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THE INDIAN INTERNET BANKING JOURNEY
"We want to use the Internet to become a universal banking major."- Nachiket Mor, Head of ICICI’s Treasury, in March 2000.
THE INTERNET BANKING BOOM
In 2001, a Reserve Bank of India survey revealed that of 46 major banks operating in India, around 50% were either offering Internet banking services at various levels or planned to in the near future. According to a research report[1], while in 2001, India's Internet user base was an estimated 9 lakh; it was expected to reach 90 lakh by 2003. Also, while only 1% of these Internet users utilized the Internet banking services in 1998, the Internet banking user base increased to 16.7% by mid- 2000.
Many of the major banks like ICICI, HDFC, IndusInd, IDBI, Citibank, Global Trust Bank (GTB), Bank of Punjab and UTI were offering Internet banking services. Based on the above statistics and the analysts' comments that India had a high growth potential for Internet banking, the players focused on increasing and improving their Internet banking services. As a part of this, the banks began to collaborate with various utility companies to enable the customers to perform various functions online. ICICI's 'Infinity,' which was already a leader in the Indian Internet banking arena, began to allow its customers to pay their online real time shopping bills.
HDFC, through its 'payment gateway' feature, allowed its Internet banking customers to make online and real time payments for their purchases. HDFC also entered into tie-ups with various portals to provide these business-to-customer (B2C) e-commerce transactions. Centurion bank acquired an equity stake in the teauction.com portal to bring together buyers, sellers, suppliers, registered brokers and associations in the tea market and eliminate the need for their physical presence at various auctions.
As more banks entered Internet banking arena, the competition between the banks also increased. This compelled the banks to focus on capturing new markets and customers and adopting advanced technology on the Internet. In the light of these developments, industry watchers remarked that Internet banking had arrived in a big way. Though it had a long way to go compared to the global standards, it was beginning to be seen as a replacement for the traditional banking set up in the future
ABOUT INTERNET BANKING
Globally, the banking business has always been in the forefront of harnessing technology to improve its services and efficiency. Banks have been quick to adopt rapidly evolving electronic and telecommunication technologies to deliver an extensive line of value added products and services to their customers. By the early 1990s, direct dial-up connections, personal computers, tele banking and automated teller machines (ATMs) became common in most developed nations. Internet banking evolved in the mid-1990s when Internet and the World Wide Web began to catch on. Soon, many major banks in the US and Europe began to use the Internet to provide banking services.
Internet banking is a web-based service that enables the bank's authorized customers to access their account information. It allows the customers to log on to the bank's website with the help of a bank-issued identification and a personal identification number (PIN). The banking system verifies the user and provides access to the requested services. The range of products and services offered by each bank on the Internet differs widely in their content. Most banks offer Internet banking as a value-added service. Internet banking has also led to the emergence of new banks, which operate only through the Internet and do not exist physically. Such banks are called 'Virtual' banks or 'Internet only' banks.
The products and services offered by the banks on the Internet can be divided into three types:
Information Kiosks: It includes providing information regarding various products and services offered by the bank to its customers and others in general. The bank's site receives and answers queries of customers through e-mails.
Basic Internet Banking: It includes enabling customers to open new accounts, check account balance and pay utility bills.
E-commerce Banking: Banks function as electronic market places (e-market place) enabling customers to use their accounts for money transfers, bills payment, purchase and sale of securities and online real time purchases and payments.
In a typical Internet banking transaction, customers' requests for online banking information are passed on from Web server to the bank's Internet banking server through the WWW interface. These requests pass through a firewall[1] before they reach the Internet banking server. Due to the use of SSL technology[2] , only authenticated requests reach the Internet banking server.
The customer information database is stored on a bank's server, which is protected by the use of various security tools in addition to the firewall technology. The WWW interface is the only media of communication with the Internet banking server and Internet banking server is the only media of communication with the customer database, thus ensuring the safety of operation and customer data. When the customer requests reach the Internet banking server it passes the requests to the bank server hoarding customer database. The database provides the required information to the Internet banking server, which is in turn passed on to the web server, through the firewall, from where the customer is able to access it (Refer Figure I).This sort of architecture, known as the 'three-tiered architecture' (comprising of a web server, Internet banking server and customer database protected by firewalls) creates a controlled environment, which allows quick incorporation of Internet security technologies. A security analyzer constantly monitors login attempts and recognizes failures that could indicate a possible unauthorized attempt to log into an account. When such trends are observed, steps are automatically taken to prevent that account from being used.
The most significant benefit of Internet banking is the ready accessibility of bank accounts at all times. The inconvenience of visiting and waiting at the banks is also eliminated. This result in, enhanced customer satisfaction, reduced customer attrition and increased customer base. Internet banking considerably reduces transaction costs for the banks. According to a study conducted by consultants Booz-Allen & Hamilton, the cost of an average transaction on the Internet is as low as 13 cents, compared to $ 1.07 through the branch, 54 cents through the telephone and 27 cents through the ATM. The study also stated that Internet banking helped banks reduce the branch load and attract future customers.
figure i-refer attached doc.
In India, the cost of one banking transaction through the Internet amounted to 10 paise to the bank, as compared to Re.1 through a branch, 45 paise through an ATM, 35 paise through phone banking and 20 paise through debit cards.The low transaction costs and the promising picture painted by analysts induced many banks in India to introduce Internet banking services during the late 1990s. However, only few of them succeeded in moving beyond the launch of the website. ICICI's Internet banking service 'Infinity' became the most recognized and popular service in the country, providing a wide range of products and services.
ICICI - INTERNET BANKING INITIATIVES
ICICI bank was incorporated as a commercial banking company, by the Industrial Credit and Investment Corporation of India (ICICI)[1] , in May 1994. The first ICICI branch was started in June 1994 at Chennai. The bank provides an array of domestic and international banking services to enable national and international trade and business, investment and foreign exchange and treasury services. Right from its inception the bank focused more on incorporating advanced technology. The bank operated the largest chain of ATMs in the country, which amounted to more than 450 in 2000. All the bank's branches were fully computerized and networked through V-SAT[2] technology. By 1999, the number of branches increased to 65 and the bank plans to have over 200 branches by the end of 2002. In April 2000, ICICI became the first Indian bank to be listed on the New York Stock Exchange..
ICICI was always regarded as one of the best private banks to foster advanced technologies in the banking sector. As part of its technology drive, in 1997, ICICI launched 'Infinity,' the first Indian Internet banking service. The service was launched to reduce transaction cost and offer convenient banking to customers. This meant enabling the customers to access their bank account and make transactions at any time. ICICI realized that to make Infinity a success, it would have to invest heavily in sound Internet banking e-commerce technology. During 1995-99, ICICI invested Rs 50 million in online banking technology solutions.In 1997, ICICI bought the 'BankAway'[3] software from Infosys. BankAway was an e-commerce solution that provided the bank a platform to offer an integrated financial services portal to the customers. It offered access to account information, bill payment, cash management, trade finance and online shopping.
'Infinity' was initially targeted at the non-resident Indians (NRIs) to enable them to manage their bank accounts in India through the Internet. According to the bank's sources, Infinity helped to increase the business generated from NRI customers from Rs 300 million in 1997 to Rs 1.4 billion in 1998. The service was also aimed at individuals in the age group of 30 to 50 years working in the corporate sector and proficient in using technology. However, over the next few years, the bank enhanced its services to attract other customers as well. As a result, by early 2000, ICICI had over 110,000 Internet banking customers. In the first half of 2000, ICICI's Internet banking customer base touched 275,000.
On account of the growing competition in the Internet banking sector, ICICI focused on enhancing and extending its business-to-business (B2B) and B2C services through tie-ups and acquisitions. The bank entered into a 50-50 joint venture with Satyam Infoway[4] in December 1999 to offer retail banking products and services on the Internet. R. Ramraj, Managing Director, Satyam Infoway, said, "ICICI bank has many corporate clients and the idea is to develop e-commerce on a B2B platform where payments will be facilitated through ICICI. The alliance is going to give a big fillip to B2B."
Infinity's services included account information, funds transfer, bill payments, online Real-Time e-shopping payments; communication with bank manager, various customized services. The products were targeted at two different customers: individuals and small businesses, and corporates having an annual turnover of over Rs 500 million.
In the first half of 2000, ICICI introduced new Internet banking products for school and college students. Kid-e-bank was introduced to help children between 5-12 years to open an account and check the account balance on the Internet. Bank@campus was a service for students to enable services like ATMs, Smart Card, educational loans etc. It was launched across the country in many campuses.
As part of its B2C programs, ICICI tied up with 10 shopping malls all over India. This allowed customers to shop and pay bills online from their accounts. It also tied up with 24 billing companies across 11 cities, including Bharat Sanchar Nigam Ltd. (BSNL) for bill payment. The bank also offered mutual funds related services to its customers. It also tied up with automobile major Ford, for local delivery of its car 'Ikon' against orders placed on the Internet.
In 2000, ICICI bank acquired the Bank of Madura. Bank of Madura (BoM). BoM was amalgamated with ICICI bank from March 10, 2001, as a part of which, ICICI acquired BoM's customer base of 1.2 million. However, analysts felt the biggest gain was BoM's IT-savvy employees. By 2001, ICICI bank had emerged as one of the leading providers of Internet banking services in India. The bank was reportedly moving towards becoming a full-fledged e-commerce company in a couple of years. Nachiket Mor, Head of ICICI Treasury said, "The Seven-Eleven supermarket chain in Japan has recently applied for a banking license. This is the way world is moving. If supermarkets get into banking, then it is also time for banks to get into the selling of consumer durables."
HURDLES IN INTERNET BANKING
[1] ICICI is a leading financial services company, established by the Government of India, in 1955, to promote industrial development in the country.
[2] Very Small Aperture Terminal (VSAT) refers to an earthbound station used in satellite communications of data, voice and video signals. A VSAT consisted of a transceiver that was placed outdoors in direct line of sight to the satellite and a device that was placed indoors to interface the transceiver with the end user's communications device such as a PC.
[3]BankAway was the first Internet banking solution in India and was installed at four out of the six leading banks in the country offering Internet banking services. It was featured in a study, 'Ranking of International Internet Banking Solutions' by Meridien Research, USA. BankAway was the only solution from Asia Pacific to be featured in the report.
[4]Satyam Infoway or Sify was a Chennai-based subsidiary of Satyam Computer Services. Sify focused on providing Internet solutions like ISP operations, cybercafes and e-commerce consultancy.
THE FUTURE
Despite the rosy predictions and increased corporate activity, the Indian Internet banking system is facing many hurdles. The problems include operational risks, security risks, system architecture risks, reputational risks and legal risks (See Exhibit I for Problems in Internet Banking).
Apart from the security issues, there are a host of other problems like:
• PC user base in India is extremely low compared to global standards.
•The Internet user base is limited.
•Lack of infrastructure to advanced technology based banking services.
•The absence of a regulatory framework for Internet banking transactions in India.
•The mindset of the Indian consumer, who prefers personal interactions and is not very comfortable, doing transactions through the Internet.
•Limited awareness about the potential of Internet banking on the part of banks.
The issue of banks not being ready to realize the full benefits of Internet banking was aptly summed up by a critic, "Much of what is now on display at bank websites is an embarrassment, to put it politely. The average site has information about certain products, e-mail contacts of bank department, perhaps the Chairman's annual general meeting speech as well. A mere information booth. This is definitely not Internet banking."
However, banks are working towards addressing these problems. The security issues can be tackled by having the bank's systems technologically equipped to evade operational and security risks. Reputational risks can be prevented by testing of the system before implementation, developing contingency plans (to handle system disruptions, system hackers, security lapses and virus attacks) and creating back-up facilities. Legal and cross-border risks can be avoided through proper customer identification devices, information screening techniques, periodic reviews on compliance with various laws, and gaining knowledge of various national laws (applicable) and guide the customers through their cross-border dealings.
Apart from ensuring the security of the Internet-based transactions, ICICI is taking steps to overcome the other hurdles. The bank is tying up with computer manufacturers to make PCs available to customers at low prices. The bank also plans to tie-up with Sify to place its ATMs in Sify cybercafes. In 2000, ICICI opened Internet kiosks (cabins) at its ATMs to enable easy Internet access to its customers for banking.
Many other banks are also adopting such practices. Analysts claim that Internet banking holds lots of potential with the emergence of growing Internet awareness among customers, integration of banking services with e-commerce service, the increasing reach of the Internet and the entry of global players in the banking sector. Even the Reserve Bank of India has come out with Internet banking related guidelines (Refer Exhibit II). With ICICI already having decided to make the Internet an integral part of its future business plans and other banks reportedly following suit, Internet banking seems poised to become an important part of the Indian banking sector in the years to come.
QUESTIONS FOR DISCUSSION:
1. Analyze the major changes that took place in the Indian banking sector with the advent of Internet banking and discuss its advantages and disadvantages.
2. Explain how a typical Internet banking transaction is conducted and discuss the need for secure system architecture, in the light of various risks associated with Internet banking?
3. "Technology advancement in banking helps high net worth customers and big corporates, but not the average middle-class customers." Do you agree with the above statement? Give reasons to support your answer.
4. Discuss the future of Internet banking in India, keeping in view its moderate growth since its inception.
THE INDIAN INTERNET BANKING JOURNEY
"We want to use the Internet to become a universal banking major."- Nachiket Mor, Head of ICICI’s Treasury, in March 2000.
THE INTERNET BANKING BOOM
In 2001, a Reserve Bank of India survey revealed that of 46 major banks operating in India, around 50% were either offering Internet banking services at various levels or planned to in the near future. According to a research report[1], while in 2001, India's Internet user base was an estimated 9 lakh; it was expected to reach 90 lakh by 2003. Also, while only 1% of these Internet users utilized the Internet banking services in 1998, the Internet banking user base increased to 16.7% by mid- 2000.
Many of the major banks like ICICI, HDFC, IndusInd, IDBI, Citibank, Global Trust Bank (GTB), Bank of Punjab and UTI were offering Internet banking services. Based on the above statistics and the analysts' comments that India had a high growth potential for Internet banking, the players focused on increasing and improving their Internet banking services. As a part of this, the banks began to collaborate with various utility companies to enable the customers to perform various functions online. ICICI's 'Infinity,' which was already a leader in the Indian Internet banking arena, began to allow its customers to pay their online real time shopping bills.
HDFC, through its 'payment gateway' feature, allowed its Internet banking customers to make online and real time payments for their purchases. HDFC also entered into tie-ups with various portals to provide these business-to-customer (B2C) e-commerce transactions. Centurion bank acquired an equity stake in the teauction.com portal to bring together buyers, sellers, suppliers, registered brokers and associations in the tea market and eliminate the need for their physical presence at various auctions.
As more banks entered Internet banking arena, the competition between the banks also increased. This compelled the banks to focus on capturing new markets and customers and adopting advanced technology on the Internet. In the light of these developments, industry watchers remarked that Internet banking had arrived in a big way. Though it had a long way to go compared to the global standards, it was beginning to be seen as a replacement for the traditional banking set up in the future
ABOUT INTERNET BANKING
Globally, the banking business has always been in the forefront of harnessing technology to improve its services and efficiency. Banks have been quick to adopt rapidly evolving electronic and telecommunication technologies to deliver an extensive line of value added products and services to their customers. By the early 1990s, direct dial-up connections, personal computers, tele banking and automated teller machines (ATMs) became common in most developed nations. Internet banking evolved in the mid-1990s when Internet and the World Wide Web began to catch on. Soon, many major banks in the US and Europe began to use the Internet to provide banking services.
Internet banking is a web-based service that enables the bank's authorized customers to access their account information. It allows the customers to log on to the bank's website with the help of a bank-issued identification and a personal identification number (PIN). The banking system verifies the user and provides access to the requested services. The range of products and services offered by each bank on the Internet differs widely in their content. Most banks offer Internet banking as a value-added service. Internet banking has also led to the emergence of new banks, which operate only through the Internet and do not exist physically. Such banks are called 'Virtual' banks or 'Internet only' banks.
The products and services offered by the banks on the Internet can be divided into three types:
Information Kiosks: It includes providing information regarding various products and services offered by the bank to its customers and others in general. The bank's site receives and answers queries of customers through e-mails.
Basic Internet Banking: It includes enabling customers to open new accounts, check account balance and pay utility bills.
E-commerce Banking: Banks function as electronic market places (e-market place) enabling customers to use their accounts for money transfers, bills payment, purchase and sale of securities and online real time purchases and payments.
In a typical Internet banking transaction, customers' requests for online banking information are passed on from Web server to the bank's Internet banking server through the WWW interface. These requests pass through a firewall[1] before they reach the Internet banking server. Due to the use of SSL technology[2] , only authenticated requests reach the Internet banking server.
The customer information database is stored on a bank's server, which is protected by the use of various security tools in addition to the firewall technology. The WWW interface is the only media of communication with the Internet banking server and Internet banking server is the only media of communication with the customer database, thus ensuring the safety of operation and customer data. When the customer requests reach the Internet banking server it passes the requests to the bank server hoarding customer database. The database provides the required information to the Internet banking server, which is in turn passed on to the web server, through the firewall, from where the customer is able to access it (Refer Figure I).This sort of architecture, known as the 'three-tiered architecture' (comprising of a web server, Internet banking server and customer database protected by firewalls) creates a controlled environment, which allows quick incorporation of Internet security technologies. A security analyzer constantly monitors login attempts and recognizes failures that could indicate a possible unauthorized attempt to log into an account. When such trends are observed, steps are automatically taken to prevent that account from being used.
The most significant benefit of Internet banking is the ready accessibility of bank accounts at all times. The inconvenience of visiting and waiting at the banks is also eliminated. This result in, enhanced customer satisfaction, reduced customer attrition and increased customer base. Internet banking considerably reduces transaction costs for the banks. According to a study conducted by consultants Booz-Allen & Hamilton, the cost of an average transaction on the Internet is as low as 13 cents, compared to $ 1.07 through the branch, 54 cents through the telephone and 27 cents through the ATM. The study also stated that Internet banking helped banks reduce the branch load and attract future customers.
figure i-refer attached doc.
In India, the cost of one banking transaction through the Internet amounted to 10 paise to the bank, as compared to Re.1 through a branch, 45 paise through an ATM, 35 paise through phone banking and 20 paise through debit cards.The low transaction costs and the promising picture painted by analysts induced many banks in India to introduce Internet banking services during the late 1990s. However, only few of them succeeded in moving beyond the launch of the website. ICICI's Internet banking service 'Infinity' became the most recognized and popular service in the country, providing a wide range of products and services.
ICICI - INTERNET BANKING INITIATIVES
ICICI bank was incorporated as a commercial banking company, by the Industrial Credit and Investment Corporation of India (ICICI)[1] , in May 1994. The first ICICI branch was started in June 1994 at Chennai. The bank provides an array of domestic and international banking services to enable national and international trade and business, investment and foreign exchange and treasury services. Right from its inception the bank focused more on incorporating advanced technology. The bank operated the largest chain of ATMs in the country, which amounted to more than 450 in 2000. All the bank's branches were fully computerized and networked through V-SAT[2] technology. By 1999, the number of branches increased to 65 and the bank plans to have over 200 branches by the end of 2002. In April 2000, ICICI became the first Indian bank to be listed on the New York Stock Exchange..
ICICI was always regarded as one of the best private banks to foster advanced technologies in the banking sector. As part of its technology drive, in 1997, ICICI launched 'Infinity,' the first Indian Internet banking service. The service was launched to reduce transaction cost and offer convenient banking to customers. This meant enabling the customers to access their bank account and make transactions at any time. ICICI realized that to make Infinity a success, it would have to invest heavily in sound Internet banking e-commerce technology. During 1995-99, ICICI invested Rs 50 million in online banking technology solutions.In 1997, ICICI bought the 'BankAway'[3] software from Infosys. BankAway was an e-commerce solution that provided the bank a platform to offer an integrated financial services portal to the customers. It offered access to account information, bill payment, cash management, trade finance and online shopping.
'Infinity' was initially targeted at the non-resident Indians (NRIs) to enable them to manage their bank accounts in India through the Internet. According to the bank's sources, Infinity helped to increase the business generated from NRI customers from Rs 300 million in 1997 to Rs 1.4 billion in 1998. The service was also aimed at individuals in the age group of 30 to 50 years working in the corporate sector and proficient in using technology. However, over the next few years, the bank enhanced its services to attract other customers as well. As a result, by early 2000, ICICI had over 110,000 Internet banking customers. In the first half of 2000, ICICI's Internet banking customer base touched 275,000.
On account of the growing competition in the Internet banking sector, ICICI focused on enhancing and extending its business-to-business (B2B) and B2C services through tie-ups and acquisitions. The bank entered into a 50-50 joint venture with Satyam Infoway[4] in December 1999 to offer retail banking products and services on the Internet. R. Ramraj, Managing Director, Satyam Infoway, said, "ICICI bank has many corporate clients and the idea is to develop e-commerce on a B2B platform where payments will be facilitated through ICICI. The alliance is going to give a big fillip to B2B."
Infinity's services included account information, funds transfer, bill payments, online Real-Time e-shopping payments; communication with bank manager, various customized services. The products were targeted at two different customers: individuals and small businesses, and corporates having an annual turnover of over Rs 500 million.
In the first half of 2000, ICICI introduced new Internet banking products for school and college students. Kid-e-bank was introduced to help children between 5-12 years to open an account and check the account balance on the Internet. Bank@campus was a service for students to enable services like ATMs, Smart Card, educational loans etc. It was launched across the country in many campuses.
As part of its B2C programs, ICICI tied up with 10 shopping malls all over India. This allowed customers to shop and pay bills online from their accounts. It also tied up with 24 billing companies across 11 cities, including Bharat Sanchar Nigam Ltd. (BSNL) for bill payment. The bank also offered mutual funds related services to its customers. It also tied up with automobile major Ford, for local delivery of its car 'Ikon' against orders placed on the Internet.
In 2000, ICICI bank acquired the Bank of Madura. Bank of Madura (BoM). BoM was amalgamated with ICICI bank from March 10, 2001, as a part of which, ICICI acquired BoM's customer base of 1.2 million. However, analysts felt the biggest gain was BoM's IT-savvy employees. By 2001, ICICI bank had emerged as one of the leading providers of Internet banking services in India. The bank was reportedly moving towards becoming a full-fledged e-commerce company in a couple of years. Nachiket Mor, Head of ICICI Treasury said, "The Seven-Eleven supermarket chain in Japan has recently applied for a banking license. This is the way world is moving. If supermarkets get into banking, then it is also time for banks to get into the selling of consumer durables."
HURDLES IN INTERNET BANKING
[1] ICICI is a leading financial services company, established by the Government of India, in 1955, to promote industrial development in the country.
[2] Very Small Aperture Terminal (VSAT) refers to an earthbound station used in satellite communications of data, voice and video signals. A VSAT consisted of a transceiver that was placed outdoors in direct line of sight to the satellite and a device that was placed indoors to interface the transceiver with the end user's communications device such as a PC.
[3]BankAway was the first Internet banking solution in India and was installed at four out of the six leading banks in the country offering Internet banking services. It was featured in a study, 'Ranking of International Internet Banking Solutions' by Meridien Research, USA. BankAway was the only solution from Asia Pacific to be featured in the report.
[4]Satyam Infoway or Sify was a Chennai-based subsidiary of Satyam Computer Services. Sify focused on providing Internet solutions like ISP operations, cybercafes and e-commerce consultancy.
THE FUTURE
Despite the rosy predictions and increased corporate activity, the Indian Internet banking system is facing many hurdles. The problems include operational risks, security risks, system architecture risks, reputational risks and legal risks (See Exhibit I for Problems in Internet Banking).
Apart from the security issues, there are a host of other problems like:
• PC user base in India is extremely low compared to global standards.
•The Internet user base is limited.
•Lack of infrastructure to advanced technology based banking services.
•The absence of a regulatory framework for Internet banking transactions in India.
•The mindset of the Indian consumer, who prefers personal interactions and is not very comfortable, doing transactions through the Internet.
•Limited awareness about the potential of Internet banking on the part of banks.
The issue of banks not being ready to realize the full benefits of Internet banking was aptly summed up by a critic, "Much of what is now on display at bank websites is an embarrassment, to put it politely. The average site has information about certain products, e-mail contacts of bank department, perhaps the Chairman's annual general meeting speech as well. A mere information booth. This is definitely not Internet banking."
However, banks are working towards addressing these problems. The security issues can be tackled by having the bank's systems technologically equipped to evade operational and security risks. Reputational risks can be prevented by testing of the system before implementation, developing contingency plans (to handle system disruptions, system hackers, security lapses and virus attacks) and creating back-up facilities. Legal and cross-border risks can be avoided through proper customer identification devices, information screening techniques, periodic reviews on compliance with various laws, and gaining knowledge of various national laws (applicable) and guide the customers through their cross-border dealings.
Apart from ensuring the security of the Internet-based transactions, ICICI is taking steps to overcome the other hurdles. The bank is tying up with computer manufacturers to make PCs available to customers at low prices. The bank also plans to tie-up with Sify to place its ATMs in Sify cybercafes. In 2000, ICICI opened Internet kiosks (cabins) at its ATMs to enable easy Internet access to its customers for banking.
Many other banks are also adopting such practices. Analysts claim that Internet banking holds lots of potential with the emergence of growing Internet awareness among customers, integration of banking services with e-commerce service, the increasing reach of the Internet and the entry of global players in the banking sector. Even the Reserve Bank of India has come out with Internet banking related guidelines (Refer Exhibit II). With ICICI already having decided to make the Internet an integral part of its future business plans and other banks reportedly following suit, Internet banking seems poised to become an important part of the Indian banking sector in the years to come.
QUESTIONS FOR DISCUSSION:
1. Analyze the major changes that took place in the Indian banking sector with the advent of Internet banking and discuss its advantages and disadvantages.
2. Explain how a typical Internet banking transaction is conducted and discuss the need for secure system architecture, in the light of various risks associated with Internet banking?
3. "Technology advancement in banking helps high net worth customers and big corporates, but not the average middle-class customers." Do you agree with the above statement? Give reasons to support your answer.
4. Discuss the future of Internet banking in India, keeping in view its moderate growth since its inception.
rosemarry2
Rose Marry
Hey Friend,
Please check attachment for Case Study of Online Banking in India - User Behaviors and Design Guidelines, so please download and check it.