account?
Can you add your minor children as custodial accounts and manage them all
centrally? If you and your spouse both set them up IRAs, is it easy to view them both
alongside the rest of your finances, or do you have to have a separate login for each
IRA to keep them on separate SSNs? These are small things that many banks dont
support, but it starts getting really complicated when you have to manage a bunch of
accounts instead of having a single place to manage all of your money.
7. Convenient Deposit Methods - Since you may not be anywhere near the physical
location of your bank, make sure you understand how to deposit money. Payroll can
be set up on direct deposit, but there will be times when you need to deposit checks.
Does the bank provide postage paid envelopes and deposit slips? Some banks work
with FedEx or UPS stores to allow you to send in a deposit overnight for free.
8. Low ATM Fees and Convenient Locations If you need to get cash, will the
bank refund the ATM fees? Are there only certain ATMs that are free, and if so, are
they located near places you normally go? Are the ATMs available nationwide so you
can use them on vacation? What are the fees for using the ATM internationally and
how is the exchange rate handled?
9. Integration with Desktop Software If you use Microsoft Money, Quicken or
something similar, youll want to make sure your bank supports it. Make sure you
understand if downloading transactions require you to login and manually download
a file, or if your money management software can directly connect and download
new transactions. If you are using Quicken on a Mac, make sure the bank is paying
Quickens extortion fee so the files will work with Mac users.
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10. Many Account Types Some banks only offer basic checking and savings
accounts. Ideally you want a bank that makes it easy to open money market accounts,
IRAs, health savings accounts, etc. If you have to go to another institution to open a
different type of account, it is more difficult to manageespecially if you are on the
road. You want to be able to easily open a CD to take advantage of a higher interest
rate, easily open an IRA to help reduce your tax liability, etc.
11. Free Money Transfers Be sure to consider how easy it is to move money in
and out of the account. You should be able to set up links with your accounts from
other institutions to transfer money back and forth as necessary. Make sure you
understand what type of fees are associated with these transfers. Good banks should
allow a certain number of transfers per month with no fee.
12. Security Balanced with Convenience - Some banks spend so much effort trying
to keep things secure that youll find yourself automatically logged out of their
website while you try to balance your account. You want security but you dont want
it to get in the way of you doing your banking. Also check into what type of
additional security features are available. For example, some banks will offer you an
RSA keychain with a number that changes every 60 seconds. In addition to your
password, you will need the number from that key in order to get access to your
account.
13. Ease of Use This is something that most banks seem to struggle with. Right
now I have my personal account with one online bank and my business accounts with
another. I dread using the business accounts and I absolutely love using my personal
account. At first I thought I was just more familiar with the bank where my personal
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ADVANTAGES TO CUSTOMER
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At a time where it seems like you can do just about anything on the internet, it
seems only right to be able to get your banking needs done online. Lets look at the
advantages of online banking versus going to a physical bank branch.
1. Convenience
Sometimes there just isnt enough time in the day to get everything you need-to-do
done, thats why convenience is one of the biggest advantages of online banking.
With business hours ranging from approximately 9am to 6pm, shorter hours on
Saturday, and often closed on Sundays, making a trip to the bank can easily become
a difficult task for customers with a regular 9 5 work schedule. Instead of running
around town, trying to make it to the bank before they close, just login online and
get your banking done whenever its convenient for you.
2.No Lines
One of the things most people dislike about banks is waiting in line. It is not
uncommon to find yourself waiting in line at a bank, waiting to be helped. By
banking online, you dont have to wait in line to get your baking done, leaving you
with more time to get other things done.
3.Availability
With online banking, you can keep track of your money much easier because your
account information is available anytime online. To get your balance, simply login to
your account. Avoid getting stuck waiting for the bank to open again, having to visit
an ATM, or calling a time consuming customer service number to get the same
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Online banking often reduces funds availability delays and hastens resolution to
disputes and inquiries. While some complaints and problems do require human
intervention, Customer Service Agents are available for longer during a calendar day
than local branch personnel are.
Online banking differs from traditional banking when physical checks or cash is
deposited; human interaction via a drive thru lane or at the counter is required.
Cashier checks, traveler checks, and money orders cannot be purchased from the
institution via online banking, but because all transactions allowed are electronic,
tracking and accountability are easily provided.
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Move from one stop shopping to 'Banking Portfolio' i.e. unbundled product
purchases.
Online security of financial data has evolved tremendously since the early
days of online banking, and often transactions can be even more secure than
those conducted in a drive thru lane.
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holders
of
the
same
bank
as
well
as
inter-bank
transfers.
The growth has also been aided by banks' efforts to offer innovative services and
tighten security measures, and the increase in awareness of services available. RBI
outlining guidelines on mobile banking, setting up of the National Payments
Corporation of India and passage of the Payments and Settlement Act too have given
a positive thrust to the growth in electronic payments. The impact of all these
measures is likely to be felt in the current fiscal, which may well mean FY10 could
become a watershed year for e-banking. While opinions of industry players differ on
whether FY10 will indeed prove to be a tipping point, there seems to be consensus
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By this point, no one can dismiss online banking as a fad. However, it is worth
considering whether the trend towards online financial transactions is going to slow
or reverse in the years to come. There will continue to be people who resist online
banking in favor of offline transactions just as there are people who prefer to keep
their money in mattresses instead of putting it in banks. Whether these people will
exert serious influence on the movement towards online banking can be examined
by looking at the needs of modern consumers, and the interests of the banks
themselves.
The Move to Online Business
The global connectivity provided by the internet, combined with the fallout from the
global financial crisis has encouraged a growing number of entrepreneurs to start
their own businesses online. As an increasing number of people look to save
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Staffing Solutions
As banks consolidate and grow larger, they are looking for more ways to cut costs,
and reducing the number of full-time employees on their payroll is an attractive
option. Encouraging customers to do their banking online allows banks to close
smaller branches in outlying locations and use economies of scale to develop
customer assistance centers in locations where the labor market is more favorable.
Physical Footprints
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Growth of Internet
The increase in the growth of internet usage will definitely help the cause of growth
of online banking in India. The following chart shows the growth of internet in India
during the past decade or so
YEAR
Users
Population
% Penetration
1998
1,400,000
1,094,870,677
0.1 %
1999
2,800,000
1,094,870,677
0.3 %
2000
5,500,000
1,094,870,677
0.5 %
2001
7,000,000
1,094,870,677
0.7 %
2002
16,500,000
1,094,870,677
1.6 %
2003
22,500,000
1,094,870,677
2.1 %
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2004
39,200,000
1,094,870,677
3.6 %
2005
50,600,000
1,112,225,812
4.5 %
2006
40,000,000
1,112,225,812
3.6 %
2007
42,000,000
1,129,667,528
3.7 %
CHAPTER-3
PROBLEMS ,SOLUTIONS &GUIDELINES RELATING TO
ONLINE BANKING
(3.1) MAIN & IMPORTANT CONCERNS RELATING TO ONLINE
BANKING
In a survey conducted by the Online Banking Association, member institutions rated
security as the most important issue of online banking. There is a dual requirement
to protect customers' privacy and protect against fraud. Banking Securely: Online
Banking via the World Wide Web provides an overview of Internet commerce and
how one company handles secure banking for its financial institution clients and
their customers. Some basic information on the transmission of confidential data is
presented in Security and Encryption on the Web. PC Magazine Online also offers a
primer: How Encryption Works. A multi-layered security architecture comprising
firewalls, filtering routers, encryption and digital certification ensures that your
account information is protected from unauthorised access:
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CHAPTER-4
CASE STUDIES
1. Email password Hacking-
One day a lady came to cyber cell office and reported that she and her
brothers e-mail IDS had been hacked by someone she suspected him to be her
husband. The lady had already lodged a case against him for dowry and was pending
for trial in Bhopal court.
The suspect had hacked ladys and her brother e-mail ID account and copied all the
information to his e-mail and produced selected e-mails to claim that . she was
happy with him and case of dowry is a false one .
To malign the image of her brother the suspect sent a copy of FIR lodged against
him at police station Habibganj. This indicated that the husband of the lady was
behind the whole affair but police had not any evidence against him.
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Cyber cell started enquiry by an order of IGP and obtained the login logs from
rediff.com .The logs indicated that the email IDs password were changed and
anonymous emails were sent from the house of ladys husband and sent from his.
Cyber cell registered a case under section 66 IT act and submitted Challan has been
filed against the suspect and trial is over.
Court has hold the conviction against the suspect Sabrish Pillai but found that the
matter came before the court as Sabrish was having family dispute with his wife and
the, act of hacking was not against the society at large, Hence let him free after
warning.
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CHAPTER-5
RESEARCH METHODOLOGY
Objectives of the study:
1) The main objective of this study was to understand the growth of the
online banking sector in India.
2) To study the opportunities for growth of online banking in India, since
India is a very fast developing country.
3) To study the challenges associated with the growth of online banking.
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Methodology used:
A. PRIMARY DATA: Questionnaire distributed among people having bank accounts. A sample
questionnaire of 10 questions distributed to people.
B. SECONDARY DATA : Internet
Reference books.
CHAPTER-6
DATA ANALYSIS
A survey was conducted on online banking in India for the primary data among 25
people. The analysis of this survey or data is as follows:Q. What kind of banking do you prefer?
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Online
Both
FINDINGS: This shows us the preference of the people towards the type of
banking. They prefer to use the services of both the online and traditional banking
rather than a particular type
YES
NO
CAN'T SAY
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10
8
6
4
2
0
YES
NO
CANT SAY
12
10
8
6
4
2
0
WEEKLY
MONTHLY REGULARLY
RARELY
PARTIALLY
FAIRLY
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NOT AT ALL
POLL out of 25: Check balances - 11; Payments - 7; Transfer of fund - 2; Other -5
FINDINGS: The utility of the online banking is service is not used to the extent is
should be and it is being majorly used for the purpose of checking the balance in the
account. The reason for this is the low volume of transaction among the people.
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CHAPTER -7
RECOMMENDATIONS & CONCLUSIONS
CONCLUSION:
People are not confident enough to whether to rely completely on online
banking. There is hesitancy in their minds with regards to preference. So they
use both the techniques of banking i.e. Online and Traditional.
Because of the complexity and the unawareness in the people regarding the
online banking, there is less utilization of the online banking services provided
by the banks.
People are not sure whether their account is completely secured in online
banking. Security concern is the main and the core reason why people do not
tend to use online banking.
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RECOMMENDATION:
After analyzing the entire study on online banking with respect to both the primary
and the secondary data, the following recommendations can be put forth: The infrastructure for the development is not being implemented in way that
could be beneficial.
There are various obstacles in the banking scenario with regards to guidelines
and issues for functioning. This has led to decline in the usage of the online
banking service of the banks.
The people having accounts can be urged to take up an internet banking
facility. They should be motivated rather than just being told that there exists a
service of online banking.
There are more people who are not actually aware of all the benefits that they
reap out of the transaction of online banking. They should be proper
awareness.
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CHAPTER-8
BIBLIOGRAPHY
WEBSITES:
http://www.onlinebanking.net/online-banking-services/
http://www.productivity501.com/choosing-online-bank/244/
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http://www.thewisdomjournal.com/Blog/pros-and-cons-of-onlinebanking/
http://www.networkmagazineindia.com/200302/feature.shtml
www.google.com
REFERENCE BOOKS:
R.K. UPPAL
BANKING WITH TECHNOLOGY
NEW CENTURY PUBLICATIONS
NEW DELHI
CHAPTER-9
QUESTIONNAIRE
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NAME:
EMAIL :
PHONE:
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