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E-Banking Components

E-banking systems can vary significantly in their configuration depending on a number of factors. Financial institutions should choose their e-banking system configuration, including outsourcing relationships, based on four factors:

Strategic objectives for e-banking

Scope, scale, and complexity of equipment, systems, and activities;

Technology expertise; and

Security and internal control requirements.

Financial institutions may choose to support their e-banking services internally.
Alternatively, financial institutions can outsource any aspect of their e-banking systems to third parties.

The following entities could provide or host (i.e., allow applications to reside on their servers) e-banking-related services for financial institutions:

Another financial institution,

Internet service provider,

Internet banking software vendor or processor,

Core banking vendor or processor,

Managed security service provider,

Bill payment provider,

Credit bureau, and

Credit scoring company.

E-banking systems rely on a number of common components or processes. The following list includes many of the potential components and processes seen in a typical institution:

Website design and hosting,

Firewall configuration and management,

Intrusion detection system or IDS (network and host-based),

Network administration,

Security management,

Internet banking server,

E-commerce applications (e.g., bill payment, lending, brokerage),

Internal network servers,

Core processing system,

Programming support, and

Automated decision support systems

These components work together to deliver e-banking services. Each component represents a control point to consider.

Through a combination of internal and outsourced solutions, management has many alternatives when determining the overall system configuration for the various components of an e-banking system. However, for the sake of simplicity, this booklet presents only two basic variations.

First, one or more technology service providers can host the e-banking application and numerous network components as illustrated in the following diagram.

In this configuration, the institution's service provider hosts the institution's website, Internet banking server, firewall, and intrusion detection system.

While the institution does not have to manage the daily administration of these component systems, its management and board remain responsible for the content, performance, and security of the e-banking system.

Second, the institution can host all or a large portion of its e-banking systems internally. A typical configuration for in-house hosted, e-banking services is illustrated below.

In this case, a provider is not between the Internet access and the financial institution's core processing system. Thus, the institution has day-to-day responsibility for system administration.

E- banking Definition

a method of banking in which the customer conducts transactions electronically via the Internet.

Advantages of E- banking

Friendlier rates
Ease of monitoring
Ease of transaction
Transfer services