CERTIFICATE
This is to certify that the project entitled “ E-Banking: A Disguise or Boom” is a bonafide record of work done by Rajni Sharma, a student of M.B.A and submitted to RIMT Engineering College, Mandi Gobindgarh in partial fulfillment of the requirements for the Degree.
This work has never been submitted to any educational institution as per good of my knowledge.
Miss. Kavita
RIMT, Engineering College
Mandi Gobindgarh
ACKNOWLEDGEMENT
Often words are too inadequate to serve as a mode of expression of one’s inner feelings, especially the sense of indebt ness and gratitude to all those who help in accomplishing the goal one has set before oneself. I shall be failing in my duty if I don’t acknowledge my sincerest gratitude to all those who assisted and guided me in completing this project report.
I acknowledge my indebtness to my erudite learned and revert guide Miss. Kavita for her valuable guidance, suggestions, constructive criticism and thought provoking discussions for completion of the task. It would not have been possible for me to complete the work without his encouragement and unfailing help.
I also want to thank all my respondent who took time for showing a great interest in the subject and extending invaluable help.
Rajni Sharma
Univ. Roll No. 42259124
CHAPTER- 1
INTRODUCTION
INTRODUCTION
Earlier people would be tired standing in along queue waiting for a passbook to be updated or they would wait for the next day for the demand draft to be prepared but now Internet Technology has invaded the portals of our banking institutions and as the cliché goes everything will just be a click away. No doubt, innovations like telebanking and automated teller machines (ATM’s) have considerably put customers at ease on the recent past. But with net banking the customer will be able to transact with the help of a mouse and his visits to the neighbourhood bank will become a thing of the past.
In the age of electronic technology the regular application of computing, wireless communication, networking, etc, in the banking field has brought revolutionary change in the traditional ways banks do business. Today, your bank can serve you at home, or allow you to serve yourself from anywhere. You can draw your money from ATM’s, you can check your accounts through the Internet, and you can phone the bank to send you a representative. Not only that, your physical bank which is still around-suddenly seems to be doing a lot more things than just banking. It is technology that is making all this possible. Internet banking has gained wide acceptance internationally and seems to be fast catching up in India with more and more banks entering the fray. This is why, most, most modern banks instead of merely dealing with financial deposits and loan apply promote, and distribute the want-satisfying products, services and ideas to start its journey towards development of computer and other technology based digital economy since 1960 to ensure quality service to its customers.
TECHNOLOGY –THE GOVERNING FACTOR:
It is the technology that is making easy operation of banks. Even 10 years back, banks would have found it impossible to provide even basic banking services to millions of small and medium customers with all their branches. At the back end technology is freeing bank employees to concentrate on value-added work rather than just mundane necessities. Today, technology offers options where banks can almost literally address a market of one with a customized product or service. Though a modest start has been made in India, net banking has still a long way to go. This development has been acknowledged by the latest Online Banking Report, which features a listing for ICICI Bank .Some others have also endeavored to make real time banking a reality before this century closes.
Reasons why new private and multi-national banks have been able to survive, thrive, and adapt in an increasingly competitive space.
These banks were able to leverage on low-cost channels such as ATM’s and Net Banking to the optimum levels contributing to reduced operating costs. The cost of transactions over channels like ATM’s and the Internet are lower than doing it through the branches-Banks have realized that shifting customer access to lower cost channels can help bring down operating costs. These channels are used not only to improve customer service but also to divert traffic from the branches.
Customers using ATM’s, phones and the Internet not only allow banking transactions, but also cross-selling of other financial products and services. For example, if the cost of a branch banking transaction is taken at Rs100/-, the cost of an ATM transaction would be around Rs30/-, phone banking around Rs20/-, and internet banking around Rs5/-.But this does not mean that branch banking is obsolete. Rather, banks are reinventing their business models to offer new financial services through its branches.
At the back-end, technology is freeing bank employees to concentrate on value-added work rather than just mundane necessities. In computerized banks, once a transaction is posted it is auto-reconciled. This system is easy and frees people to concentrate on other customer services.
NEW HORIZONS
The important factor that is causing a shift in the industry is that of conveniences for the consumer. People need timely access to banking services, and have less time to spend at banks, and prefer the convenience of long distance banking. Of course, society’s view of what is convenient is changing .People were accustomed to associating convenience with doing business in their neighbourhood, and not traveling to a bank across town. Now, however, society has a different definition of bank convenience. Also, we should mention it is directly due to mergers that banks are able to offer more full service branches, and ATM machines. This is more convenient to the customers, and creates bank loyalty.
Increased use in ATM’s , the growing use of home and office computers, fax machines, and point of sale terminals allowing consumers to make transaction electronically is now considered convenient. Thus, branch location is no longer a priority from the consumer’s view.
The various banks which have adopted with corporate giving software and solution and services as of date are as follows: *
BANK NAME TECHNOLOGY VENDOR SERVICE OFFERING
ABN AMRO Bank
Infosys (Bank Away)
Net Banking
Abu Dhabi Commercial
Bank
Infosys (Bank Away)
ADCB NetLink
Bank of India
I-Flex
BOIonline
Centurian Bank
Logica
MyCBOL
Citibank
Orbitech (now Polaris)
Citibank Online
Corporation Bank
I-Flex
CorpNet
Deutche Bank
Db direct
Federal Bank
Sanchez
FedNet
Global Trust Bank
Infosys (Bank Away)
ibank@gtb
HDFC Bank
i-flex / Satyam
NetBanking
HSBC
Online@hsbc
ICICI Bank
Infosys, ICICI Infotech
Infinity
IDBI Bank
Infosys (Bank Away)
i-net banking
IndusInd Bank
CR2
IndusNet
Punjab National Bank
Infosys (Bank Away)
Saraswat Bank
Standard Chartered Bank
In-House
Me Standard Chartered Online
State Bank of India
Satyam / Broadvision
Onlinesbi.com
UTI Bank
Infosys (Bank Away)
Iconnect
PIVOTAL ROLE OF IT :
A look at the above mentioned various associative banks have entered into and it is obvious that IT is central to banking. The perceptions and the expectation of the customers have undergone a sea change, with the availability of banking services to the customers at their doorsteps through the help of technology. As per IDC estimates, the total number of registered users and multiple accounts (a user having accounts with more than one bank).India has a little less than a million active Internet banking users .And though this is just 0.096 % of the total population. Thus indicating that the concept of Internet Banking is surely catching on.
Impressive as these figures might be, the truth is that India lags behind other countries in Internet Banking. In the US , the number of commercial banks with transactional websites is 1, 275 or 12% of the total number of banks.
At present, in the US approximately 78% of all commercial banks with assets more than $5 billion, 43% of banks with $ 500 million to $ 5 billion in assets, and 10% of banks under $ 500 million in assets have transactional websites.
In contrast, Indian Banks have an insignificant Internet Banking record. ICICI Bank kicked off online banking way back in 1996 and a host of other banks soon followed suit. But even for the Internet as a whole, 1996 to 1998 marked the adoption phase, while usage increased only in 1999-due to lower ISP online charges, increased PC penetration and a tech-friendly atmosphere.
Today, Banks are looking at newer ways to make a customer’s banking experience more convenient, efficient and effective. They are using new technology tools and techniques to identify customer needs and are offering tailor-made products to match them. Says C N Ram, head, Information technology, HDFC Bank, “Our vision was very clear, we were not enamored by the concept of Internet Banking but looked at it more as an add-on service which our customers should gradually adopt.”
Earlier, banks could decide when and where they wanted customer interfaces, now customers decide when and where they will access banking channels. The services, which can be availed of as of date, centralized operations and process automation using core-banking applications and IP-based networks improve efficiency and productivity levels tremendously. Core banking applications help a bank to shift from ‘Branch Banking’ to ‘Bank Banking’.
Internet Banking not only helps in acquiring more customers but it also reduces problems if customer visits bank physically. This basically means that a customer will be treated as a bank’s customer than just the customer of a particular branch, which was the case earlier. Also, I{-networks let a bank offer multiple services over the same network , resulting in costs savings.
Earlier banks could decide when and where the wanted customer interfaces. Now, the customers decide when and where they will access banking channels.
THE SERVICES, WHICH CAN BE AVAILED AS OF DATE, ARE:
• Transfer one’s money from one city to any other branch in a city.
• Open a Fixed deposit (FD) account via the net. One needs to provide data regarding the amount and term of the deposit and also the branch in which the account is opened.
• Order for an issue of a demand draft can be delivered only to the customer’s address and not to any other party.
• Inquire on the balance in one’s saving , current and FD account and also on the tax deducted at source on one’s FD account for the current and financial year.
• Give instructions over the net for stopping payment on a cheque/s .-Request for a chequebook via the Internet , which will take three days to come.
• View all the transactions completed on an account for a specified period and get a copy via e-mail.
Though relationship tends to look impersonal the customers should feel it personal. The customers need not necessarily positively evaluate the personalized services offered by the bank. Therefore bank should be cautious to ensure that customers feel the services as personal and useful. With the aid of technology they should further mechanize and automate the services offered to customers.
OBJECTIVE OF THE STUDY
1. To access the present scenario of the services of Internet Banking.
2. To study the scope of Internet Banking in future.
3. To study the problems faced by the consumers in availing the Internet
Banking Services.
4. To access the satisfaction level experienced by the users of Internet
Banking Services.
RESEARCH METHODOLOGY
Problem Defining: The project was mainly concerned with evaluating the performance of Internet Banking Services and finding out the scope of Internet Banking Services by doing a comparative analysis of the Internet Banking Services provided by ICICI BANK, SBI BANK, HDFC BANK.
Sample Unit: Individuals who are avaling Internet Banking Services.
Sample Size: 40 respondents
Sampling Method: Non-Probabilistic convenience sampling.
Sampling Area: Patiala
Sources of Data: The data was collected from both primary and secondary sources.
Primary Data: The primary data collection was done through the survey method. The survey was conducted using the questionnaire method.
Secondary Data: Secondary data was collected from the following sources:
a) Books on Internet Banking
b) Internet
c) Journals
CHAPTER-2
PROFILES OF VARIOUS BANKS
PROFILES OF VARIOUS BANKS
PROFILE OF SBI
Evolution of SBI
The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later the bank received its charter and was re-designed as the Bank of Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of British India sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained at the apex of modern banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921.*
Primarily Anglo-Indian creations, the three presidency banks came into existence either as a result of the compulsions of imperial finance or by the felt needs of local European commerce and were not imposed from outside in an arbitrary manner to modernise India's economy. Their evolution was, however, shaped by ideas culled from similar developments in Europe and England, and was influenced by changes occurring in the structure of both the local trading environment and those in the relations of the Indian economy to the economy of Europe and the global economic framework.
* reference- www.sbi.com
Bank of Bengal H.O.
The establishment of the Bank of Bengal marked the advent of limited liability, joint-stock banking in India. So was the associated innovation in banking, viz. the decision to allow the Bank of Bengal to issue notes, which would be accepted for payment of public revenues within a restricted geographical area. This right of note issue was very valuable not only for the Bank of Bengal but also its two siblings, the Banks of Bombay and Madras. It meant an accretion to the capital of the banks, a capital on which the proprietors did not have to pay any interest. The concept of deposit banking was also an innovation because the practice of accepting money for safekeeping (and in some cases, even investment on behalf of the clients) by the indigenous bankers had not spread as a general habit in most parts of India. But, for a long time, and especially upto the time that the three presidency banks had a right of note issue, bank notes and government balances made up the bulk of the investible resources of the banks.
The three banks were governed by royal charters, which were revised from time to time. Each charter provided for a share capital, four-fifth of which were privately subscribed and the rest owned by the provincial government. The members of the board of directors, which managed the affairs of each bank, were mostly proprietary directors representing the large European managing agency houses in India. The rest were government nominees, invariably civil servants, one of whom was elected as the president of the board.
Group Photogaph of Central Board (1921)
The business of the banks was initially confined to discounting of bills of exchange or other negotiable private securities, keeping cash accounts and receiving deposits and issuing and circulating cash notes. Loans were restricted to Rs.one lakh and the period of accommodation confined to three months only. The security for such loans was public securities, commonly called Company's Paper, bullion, treasure, plate, jewels, or goods 'not of a perishable nature' and no interest could be charged beyond a rate of twelve per cent. Loans against goods like opium, indigo, salt woollens, cotton, cotton piece goods, mule twist and silk goods were also granted but such finance by way of cash credits gained momentum only from the third decade of the nineteenth century. All commodities, including tea, sugar and jute, which began to be financed later, were either pledged or hypothecated to the bank. Demand promissory notes were signed by the borrower in favour of the guarantor, which was in turn endorsed to the bank. Lending against shares of the banks or on the mortgage of houses, land or other real property was, however, forbidden.
Indians were the principal borrowers against deposit of Company's paper, while the business of discounts on private as well as salary bills was almost the exclusive monopoly of individuals Europeans and their partnership firms. But the main function of the three banks, as far as the government was concerned, was to help the latter raise loans from time to time and also provide a degree of stability to the prices of government securities.
Old Bank of Bengal
A major change in the conditions of operation of the Banks of Bengal, Bombay and Madras occurred after 1860. With the passing of the Paper Currency Act of 1861, the right of note issue of the presidency banks was abolished and the Government of India assumed from 1 March 1862 the sole power of issuing paper currency within British India.
The task of management and circulation of the new currency notes was conferred on the presidency banks and the Government undertook to transfer the Treasury balances to the banks at places where the banks would open branches. None of the three banks had till then any branches (except the sole attempt and that too a short-lived one by the Bank of Bengal at Mirzapore in 1839) although the charters had given them such authority. But as soon as the three presidency bands were assured of the free use of government Treasury balances at places where they would open branches, they embarked on branch expansion at a rapid pace. By 1876, the branches, agencies and sub agencies of the three presidency banks covered most of the major parts and many of the inland trade centres in India. While the Bank of Bengal had eighteen branches including its head office, seasonal branches and sub agencies, the Banks of Bombay and Madras had fifteen each.
Bank of Madras Note Dated 1861 for Rs.10
The presidency Banks Act, which came into operation on 1 May 1876, brought the three presidency banks under a common statute with similar restrictions on business. The proprietary connection of the Government was, however, terminated, though the banks continued to hold charge of the public debt offices in the three presidency towns, and the custody of a part of the government balances. The Act also stipulated the creation of Reserve Treasuries at Calcutta, Bombay and Madras into which sums above the specified minimum balances promised to the presidency banks at only their head offices were to be lodged. The Government could lend to the presidency banks from such Reserve Treasuries but the latter could look upon them more as a favour than as a right.
Bank of Madras
The decision of the Government to keep the surplus balances in Reserve Treasuries outside the normal control of the presidency banks and the connected decision not to guarantee minimum government balances at new places where branches were to be opened effectively checked the growth of new branches after 1876. The pace of expansion witnessed in the previous decade fell sharply although, in the case of the Bank of Madras, it continued on a modest scale as the profits of that bank were mainly derived from trade dispersed among a number of port towns and inland centres of the presidency.
India witnessed rapid commercialisation in the last quarter of the nineteenth century as its railway network expanded to cover all the major regions of the country. New irrigation networks in Madras, Punjab and Sind accelerated the process of conversion of subsistence crops into cash crops, a portion of which found its way into the foreign markets. Tea and coffee plantations transformed large areas of the eastern Terais, the hills of Assam and the Nilgiris into regions of estate agriculture par excellence. All these resulted in the expansion of India's international trade more than six-fold. The three presidency banks were both beneficiaries and promoters of this commercialisation process as they became involved in the financing of practically every trading, manufacturing and mining activity in the sub-continent. While the Banks of Bengal and Bombay were engaged in the financing of large modern manufacturing industries, the Bank of Madras went into the financing of large modern manufacturing industries, the Bank of Madras went into the financing of small-scale industries in a way which had no parallel elsewhere. But the three banks were rigorously excluded from any business involving foreign exchange. Not only was such business considered risky for these banks, which held government deposits, it was also feared that these banks enjoying government patronage would offer unfair competition to the exchange banks which had by then arrived in India. This exclusion continued till the creation of the Reserve Bank of India in 1935.
Bank of Bombay
The presidency Banks of Bengal, Bombay and Madras with their 70 branches were merged in 1921 to form the Imperial Bank of India. The triad had been transformed into a monolith and a giant among Indian commercial banks had emerged. The new bank took on the triple role of a commercial bank, a banker's bank and a banker to the government.
But this creation was preceded by years of deliberations on the need for a 'State Bank of India'. What eventually emerged was a 'half-way house' combining the functions of a commercial bank and a quasi-central bank.
The establishment of the Reserve Bank of India as the central bank of the country in 1935 ended the quasi-central banking role of the Imperial Bank. The latter ceased to be bankers to the Government of India and instead became agent of the Reserve Bank for the transaction of government business at centres at which the central bank was not established. But it continued to maintain currency chests and small coin depots and operate the remittance facilities scheme for other banks and the public on terms stipulated by the Reserve Bank. It also acted as a bankers' bank by holding their surplus cash and granting them advances against authorised securities. The management of the bank clearing houses also continued with it at many places where the Reserve Bank did not have offices. The bank was also the biggest tenderer at the Treasury bill auctions conducted by the Reserve Bank on behalf of the Government.
The establishment of the Reserve Bank simultaneously saw important amendments being made to the constitution of the Imperial Bank converting it into a purely commercial bank. The earlier restrictions on its business were removed and the bank was permitted to undertake foreign exchange business and executor and trustee business for the first time.
The Imperial Bank during the three and a half decades of its existence recorded an impressive growth in terms of offices, reserves, deposits, investments and advances, the increases in some cases amounting to more than six-fold. The financial status and security inherited from its forerunners no doubt provided a firm and durable platform. But the lofty traditions of banking which the Imperial Bank consistently maintained and the high standard of integrity it observed in its operations inspired confidence in its depositors that no other bank in India could perhaps then equal. All these enabled the Imperial Bank to acquire a pre-eminent position in the Indian banking industry and also secure a vital place in the country's economic life.
Imperial Bank of India
When India attained freedom, the Imperial Bank had a capital base (including reserves) of Rs.11.85 crores, deposits and advances of Rs.275.14 crores and Rs.72.94 crores respectively and a network of 172 branches and more than 200 sub offices extending all over the country.
In 1951, when the First Five Year Plan was launched, the development of rural India was given the highest priority. The commercial banks of the country including the Imperial Bank of India had till then confined their operations to the urban sector and were not equipped to respond to the emergent needs of economic regeneration of the rural areas. In order, therefore, to serve the economy in general and the rural sector in particular, the All India Rural Credit Survey Committee recommended the creation of a state-partnered and state-sponsored bank by taking over the Imperial Bank of India, and integrating with it, the former state-owned or state-associate banks. An act was accordingly passed in Parliament in May 1955 and the State Bank of India was constituted on 1 July 1955. More than a quarter of the resources of the Indian banking system thus passed under the direct control of the State. Later, the State Bank of India (Subsidiary Banks) Act was passed in 1959, enabling the State Bank of India to take over eight former State-associated banks as its subsidiaries (later named Associates).
The State Bank of India was thus born with a new sense of social purpose aided by the 480 offices comprising branches, sub offices and three Local Head Offices inherited from the Imperial Bank. The concept of banking as mere repositories of the community's savings and lenders to creditworthy parties was soon to give way to the concept of purposeful banking subserving the growing and diversified financial needs of planned economic development. The State Bank of India was destined to act as the pacesetter in this respect and lead the Indian banking system into the exciting field of national development.
TECHNOLOGY UPGRADATION HIGHLIGHTS
SBI’s Information Technology Programme aims at achieving efficiency in operations, meeting customer and market expectations and facing competition. Our achievements are summarized below:*
FULL BRANCH COMPUTERISATION (FCBs): All the branches of the Bank are now fully computerized. This strategy has contributed to improvement in customer service.
ATM SERVICES: There are 4633 ATMs on the ATM Network including 3181 ATMs of SBI and 1452 from the 7 Associate Banks and Subsidiaries. These ATMs are located in 1521 centres spread across the length and breadth of the country, thereby creating a truly national network of ATMs with an unparalleled reach. Value added services like ATM locator, payment of fees for college students, multilingual screens, voice over and drawal of cash advance by SBI credit card holders have been introduced.
INTERNET BANKING (INB): This on-line channel enables customers to access their account information and initiate transactions on a 24x7, boundary less basis. 1994 branches, covering 555 centres, are extending INB service to their customers. All functionalities other than Cash and Clearing have been extended to individual retail customers. A separate Internet Banking Module for Corporate customers has been launched and available at 1305 branches. Bulk upload of data for Corporate, Inter-branch funds transfer for Retail customers, online payment of Customs duty and Govt. tax, Electronic Bill Payment, SMS Alerts, E-Poll, IIT GATE Fee Collection, Off-line Customer Registration Process and Railway Ticket Booking are the new features deployed.
GOVT. BUSINESS: Software has been developed and rolled out at 7785 fully computerised branches. Electronic generation of all reports for reporting, settlement and reconciliation of Govt. funds, is available.
STEPS: Under STEPS, the bank’s electronic funds transfer system, the Products offered are eTransfer (eT), eRealisation (eR), eDebit (CMP) and ATM reconciliation. STEPS handles payment messages and reconciliation simultaneously.
SEFT: SBI has launched the Special Electronic Fund Transfer (SEFT) Scheme of RBI, to facilitate efficient and expeditious Inter-bank transfer of funds. 241 branches of our Bank in various LHO Centres are participating in the scheme. Security of message transmission has been enhanced.
MICR Centres: MICR Cheque Processing systems are operational at 16 centres viz. Mumbai, New Delhi, Chennai, Kolkata, Vadodara, Surat, Patna, Jabalpur, Gwalior, Jodhpur, Trichur, Calicut, Nasik, Raipur, Bhubaneswar and Dehradun.
Core Banking : The Core Banking Solution provides the state-of-the-art anywhere anytime banking for our customers. The facility is available at 574 branches.
Trade Finance: The solution has been implemented, providing efficiency in handling Trade Finance transactions with Internet access to customers and greatly enhances the bank’s services to Corporates and Commercial Network branches. This new Trade Finance solution, EXIMBILLS, will be implemented at all domestic branches as well as at Foreign offices engaged in trade finance business during the year.
WAN: The bank has set up a Wide Area Network, known as SBI connect, which provides connectivity to 4819 branches/offices of SB Group across 306 cities. This network provides across the board benefits by providing nationwide connectivity for its business applications.
PROFILE OF HDFC BANK
The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in-principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalisation of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. *
Promoter
HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain a market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment.
Business Focus
HDFC Bank's mission is to be a World-Class Indian Bank. The Bank's aim is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services in the segments that the bank operates in and to achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank is committed to maintain the highest level of ethical standards professional integrity and regulatory compliance. HDFC Bank's business philosophy is based on four core values: Operational Excellence, Customer Focus, Product Leadership and People.
Capital Structure
The authorized capital of HDFC Bank is Rs.450 crore (Rs.45 billion). The paid-up capital is Rs.282 crore (Rs.28.2 billion). The HDFC Group holds 24.2% of the bank's equity while about 13.1% of the equity is held by the depository in respect of the bank's issue of American Depository Shares (ADS/ADR Issue). The Indian Private Equity Fund, Mauritius (IPEF) and Indocean Financial Holdings Ltd., Mauritius (IFHL) (both funds advised by J P Morgan Partners, formerly Chase Capital Partners) together hold about 5.5% of the bank's equity. Roughly 27.5% of the equity is held by FIIs, NRIs/OCBs while the balance is widely held by about 214,000 shareholders. The shares are listed on The Stock Exchange, Mumbai and the National Stock Exchange. The bank's American Depository Shares are listed on the New York Stock Exchange (NYSE) under the symbol "HDB".
TimesBank Amalgamation
In a milestone transaction in the Indian banking industry, TimesBank Limited (another new private sector bank promoted by Bennett, Coleman & Co./Times Group) was merged with HDFC Bank Ltd., effective February 26, 2000. As per the scheme of amalgamation approved by the shareholders of both banks and the Reserve Bank of India, shareholders of TimesBank received 1 share of HDFC Bank for every 5.75 shares of TimesBank. The amalgamation added significant value to HDFC Bank in terms of increased branch network, expanded geographic reach, enhanced customer base, skilled manpower and the opportunity to cross-sell and leverage alternative delivery channels.
Distribution Network
HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of over 451 branches spread over 205 cities across the country. All branches are linked on an online real-time basis. Customers in 90 locations are also serviced through Phone Banking. The Bank's expansion plans take into account the need to have a presence in all major industrial and commercial centres where its corporate customers are located as well as the need to build a strong retail customer base for both deposits and loan products. Being a clearing/settlement bank to various leading stock exchanges , , the Bank has branches in the centres where the NSE/BSE has a strong and active member base.
The Bank also has a network of over 1054 networked ATMs across these cities. Moreover, HDFC Bank's ATM network can be accessed by all domestic and international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders.
Management
Mr. Jagdish Capoor took over as the bank's Chairman in July 2001. Prior to this, Mr. Capoor was a Deputy Governor of the Reserve Bank of India.
The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25 years and before joining HDFC Bank in 1994 was heading Citibank's operations in Malaysia.
The Bank's Board of Directors is composed of eminent individuals with a wealth of experience in public policy, administration, industry and commercial banking. Senior executives representing HDFC are also on the Board.
Senior banking professionals with substantial experience in India and abroad head various businesses and functions and report to the Managing Director. Given the professional expertise of the management team and the overall focus on recruiting and retaining the best talent in the industry, the bank believes that its people are a significant competitive strength.
Technology
HDFC Bank operates in a highly automated environment in terms of information technology and communication systems. All the bank's branches have connectivity which enables the bank to offer speedy funds transfer facilities to its customers. Multi-branch access is also provided to retail customers through the branch network and Automated Teller Machines (ATMs).
The Bank has made substantial efforts and investments in acquiring the best technology available internationally to build the infrastructure for a world-class bank. In terms of software, the Corporate Banking business is supported by Flexcube, while the Retail Banking business by Finware, both from i-flex Solutions Ltd. The systems are open, scaleable and web-enabled.
The Bank has prioritized its engagement in technology and the internet as one of its key goals and has already made significant progress in web-enabling its core businesses. In each of its businesses, the Bank has succeeded in leveraging its market position, expertise and technology to create a competitive advantage and build market share.
Business Profile
HDFC Bank caters to a wide range of banking services covering commercial and investment banking on the wholesale side and transactional / branch banking on the retail side. The bank has three key business areas :-
a) Wholesale Banking Services
The Bank's target market is primarily large, blue-chip manufacturing companies in the Indian corporate sector and to a lesser extent, emerging mid-sized corporates. For these corporates, the Bank provides a wide range of commercial and transactional banking services, including working capital finance, trade services, transactional services, cash management, etc. The bank is also a leading provider of structured solutions which combine cash management services with vendor and distributor finance for facilitating superior supply chain management for its corporate customers. Based on its superior product delivery / service levels and strong customer orientation, the Bank has made significant inroads into the banking consortia of a number of leading Indian corporates including multinationals, companies from the domestic business houses and prime Public Sector companies. It is recognised as a leading provider of cash management and transactional banking solutions to corporate customers, mutual funds, stock exchange members and banks.
b) Retail Banking Services
The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements. The products are backed by world-class service and delivered to the customers through the growing branch network, as well as through alternative delivery channels like ATMs, PhoneBanking, NetBanking and MobileBanking.
The HDFC Bank preferred program for high net worth individuals, the HDFC Bank Plus and the Investment Advisory Services programs have been designed keeping in mind needs of customers who seek distinct financial solutions, information and advice on various investment avenues. The Bank also has a wide array of retail loan products including Auto Loans, Loans against marketable securities, Personal Loans and Loans for Two-wheelers. It is also a leading provider of Depository Services to retail customers, offering customers the facility to hold their investments in electronic form. HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA Electron) and issues the Mastercard Maestro debit card as well. The debit card allows the user to directly debit his account at the point of purchase at a merchant establishment, in India and overseas. The Bank launched its credit card in association with VISA in November 2001. The Bank is also one of the leading players in the "merchant acquiring" business with over 25,000 Point-of-Sale (POS) terminals for debit / credit cards
acceptance at merchant establishments. The Bank is well positioned as a leader in various net-based B2C opportunities including a wide range of internet banking services for Fixed Deposits, Loans, Bill Payments, etc.
c) Treasury Operations
Within this business, the bank has three main product areas - Foreign Exchange and Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the liberalisation of the financial markets in India, corporates need more sophisticated risk management information, advice and product structures. These and fine pricing on various treasury products are provided through the bank's Treasury team. To comply with statutory reserve requirements, the bank is required to hold 25% of its deposits in government securities. The Treasury business is responsible for managing the returns and market risk on this investment portfolio.
Rating
HDFC Bank has its deposit programmes rated by two rating agencies - Credit Analysis & Research Limited (CARE) and Fitch Ratings India Pvt. Ltd. The Bank's Fixed Deposit programme has been rated 'CARE AAA (FD)' [Triple A] by CARE, which represents instruments considered to be "of the best quality, carrying negligible investment risk". CARE has also rated the Bank's Certificate of Deposit (CD) programme "PR 1+" which represents "superior capacity for repayment of short term promissory obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has assigned the "tAAA (ind)" rating to the Bank's deposit programme, with the outlook on the rating as "stable". This rating indicates "highest credit quality" where "protection factors are very high". HDFC Bank also has its long-term unsecured, subordinated (Tier-II) Bonds rated by CARE and Fitch Ratings India Pvt. Ltd. CARE has assigned the rating of "CARE AAA" for the Tier-II Bonds while Fitch Ratings India Pvt. Ltd. has assigned the rating "AAA (ind)" with the outlook on the rating as "stable". In each case referred to above, the ratings awarded were the highest assigned by the rating agency for those instruments.
Corporate Governance Rating
The bank was one of the first four companies which subjected itself to a Corporate Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating Information Services of India Limited (CRISIL). The rating provides an independent assessment of an entity’s current performance and an expectation on its "balanced value creation and corporate governance practices" in future. The bank has been assigned a ‘CRISIL GVC Level 1' rating which indicates that the bank's capability with respect to wealth creation for all its stakeholders while adopting sound corporate governance practices is the highest.
Product Range
Savings, Fixed Deposits, Current and Demat Accounts
Savings Account: Apart from the usual facilities, the customer gets a free ATM Card, Interbranch banking, NetBanking, BillPay, PhoneBanking, Debit Card and MobileBanking, among others.
HDFC Bank Preferred: A preferential Savings Account where the customer is assigned a dedicated Relationship Manager, who is the customer’s one-point contact. The customer also get privileges like fee waivers, enhanced ATM withdrawal limit, priority locker allotment, free Demat Account and lower interest rates on loans, to name a few.
Sweep-In Account: A fixed deposit linked to the customer’s Savings Account. So, even if the customer’s Savings Account runs a bit short, he/she can issue a cheque (or use your ATM Card). The money is automatically swept in from his/her fixed deposit into his/her Savings Account.
Super Saver Account: It gives the customer an overdraft facility up to 75% of his/her Fixed Deposit. In an emergency, the customer can access his/her funds while his/her Fixed Deposit continues to earn high interest.
HDFC Bank Plus: Apart from Regular and Premium Current accounts the bank also has HDFC Bank Plus, a Current Account and then some more. The customer can transfer up to Rs. 50 lakh per month at no extra charge, between the four metros. The customer can also avail of cheque clearing between the four metros, get cash delivery/pickup upto Rs. 25,000/-, home delivery of Demand Drafts, at-par cheques, outstation cheque clearance facility, etc.
Demat Account: The customer can conduct hassle-free transactions on his/her shares. The customer can also access his/her Demat Account on the Internet.
Innovative services for your convenience...
PhoneBanking: 24-hour automated banking services with 39 PhoneBanking numbers available.
ATM 24-hour banking: Apart from routine transactions, the customer can also pay his/her utility bills and transfer funds, at any of the bank’s ATMs across the country all year round.
Inter-city/Inter-branch Banking:The customer can access his/her account from any of the bank’s 451 branches in 205 cities.
NetBanking: The customer can access his/her bank account from anywhere in the world, at anytime, at his/her own convenience. The customer can also view his/her Demat Account through NetBanking.
International Debit Card: With an ATM card the customer can shop with all over the country and in over 140 countries with. The customer can spend in any currency, and pay in Rupees.
MobileBanking: The customer can access his/her account on his/her mobile phone screen at no airtime cost. The customer can use SMS technology to conduct his/her banking transactions from his/her cellphone.
BillPay: The customer can pay his/her telephone, electricity and mobilephone bills through the bank’s ATMs, Internet, phone or mobile phone.
Loans for every need
Now, the bank’s loans come to the customerin easy-to-pay monthly instalments, and are available with easy documentation and quick delivery.
Personal Loans: The customer can now take a loan of up to Rs. 3 lakh for a wedding, education, purchase of a computer or an exciting holiday.
New Car Loans and Used Car Loans: The customer can now avail finance up to 90% of the cost of a car, new or used! And the loans come to the customer with easy documentation and speedy processing at attractive interest rates.
Loans Against Shares: The customer can get an overdraft up to Rs. 10 lakh at an attractive interest rate against physical shares, up to 50% of the market value of his/her shares. In case of Demat Shares, the customer can get a Loan Against Shares of up to 65% of the market value of his/her shares, till Rs. 20 lakh.
Two Wheeler & Consumer Loans: It is to help the customer to buy the best durables for his/her home.
Demat Account: The customer can now protect his/her shares from damage, loss and theft, by maintaining the customer’s shares in electronic form. The customer can also access his/her demat account on the internet.
Current Account: The customer can get a personalised cheque book, monthly account statements, inter-branch banking and much more.
Mutual Funds: Apart from a wide choice of mutual funds to suit the customer’s needs the customer benefits from expert advice on choosing the right funds based on in-depth market analysis.
International Credit Card: The customer can get an option of Silver, Gold, or Health Plus Credit card, accepted worldwide from a world-class bank. If the the customer has an outstanding balance on his/her credit card the customer can transfer that balance to this card at a lower interest rate.
NRI Services: A comprehensive range, backed by unmatched features and world-class service, ensures NRIs all the banking support they need.
Forex Facilities: The customer can avail foreign currency, travellers cheques, foreign exchange demand drafts, to meet his/her travel needs.
Insurance*: HDFC Bank now brings its customers Life Insurance and Pension Solutions like Risk Cover Scheme, Savings Scheme, Children’s Plan and Personal Plan from HDFC Standard Life Insurance Co. Ltd.
*Insurance is the subject matter of solicitation.
PROFILE OF ICICI BANK
ICICI Bank is India's second-largest bank with total assets of about Rs.146,214 crore at December 31, 2004 and profit after tax of Rs. 1,391 crore in the nine months ended December 31, 2004 (Rs. 1,637 crore in fiscal 2004). ICICI Bank has a network of about 505 branches and extension counters and about 1,850 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank set up its international banking group in fiscal 2002 to cater to the cross-border needs of clients and leverage on its domestic banking strengths to offer products internationally. ICICI Bank currently has subsidiaries in the United Kingdom and Canada, branches in Singapore and Bahrain and representative offices in the United States, China, United Arab Emirates and Bangladesh.*
ICICI Bank's equity shares are listed in India on the Stock Exchange, Mumbai and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).
As required by the stock exchanges, ICICI Bank has formulated a Code of Business Conduct and Ethics for its directors and employees.
At October 31, 2004, ICICI Bank, with free float market capitalisation* of about Rs. 220.00 billion (US$ 5.00 billion) ranked third amongst all the companies listed on the Indian stock exchanges.
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE.
After consideration of various corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would create the optimal legal structure for the ICICI group's universal banking strategy. The merger would enhance value for ICICI shareholders through the merged entity's access to low-cost deposits, greater opportunities for earning fee-based income and the ability to participate in the payments system and provide transaction-banking services. The merger would enhance value for ICICI Bank shareholders through a large capital base and scale of operations, seamless access to ICICI's strong corporate relationships built up over five decades, entry into new business segments, higher market share in various business segments, particularly fee-based services, and access to the vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's financing and banking operations, both wholesale and retail, have been integrated in a single entity.
*Free float holding excludes all promoter holdings, strategic investments and cross holdings among public sector entities.
CHAPTER-3
E-BANKING SERVICES PROVIDED BY VARIOUS BANKS
INTERNET BANKING SERVICES PROVIDED BY VARIOUS BANKS
Internet Banking Services provided by STATE BANK OF INDIA:*
1. BILL PAYMENT
About Bill Payment
SBI e-PAY - A simple and convenient service for receiving and paying the customer’s bills online
• No more late payments
• No more queues
• No more hassles of depositing cheques
OnlinePay: Using SBI e-PAY the customer can 'see and pay' his/her various bills online, directly from his/her SBI Account. The customer can pay telephone, electricity, insurance, credit card and other bills - from the comfort of his/her house or office, 24 hours a day, 365 days a year! He/she will simply have to logon to http://www.onlinesbi.com/ to 'see and pay' their bills. The customer can also get an electronic acknowledgment for every bill paid by him/her using e-PAY.
AutoPay: The customer can also set up AutoPay instructions with an upper limit to ensure that his/her bills are paid automatically whenever they are due. The upper limit ensures that only bills within the specified limit are paid automatically, thereby providing the customer complete control over these payments.
The e-PAY service is available in various cities across the country and the customer can now make payments to several billers in his/her region.
To start receiving and paying their bills online, the customers will simply have to login to http://www.onlinesbi.com and use the 'Add Biller' feature to select the billers they wish to make payments to. Alternately, the customers can also fill out the SBI e-PAY Registration Form (SeRF) available at their SBI branch, complete it and submit it to the branch.
2. SMS ALERTS
SMS Alerts are the fashionable way to keep track of critical activity on one’s accounts. In a significant step towards enabling anytime-anywhere banking, OnlineSBI.com now enables its customers to receive alerts on his/her mobile phone. The customer can ask to be alerted when the balance on his/her account goes above or below a particular amount; or when a transaction of greater than a specified amount hits the customer’s account; or when an interest is applied on the customer’s accounts more.Receiving alerts on your mobile phone is a two-step process.
1. Set your mobile number. Be sure to correctly select the country the mobile number belongs to.
2. Define your alert criteria; be it balance alert or a transaction alert or an interest alert.
The bank will now do the hard work of alerting when these events happen to his/her account.
3. ONLINE BOOKING OF RAILWAY TICKETS
The customer should follow under noted process for booking of railway tickets.
• Logon to the site of IRCTC www.irctc.co.in
• Register yourself on the site (if first time user) or log on with
Username and Password (meant for IRCTC site).
• Provide the requisite information i.e. stations (departure & arrival),
date and class of the journey under option of "Plan My Travel and Book
Ticket"
• Select your train from the list of trains displayed by IRCTC and click
on "Book Ticket"
• Provide passenger details and confirm your address for getting delivery
of tickets . The amount of ticket will be displayed for payment.
• Choose payment option "State Bank of India". You will be taken to our
site onlineSBI.
• Log in with Username and Password (meant for onlineSBI ) and confirm
the payment.
• On successful transaction, you will be provided with Transaction Id and
date of transaction.
• The ticket will be delivered by IRCTC at your place of choice. Delivery
of ticket is sole responsibility of IRCTC.
• For cancellation of ticket, submit your ticket at a computerized counter
of Railways. On cancellation of ticket by Railways, the amount shall be
credited back to your account.
State Bank of India.
4. MUTUAL FUNDS
SBI Mutual Fund has grown tremendously in terms of corpus as well as number of investors. Today it is one of the largest Bank sponsored Mutual Fund in the country. The bank has launched 35 Schemes, of which 15 have been redeemed, yielding handsome returns to investors. The fund has over Rs. 5,500 Crores as assets under management.
SBI is also the first Bank sponsored Mutual Fund to launch an offshore fund, the India Magnum Fund, with a corpus of around Rs. 225 Crores.
Today the Fund has an investor base of over 8 Lacs spread over 18 schemes. With a large network over 35 collection branches, 26 Investor Service Centres, 19 Investor Service Desks and 21 District Organizers, the SBI is constantly endeavouring to get closer to the bank’s growing family of investors.
INTERNET BANKING SERVICES PROVIDED BY ICICI BANK
1. BILL PAYMENT
ICICI Bank Internet Banking is the most convenient channel to manage and pay the bills anytime, anywhere. No more hassles of personally visiting the Biller to pay the bills. Its free for all the Customers. The bank has enabled the billers in following two modes:
• Presentment Type Billers: For these billers, the bill amount and due date will be presented to them online on http://www.icicibank.com/ and a reminder will be sent to their on Email.
• Payment Type Billers: For these billers the customer’s can register and pay any amount immediately
2. ONLINE SHOPPING*
ICICI Bank has tied up with more than 75 organizations to facilitate online shopping for all its Internet Banking Customers. The customer’s
Have to choose their products online and pay conveniently through ICICI Bank Internet Banking Service.
Online Shopping Process
Their esteemed partners are:
ICICI Bank brings Insurance products to the customer’s door-step. The customers can buy Insurance products from ICICI Lombard General Insurance and pay through the bank’s Internet Banking. Details...
The customer’s can book their Air Tickets online at http://www.icicibank.com/pfsuser/icicibank/online/shopping/online_shopping.htm# and pay through Internet Banking. The customer’s can also take a print of their ticket instanteneously.Details...
The customer’s can book their railway ticket through http://www.icicibank.com/pfsuser/icicibank/online/shopping/online_shopping.htm# using ICICI Bank Internet Banking. IRCTC will deliver ticket to delivery address mentioned by the customer. Details...
The customer’s can pay their Reliance Infocom bills through Internet Banking. The customer’s can visit Reliance Infocomm, view their bill details and make instantaneous payments.
3. TICKET BOOKING
Ticket Booking
The customer’s can now book their Railways and Air Tickets Online
The customer’s can now buy their tickets online and pay using the bank’s Internet Banking Facility. ICICI Bank has tied up with IRCTC (for Railway Ticket Booking) and Air Deccan (for Air Ticket booking).
The salient features of the facility are as under:
1. All internet banking customers can use the facility.
2. For booking tickets, please visit www.irctc.co.in (for railway tickets) and http://www.airdeccan.net/ (for air tickets). Select your journey date and other details.
3. On payment option, select ICICI Bank for making the payment. The customer will be redirected to secured login page of ICICI Bank. After logging on to the site the customer can see his/her displayed payment amount, and Payee Details.
4. The customer will be required to confirm the transaction by entering transaction password. On successful authentication, the customer’s Bank Account will be immediately debited and payment confirmation number will be provided. Within some time the customer will also receive online confirmation from IRCTC/ Air Deccan website. Tickets are booked immediately and PNR number is provided online at Partner's website.
Cancellation of tickets: No cash will be paid at the time of cancellation. The customer’s bank account will be credited with the ticket amount less cancellation charges as levied by IRCTC/ Air Deccan. ICICI Bank does not levy any cancellation charges.
4. INSURANCE POLICIES OFFERED BY ICICI BANK *
Convenience has always been synonymous with ICICI Bank and keeping in line with this, icici bank now offers it’s customers, the most comprehensive suite of General Insurance products from ICICI Lombard, to cater to their insurance needs and that too online.
10K Tax Saver Health Insurance Family Floater Health Insurance
For the first time in India ICICI Lombard introduces, 10K Tax Saver Health Insurance plan. This fixed premium Family Floater Health plan is designed to give the maximum tax benefit u/s Sec. 80D
For the First time in India, Family Floater Health Plan, a single health insurance cover that takes care of the customer’s entire family’s medical expenses during sudden illness, surgeries and accidents.
• Maximum tax benefit. Rs.10,000 deduction u/s 80 D.
• Fixed premium plan where the insured amount changes with no. of members.
• Family Floater advantage. One policy for entire family.
• Special covers (Double & Convalescence benefits) in addition to the regular health cover. • A single policy covers the entire family's health needs
• Covers expenses towards cost of hospital room/bed during illness, surgeries & accidents
• Cashless facility at more than 1100 network hospitals across 214 cities in India
• 5 % No - Claim discount on renewal premium
Overseas Travel Insurance Student Travel Insurance
ICICI Lombard Overseas Travel Insurance charges it’s customer’s on a ‘Pay Per Day’ basis.
ICICI Lombard’s Comprehensive Overseas Student Travel Insurance.
• Protection against all list of emergencies that may occur whilst traveling abroad
• Premium on a "Pay Per Day" basis instead of slab rates
• Cashless hospitalisation benefit available globally
• Cover available for a maximum period of 6 months with an extension option
• Dedicated toll-free help line number across all countries • Protection against all list of emergencies that may occur whilst traveling abroad
• Customer can pay in rupees, and can save valuable dollars.
• Plan meets foreign universities insurance requirements
• No documentation. No health check-up. Instant policy issuance
• Policy is renewable for the second year
3. ICICI BANK’S ONLINE SHARE TRADING.
ICICI bank also provides the service of online share trading to its customers through www.icicidirect.com.
INTERNET BANKING SERVICES PROVIDED BY HDFC BANK
NETBANKING FEATURES*
1.Credit card Payment
Customers can pay their HDFC Bank Credit card dues through this option.
2.Statement Download
The customers can download their account statement onto their PC for the period of 5 months from the given date.
3.Change Customer profile
The customers can update their mailing address and all their communication from bank will go to this new address.
4. Funds Transfer
The customers cant transfer funds between their accounts, even if they are in different branches/cities. The customer can also transfer funds to any person having an HDFC Bank account anytime, anywhere, using our Third Party Funds Transfer option. To avail of TPT facility, customer will have to sign the declaration form, which is available on the Net or at any of the bank’s branches.
5. New Fixed Deposit Request*
The customer can open a Fixed Deposit Account on the Internet. He will just have to give details regarding the account from which he/she wants to transfer funds, the amount and terms for the Fixed Deposit, the branch and the relevant maturity instructions.
6. Fixed Deposit Inquiry
The customers can access details of their Fixed Deposit Account such as Principal Balance, Term of Deposit, Rate of Interest, Maturity Date, Maturity Amount and Instructions for Payment.
7. Demand Draft* Request
The customers can issue a DD from their account at special rates. They will just have to select the account to be debited from and give the bank details of the amount, location and beneficiary. The bank will even have the Demand Draft couriered to the customer’s mailing address. (DDs will be issued only where the bank has a branch or has an arrangement with a local bank).
8. Demand Draft Request at Beneficiary's address
NetBanking offers a new facility to all its customers. The customer can issue a Demand Draft on the Beneficiary's name and address of his/her choice. He/she will just have to just select the account to be debited from and give the bank the details of the amount and beneficiary's name & address where the customer want the Demand Draft to be delivered. The Demand Drafts would only be delivered within India. (DDs will be issued only where the Bank has a branch or has an arrangement with a local Bank).
Note : 1) This facility is only open to users who have registered for Third Party Transfer (TPT).
9. TDS Inquiry
the customer can access information on Tax Deducted at Source for all their deposits for the current or previous financial year.
10. Stop Payment Request
The customer can request Stop Payment on a cheque or series of cheques online by just entering the cheque number and the reason for stopping payment.
11. Cheque Status Inquiry
The customer can view the status of a specific cheque issued on any of his/her accounts.
12. Cheque Book Request
The customer can request for a new cheque book online. His/Her cheque book will be couriered to the address on the bank’s records.
13. Account Balance Inquiry
The customer can check his/her savings or current account balance, including information regarding Uncleared Funds, Ledger Balances, Overdraft Limits and Sweep-In Amounts.
14. Account Statement Inquiry
The customer can view all the transactions on his/her account for either the current period (i.e. from date of last statement mailed to him/her), or a specific period determined by him/her/. The customer can also request his/her statement via mail (mailing address will be as per bank records).
15. Customer Support
The customer can use this option to communicate with the Bank for requests, instructions and queries.
16. Demat on the NET
If the customer also holds a Demat Account with the bank, he/she can now access his/her account online. Through Demat on the Internet, he/she can see his/her holdings as on the close of the last business day.He/She can view his/her your transactions for the last 7 days. Check the status of the shares submitted for Demat in the last one month. The bank will also provide the customer with an ISIN search and a calendar to know the various settlement details on various exchanges.
17. Direct Pay
An option exclusively for HDFC Bank NetBanking customers, which allows online purchases in a safe and secure environment. Shop online at websites, which offer our Direct Pay facility, such as Sify.com, Fabmart.com, VSNL.com and many more. Through Direct Pay, the customer’s account would be debited and the merchant's/ website's account gets credited instantaneously.
18. BillPay
The customer can pay his/her mobile phone, electricity and telephone bills through the Internet using the BillPay facility.
19. Security
With NetBanking, the customer can carry out all his/her banking and shopping transactions safely and with total confidentiality. The entire system is secured, using the whole gamut of security architecture including firewalls, filtering routers, 128-bit encryption and digital certification. So the customer is absolutely sure that all his/her online transactions are safe and protected.
* New Fixed Deposit Request/DD Request will be processed only during banking hours on the next working day.
Who Can Apply
All the customer need to access NetBanking is have a savings or current or fixed deposit account. Financial transactions can be made by savings account holders (with an either or survivor mandate), individual current account holders and sole proprietorship account holders.
Now Kartas of HUF, Patnerships and authorised signatories of Partnership Concerns and Private Limited Companies can do financial transactions by filling up a special imdemnity. The customer can download the form from website or contact your nearest branch.
REGISTRATION FOR NETBANKING
If the cutomer is a HDFC Bank customer, he/she can register for NetBanking by Calling PhoneBanking if he/she has a Telephone Identification Number (TIN)
OR
downloading an e-Age Banking form. The completed form can be submitted at the nearest branch.
The IPIN (password) will be mailed to the customer’s correspondence address.
NetBanking form for Individuals
NetBanking form for Corporates
If the customer does not have an HDFC Bank Account he/she can download* the relevant Account Opening Form print it, fill in the details along with his/her signature and drop it off the nearest HDFCBank branch. This form includes the NetBanking registration form.
Account Opening Form for Individuals
Account Opening Form for Companies
* The customer will need Adobe Acrobat Reader to read the Account Opening and NetBanking Application forms. If the customer does not have Adobe Acrobat Reader, download it. After the customer have downloaded and installed Adobe Acrobat Reader, the customer will need to restart his/her browser.
INTERNET BANKING SERVICES PROVIDED BY HDFC BANK INCLUDES THE FOLLOWING SERVICES:
1. ATM FACILITY
ATM in India for 24 Hour Banking
Now, the customer’s money is accessible to him/her 24 hours a day, 7 days a week, 365 days a year from any of the bank’s over 1054 ATM across India.
2. BILL PAYMENT
BillPay - Bill Payments Service
Now, the customer can have the luxury of paying his/her telephone, electricity and mobile phone bills at your convenience. Through the Internet, ATMs, his/her mobile phone and telephone. LIC insurance premiums can also be paid through this facility. The customer can also Renew your VSNL Internet Account and even Register for a New VSNL Internet Account using BillPay, a comprehensive bill payments solution. The customer can check the bill amount before he/she makes any payments ensuring that he/she always pays the right amount. BillPay has made all your bill payments easy. It gets even better if the customer is a resident of Hyderabad or Secunderabad and registered for the bank’s NetBanking service. Thanks to the bank’s tie-up with eseva, a unique integrated service launched by the government of Andhra Pradesh, the customer can now pay his/her electricity bills, water bills and municipal taxes (telephones to be introduced shortly) through the Internet using the Direct Debit option. The most important aspect of this service is that the payments made are updated in the database of the utility companies on an online and real-time basis.
3 DEBIT CARD
EasyShop Gold Debit Card
HDFC Bank proudly presents the EasyShop Gold Debit Card. The EasyShop Gold Debit Card is the first Gold Debit Card in India. Not only does it replace the customer’s ATM card, it also revolutionises the way he/she spends through a Debit Card and The customer also gets the benefits that as a Gold Debit Card Customer.
• Cash back*
For every Rs. 100 that the customer will spend, he/she will receive Re. 1 as cash back. This cash back is valid on all purchases made through the card, at all times of the year!!!
• Zero surcharge at Petrol Pumps*
The customer can now use his/her Debit Card at the Petrol Pumps. As a Gold Card holder, no surcharge would be levied on the customer at the petrol pumps.
• Special Offers at Premium Outlets, Hotels and Restaurants*
The bank has arranged for special offers for its customers, the details of which are available in the Merchant Booklet.
• Insurance covers*
The following are included in the insurance covers
o Death Cover by Air / Road - Sum assured Rs. 5,00,000
o Fire & Burglary for the items purchased under Debit Card (upto 6 months) - Sum assured Rs. 50,000
Loss of Baggage Insurance - Sum assured Rs. 20,000
4. INTERNATIONAL DEBIT CARD
Easyshop International Debit Card
Easyshop International Debit Card lets the customer shop and do much more than he/she could do with his/her ATM Card. It replaces cash, so when one goes shopping, the customer no longer need to carry cash with him/her. This card can be used in India and abroad at merchant locations such as shops and restaurants and to withdraw cash from a widespread network of ATMs. The value of the payment made or cash withdrawn is instantly debited from his/her account. What's more, while all purchases and cash withdrawals of the customer are in the currency of the country he/she is in, his/her account is debited in Rupees!
HDFC Bank offers the following Debit Card programmes in India:
1. Visa in association with Visa International
2. Maestro in association with MasterCard International
5. ONLINE SHOPPING
NetSafe, is a unique online payment solution that offers the customer’s complete security while shopping on the Internet. With NetSafe, they can now shop online without revealing their HDFC Bank Credit Card number. They can now use their HDFC Bank Debit Card also for online purchases.
The customers will have to follow a simple 3-step process to register for NetSafe using either his/her HDFC Bank Visa Credit or Debit Card. Once registered, the customer will have to choose the amount and account he/she wish to debit and create as many NetSafe cards as he/she wants. And after the transaction or a max of 48 hours, the card will cease to exist. All this comes FREE with the customer’s HDFC Bank Credit / Debit Card.
*
Step1:OnetimeRegistration
NetSafe requires a one-time registration. After accepting the Terms and Conditions, the customer will need to key in his/her Debit / Credit card number , his/her ATM PIN and the date of expiry of your card.He/She can then generate his/her own Login Id and Password after adding his/her personal details. The Registration process is complete and the customer can Login to NetSafe !
Step2:YourfirstNetSafecard
The customer will have to create a NetSafe card drawing funds from his/her existing HDFC Bank Debit or Credit card accounts . All the customer needs to do is specify the account to be debited and the required value( limit ) of his/her NetSafe card.
Step3:ShoppingwithNetSafe
The customer can use his/her NetSafe card to make purchases online in 2 ways
• He should copy the NetSafe Card Number as the Card Number required in the payment screen of his/her shopping site.
• The customer should download the Plug-In during the Registration process.
6. DIRECT PAY FACILITY
HDFC Bank's Direct Pay facility is an e-Age Banking Channel where the purchases are debited directly to the customer’s account and credited to the account of the establishment (or the website where the purchases were made). If the customer is an account holder with HDFC Bank, all he/she will have to do is to register for the NetBanking facility to use this option.
However, shopping is not the only option that the customer has. If the customer is a resident of Hyderabad or Secunderabad, it gets even better. Thanks to the bank's tie-up with Eseva, a unique integrated service launched by the government of Andhra Pradesh, you can now pay your electricity, water bills and municipal taxes (telephones to be introduced shortly) using the Direct Pay option. The most important aspect of this service is that the payments made are updated in the database of the utility companies on an online and real-time basis.
What's more, both the Direct Pay and NetBanking facilities are available FREE of cost.
HDFC Bank offers the highest level of security available today - 128-bit SSL (Secure Socket Layer) encryption. The customer’s NetBanking details (Customer ID and password) are kept confidential and cannot be viewed by the merchant.
7. INSTA-ALERT
HDFC Bank has made its customers life easier than ever before. Because with the bank’s new InstaAlert service the customer can get regular updates on you’re his/her bank account via SMS or e-mail.
I
- 1 Credit in account greater than Rs. 5,000/ Rs.10, 000/ Rs. 20,000/Rs. 50,000
- 2 Account Balance below Rs. 5,000/ Rs.10, 000/ Rs. 20,000/Rs. 50,000
- 3 Weekly account balance
- 4 Salary Credits*
- 5 Utility bill payment due Alert**
*The customer needs to have a Corporate Salary account with HDFC Bank
** To avail this alert the customer needs to be registered for the Bill Pay service. Also, this is applicable only to the presentment/biller companies.
8. REFILL OF PREPAID CARD THROUGH SMS
HDFC Bank introduces refill of prepaid card through SMS
All the customer need to have is an HDFC Bank Account and be a prepaid customer.
Pre-paid Refill through SMS
Pre-paid Refill through ATM
Pre-paid Refill through SMS :
The customer needs to be registered for this service.But for once the bank has taken the pain of filling up a form away.The customer can now just have to walk across to an HDFC Bank ATM and do the following.
1. Select 'Prepaid Refill/Bill Pay'option
2. Select 'SMS refill registration'
3. Enter your 10 digit mobile number and confirm
Within seconds the customer will receive an SMS confirming his/her registration, giving the customer a code number and also the syntax of the message that the customer needs to send for getting a refill done. The number to which the message needs to be sent will also be a part of this message that the customer receives.
So now a refill is just an SMS away.
How much does it cost ? *
This service is absolutely free from HDFC Bank! The customer will only have to pay the regular SMS charge for the customer’s SMS request.
Where can I access this service ?
Operator Name Circle
Airtel Mumbai
Orange Mumbai
Prepaid refill through ATM :
It's actually very easy to refill your prepaid card. The customer just needs to walk into an ATM.
1. Select 'Prepaid Refill/Bill Pay'
2. Then select Pre-paid Refill
3. Enter the 10 digit mobile number and confirm
4. Fill the amount you want your card to be re-filled for
Within seconds the customer will get an SMS confirming the refill for the asked amount!
How much does it cost ?
This service is absolutely free from HDFC Bank! The customer will only have to go to the ATM and use his/her card. It's a service that has been introduced for the first time in India, just to make the customer’s world easier.
Where can I access this service ?
Operator Name Circle
Airtel
Andhra Pradesh, Chennai, Delhi, Gujarat, Haryana, Himachal Pradesh, Karnataka, Kerala, Kolkata, Madhya Pradesh, Maharashtra, Mumbai, Punjab, Tamil Nadu, Uttar Pradesh (West)
Hutch Andhra Pradesh, Chennai, Delhi, Gujarat, Haryana, Karnataka, Kolkata, Punjab, Rajasthan, Uttar Pradesh
Idea Andhra Pradesh, Delhi, Gujarat, Haryana, Kerala, Madhya Pradesh, Maharashtra, Uttar Pradesh (West)
Orange Mumbai
9. ONEVIEW OF ONE’S ACCOUNTS IN 6 BANKS
OneView. For the first time in India, this convenient service brings together the customer’s online bank accounts (including those of family members), in one place, in total security.
Now, OneView puts it all on one screen for its customer, so that tracking and managing his/her online accounts becomes quicker and easier than ever before. It gives its customer a complete picture of his/her finances across multiple accounts.
If the customer has one or more accounts with HDFC Bank, Citibank, ICICI Bank, HSBC India, Standard Chartered Bank and/or Global Trust Bank then OneView is just right for him/her. Best of all, it's absolutely free!
Simply register for Internet banking with these banks and use OneView to get a single window acess to :
1. Current/Savings account balances
2. Current/Savings account transaction history
3. Fixed deposit summary
4. Saving/Fixed deposit summary
5. Citibank Credit Card
6. Citibank Credit Card transaction history
7. Hdfcbank Demat Profile
8. Hdfcbank Demat Holdings
9. Hdfcbank Demat Status
It will provide the comprehensive information the customer needs at one place. So get the convenience of OneView now and get into 6 banks.
CHAPTER-4
PROMISES OF
E-BANKING
PROMISES OF INTERNET BANKING
As the potential that the internet held to transform different aspects of our lives manifested itself, it was forecast that its impact on financial services such as stock-broking and banking would be especially profound. Banking transactions could be conducted entirely in a virtual context with no physical exchange necessary. Also transactions are to a large extent standard with little, apart from price, difference between banks. For both these reasons banking was especially well suited to use the Internet. It promised to create a perfectly competitive electronic marketplace for banking products- with perfect information about products ;larger number of buyers and sellers; and reduced transaction costs.*
1. No physical change
Historically, as the means of payment substituted gold by paper currency and paper currency by plastic and finally plastic by direct debits, the information intensity kept increasing. In the case of buying physical goods online, a large portion of the value to the customer is derived only after the goods are physically delivered. The internet brings supplemental value by aiding the search process, making comparisons efficient and automating order placement and billing. On the other hand, in determining which bank to place a deposit with, not only can the search be done online but the actual product delivery (deposit booking) can also be affected online. Since there is high information intensity and no physical exchange, the internet as a delivery channel is responsible for delivering a large portion of the value for a customer. More importantly, the end-to-end process can be completed entirely online.
2. Reduced transaction costs
Additionally various studies showed that as a delivery or distribution channel, the Internet could bring substantial cost advantages for banks. Consultants Booz-Allen & Hamilton estimated that whereas the cost of a customer walking into the branch and using a teller is USD 1.01 , the cost of conducting the same transaction on the internet is a tenth of that and is close to USD 0.10.This was also considerably lower than the cost of conducting the transaction over the telephone(USD 0.52) or having a customer visit an ATM (USD 0.27). Significantly, transaction costs over the internet are also lower than the cost of a customer accessing the bank over a dedicated telephone line using a modem.
The Booz-Allen study was quoted in many commentaries that described the impact of the Internet on banking, included one by the United States Department of Commerce. There was a similar study on the costs of delivering banking services across different channels conducted by the IBM Consultancy Group. Although the absolute costs that they estimated for each channel were different from Booz-Allen , the message was the same- banking transactions on the Internet would cost banks a fraction of what a physical branch would.
3. Double-edged Sword
Reduced delivery costs and the absence of physical exchange is indicative of why the Internet held so much promise to turn banking upside down. In theory, physical branches were not required and the transaction costs over the Internet were much lower. It was almost obvious that from a bank’s perspective this was the way to go. However, the promise of the Internet was a double-edged sword.
While it held the opportunity to lower costs and do away with costly branches and staff, it also posed the threat of compressing profit margins by making it easier and more efficient for customers to search and get comparative information on the offerings of various providers. Another threat that loomed in the distance was that this new electronic marketplace for banking products would directly link the savers in the economy with the borrowers and ultimately diminish the role of intermediaries like banks.
3. Perfect Information
One of the things that the Internet does extremely well is make perfect information available to all market participants by bringing about efficiencies in the search process. For buyers of banking services, there are sites that aggregate information on product offerings from different providers at a single location. By merely making information available to customers about multiple providers, these sites perform the function of dismantling the oligopoly of a few providers and bringing about a structure tending towards perfect competition. A good example of this would be E-loan, an online aggregator of loans. It allows potential borrowers to search and compare the offerings of thousands of providers. Obviously, this is something that a borrower cannot efficiently accomplish by walking around branches, researching product catalogues or calling.
Eliminating the agent’s commission effects a further reduction in mortgage cost. As a further value addition to the client (and to the obvious detriment of the bank’s profitability), E-loan monitors the mortgage over its life and continually alerts the borrower to cheaper refinance options.
Perfect information would be available to the banks as well. The Internet makes it
less likely that, for example, an individual could hide a bad credit history from prospective providers and beat the system by switching providers frequently. To that extent this superior information-set would enable banks to move away from portfolio-pricing, where good credits subsidise the bad ones, to a pricing structure that is based on the customer’s credit history.
4. Reduced role for intermediaries
One of the most successful companies on the Internet is eBay. It offers visitors the ability to participate in online auctions hawking everything from a used car to a perfume bottle collection. More than 60 million auctions have been completed to eBay on an average basis set a new record of 1.782 million. For the first quarter of 2000, eBay generated net revenues of USD 85.8 million, a 100 % increase over the earlier year.
The likely reason for eBay’s success is that it offers visitors an electronic marketplace that is tending towards perfect competition. This is achieved by two economic functions that eBay is providing. The first is
aggregation of buyers and sellers and facilitating a search function. The second is bringing about efficiency in determining price that is enabled by the online auction mechanism which makes pricing transparent and also makes it dynamic since it is now driven by market conditions of ‘demand and supply’.
An eBay online auction model applied to banking services could have a potentially devastating effect on banks. On the corporate baking side, the Internet could replace expensive teams of bankers whose job is to link the companies in need of capital with the providers of capital (and, in the process slice-off banking fees). By creating competition among the providers of capital, the Internet could help companies raise money at much finer spreads. Investment banks using the Internet such as WR Hambrecht have pioneered the use of online auctions to determine prices for initial public offerings (IPOs).
Hambrecht’s trademarked OpenIPO is based on a Dutch auction system designed by Noble Prize winner economist Vickrey and allows individual and institutional investors to bid online for shares of an IPO. Participation is not based on who you know-qualified investor can open an account and place a bid. The auction treats all bids equally, whether from qualified individual investors or from a large institutional investor. The allocation is based on what the bidder is willing to pay rather than on the preferential treatment. This creates a market driven by supply and demand rather than influence or artificial demand.
INTERNET ENABLED BANKING MODEL
The new banking business model coalesces around the ‘6 Cs’ which are summarized below.*
The 6 Cs
Traditional Model
Internet Enabled
Cross-sell
Product Driven
Relationship value driven
Connectivity
Stand-alone
Connected
Channels
Few
Multiple
Consolidation
Low
High-across products and banks
Competition
Within Industry
Outside Industry
Convenience
Short time window
24*7*365
1. Cross-sell
Traditionally, banks have organized themselves along product/relationship lines. The product teams are responsible for the revenues on the portfolios of products managed by them-across the customers of the bank. They also manage brand equity and track market share. The relationship teams are responsible for the revenues on the set of customers managed by them – across the products offered by the bank.
Managing a bank on a product profitability basis is fine when there are few providers and competition is limited. When product competition intensifies, it becomes important to view ‘relationship profitability’. This means that some products might be loss-leaders that enable the bank an entry into the customer relationship and cross-sell other, often more profitable, products. Foe example, a bank provides fine pricing on trade services to get the customer’s foreign exchange business.
In the emerging business model, individual product profitability will become less important and a cross-sell strategy will drive marketing efforts. One of the drivers of this change will be eroding profit-margins at a product level. As the margins get compressed, cross-sell of various products will become essential to achieve a viable level of profitability at a customer relationship management (CRM) tools will become important in identifying cross-sell opportunities and tracking their conversion.
2. Connectivity
In comparison with the stand-alone high street branch of the traditional business model, the emerging business model will have a high degree of connectivity across its branches and products. In part, this will be driven by the market, with customers seeking to seamlessly access their account across locations. It will also be driven by the need to monitor the customer buying behavior and include all possible data points so that cross-sell opportunities are identified.
Connectivity in the emerging business model will also imply electronic linkages between the bank and its customers, especially on the corporate side. Already, many bank-processing platforms on the corporate side. Already, many bank-processing platforms integrate electronically with customer back end systems such as an enterprise resource planning(ERP) software. Data on accounts payable, foe example may be electronically accessed by the bank to process payments (in a straight through manner) to the customer’s suppliers.
Developments in the Internet, especially expansions of coverage and increase in bandwidth have made connectivity logistically possible and economically feasible.
3. Channels
Not so ling ago, customers had to conduct a banking transaction by physically going across to a branch within a limited time window. More recently, new channels such as telebanking and ATM have also been offered by banks and have become popular with customers. There will be a multitude of channels in the internet enabled banking model through which a customer can reach a bank. Not only will access increasingly be online via a PC, it will quickly become wireless via mobile phone or personal digital assistant.
The context of the physical branch will also change. From the imposing banking halls on main high streets, branches will increasingly be a counter at a supermarket. In the United Kingdom, Tesco and Sainsbury already have banking kiosks within their supermarkets that carry their brand names. In the United States, the Canadian Imperial Bank of Commerce is setting up banking services in the 1400 odd outlets of the safeway supermarket chain. The emphasis of the model is thus changing from symbolising
Stability to a more functional and convenience driven one. It is also possible that the physical branch may not be a bank at all. Online banks such as Juniper allow their customers to drop deposits off at any of the 3400 United States outlets of Mail Boxes Etc, a San Diego based private postal outlet.
4. Consolidation
Traditionally, a customer who purchased more than one product from a bank probably had to interface with two different departments. It is also likely that these departments had no idea of what other banks’ products and services the customer avails of. Consolidation (or aggregation) of accounts for a customer across products within the same bank is taking place.
The primary driver of this consolidation is customer convenience and at a mere click, a customer can view all her account statements. However, the signs for bank profitability are ominous. Consolidation means that information to a customer is now readily available. It follows that it is unlikely that a customer would be paying interest on a credit balance while having idle money in a checking account.
Taking consolidation a step further is aggregation of accounts across banks. This means that a customer can view her savings accounts, credit cards and mortgage all in one place even though the providers of those products may be different. In such a scenario, the ownership of the customer will shift from the banks providing the products to the banks aggregating them because of the latter’s control over the customer’s access to information.
5. Competition
In the last decade, there has been a surfeit of deregulation of banking activity across the world, the most prominent being the Gramm-Leach-Bliley Act in the United States. Banks have seen lowering of the barriers to enter the banking sector or expand within it. Competition has not only come in the form of new entrants setting up shop-incumbent banks have seen erosion of their monopoly over customers by non-traditional competitors from other parts of the financial services industry such as mutual funds who have out-competed them for surpluses.
There is more competition to come and the Internet enabled bank will see threats from new competitors that come from outside the financial services industry. In the United Kingdom, the Post Office made a foray into banking by launching its ‘Universal Bank’. As technology and telecommunications increase their weightage as critical success factors, players in these areas will look for a slice of the action. Many a banker’s nightmare is the threat of a software powerhouse such as Microsoft integrating forward and providing a banking service. There are already a plethora of alliances and strategic partnerships between the telecom players and banks to jointly offer customers a mobile banking proposition. This is driven in part by the need of the telecom companies to recoup some of their own capital investments by providing new services as their traditional voice and data services suffer declining margins.
6. Comfort
It follows from the multiplicity of channels and the underlying technologies the Internet enabled banking model will have far higher customer convenience. The model envisages basing the service offerings around the convenience paradigm. Access the bank anytime (on 24*7*365 basis); anywhere (from across the globe) and anyhow (through whichever preferred channel).
The Internet is likely to make the term ‘bank holiday’ redundant. Its capabilities will make possible ‘around the year and around the clock’ access to the bank. Importantly, it will do so at a cost that will not inhibit delivery. In the bricks and mortar world, an anytime service offering came at additional cost for the bank because of the utility and overtime expenses of a teller or call centre respondent. And ‘anywhere’ meant opening branches to service customers that may not have been profitable at the margin. The Internet does change everything.
CHAPTER-5
IMPACT OF INTERNET ON DELIVERY OF BANKING PRODUCTS
IMPACT OF INTERNET ON DELIVERY OF BANKING PRODUCTS:*
1. Credit cards:Nextcard
2. Consumer Loan Origination-loan
3. Corporate Treasury:FXall
1. Credit cards:Nextcard
Winning a customer in a heartbeat - Launched in 1998 in United States, NextCard exemplifies the potential of the internet to force a paradigm shift in the distribution of financial products. Existing processes for approval (or declines) of credit cards take up to three weeks time. NextCard announced its arrival rather dramatically by granting approvals (or declines) for its online credit card applications in less than 30 seconds. Approved customers could even start shopping online the same day and need not wait for the physical card to arrive. By the second quarter of 2001, NextCard crossed the one-million milestone and established itself as one of the leaders in the online credit card market.
At the heart of the NextCard instant approval process is a proprietary engine, RapidResults , which integrates logic and data from the major credit bureaux, national fraud databases and NextCard’s own databases. When a prospective customer provides brief details online- name, address, income and social security number- NextCard’s approval engine checks the cudstomer’s record in these databases and creates two credit scores. One is the industry-recognized score developed by Fair, Isaac & Company (FICO) and another is an internally developed score. The application is approved or rejected by the computer almost instantaneously based on the set decision criteria.
Market Segment of One
The internet has allowed NextCard to customize its card offering to each customer as if they were a segment on their own. Importantly, it has afforded this without adversely impacting the cost base. NextCard’s computers search from among an array of thousands of options and provide the customer with combinations that best suit her credit profile and requirements. For example ,a customer who is willing to transfer a higher balance may be enticed to do so by being offered a better rate.
This automated methodology of providing alternate credit card pricing terms based on balance transfers from other credit cards in real time over the Internet is now patented. Significantly, the algorithm is able to sniff out those applicants who are prone to moving their balances at the prospect of a better ‘teaser rate’ elsewhere. The average NextCard customer keeps a balance in excess of USD 1700 on their card which is higher than industry average of about USD 1500.
Customization implies that each NextCard customer has differential pricing that is based on her individual risk profile and profitability dimensions such as balances held. This is opposed to a traditionally used portfolio approach to credit card pricing that involves some customers being subsidized by others. In a portfolio, profitable customers such as those who keep high balances on their cards routinely subsidise those unprofitable customers who pay-off their outstanding balances in time.
The impact of this differential pricing is quite profound. It allows the issuer to broaden the catchment area of potential customers. This is especially for the so-called ‘sub-prime’ segment which is usually considered to be high-risk in terms of their credit-worthiness. Using a portfolio approach, these ‘sub-prime’ customers would have fallen through the credit sieve. Under an information-led customized approach, these customers have the opportunity to get credit cards and the issuer is rewarded for the higher risk by a higher interest rate.
Furthermore, continuous mining of the card spend data allows the issuer to pick up any early warning signals.
Differential pricing also improves the quality of the credit in the portfolio of the customers. It does this by avoiding the problems of what economists term ‘adverse selection’, whereby a lowering of the portfolio interest rate makes the card attractive for customers who would otherwise be unable to afford the terms. Moving away from the portfolio approach allows the issuer to adopt an aggressive approach to interest rates to expand market-share by signing-up customers who are desirable while simultaneously ensuring that the lower quality credits continue to be priced in accordance with the higher credit risk they pose.
e-service
NextCard uses the Internet to provide superior service that is also customized for each customer such as putting a picture of the customer’s kids as wallpaper for the card. This creates affinity and, as a JP Morgan analyst noted, this makes it less likely that the customer will cut up her card and send it back.
Customers can also set automated e-mail alerts that send them an e-mail when, for example, a specific merchant posts a transaction into a account. Each customer gets a concierge, an online shopping ‘bot’, which remembers passwords, fills up forms and searches the web for the best prices. Yet another innovation is the active credit card statement which provides exclusive merchant offers to cardholders. These offers can be availed by a simple click on the site.
2. Customer Loan Origination: E-loan
Empowering the customer
E-loan is online lender that burst onto the scene in 1997 with a promise of offering the customers the best loans at the lowest cost. Founded by Chris Larsen and Janina Pawlowski who met while working at a mortgage brokerage in Palo Alto, California, their vision was to transform the inefficient mortgage industry and create an information resource that would put up the customer in charge of the process of securing a loan.
This was an Internet venture that took shape more by accident than by design. Larsen and Powlowski who had computer backgrounds and had written software that compared different mortgage products for their clients, founded the Palo Alto Funding Group in 1992. The infant E-loan went to the Internet as www.pafg.com as a part of a pilot project on e-commerce funded by a Silicon valley consortium. When 12 applications were received in less than a week, the founders realized that they were on to something.
Trends in online mortgage
In the United States, it is estimated that in year 2000, about 1% of the total mortgages were originated online. Predictions by TowerGroup and Forrester Research vary, but broadly, online mortgages are expected to reach 10% of the total mortgage value over the next few years.
Trends in searching and applying for a mortgage online are fuelled by growth in use of the Internet in the process of buying or selling a home. Consultants, Gomez Advisors conducted a survey of about 4000 real-estate agents and 17000 adult Internet users. More than two-thirds of the respondents believe that the Internet will alter the way homes are bought and sold; that it will make the process quicker and there will also be likely declines in the standard 6% commission rate currently payable to agents. Using the Internet to search and apply for a mortgage is a natural extension of searching foe homes online.
E-loan has sold mortgages for a dollar value in excess of a billion dollars each in the years 1998-2000. In 2001, it experienced rapid growth and sold as many mortgages as the cumulative value of mortgages sold in the previous three years. It is to be noted that the actual value of loans sold by E-loan is higher, given the auto loans that it also sells. This was a product line that got a kick-start when E-loan acquired carfinance.com from Bank of America.
Putting the Customer in Charge-Enabling Search
E-loan enables customers to perform an automated search for the most suitable loan from over 50000 products provided by more than 70 lending sources. It matches the customer’s risk profile, debt objectives, repayment capacity and other borrowing criteria with the products available and offers the most competitively priced loans. The customer can apply for the loan online and also track the status online. Through this process, traditional intermediaries in the loan process such as the mortgage broker or commissioned loan agent are eliminated.
The most revolutionary part of the E-loan offering, however, is the proactive management of the loan for the customer. Computers continually scout around for better refinance opportunities and alert the customer as they arise over the entire lifetime of the loan. By alerting the customer about the potentials savings from refinancing an existing mortgage and making it easier for the transaction to close, E-loan is threatening to erode the profitability of incumbent loan providers.
The Internet Powered value proposition
E-loan is leveraging the power of the Internet for lowering the costs of search. These costs are defined as those borne by customers who include the time and effort involved in searching for a new supplier.
It also creates a situation of more perfect information between providers of the loan and the customer and drives the interest rate and other terms down to competitive levels. Over the life of the loan, the Internet enabled processing engines proactively manage the loan and alert the customer regarding cheaper finance options. There are also savings in the E-loan business model owing to a reduction of transaction costs by eliminating paper during the application process. Without the Internet, it is unlikely that such a service could be offered without substantial cost.
3. Corporate Treasury: FXall*
Even though global foreign exchange markets are the largest and the most liquid, tracing on the market by corporate customers has remained untouched by technology. According to the Bank for International Settlements (BIS), the average daily turnover on foreign exchange markets was estimated to be USD 1200 billion in April 2001. This trading volume is almost six times higher than the combined global debt and equity markets. Of the total turnover, four-fifths, is comprised of interbank transactions between banks and their customers.
In this day and age, customers trading currencies do so by calling their bank and asking for the rates. Banks quote with a spread that is determined by the size of the transaction and the overall corporate banking relationship. Price discovery takes place, in the most primitive way, only if the customer calls multiple banks and compares rates. This is especially cumbersome when the market is volatile and moves before a trade is consummated. If there is agreement on the price, a deal is closed and, this leads to a complicated, manual and paper-based chain of events that constitute the trade settlement process. This lack of automation has resulted in the market being inefficient, opaque and costly.
In an attempt to improve this situation, the year 2001 saw the launch of two competing electronic trading systems for foreign exchange, Fxall and Atriax. Consortia of leading banks sponsored both these systems. FXall has been supported by a group of 14 banks such as Bank of America, Credit Suisse First Boston, Goldman Sachs, and Morgan Stanley Dean Witter. On the other hand, Citigroup, Deutsche Bank, JP MOrganChase and Reuters backed Atriax.However, in may 2002 , Atriax ceased operations after in conclusive merger talks with Fxall and Citigroup , Deutsche Bank and JP MorganChase moved their liquidity commitments to FXall.
Greater transparency, finer spreads
The Electronic trading systems such as FXall allow a customer to complete the price discovery , trade and settlement online and automate the FX lifecycle. Customers log on and are offered quotes from either a single bank or multiple banks and these quotes can be either one or two-way. The customer can maintain rules that enable the automatic identification of the best competing price. These rules include highest bid/lowest offer; tightest bid/offer spread; fastest quote; favorite bank.
These systems allow for straight through processing (STP).While they allow the customer to input deals manually or by importing a spreadsheet they are designed to seamlessly integrate with the customer processing system. Also they provide economic research, market news and currency forecasts, and post-MIS.
A natural consequence of the greater transparency that characterizes electronic trading is:
• A narrowing of the bid/ask spread.
• Customers are able to estimate better the liquidity available in the market.
• Transactions are not only cheaper as paper is eliminated and STP is enabled but they are also less error prone.
Adoption Rates
In the backdrop of these multiple benefits to customers, it is perhaps not surprising that the share of electronic trading of foreign exchange by bank customers is expected to sharply increase. From levels of about 5%in 2001, the share of electronic trading of foreign exchange by value is expected to increase to about 35% by 2004. Technology consultancy, TowerGroup, has a far more optimistic projection of more than 75%.
MOBILE BANKING :
Mobile operators may place their bets on financial content and, in doing so, enable the adoption of mobile banking. The mobile devices are eminently suited for the most basic banking transactions such as viewing the account balance ,ordering cheque books and accessing ( a limited number of )past transactions. These are services that customers may or may not pay for. However, a mobile device can support even more complex transactions such as share trading , bill payment and can be used to effect other payments. These are services that customers are not only willing to pay for explicitly, but they also create opportunities for implicit revenue generation, such as earnings on float.
Indicative of the suitability of the mobile device for banking is report by Durlacher, which cites that 90% of banks in Europe were offering some form of mobile banking in as early as 1999. Surveys by Nokia and IDC reveal that banking is the foremost mobile application which is demanded by users of mobile phones and other wireless devices. Banks find that offering mobile services is a good way to improve the positioning of their offering as encompassing ‘cutting edge technology’. Unlike PC based Internet banking, rudimentary mobile banking services can be operationalised within a short time frame and with small outlays. Apart from providing another channel, the mobile phone offers the prospect of value added services if combined with positioning technologies. Furthermore, the mobile payments proposition promises to vastly improve banks’ service delivery in the micropayments area by reducing the need for handling physical cash.
A combination of all these factors has led to great optimism about the penetration of mobile banking. The estimates of mobile banking users vary of wireless financial services by 2004, which is double the number they predict in 2003. Meridien Research, on the other hand, estimates that there will be only 40 million users by 2003.
Significantly, most of the growth in customer adoption is predicted to be in the Asia-Pacific region. In some countries such as Japan, the relatively advanced network is driving growth. In others, fixed line telephone penetration has been abysmal and mobile telephony is the only viable option. The US, in particular, is not seeing such growth because the country is a patchwork of three different mobile protocols –GSM, TDMA and CDMA. The lack of interoperability across territories is an inherent disadvantage for a mobile customer since it undermines the core mobility proposition itself. In contrast, most of the Asia-Pacific region as well as Europe is on a GSM network. Another factor discouraging penetration in the US is that the mobile customer receiving the call pays for the call, whereas almost everywhere else the ‘calling party pays.
Phone Banking in the Internet Age
Product Information
Mobile devices can provide users with a wide variety of information from the public domain which can range from foreign exchange rates to the list of ATM’s in a city. Customers can also get information that is not in the public domain and which is specific to them. An example would be the ability to access their last five transactions. The customer can pull out this product information on demand- by accessing the website of the bank. It can also be pushed out to the customer in the form of customised alerts. A customer can get an SMS alert when the dollar/euro breaches a certain level or when an item of an unusually high value is debited to the account.
There are a few new banking applications that the ubiquity of the mobile-device and location-based services combine to provide. One of these involves helping customers go beyond finding an ATM- the network uses location-based technologies to indicate to the customer the nearest ATM. Another application adds to security-it sends the customer an SMS message alerting him or her of a transaction on the credit card or money withdrawn using the ATM card.
Transaction Initiation
The size of the mobile device makes it amenable to conduct most banking transactions. These include transferring funds between accounts, issuing instructions to book a certificate of deposit for a specific tenor or to order a cheque book. One of the applications that have been widely believed to be the ‘killer application’ for PC based Internet banking as well as mobile banking is bill presentation and payment. MeritaNordbanken (one of the entities that merged to form Nordea) has offered this to customers as early as 1992 and more recently, the UK building society Woolwich also announced an application. Over a mobile, a composite bill cannot be presented and only a summary is sent to the user.
Since the device is ubiquitous, a mobile can also be used to validate transactions. For example, large credit card payments could be validated electronically by the customer by inputting a secret pin number. Or, a call could be made to the customer on the mobile reconfirming that they are in the process of buying a large ticket item using their credit card.
However, within banking, the application that holds the largest potential is payments. Initially, it is expected that these will be of small value or micropayments but over a period of time, all payments could be made using the mobile device. There are multiple reasons to expect that the initial application will be focused on micropayments . Firstly, this is an area that is not currently addressed by the present card forms and hence will face least resistance as it entails no substitution. Smart cards that function as stand-alone stored value e-wallets have had a limited penetration, that too, only within closed communities such as a university campus. Currently micropayments are settled by exchanging physical currency. This is something that banks would be more than happy to substitute given the costs of handling, storage and issuance (not considering that some of the current infrastructure for mobile payments is not fail proof and, therefore, makes its unsuitable for large value payments).
Cash, card or mobile?
In order to complete a payment transaction, there are four steps that need to be fulfilled.
• The transaction needs to nr initiated with the customer account number, the merchant account number and the amount.
• It needs to be routed to a payment server that will affect the entries.
• If the payments are for amounts that are not insignificant then the payment amount needs to be validated by the customer.
• Also, the merchant needs to receive a confirmation that he has been/will be credited so that the goods can be released.
Banks want to play too:
Dual slot/chip systems
Payment solutions that involve an active partnership between the mobile operator and a bank include those that involve a dual slot phone. In this case, the customer selects an item to be purchased on the website of the merchant. The merchant then sends an authorization request the customer with the product’s price. The customer inserts his or her plastic card into the second slot of the mobile phone and enters a transaction PIN number to authorize the payment. In effect, the mobile phone becomes a POS terminal. Advantages of this system are the incremental security since, in addition to the SIM of the phone, there is a payment card that is required. However, the second slot and card reader in the mobile phone makes it heavier and more expensive –and limits widespread adoption.
The Iti Achat system that is in operation in France is based on this mobile payment model. It is the outcome of alliance between Mastercard , Oberthur smart cards , France Telecom , Europay and Motorola (which provides the dual slot Motorola StarTac hanset). The debit/credit card used is called the CB or cartes bancaires. A variation of this system is for the amount to be debited to a wallet with value stored on a smart card (prepaid).
It is crucial to understand that the real motivation behind the slot phones is not security but rather considerations of banks and credit card companies to retain their dominance over payment systems. An embellishment to the system is the development of phones with dual chips (as opposed to the dual slots). This involves a chip card issued by bank that is in addition to the GSM card issued by the mobile operator. The bank issued card acts as the plastic debit/credit card that provides the security without the incremental weight of a dual slot phone and the added step of inserting and taking the payment the card out of the slot. The chip insures that the payment transaction is independent of the operator. Having the payment card ‘always in’ also enables loyalty programs to be administered and interactive shopping such as pay per view.
Nokia, Nordea and Visa have come together to provide customers an Electronic Mobile Payment Services (EMPS) based on dual chip technology. A limited number of specially designed Nokia phones were issued to customers in Helsinki in late 2001.During the pilot, payments could be made online at a designated Internet grocery store and in the real world, at a movie theatre.
Banks get revenues from payments explicitly from fees and commissions and implicitly from the floats. According to the Boston Consultancy Group (BCG), a payments revenue pie currently worth USD 300 billion is at stake. They estimate that because mobile payments will be cheaper for both merchants and consumers as compared to conventional payments effected by cheque or card, the pie could shrink overall. For banks, the bad news is compounded because mobile operators could gobble up a slice as large as 20% of the (smaller) revenue pie from the banks.
Partner or perish*
It is imperative that the mobile operators increase revenue by providing content such as banking applications. On their part, the banks would strive to protect their payments revenues from attack by outsiders. With both banks and mobile operators focusing on mobile banking, is a showdown in the offing? Perhaps not – if the slew of alliances seen recently is considered – it is likely that more cooperation will be seen between them.
Country Bank Mobile Operator
Finland Leonia/various Sonera
Germany Deutshe Mannesmann
Direkt Anlage T-Mobil
Hypo Vereinsbank Viag Interkom
LBBW MobilCom
Italy Banca Intesa Omnitel
Banco di Roma/Fineco Telecom Italia
Japan Sakura Bank NTT DoCoMo
Norway Den Norske Bank Telenor
Spain BBVA Telefonica Moviles
Sweden Swed Bank Telenor
England Llod’s BT-Cellnet
Natwest Orange
MOBILE OPERATORS AND BANKS: JOINING HANDS
This cooperation emerges from the strategies of both banks and mobile operators to ‘buy’ rather than ‘build’. From the banks’ perspective, an alliance allows them to continue to provide the core value proposition in the payments process. As noted, mobile operators have a relationship with the customer and could relegate banks to performing peripheral functions of becoming a final clearing and settlement bank.
For a variety of reasons, banks are unlikely to consider getting control of mobile telecom assets themselves. Efforts to mandate bank-friendly industry standards such as the EPMS based on dual chip technology are dependent on customer adoption and cannot be entirely relied upon to ensure that disintermediation does not take place. For example, the Danish operator Mobilix has already piloted a system in partnership with a card-processing firm that provides customers with a mobile wallet. Since customers receive a new SIM card that stores a confidential PIN code, neither is a dual slot necessary nor is a dual chip phone.
For the mobile operators, an alliance strategy works better than the other option of building a bank from scratch or acquiring one. Post the 3G licensing, the capital outlays are just not available to mobile operators for acquisitions. Building a bank from requires investments and domain expertise-again, the operators have neither. Alliances are a good way to provide customers with a banking service without significant outlays of capital.
In summary – the till is not ringing, it is beeping
There are significant factors that are driving the increased penetration of mobile banking, both on demand and supply side. The penetration of mobile devices is experiencing exponential growth. Under pressure to arrest declines in voice revenues, mobile operators are adding value added services, primary among which are banking applications.
The mobile device takes the concept of anywhere banking to the next level and presents a whole host of new product opportunities for banks to make available to their customers. Much like a double-edged sword, mobile banking also presents a threat to those banks that ignore it. Payments for small value purchases are one such area where the available value can be competed away by nimble-footed groups of mobile telecom companies and banks acting in unison. Various mobile payment solutions are currently being piloted. It is just a matter of time before the clinker of coins is replaced by the beep of a mobile device.
CHAPTER-6
FOLLOWING TRIOKA OF PRODUCTS USE THE INTERNET
FOLLOWING TRIOKA OF PRODUCTS USE THE INTERNET TO MOVE BEYOND THE PURE EFFICIENCY GAINS AND WHICH PORTEND A PARADIGM SHIFT IN THE WAY BANKING IS DONE:*
1. ACCOUNT AGGREGATION: Hailed as the “most significant financial innovation in 2000”, account aggregation is a relatively recent product that has been enabled by the internet. The product involves aggregating information from a customer’s different financial accounts maintained with multiple providers and presenting them to the customer on a single website. The customer can access the information seamlessly by using a single username and password.
Most customers have relationships with more than one bank and use more than one banking product. For example, in the United States, a Banking Industry Technology Secretariat (BITS) estimate says that households in the US use an average of 3.6 financial institutions. Account aggregation allows these customers to better manage their money without the bother of collating information from different websites. Aggregation can also involve non-financial products such as frequent flyer miles and e-mail.
The initial customer interest in account aggregation is very high. In the United States, the first customers were signed up in 2000 and these have risen to about 5million in 2001.Citibank, which was one of the first large institutions to offer aggregation, saw almost 2000 customers sign-up daily for its service branded myciti.com. In the UK, the number of customers has touched a million and it is reported that the aggregation launch has generated at least half of new-to-bank customers.
There are varying estimates about how many customers are predicted to embrace aggregation but all of the studies indicate explosive growth. Datamonitor for example, forecasts that within the US and Europe, aggregation users could touch 30million each by 2005. These numbers represent almost 65% of e-banking users in the US and 40% of the users in Europe.
ENABLED BY THE INTERNET
In, personal finance managers (PFM) such as Quicken and Microsoft Money have allowed customers to aggregate their financial data from multiple sources onto their PC. However, this is a little cumbersome- the data has to be entered into the PFM since only a few financial institutions enable data downloads. The high rates of adoption are premised on Internet enabled aggregation on a website. This can be at the website of the customer’s financial institution, at the website of an independent aggregator such as Yodlee or at the customer’s point of access to the Internet such as America Online (AOL) or Yahoo.
How Aggregation Takes Place
Screen Scrapping: Screen scrapping involves the use of software robots or ‘bots’ that go into the financial institution’s website, masquerading as the customer, and extract static financial data. The customer’s username and password are stored with the aggregator and usually the financial institution cannot tell whether it is the actual customer or the ‘bot’ which has visited the site. The data so obtained is then translated by the aggregator into a standard format and stored in a central server for presentation to the customer.
The scraping begins by mapping the HTML of the website but data layouts and formats can change and so the website being aggregated needs to be constantly monitored for any changes. The technology is unsuitable for applications where the data is time-sensitive, since it works on a batch-basis and mostly scrapes once a day.
Though the technology is admittedly clumsy, it works. Embellishments to the technology have come in the form of more ‘intelligent’ scraping where the ‘bots’ are configured , using object-based parsing, to specifically find the financial information they need.
Direct Feeds
Direct Feeds involve the active participation and consent of the financial institution in the aggregation process. This is also the reason why some observers refer to the technology as ‘permissive aggregation’. Based on a customer’s standing instruction, the financial institution provides a direct datafeed to the aggregator using a normal communication protocol. This may be converted into a standard format by the aggregator using simple conversion routines and displayed on its website. The data can be provided on real time basis.
Most financial institutions wherewithal to provide these feeds since existing channels such as ATM network or electronic inputs use similar inputs. Direct feed is an obviously more robust process for collating data and affords greater security and integrity. While a real time feed is possible in technological terms, the costs may outweigh the customer benefits. Though both screen scraping and direct feeds are important in their own right, there was widespread opposition by financial institutions to the nascent screen scraping aggregation service. Screen scraping helped to jumpstart the industry by obviating the need for the buy-in of the financial institution. It is still possibly the more efficient way to look at aggregating simple things like account balances especially as the adoption of a standard such as OFX becomes more widespread.
Direct feeds are costly to negotiate, set up and operationalise but obviously provide data that is rich in content and can be trusted. They can be used to move aggregation beyond the level of a commodity and enable value added applications such as advisory services.
BUILD VALUE ADDED SERVICES
Aggregation on its own is a commodity service. Customers want information relating to all their accounts in one place, but importantly, once they have the information, they want to be able to act on it. To be able to attract customers, and keep them coming back, aggregators must jump to the next level of functionality.
One of the obvious features that the aggregation services should look at next is the transfer of funds between accounts. If a customer ahs money in a savings account and an outstanding credit card balance or loans, then it is important that the aggregator allows the transfer between these two accounts. The ability to initiate payments would also help settle credit card utility bills that have been aggregated at the site.
Once a customer’s banking, brokerage and insurance products are aggregated at one place, one of the obvious value additions for an aggregator is financial advisory services. The access to customer information in terms of its breadth and depth would be unique and would enable the delivery of advice that is more closely aligned with the customer’s risk-return preferences and financial priorities. It is important to note that for the high level applications such as wealth management, the underlying technology must change to direct feeds as opposed to screen scraping. The latter will fall short of the task when required to get security prices, which may be an important input into the wealth management process.
2. ELECTRONIC BILL PRESENTATION AND PAYMENT (EBPP)
Electronic bill presentation and payment (EBPP) involves the delivery of bills (or invoices) over the Internet and also affords consumers the opportunity to review and pay these items electronically. By eliminating paper and the delays associated with physical bills and payments, EBPP delivers value in terms of reduces time and lower costs.
EBPP has been described as the ‘killer application’ for banks, which promises to redefine value propositions and transform the competitive landscape by a radical and creative combination of technology, product and service. According to Forrester Research, there will be 21 million households using EBPP by 2005 and paying about 13% of all their bills by using their product. These estimates are broadly similar to those provided by Jupiter Communications (25 million households) and TowerGroup (9% of bills paid) for the same time frame.
ENABLED BY THE INTERNET
The electronic exchange of invoices has existed for a while between trading partners operating within a closed loop network. This involved electronic data interchange (EDI) and participants had to sign up for expensive, proprietary software. There were also recurring costs of network linkage and usage.
The Internet affords an EBPP solution that is easy to implement and comes at a low cost. Even a minor examination of the dynamics of EBPP, reveals that there are substantial benefits that accrue to the billers and the payers. It is therefore not surprising that there is so much optimism about EBPP . TowerGroup , for example, estimates that some banks are expected to spend up to a quarter of their IT budgets on electronic billing between 2001 and 2005. Meridien Research also predicts an increase in expenditure on EBPP solutions along broadly the same time frame.
VALUE PROPOSITION
EBPP delivers its value from reductions in cost and time in the billing process. For billers, EBPP reduces bill presentation expense by avoiding the need for printing and mailing of physical bills. Eliminating mailing delays and allowing an almost instantaneous presentation reduces cycle time. EBPP also fosters better customer service by removing ambiguities on the dispatch or receipt of bills. For payers, EBPP affords the ability to review bills and make payments on 24*7*365 basis from the convenience of their personal Internet device. Savings accrue because mail float on the payment leg can be avoided as also the costs of cheques, postage and envelopes. It is also possible to wait till the very last day to initiate an electronic payment and be confident that it is not late. Finally, for both billers and payers EBPP offers simplification of record retention and retrieval.
As an illustration, households in the US pay an estimated 20 billion bills each year. Of these, 15billion are fixed amount payments representing flows like mortgage and loan repayments and 5 billion are variable such as credit card bills. Assuming that the time spent by the consumer (payer) to review and process the payment of the electronic bill is the same as that for a physical bill, and also ignoring maul float, consumers save USD 5 billion on stamps alone. Gartner Group has estimated that 20% of bills are currently paid electronically and taking this estimate is into account, the potential savings are a healthy USD 4 billion.
By the same logic, billers not only save the costly of posting but also save the printing costs. The estimates for the cost of printing and distributing a bill vary between USD 0.85 to 1.5. Both of these costs imply, on an average, savings of another USD 15 billion for billers. A study by McKinsey estimated the benefits to billers to be even higher, at about USD 2, for an average bill size of USD 100 with more than 60% of the savings coming from elimination of paper processing and postage.
3. PERSON-TO-PERSON (P2P) PAYMENTS
It has the elements of the proverbial Silicon Valley start-up in a garage. Russian Max Levchin , an expert in security applications for palmtops, and American Peter Thiel who is a nationally ranked chess grand master, fund manager and author first met at a Stanford lecture and set up a company , PayPal , which launched an e-mail payment service in the summer of 1999. There is also a third player, Elon Musk , who left South Africa to avoid a compulsory stint in the military . Musk sold his first start-up called Zip2 to Compaq for USD 307 million and the forayed into financial services and set up X.Com intending it to be a financial supermarket. In March 2000, X.Com and PayPal , the two biggest players in the person-to-person (P2P) payments space merged.
The average age of the three players is just about 30, and with the exception of a summer internship that Musk had, none of them have any experience with a bank. Yet, the e-mail based payment service that they have created has been huge adoption for P2P small value payments. In late 2001, PayPal had a customer base of more than twelve million and was transferring more than USD 3.5 billion for its customers in a year. According to its website, PayPal constitutes over 10% of the Internet traffic in the financial services category, more than Citibank, wells Fargo and Bank of America combined. Not own P2P services in an attempt to build their own “consumer payment engines of the Internet”.
THE CHEQUES IS IN THE E-MAIL
P2P payments are strikingly simple in how they work. If you use PayPal , which is the first mover and is currently almost synonymous with P2P payments , all need to know is the e-mail address of the person to whom you want to send money. You have the choice of paying by credit-card, existing bank account or PayPal account (which recently started paying interest on balances). The recipient will be notified by e-mail(You’ve Got Cash!) that someone has sent them money and has the option of asking PayPal to send them a physical cheque, directly credit their bank account or their PayPal account.
BENEFITS OF P2P PAYMENTS
This is a key reason why P2P payments have had a healthy adoption rate –simplicity of the proposition and delivery method. P2P payments can be made between people as long as they use e-mail. No plastic needs to be issued, no point of sale machine needs to be swiped and neither does any expensive software need to be installed. The power of this proposition cannot be underestimated since e-mail is the most used application on the Internet with an exponential rate of growth.
In order to establish the identity of its first time user, PayPal deposits a random amount between 1and 99 cents into the user’s checking account. It then asks the user to verify the amount deposited. In so doing, it piggy-backs on the established and sophisticated controls that a customer is subject to before opening a checking account in the real world. Since a payment system is as good as the number of people using it, PayPAl employed the viral marketing technique is to get network economies. It paid new users a sign on bonus of USD 5 and also every time they brought a referral. As an analyst observed, much like Western Union, the wire transfer specialists, PayPal pulls users to sign up because they have money waiting for them rather than pushing people to do so.
The services make money in two ways:
• One is to charge a fee for the actual transfer itself. Citigroup’s c2it, for example, started at a flat USD 2% transfer but now charges a percentage of the money sent. PayPal does not charge if the money transferred is less than USD 300 per year and beyond that only a small amount. It has also a charge for merchants, at 1.9% of the transaction value, which is lower than the corresponding charges for mainstream credit card companies.
• The second source of revenue is the float on the payment. As noted, the sender gets debited for the money upfront and float is earned on the money since the recipient does not get the money straightaway. In the case of PayPal revenues were about USD 30 million for the quarter ended September 30, 2001.
CHAPTER-7
COMPARISON OF VARIOUS
E-BANKING SERVICES
COMPARISON OF VARIOUS INTERNET BANKING SERVICES PROVIDED BY ICICI BANK, SBI BANK AND HDFC BANK :
1. BILL PAYMENT
ICICI BANK
ICICI Bank has tied up with more than 60 organizations across the country to facilitate payment of bills for Utility Companies (Electricity and Telephone) Bills, ICICI Bank credit card, Mobile Phone and Insurance Premium bills.
For the customers ease the bank has enabled the billers in following two modes:
• Presentment Type Billers: For these billers, the bill amount and due date will be presented to the customers online on http://www.icicibank.com/ and a reminder will be sent to them on Email.
• Payment Type Billers: For these billers the customers can register and pay any amount immediately
SBI BANK
SBI e-PAY - It provides a simple and convenient service for receiving and paying of bills online
OnlinePay: By using SBI e-PAY the customers can 'see and pay' their various bills online, directly from their SBI Account. The customers can pay telephone, electricity, insurance, credit card and other bills - from the comfort of their house or office, 24 hours a day, 365 days a year! They will have to just logon to http://www.onlinesbi.com/ to 'see and pay' their bills. They will also get an electronic acknowledgment for every bill paid by them using e-PAY.
AutoPay: The customers can also set up AutoPay instructions with an upper limit to ensure that their bills are paid automatically whenever they are due. The upper limit ensures that only bills within the specified limit are paid automatically, thereby providing the customers complete control over these payments.
HDFC BANK
HDFC Bank provides the luxury of paying its customer’s telephone, electricity and mobile phone bills at their convenience. Through the Internet, ATMs, your mobile phone and telephone. LIC insurance premiums can also be paid through this facility.
It is better for the residents of Hyderabad or Secunderabad and registered for Hdfc NetBanking service. Thanks to the bank’s tie-up with eseva, a unique integrated service launched by the government of Andhra Pradesh, now these residents can pay their electricity bills, water bills and municipal taxes (telephones to be introduced shortly) through the Internet using the Direct Debit option. The most important aspect of this service is that the payments made are updated in the database of the utility companies on an online and real-time basis.
2. ONLINE SHOPPING
ICICI BANK
ICICI Bank has tied up with more than 75 organizations to facilitate online shopping for all its Internet Banking Customers. They can now choose their products online and pay conveniently through ICICI Bank Internet Banking Service.
ICICI Bank has teamed up with four partners to buy various products/ services online.
• ICICI Bank has brought Insurance products to one’s door-step. Now one can buy Insurance products from ICICI Lombard General Insurance and pay through ICICI Bank’s Internet Banking.
• ICICI Bank has teamed up with AIR DECCAN SIMPLIFY so one can now Book his/her Air Tickets online and pay through Internet Banking.
• ICICI Bank has teamed up with INDIAN RAILWAYS so now one can book his railway tickets using ICICI Bank Internet Banking. IRCTC will deliver ticket to delivery address mentioned by the person on whose name the tickets are booked.
• ICICI Bank has teamed up with RELIANCE INFOCOMM and now one can pay his/her Reliance Infocom bills through Internet Banking.
SBI BANK
It does not provide online shopping service.
HDFC BANK
HDFC Bank proudly presents the EasyShop Gold Debit Card. The EasyShop Gold Debit Card is the first Gold Debit Card in India. Not only does it replaces the customer’s ATM card, it also revolutionises the way the customers spend through a Debit Card.
Easyshop International Debit Card : This card can be used in India and abroad at merchant locations such as shops and restaurants and to withdraw cash from a widespread network of ATMs. The value of the payment made or cash withdrawn is instantly debited from customer’s account. While all the purchases and cash withdrawals are in the currency of the country in which the customer is in, the customer’s account is debited in Rupees!
NetSafe, is a unique online payment solution that offers the customers complete security while shopping on the Internet. With NetSafe, the customers can now shop online without revealing their HDFC Bank Credit Card number. They can now use their HDFC Bank Debit Card also for online purchases.
Follow a simple 3-step process to register for NetSafe using either your HDFC Bank Visa Credit or Debit Card. Once registered, the customers can choose the amount and account they wish to debit and create as many NetSafe cards as they want. And after the transaction or a max of 48 hours, the card will cease to exist. All this comes FREE with HDFC Bank Credit / Debit Card.
3. TICKET BOOKING
ICICI BANK
With ICICI Bank one need not visit Train/ Air ticket booking reservation centers any more. One can now buy your tickets online and pay using ICICI Bank’s Internet Banking Facility. ICICI Bank has tied up with IRCTC (for Railway Ticket Booking) and Air Deccan (for Air Ticket booking).
SBI BANK
SBI bank also provides online railway booking and for this one has to log on to www.irctc.co.in and register their on this site and further one has to follow the procedure as given in SBI’s site.
HDFC BANK
It does not provide online booking of tickets.
4. INSURANCE SERVICE
ICICI BANK
ICICI BANK NOW offers its customers the most comprehensive suite of General Insurance products from ICICI Lombard, to cater to their insurance needs and that too online.
It offers the following products:
• 10K TAX SAVER HEALTH INSURANCE
• FAMILY FLOATER HEALTH INSURANCE
• OVERSEAS TRAVEL INSURANCE
• STUDENT TRAVEL INSURANCE
• 4 WHEELER INSURANCE
• 2 WHEELER INSURANCE
• HOME INSURANCE
SBI BANK
It does not provide online INSURANCE SERVICE to its customers.
HDFC BANK
It does not provide online INSURANCE SERVICE to its customers.
5. ONLINE SHARE TRADING
ICICI BANK
It offers online share trading service to its customers through ICICI direct.com.
SBI BANK
It does not provide ONLINE SHARE TRADING services to its customers.
HDFC BANK
HDFC BANK does not provide ONLINE SHARE TRADING services to its customers but it provides advice on direct equity through research reports based on fundamental and technical parameters across individual stocks / model portfolio / customized client portfolios.
Research recommendations are generated by bank’s Equity Research team and cover different risk parameters and time horizons.
6. SMS ALERTS
ICICI BANK
ICICI Bank offers Mobile Banking facility to all its Bank, Credit Card and Demat customers. ICICI Bank Mobile Banking enables its customers to bank while being on the move.
ICICI Bank Mobile Banking can be divided into two broad categories
• Requests
• Alerts
Mobile Banking Requests:
ICICI Bank Mobile requests provides its customers with the following requests:
a)Bank Requests
b) Credit Card Requests
c) Demat Requests
Mobile Banking Alerts:
ICICI Bank Mobile alerts provides its customers with the following alerts:
a) Bank Alerts
b) Credit Card Alerts
b) Demat Alerts
Charges:
All ICICI Bank Mobile Banking services are currently FREE. For charges on sending SMS Requests to ICICI Bank, the customers will have to check with their mobile phone Service Provider. All updates of the fees would be put up on the bank’s site page for the customer’s reference. ICICI Bank reserves the right to change the charges for this facility.
SBI BANK
In a significant step towards enabling anytime-anywhere banking, OnlineSBI.com now enables its customers to receive alerts on their mobile phone. The customers can ask to be alerted when the balance on their account goes above or below a particular amount; or when a transaction of greater than a specified amount hits their account; or when an interest is applied on their account.
HDFC BANK
HDFC Bank presents Mobile Banking service. Now one can access his/her bank account and conduct a host of banking transactions and inquiries through the bank’s Mobile Banking service. One can check his/her balance, stop a cheque payment, or even pay your utility bills. This bank’s Mobile Banking service gives account information and real-time transaction capabilities from the mobile phones at a true "anywhere, anytime, anyhow" convenience.
All this through SMS or WAP or R World ( for Reliance India Mobile customers). SMS Banking brings the customer’s bank accounts to his/her fingertips. It works using Short Messaging Service (SMS) technology. With SMS one can perform a wide range of query-based transactions from his/her mobile phone, without even making a call.
7. ATM SERVICE
ICICI BANK
ICICI Bank's 24 Hour ATM network is one of the largest and most widespread ATM Network in India. ICICI Bank’s ATMs are located in commercial areas, residential localities, major petrol pumps, airports, near railway stations and other places which are conveniently accessible to the customers.
ICICI Bank ATMs features user-friendly graphic screens with easy to follow instructions. The bank has introduced ATMs which interact with customers in their local language for increased convenience.
SBI BANK
State Bank offers its customers the convenience of over 5067 ATMs in India. This means that one can transact free of cost at the ATMs of State Bank Group (This includes the ATMs of State Bank of India as well as the Associate Banks – namely, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, State Bank of Mysore, State Bank of Patiala, State Bank of Saurashtra, and State Bank of Travancore), using the State Bank Cash Plus card.
State Bank Cash Plus Domestic Card: It offers its customers the latest in banning convenience viz. State Bank Cash Plus card. With this card, there is no need to carry cash in one’s wallet and one need not fear overspending on his/her credit card. One can now withdraw cash and make purchases anytime he/she wishes to. One can get a FREE ATM-cum-Debit card with which one can transact for FREE at any of the 5067 ATMs of State Bank Group within our country.
HDFC BANK
HDFC bank provides ATM services 24 hours a day, 7 days a week, 365 days a year from any of their over 1054 ATM across India.
8. ONEVIEW SERVICE
ICICI BANK
It does not provide oneview service to its customers.
SBI BANK
It does not provide oneview service to its customers.
HDFC BANK
For the first time in India, this convenient service brings together one’s online bank accounts (including those of family members), in one place, in total security. OneView puts it all on one screen for the customer , so that tracking and managing His/her online accounts becomes quicker and easier than ever before. It gives the customer a complete picture of his/her finances across multiple accounts.
If the customer has one or more accounts with HDFC Bank, Citibank, ICICI Bank, HSBC India, Standard Chartered Bank and/or Global Trust Bank then OneView is just right for him, it's absolutely free!
9. PREPAID REFILL OF SIM CARD
ICICI BANK
It does not provide this service to its customers.
SBI BANK
It does not provide this service to its customers.
HDFC BANK
Pre-paid Refill through SMS :
A customer needs to be registered for this service. Now one will just have to walk across to an HDFC Bank ATM and do the following.
1. Select 'Prepaid Refill/Bill Pay’ option
2. Select 'SMS refill registration'
3. Enter his/her 10 digit mobile number and confirm
Within seconds he/she will receive an SMS confirming his/her registration, giving his/her a code number and also the syntax of the message that he/she needs to send for getting a refill done. The number to which the message needs to be sent will also be a part of this message that he/she receives. So now a refill is just an SMS away.
How much does it cost ?
This service is absolutely free from HDFC Bank! One will only have to pay the regular SMS charge for his/her SMS request.
Where can one access this service ?
Operator Name Circle
Airtel Mumbai
Orange Mumbai
10. MUTUAL FUND SERVICE
ICICI BANK
One can invest in mutual funds through ICICIdirect.com.
SBI BANK
It provides this service through SBI Mutual Fund (a partner for life).It offers both open-ended as well as closed-ended schemes.
HDFC BANK
It does not provide investing in mutual funds through its website.
11. ONLINE DEMAT SERVICES
ICICI BANK
ICICI Bank Demat Services boasts of an ever-growing customer base of over 7 lacs account holders. In their continuous endeavor to offer best of the class services
to their customers they offer the following features:
• Online access to his/her demat account. The customers can check their holdings, transactions, details of bills and status of requests and much more.
• Digitally signed transaction statement by e-mail.
• Corporate benefit tracking.
• e-Instruction facility - facility to transfer securities 24 hours a day, 7 days a week through Internet & Interactive Voice Response (IVR) at a lower cost.
• Dedicated specially trained customer care executives at the bank’s call centre, to handle all queries of the customer’s
SBI BANK
It does not provide ONLINE DEMAT SERVICES to its customers.
HDFC BANK
HDFC Bank provides its customers with online access to his/her Demat Account, so that they can check their holdings using the NetBanking facility. Now the customer can convert his/her securities to electronic format with the HDFC Bank Demat Account.
CONCLUSION:
From this comparison of online internet banking services provided by ICICI BANK, STATE BANK OF INDIA (SBI) and HDFC BANK, I have drawn a conclusion that as compared to ICICI BANK and HDFC BANK, SBI provides less online internet banking services.
When I compared the online internet banking services provided by ICICI BANK and HDFC BANK, I came to the conclusion that these banks provided online internet banking services almost at the same level.
Therefore, the GENERALISED CONCLUSION drawn by me is that the private banks provide more online internet banking services than the public sector banks, so the public sector banks should also start providing more online internet banking services and should expand these services to most of its branches, this will enable them to expand their customer base and to face the competition in a better way.
CHAPTER - 8
ANALYSIS OF THE DATA COLLECTED
ANALYSIS OF THE DATA COLLECTED THROUGH THE QUESTIONNAIRE
I have analyzed the data collected through the questionnaire and have classified the data into tables.
TABLE-I
NO. OF USERS WHO HAVE AVAILED THE ATM FACILITY OF ANY BANK
AVAILED THE FACILITY
NO.OF USERS
YES
90%
NO
10%
TABLE-II
The users have used the ATM facility of the following banks:
NAME OF THE BANK
NO. OF USERS IN PERCENTAGE
HDFC BANK
25
STATE BANK OF PATIALA
25
ICICI BANK
10
BANK OF PUNJAB
15
STATE BANK OF INDIA
15
NOT USED THE FACILITY OF ATM
OF ANY BANK
10
TABLE-III
THE SATISFACTION LEVEL EXPERIENCED BY THE ATM USERS
LEVEL OF SATISFACTION
NO. OF USERS IN PERCENTAGE
HIGHLY SATISFIED
20
SATISFIED
70
INDIFFERENT
0
DISSATISFIED
0
HIGHLY DISSATISFIED
0
USERS NOT AVAILING THE FACILITY
10
TABLE-IV
Following number of times in a week the users have used the ATM:
NUMBER OF TIMES NUMBER OF USERS IN PERCENTAGE
1
60
2
20
3
5
5
5
USERS NOT AVAILING THE FACILITY OF ATM
10
TABLE-V
Preference of the users of ATM card of the benefits of ATM:
BENEFITS OF ATM
NUMBER OF USERS IN PERCENTAGE
It is time-saving
20
It is beneficial when cash is needed
Urgently
60
It is convenient
20
TABLE-VI
WHETHER THE USERS OF ATM CARD HAVE FACED ANY PROBLEM WHILE USING THE ATM CARD:
YES
40% (No. of users)
NO
60% (No. of users)
PROBLEMS FACED BY THE USERS:
NATURE OF PROBLEM
NO. OF USERS IN PERCENTAGE
The card got withheld in the machine
25
ATM was not working
63
Instructions to use the ATM were not clear and received no help from employees of the bank
12
TABLE-VII
Other Internet Banking Services availed by the respondents:
NATURE OF SERVICE
NO. OF USERS IN PERCENTAGE
Credit card
15
Transferring one’s money from one city to any other branch in a city
5
Opening Fixed Deposit account via
The Internet
10
Inquire about the balance in one’s saving, Current and FD account
0
Tax deducted at source on one’s FD account for current financial year
0
Giving instructions over the internet for stopping payments on cheques
0
Request for a cheque book via the internet
5
View all transactions on an account for a specified period and get a copy via e-mail
0
None of the above
65
TABLE-VIII
Whether the respondents ever had any grievance against the bank providing Internet Banking Services to it:
YES
5% (NO. OF USERS)
NO
95% (NO. OF USERS)
TABLE-IX
Level of satisfaction experienced by the respondents of the grievance handling procedure of the bank:
LEVEL OF SATISFACTION
NO. OF USERS IN PERCENTAGE
Highly Satisfied
0
Satisfied
100
Indifferent
0
Dissatisfied
0
Highly Dissatisfied
0
TABLE-X
Respondent’s opinion of the weaknesses of Internet Banking Services:
NATURE OF WEAKNESS
NO. OF USERS IN PERCENTAGE
There is only one way communication
44
The security is not flawless
30
Lack of first hand experience gained by a person by visiting a bank is not there
26
TABLE-XI
Respondent’s view of the security of the Internet Banking Services:
It is secure
45% (No. of respondents)
It is not secure
55% (No. of respondents)
It is secure because
The security systems are reliable
89% ( No. OF RESPONDENTS)
There are firewalls which strengthens the security system
11% ( No. OF RESPONDENTS)
It is not secure because there is always a risk from the hackers who may hack the password of one’s account and may manhandle one’s account or transfer money from one’s account to their own account-------- THIS OPINION IS SUPPORTED BY 100% OF THE RESPONDENTS WHO ARE OF THE OPINION THAT THE INTERNET BANKING IS NOT SECURE.
TABLE-XII
Opinion of the respondent’s on whether all public sector banks should start providing Internet Banking Services to survive in the market:
ANSWER OF THE RESPONDENTS
NO. OF USERS IN PERCENTAGE
YES
75
NO
25
RESPONDENT’S REASON FOR SAYING YES IN THE ABOVE TABLE:
RESPONDENT’S REASONS
NO. OF USERS IN PERCENTAGE
Internet Banking is time-saving
20
To face the competition
50
Internet Banking is convenient and hassle-free
20
Customer preference and increasing number of people using the internet
10
FINDINGS EXTRACTED OUT OF THE INFORMATION COLLECTED THROUGH A QUESTIONNAIRE
1. Most of the respondents used ATM facility (90% of them availed this facility.)
2. Respondents were using the ATM facility of private banks more than the public sector banks.
3. Most of the respondents were satisfied by the ATM facility being used by them.
4. Most of the respondents used ATM facility once in a week.
5. Most of the respondents feel that the benefit of the ATM card is that it comes handy when cash is needed urgently.
7.60% of the respondents faced using the ATM faced no problem in using the ATM while 40% of the respondents faced a problem while using the ATM.
8.e major problem faced by the respondents while availing ATM card facility was that the ATM was not working and the second common problem was that the card got withheld in the machine.
9. Most of the respondents used very less Internet Banking facilities other than the ATM. Out of the other facilities, credit card was the most commonly used service and the second service used was opening a Fixed Deposit account via the internet.
10.95% of the respondents didn’t have any grievance against the bank providing them the internet services and the 5% respondents which had a grievance against bank providing them the internet banking services were satisfied with the grievance handling procedure of the bank.
11. Most of the respondents felt that the weakness of internet banking is that it is a one way communication and the second most commonly held weakness was that it is not secure.
12. 55% of the respondents felt that Internet Banking is not secure and the reason behind this is that hackers may hack the password of one’s account and this may result in huge losses to the user of Internet Banking.
13. Most of the respondents felt that the public sector banks should start providing the Internet Banking services in order to face the competition from the private banks and also because Internet Banking is time-saving and hassle-free.
SUMMARY AND CONCLUSION
E-commerce is rapidly expanding its wings across the globe and India is no exception to this phenomenon. Now, several banks have put their electronic banking facilities on the Internet and are providing many facilities like adopting ECS and EDI for knowing account-status , funds transfer between accounts , Billing payments, Web-shopping, Railway and air-ticket booking, etc to their customers at the click of a button. But since Web is a public space open to all , THESE INTENET BASED SERVICES ALSO RAISE NEW THREATS FOR THE BANKS. Financial institutions like banks and merchant websites like Rediff , Amazon , payment sites like PayPal etc,. by virtue of the value of information , their customers share with them are becoming the most lucrative target for the attackers. Attackers are formulating newer strategies for attack and one such attack is Phishing.
The use of ‘Ph’ in the word instead of ‘f’ has come from the word “Phreaks” who were involved in “Phreaking” which was a type of attack on telephone system in 1970’s. Later in the 1990’s the term was used for the hackers who used these techniques for stealing passwords and user-id’s for ISP’s. It is believed that the term became popular after its use in the famous hacker newletter “alt.2600” in January 1996.*
Phishing is based on impersonating, which has been one of the most popular types of trickery used by people and the instances of which are available in plenty, even in our mythology. Phishing can be considered as an e-avatar of tricking by impersonating. Like all identity based attacks , Phishing also takes the help of impersonating and social engineering to divulge confidential information like account details;passwords;PINs etc. from the users , for various nefarious activities.
Most common Phishing attacks are HTML based and are use e-mail as the medium to propagate. Such attacks are easy to perpetrate and enjoy a good success rate. Phishing is “The act of sending e-mail to a user falsely claiming to be an established legitimate enterprise in an attempt to scam the user into surrendering private information that will be used for identity theft.” It is also called carding or brand spoofing.
According to recent studies by Gartner , 57milllion US Internet users have identified the receipt of e-mail as linked to Phishing scams , and about 11million US adult Internet users have clicked in the link in a Phishing email and out of these around 1.78 million are thought to have succumbed to the convincing attacks , which made them divulge their personal information.
ANATOMY OF THE ATTACK
Phishing attacks are a combination of technical loophole exploits and social engineering, which trigger a series of actions by the user or victim and make him furnish his confidential details to the attacker. One fine day the user gets a mail from his bank that his account has been compromised or his password has leaked or a compulsory security update needs to be done etc. The content ca vary depending on the skill of the fraudster in the field of social engineering. The mail will contain company logos, watermarks, a familiar language and almost everything just perfect so that a naïve user could think of a possibility that this is not a genuine mail. Here the attacker adopts two kinds of strategies.
2. Either the user will be prompted to click an embedded URL in the email, in order to make any entries.
3. The user is prompted to fill a HTML form and submit.
THREATS TO THE BANKS DUE TO PHISHING
The first and foremost threat is loss of customer faith in technology. Such attacks could make customers shun e-banking and reverts towards tradition brick and mortar banking. So, the banks will not be able to leverage the benefits from huge investments they have made for adopting technology. This threat thus spans the whole industry rather than any particular bank. Many a times banks have compensation policies for such cases where customer credit cards are used fraudulently using any of the techniques. If such attacks increase beyond a proportion the banks will lose control over the provisioning done for compensatory expenses. The bank may face lawsuits filed by customers under various legislatures like Privacy under IT Act 2000. There can be significant wastage of productive resources in handling such attacks and their consequences in the form of lawsuits etc. Another very important threat to banks is Reputation Threat. This is a threat which no bank can afford in today’s competitive scenario. The ultimate threat is loss of business, profits, profitability and loss of customers.
PREVENTING BEING PHISHED
In order to device methods and doing research in the identity frauds a cross-industry organization called “Anti-Phishing Working Group” (APWG) has been formed recently .
• Strong website client authentication.
• Mail server authentication.
• Digitally signing e-mails.
These strategies though, if implemented will help solving this problem to a great extent but there are practical difficulties in implementing them (many web-based mail clients e.g. Hotmail, Yahoo! Mail etc. so not support S/MIME ; most users do not have smart cards or tokens ). We can safely assume that these will not be possible in the Indian Scenario in the immediate future. Thus a more prudent approach at present should be one based on education and awareness.
STEPS TO BE TAKEN BY BANKS
• EDUCATION AND AWARENESS
The banks need to generate awareness among its employees and customers about the attack. Banks need to educate their customers as well as customer facing employees about Phishing, types of attacks, countermeasures etc. Information can be given on the website of the bank regarding handling e-mails that appear to come from legitimate sources.
Further in order to give the customer a real idea of how the attack actually occur the bank can give a demo on its site. The customer will click a given URL and he will go through the steps similar to those in an actual attack. In this way by simulating the attack customers can be better educated.
• PROTECTING PRIVACY
The banks should ensure that customer contact information like e-mail addresses should never fall in wrong hands since this betrays the customer trust and is against the basic protocols of banking.
• MONITORING
Banks can develop some intelligent fraud detection tools to trace fraudulent behaviors by noticing the activities done by an attacker once he gets access to other’s personal information. This can be integrated with the existing fraud detection and money laundering systems.
• LOGIN REPORTS
On logging in his account on the website the customer should be provided his last three login times/dates including the exact duration. Also the bank may send monthly login information to the customers.
• OTHER APPROACHES
Banks can become a member to organizations like APWG, in order to get latest updates about the modus operandi of the attack and countermeasures. Also it can hire the services of third party vendors, like a web server monitoring company. These companies examine contents and looks of websites, which look similar to the organization’s site. Another approach can be, to have a PassMark security, which is a new initiative by a Silicon Valley, based company. It works in reverse manner to passwords in the sense that instead of user having confidential information in order to prove his identity, the institution shares an image uniquely with each user. These personalized images can be embedded in outgoing e-mails and on their website logon pages to provide a higher level of assurance to the customer that the e-mail or website is authentic and not a rogue. Customers should ensure the correct PassMark before entering their personal information on Web pages.
• FRAUD RESPONSE
Banks should formulate strategies for responding to such frauds when they occur, so as to minimize the losses. The customer should be educated to immediately inform the bank, in such a case. The bank can then immediately freeze that account and try to catch the fraudster. These response actions should be well understood and documented.
So, Internet Banking is the need of the hour and private banks are already providing efficient Internet Banking Services to their customers. Although Public sector banks are also providing Internet Banking Services but the number of their branches facilitating such services are less as compared to private banks. So, the Public sector banks should concentrate more on providing Internet Banking services. By taking the above measures Internet Banking will become more secure and will help the banks to become more competitive and profitable.
BIBLIOGRAPHY
Library Sources
1. Internet Banking-The Second Wave: By Sanjeev Singhal,Tata Mcgraw Hill Publication , 2003
2. Management Trends (A Journal of Department of Business Management)
Article- Internet Banking by Kavita Kshatriya Sep 2004
3. Indian Banking 2005 , The ICFAI University Press Publication
4. The Journal of Internet Banking and Commerce ( Published by Array Development of Ottawa )
5. International Journal of Business Performance Management 2002 (Published by InderScience publishers)
6. The Small Business Guide to Internet Banking by – Ray Hurst
7. Internet Banking Shopping for the Older Generation by ---- Greg Chapman
8. Internet Banking :Strategies, Tools and Best Practices – by Mona Brewer
(Published by Sheshunoff and Co.)
10. Banking and Finance on the Internet (Internet Management Series ) by Mary J. Cronin
(Published by John Wiley and Sons )
11. Successful Web Portals in Retail Banking by--- Daniel Singer, Douglas Ross, Albert Avery
(Published by --- Wiley)
Internet Sources
www.sbi.com
www.hdfcbank.com
www.icicibank.com
www.firstib.com
www.nationalcity.com
www.netbanker.com
Annexure
FORMS OF SBI OF VARIOUS INTERNET BANKING SERVICES
STATE BANK OF INDIA
INTERNET BANKING
" OnlineSBI "
Registration Form
(for Corporations / firms)
To
The Branch Manager
State Bank of India
________________
We wish to register our firm / company / corporation for availing of the Bank's Internet Banking Service ~ "OnlineSBI". *
Our firm / company / corporation has already been registered for availing of the Bank's Internet Banking Service ~ "OnlineSBI". * (*Strike off whichever is inapplicable)
We request you to register the below named official / employee as an authorised USER on behalf of the firm / company / corporation* for accessing its account(s). We confirm having read and understood the document containing the "Terms of Service" governing the SBI's Internet Banking Service and we accept them.
Name of firm / company / corporation :
Name of the Official / employee being authorised :
(Any official / employee of the firm / company / corporation may be nominated to use the OnlineSBI Service for Enquiry purposes only)
Designation & Official Address of the Official : e-mail Address
____________________ _________________
____________________________________
____________________________________ Tel. No._________________
Pin : _____________
Account Numbers : (Please mention 11 / 13 digit A/c No. as mentioned in your Statement of Account)
For Firm / Company / Corporation,
Date : _________________________ ________________________
(Signature of Official being Authorised) (Authorised Signatory / Signatories)
For office use
SIGNATURE(S) OF AUTHORISED SIGNATORY(IES) OF FIRM/COMPANY/CORPORATION VERIFIED
OFFICER
FOR OFFICE USE
Application Serial Number :
PARTICULARS DATE SIGNATURE OF AUTHORISED OFFICIAL
The account numbers and the account name quoted in the registration form tallied with branch records.
Rights of the Signatory(ies) on the registration form for authorizing access to the accounts of the firm / company / corporation verified and found to be correct & in order.
Notes:
(a) The Account Numbers and Name of Firm should appear in the same manner and form, as it is stored in Bankmaster.
(b) Name of the authorised official must be entered as appearing in the registration form.
(c) Authorised Signatory means those person(s) who are authorised to conduct operations on the account. A separate resolution for using OnlineSBI services is not necessary.
Authorised Official/user means any official/employee of the corporate/ firm who is authorised to use OnlineSBI services by the Authorised Signatories.
Recommended for providing/ rejecting Internet Access Internet Access permitted/rejected
DATE : OFFICER DATE BRANCH MANAGER/
MANAGER OF DIVISION
Reason(s) for rejecting the INB Service (if any)
DATE SIGNATURE OF OFFICIAL
Reason(s) advised to the Applicant
INB Service approved and INB Customer Flag set to "Y" in the Bankmaster *
User Details Uploaded
* This is necessary only at the time of registration of the First Authorised User and not for the subsequent authorised users of the firm/Company/Corporation.
CINB – C3
STATE BANK OF INDIA
FOR OFFICE USE
Application Serial number:
CORPORATE INTERNET BANKING (VYAPAR)
" OnlineSBI "
Registration of Local Admin
To
The Branch Manager
State Bank of India
________________
We have been registered for accessing "OnlineSBI".
The Corporate ID allotted to us is
We request you to register the executive named herein as a Local Admin for the accounts listed below.
Name of company:
Name of the Local Admin:
Address for despatch of User-ID/Password
Line 1
Line 2
City
District
State
Pin code.
Designation: ……………………
Department:…………………….
e-mail address :…………………
Tel. No…………………………..
List of Account Numbers :
Please mention the 11 or13 digit A/c number as mentioned in your Statement of Account. Use additional sheets if necessary. It will suffice if one account number per Customer-ID is mentioned. See note below for further information on Customer-IDs.
* “Company” used here includes a Corporate, (Signature of Local Admin)
Firm, Institution, Association, Local Body or any such Signature of Local Admin attested
Entity operating accounts in the Bank. For
Date : ________________________
(Authorised Signatory / Signatories)
_
Note on the account numbering system followed by the SBI:
a. The Account number assigned by SBI to a Company’s bank account has 11 to 13 digits. Digits 6 to 11 (both inclusive) form the customer ID.
b. Accounts opened in future bearing these customer-IDs will automatically get assigned to this Local Admin.
For Branch Use
Application Serial Number :
Requirement Yes/ No SIGNATURE OF OFFICIAL
The Account Name tallies with Branch Record
Signature of authorised signatories on Registration Form verified and found correct
Corporate ID quoted in the application form verified with web interface and confirm that the ID is valid for the Corporate
Recommended for Providing Access to OnlineSBI..
Internet Access Permitted
Local Admin’s details uploaded
Notes:
(d) Name of Corporate should appear in the same style and form, as it is stored in Bankmaster.
(e) Name of the Local Admin must be entered in the web interface strictly as it appears in the Registration Form.
(f) Authorised Signatory means those person(s) who are authorised by a Board Resolution/ Mandate to operate on the account.
(g) A Board resolution/ Mandate for using OnlineSBI services has already been obtained while registering Corporate ID and hence a Board Resolution for this application is not necessary.
(h) While uploading data it would be sufficient if one account per customer ID is uploaded.
If rejected, then please enter reasons for rejection on the application form.
Form C5
Format of Board Resolution to be submitted by the Company alongwith the Corporate Internet Banking Registration Form
Resolved that:
The Company do avail the ‘Corporate Internet Banking Service’ over Internet Channel with State Bank of India (SBI) at their various Branches and the Company accepts such “Terms of Service” for Corporate Internet Banking laid down by SBI from time to time for the purpose.
Resolved further that each of the officials as empowered by the Company to operate the Company’s accounts with SBI either singly or jointly as the case may be, is hereby authorized to apply for and avail of the ‘Corporate Internet Banking’ facility offered by SBI and do all they have been authorized, electronically, using their user name and password.
Accepted
Signature
Authorised Signatory of the Company
Place Date
CINB – C1
STATE BANK OF INDIA
CORPORATE INTERNET BANKING (VISTAR)
" OnlineSBI "
Registration Form
To
The Branch Manager
State Bank of India
________________
OnlineSBI : Corporate Internet Banking
We wish to register for the Bank's Corporate Internet Banking Service ~ "OnlineSBI".
We confirm having read and understood the document containing the "Terms of Service" governing the SBI's Internet Banking Service. A copy of the document is enclosed duly authenticated by the authorised signatories in token of having accepted the terms of the service contained therein.
The Board Resolution for the purpose is enclosed.
Name of Company:
Address of the Registered office:
____________________________________
____________________________________
____________________________________ Tel. No._________________
Pin Code: _____________
For use only when registration of Regulator is not contemplated immediately.
We request the Bank to set up the following parameters for our company. We are aware that we can change these when a Regulator is appointed:
1. Upper Limit for issue of DD/TT Rs………………
(Default Value – Rs.0.00)
2. Upper Limit on request for third party transfer Rs……………… (Default Value – Rs.0.00)
4. Whether Audit User feature is required Yes/No
(Default Value – No)
If Yes,
a. Upper Limit for Un-audited E-Cheques ………………..
b. Threshold value (amount) of E-Cheques for Audit Rs…………….
For
Date : ________________________
(Authorised Signatory / Signatories)
Should be a senior corporate level person authorised by the Board to operate on Company’s account.
This Registration Form need be submitted only ONCE to the SBI Branch where the Company’s principal account is maintained.
For Branch Use
Application Serial Number :
Requirement Yes / No SIGNATURE OF OFFICIAL
The Account Name tallies with Bankmaster Record
Signature on Registration Form Verified
Recommended for Providing Internet Access
Corporate Details Uploaded
Corporate ID Generated
Corporate ID Advised
Notes:
(i) Name of Company should appear in the same style and form as it appears in Bankmaster records.
(j) A separate Board resolution for using OnlineSBI services as per the format enclosed to Terms of Service and a copy of CINB- C4 recording acceptance of Terms of Service must have been received, scrutinized and attached to Account Opening Form.
Corporate-ID No
If application is rejected, then please enter reasons for rejection on the application form
CINB – C2
STATE BANK OF INDIA
FOR OFFICE USE
Application Serial number:
CORPORATE INTERNET BANKING
(VISTAR)
" OnlineSBI "
Registration of Regulator
To
The Branch Manager
State Bank of India
________________
OnlineSBI: Corporate Internet Banking
We have registered for accessing "OnlineSBI".
The Corporate-ID allotted to us is
We request you to register the executive named herein as the Regulator.
Name of the Corporate:
Name of the Executive:
Designation : e-mail address :
Employee Number: Tel. No.
Address for Despatch of User-ID/Password
Line 1
Line 2
City
District
State
Pin code.
(Signature of Regulator)
Signature of Regulator attested.
For
(Authorised Signatory / Signatories)
Date:
For Branch Use
Application Serial Number :
Requirement Yes / No SIGNATURE OF OFFICIAL
Signature on Registration Form Verified
Corporate-ID quoted in the application Form verified on web Interface and confirm that the ID is valid for the applicant corporate.
Recommended for Providing Access to Internet Banking.
Internet Access Permitted
Regulators’ details uploaded
Notes:
(k) Name of Corporate should appear in the same style and form, as it is stored in Bankmaster.
(l) Name of the INB Regulator must be entered on the web interface as appearing in this Registration Form.
(m) Authorised Signatory means those person(s) who are authorised by a Board Resolution to operate on the account. The regulator himself can sign this form if he is an authorised signatory.
If rejected, then please enter reasons for rejection on the application form.
CINB – C3
STATE BANK OF INDIA
CORPORATE INTERNET BANKING
(VISTAR)
" OnlineSBI "
Registration of Local Admin
To
The Branch Manager
State Bank of India
________________
We have been registered for accessing "OnlineSBI".
The Corporate ID allotted to us is
We request you to register the executive named herein as a Local Admin for the accounts listed below.
Name of company:
Name of the Local Admin:
Address for despatch of User-ID/Password
Line 1
Line 2
City
District
State
Pin code.
Designation: ……………………
Department:…………………….
e-mail address :…………………
Tel. No…………………………..
List of Account Numbers :
Please mention the 11 or13 digit A/c number as mentioned in your Statement of Account. Use additional sheets if necessary. It will suffice if one account number per Customer-ID is mentioned. See note below for further information on Customer-IDs.
(Signature of Local Admin)
Signature of Local Admin attested
For
Date : ________________________
(Authorised Signatory / Signatories)
_________________________________________________________________________
Note on the account numbering system followed by the SBI:
c. The Account number assigned by SBI to a Corporate’s bank account has 11 to 13 digits. Digits 6 to 11 (both inclusive) form the customer ID.
d. Customer ID is the only basis for assigning accounts to a Local Admin.
e. Accounts opened in future bearing the same customer-ID will automatically get assigned to this Local Admin.
For Branch Use
Application Serial Number :
Requirement Yes/ No SIGNATURE OF OFFICIAL
The Account Name tallies with Branch Record
Signature of authorised signatories on Registration Form verified and found correct
Corporate ID quoted in the application form verified with web interface and confirm that the ID is valid for the Corporate
Recommended for Providing Access to OnlineSBI..
Internet Access Permitted
Local Admin’s details uploaded
Notes:
Name of Corporate should appear in the same style and form, as it is stored in Bankmaster.
(o) Name of the Local Admin must be entered in the web interface strictly as it appears in the Registration Form.
(p) Authorised Signatory means those person(s) who are authorised by a Board Resolution to operate on the account.
(q) A Board resolution for using OnlineSBI services has already been obtained while registering Corporate ID and hence a Board Resolution for this application is not necessary.
(r) While uploading data it would be sufficient if one account per customer ID is uploaded.
If rejected, then please enter reasons for rejection on the application form.
Form C5
Format of Board Resolution to be submitted by the Company alongwith the Corporate Internet Banking Registration Form
Resolved that:
The Company do avail the ‘Corporate Internet Banking Service’ over Internet Channel with State Bank of India (SBI) at their various Branches and the Company accepts such “Terms of Service” for Corporate Internet Banking laid down by SBI from time to time for the purpose.
Resolved further that each of the officials as empowered by the Company to operate the Company’s accounts with SBI either singly or jointly as the case may be, is hereby authorized to apply for and avail of the ‘Corporate Internet Banking’ facility offered by SBI and do all they have been authorized, electronically, using their user name and password.
Accepted
Signature
Authorised Signatory of the Company
Place Date
QUESTIONNAIRE
CONSUMER PERCEPTION ABOUT INTERNET BANKING
1. Name:
2. Age :
3.Occupation: : ______________________________________________________
4. Do you avail the ATM facility of any bank :
Yes No
( If yes, then proceed to Q:5 otherwise move to Q:10)
5. You are using the ATM facility of which bank ?
6. What is the satisfaction level experienced by you with the ATM facility being used by you ?
Highly Satisfied
Satisfied
Indifferent
Dissatisfied
Highly Dissatisfied
7. How many times in a week do you use your ATM card?
8. Rank in order of preference the benefits of ATM card in your opinion :
It is time-saving
It is beneficial when cash is needed urgently
It is convenient
9. Have you ever faced any problem while using your ATM card
Yes No
If yes , the select any of the following problems which you have faced
The card got withheld in the machine
ATM was not working
While using it for the first time , you faced a problem while understanding the instructions and there was no employee of the bank to help you
10. Which of the following Internet Banking Services are you availing?
Credit card
Tranferring one’s money from one city to any other branch in a city
Open Fixed Deposit (FD) account via the internet
Inquire about balance in one’s saving , current and FD account and also on
the tax Deducted at source on one’s FD account for the current and financial year
Giving instructions over the internet for stopping payment on cheques
Request for a cheque book via the internet
View all transactions on an account for a specified period and get a copy via e-mail
None of the above
11. Did you ever had any grievances against the bank providing you Internet Banking service regarding
the Internet Banking service provided by it?
Yes No
( If yes then answer the next question , If no then move on to Q:13)
12. What was the level of satisfaction experienced by you of the grievance handling procedure of the Bank?
Highly Satisfied
Satisfied
Indifferent
Dissatisfied
Highly Dissatisfied
13. What is in your opinion the weakness of Internet Banking?
There is only one way communication
The security is not flawless
Lack of first-hand experience gained by a person visiting a bank is not there
14. Do you think Internet Banking is secure?
Yes No
Give a reason for your anwer
15. Do you think that all public sector banks in India should start providing Internet Banking Services to
Survive in the market?
Yes No
If Yes, why?
CERTIFICATE
This is to certify that the project entitled “ E-Banking: A Disguise or Boom” is a bonafide record of work done by Rajni Sharma, a student of M.B.A and submitted to RIMT Engineering College, Mandi Gobindgarh in partial fulfillment of the requirements for the Degree.
This work has never been submitted to any educational institution as per good of my knowledge.
Miss. Kavita
RIMT, Engineering College
Mandi Gobindgarh
ACKNOWLEDGEMENT
Often words are too inadequate to serve as a mode of expression of one’s inner feelings, especially the sense of indebt ness and gratitude to all those who help in accomplishing the goal one has set before oneself. I shall be failing in my duty if I don’t acknowledge my sincerest gratitude to all those who assisted and guided me in completing this project report.
I acknowledge my indebtness to my erudite learned and revert guide Miss. Kavita for her valuable guidance, suggestions, constructive criticism and thought provoking discussions for completion of the task. It would not have been possible for me to complete the work without his encouragement and unfailing help.
I also want to thank all my respondent who took time for showing a great interest in the subject and extending invaluable help.
Rajni Sharma
Univ. Roll No. 42259124
CHAPTER- 1
INTRODUCTION
INTRODUCTION
Earlier people would be tired standing in along queue waiting for a passbook to be updated or they would wait for the next day for the demand draft to be prepared but now Internet Technology has invaded the portals of our banking institutions and as the cliché goes everything will just be a click away. No doubt, innovations like telebanking and automated teller machines (ATM’s) have considerably put customers at ease on the recent past. But with net banking the customer will be able to transact with the help of a mouse and his visits to the neighbourhood bank will become a thing of the past.
In the age of electronic technology the regular application of computing, wireless communication, networking, etc, in the banking field has brought revolutionary change in the traditional ways banks do business. Today, your bank can serve you at home, or allow you to serve yourself from anywhere. You can draw your money from ATM’s, you can check your accounts through the Internet, and you can phone the bank to send you a representative. Not only that, your physical bank which is still around-suddenly seems to be doing a lot more things than just banking. It is technology that is making all this possible. Internet banking has gained wide acceptance internationally and seems to be fast catching up in India with more and more banks entering the fray. This is why, most, most modern banks instead of merely dealing with financial deposits and loan apply promote, and distribute the want-satisfying products, services and ideas to start its journey towards development of computer and other technology based digital economy since 1960 to ensure quality service to its customers.
TECHNOLOGY –THE GOVERNING FACTOR:
It is the technology that is making easy operation of banks. Even 10 years back, banks would have found it impossible to provide even basic banking services to millions of small and medium customers with all their branches. At the back end technology is freeing bank employees to concentrate on value-added work rather than just mundane necessities. Today, technology offers options where banks can almost literally address a market of one with a customized product or service. Though a modest start has been made in India, net banking has still a long way to go. This development has been acknowledged by the latest Online Banking Report, which features a listing for ICICI Bank .Some others have also endeavored to make real time banking a reality before this century closes.
Reasons why new private and multi-national banks have been able to survive, thrive, and adapt in an increasingly competitive space.
These banks were able to leverage on low-cost channels such as ATM’s and Net Banking to the optimum levels contributing to reduced operating costs. The cost of transactions over channels like ATM’s and the Internet are lower than doing it through the branches-Banks have realized that shifting customer access to lower cost channels can help bring down operating costs. These channels are used not only to improve customer service but also to divert traffic from the branches.
Customers using ATM’s, phones and the Internet not only allow banking transactions, but also cross-selling of other financial products and services. For example, if the cost of a branch banking transaction is taken at Rs100/-, the cost of an ATM transaction would be around Rs30/-, phone banking around Rs20/-, and internet banking around Rs5/-.But this does not mean that branch banking is obsolete. Rather, banks are reinventing their business models to offer new financial services through its branches.
At the back-end, technology is freeing bank employees to concentrate on value-added work rather than just mundane necessities. In computerized banks, once a transaction is posted it is auto-reconciled. This system is easy and frees people to concentrate on other customer services.
NEW HORIZONS
The important factor that is causing a shift in the industry is that of conveniences for the consumer. People need timely access to banking services, and have less time to spend at banks, and prefer the convenience of long distance banking. Of course, society’s view of what is convenient is changing .People were accustomed to associating convenience with doing business in their neighbourhood, and not traveling to a bank across town. Now, however, society has a different definition of bank convenience. Also, we should mention it is directly due to mergers that banks are able to offer more full service branches, and ATM machines. This is more convenient to the customers, and creates bank loyalty.
Increased use in ATM’s , the growing use of home and office computers, fax machines, and point of sale terminals allowing consumers to make transaction electronically is now considered convenient. Thus, branch location is no longer a priority from the consumer’s view.
The various banks which have adopted with corporate giving software and solution and services as of date are as follows: *
BANK NAME TECHNOLOGY VENDOR SERVICE OFFERING
ABN AMRO Bank
Infosys (Bank Away)
Net Banking
Abu Dhabi Commercial
Bank
Infosys (Bank Away)
ADCB NetLink
Bank of India
I-Flex
BOIonline
Centurian Bank
Logica
MyCBOL
Citibank
Orbitech (now Polaris)
Citibank Online
Corporation Bank
I-Flex
CorpNet
Deutche Bank
Db direct
Federal Bank
Sanchez
FedNet
Global Trust Bank
Infosys (Bank Away)
ibank@gtb
HDFC Bank
i-flex / Satyam
NetBanking
HSBC
Online@hsbc
ICICI Bank
Infosys, ICICI Infotech
Infinity
IDBI Bank
Infosys (Bank Away)
i-net banking
IndusInd Bank
CR2
IndusNet
Punjab National Bank
Infosys (Bank Away)
Saraswat Bank
Standard Chartered Bank
In-House
Me Standard Chartered Online
State Bank of India
Satyam / Broadvision
Onlinesbi.com
UTI Bank
Infosys (Bank Away)
Iconnect
PIVOTAL ROLE OF IT :
A look at the above mentioned various associative banks have entered into and it is obvious that IT is central to banking. The perceptions and the expectation of the customers have undergone a sea change, with the availability of banking services to the customers at their doorsteps through the help of technology. As per IDC estimates, the total number of registered users and multiple accounts (a user having accounts with more than one bank).India has a little less than a million active Internet banking users .And though this is just 0.096 % of the total population. Thus indicating that the concept of Internet Banking is surely catching on.
Impressive as these figures might be, the truth is that India lags behind other countries in Internet Banking. In the US , the number of commercial banks with transactional websites is 1, 275 or 12% of the total number of banks.
At present, in the US approximately 78% of all commercial banks with assets more than $5 billion, 43% of banks with $ 500 million to $ 5 billion in assets, and 10% of banks under $ 500 million in assets have transactional websites.
In contrast, Indian Banks have an insignificant Internet Banking record. ICICI Bank kicked off online banking way back in 1996 and a host of other banks soon followed suit. But even for the Internet as a whole, 1996 to 1998 marked the adoption phase, while usage increased only in 1999-due to lower ISP online charges, increased PC penetration and a tech-friendly atmosphere.
Today, Banks are looking at newer ways to make a customer’s banking experience more convenient, efficient and effective. They are using new technology tools and techniques to identify customer needs and are offering tailor-made products to match them. Says C N Ram, head, Information technology, HDFC Bank, “Our vision was very clear, we were not enamored by the concept of Internet Banking but looked at it more as an add-on service which our customers should gradually adopt.”
Earlier, banks could decide when and where they wanted customer interfaces, now customers decide when and where they will access banking channels. The services, which can be availed of as of date, centralized operations and process automation using core-banking applications and IP-based networks improve efficiency and productivity levels tremendously. Core banking applications help a bank to shift from ‘Branch Banking’ to ‘Bank Banking’.
Internet Banking not only helps in acquiring more customers but it also reduces problems if customer visits bank physically. This basically means that a customer will be treated as a bank’s customer than just the customer of a particular branch, which was the case earlier. Also, I{-networks let a bank offer multiple services over the same network , resulting in costs savings.
Earlier banks could decide when and where the wanted customer interfaces. Now, the customers decide when and where they will access banking channels.
THE SERVICES, WHICH CAN BE AVAILED AS OF DATE, ARE:
• Transfer one’s money from one city to any other branch in a city.
• Open a Fixed deposit (FD) account via the net. One needs to provide data regarding the amount and term of the deposit and also the branch in which the account is opened.
• Order for an issue of a demand draft can be delivered only to the customer’s address and not to any other party.
• Inquire on the balance in one’s saving , current and FD account and also on the tax deducted at source on one’s FD account for the current and financial year.
• Give instructions over the net for stopping payment on a cheque/s .-Request for a chequebook via the Internet , which will take three days to come.
• View all the transactions completed on an account for a specified period and get a copy via e-mail.
Though relationship tends to look impersonal the customers should feel it personal. The customers need not necessarily positively evaluate the personalized services offered by the bank. Therefore bank should be cautious to ensure that customers feel the services as personal and useful. With the aid of technology they should further mechanize and automate the services offered to customers.
OBJECTIVE OF THE STUDY
1. To access the present scenario of the services of Internet Banking.
2. To study the scope of Internet Banking in future.
3. To study the problems faced by the consumers in availing the Internet
Banking Services.
4. To access the satisfaction level experienced by the users of Internet
Banking Services.
RESEARCH METHODOLOGY
Problem Defining: The project was mainly concerned with evaluating the performance of Internet Banking Services and finding out the scope of Internet Banking Services by doing a comparative analysis of the Internet Banking Services provided by ICICI BANK, SBI BANK, HDFC BANK.
Sample Unit: Individuals who are avaling Internet Banking Services.
Sample Size: 40 respondents
Sampling Method: Non-Probabilistic convenience sampling.
Sampling Area: Patiala
Sources of Data: The data was collected from both primary and secondary sources.
Primary Data: The primary data collection was done through the survey method. The survey was conducted using the questionnaire method.
Secondary Data: Secondary data was collected from the following sources:
a) Books on Internet Banking
b) Internet
c) Journals
CHAPTER-2
PROFILES OF VARIOUS BANKS
PROFILES OF VARIOUS BANKS
PROFILE OF SBI
Evolution of SBI
The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later the bank received its charter and was re-designed as the Bank of Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of British India sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained at the apex of modern banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921.*
Primarily Anglo-Indian creations, the three presidency banks came into existence either as a result of the compulsions of imperial finance or by the felt needs of local European commerce and were not imposed from outside in an arbitrary manner to modernise India's economy. Their evolution was, however, shaped by ideas culled from similar developments in Europe and England, and was influenced by changes occurring in the structure of both the local trading environment and those in the relations of the Indian economy to the economy of Europe and the global economic framework.
* reference- www.sbi.com
Bank of Bengal H.O.
The establishment of the Bank of Bengal marked the advent of limited liability, joint-stock banking in India. So was the associated innovation in banking, viz. the decision to allow the Bank of Bengal to issue notes, which would be accepted for payment of public revenues within a restricted geographical area. This right of note issue was very valuable not only for the Bank of Bengal but also its two siblings, the Banks of Bombay and Madras. It meant an accretion to the capital of the banks, a capital on which the proprietors did not have to pay any interest. The concept of deposit banking was also an innovation because the practice of accepting money for safekeeping (and in some cases, even investment on behalf of the clients) by the indigenous bankers had not spread as a general habit in most parts of India. But, for a long time, and especially upto the time that the three presidency banks had a right of note issue, bank notes and government balances made up the bulk of the investible resources of the banks.
The three banks were governed by royal charters, which were revised from time to time. Each charter provided for a share capital, four-fifth of which were privately subscribed and the rest owned by the provincial government. The members of the board of directors, which managed the affairs of each bank, were mostly proprietary directors representing the large European managing agency houses in India. The rest were government nominees, invariably civil servants, one of whom was elected as the president of the board.
Group Photogaph of Central Board (1921)
The business of the banks was initially confined to discounting of bills of exchange or other negotiable private securities, keeping cash accounts and receiving deposits and issuing and circulating cash notes. Loans were restricted to Rs.one lakh and the period of accommodation confined to three months only. The security for such loans was public securities, commonly called Company's Paper, bullion, treasure, plate, jewels, or goods 'not of a perishable nature' and no interest could be charged beyond a rate of twelve per cent. Loans against goods like opium, indigo, salt woollens, cotton, cotton piece goods, mule twist and silk goods were also granted but such finance by way of cash credits gained momentum only from the third decade of the nineteenth century. All commodities, including tea, sugar and jute, which began to be financed later, were either pledged or hypothecated to the bank. Demand promissory notes were signed by the borrower in favour of the guarantor, which was in turn endorsed to the bank. Lending against shares of the banks or on the mortgage of houses, land or other real property was, however, forbidden.
Indians were the principal borrowers against deposit of Company's paper, while the business of discounts on private as well as salary bills was almost the exclusive monopoly of individuals Europeans and their partnership firms. But the main function of the three banks, as far as the government was concerned, was to help the latter raise loans from time to time and also provide a degree of stability to the prices of government securities.
Old Bank of Bengal
A major change in the conditions of operation of the Banks of Bengal, Bombay and Madras occurred after 1860. With the passing of the Paper Currency Act of 1861, the right of note issue of the presidency banks was abolished and the Government of India assumed from 1 March 1862 the sole power of issuing paper currency within British India.
The task of management and circulation of the new currency notes was conferred on the presidency banks and the Government undertook to transfer the Treasury balances to the banks at places where the banks would open branches. None of the three banks had till then any branches (except the sole attempt and that too a short-lived one by the Bank of Bengal at Mirzapore in 1839) although the charters had given them such authority. But as soon as the three presidency bands were assured of the free use of government Treasury balances at places where they would open branches, they embarked on branch expansion at a rapid pace. By 1876, the branches, agencies and sub agencies of the three presidency banks covered most of the major parts and many of the inland trade centres in India. While the Bank of Bengal had eighteen branches including its head office, seasonal branches and sub agencies, the Banks of Bombay and Madras had fifteen each.
Bank of Madras Note Dated 1861 for Rs.10
The presidency Banks Act, which came into operation on 1 May 1876, brought the three presidency banks under a common statute with similar restrictions on business. The proprietary connection of the Government was, however, terminated, though the banks continued to hold charge of the public debt offices in the three presidency towns, and the custody of a part of the government balances. The Act also stipulated the creation of Reserve Treasuries at Calcutta, Bombay and Madras into which sums above the specified minimum balances promised to the presidency banks at only their head offices were to be lodged. The Government could lend to the presidency banks from such Reserve Treasuries but the latter could look upon them more as a favour than as a right.
Bank of Madras
The decision of the Government to keep the surplus balances in Reserve Treasuries outside the normal control of the presidency banks and the connected decision not to guarantee minimum government balances at new places where branches were to be opened effectively checked the growth of new branches after 1876. The pace of expansion witnessed in the previous decade fell sharply although, in the case of the Bank of Madras, it continued on a modest scale as the profits of that bank were mainly derived from trade dispersed among a number of port towns and inland centres of the presidency.
India witnessed rapid commercialisation in the last quarter of the nineteenth century as its railway network expanded to cover all the major regions of the country. New irrigation networks in Madras, Punjab and Sind accelerated the process of conversion of subsistence crops into cash crops, a portion of which found its way into the foreign markets. Tea and coffee plantations transformed large areas of the eastern Terais, the hills of Assam and the Nilgiris into regions of estate agriculture par excellence. All these resulted in the expansion of India's international trade more than six-fold. The three presidency banks were both beneficiaries and promoters of this commercialisation process as they became involved in the financing of practically every trading, manufacturing and mining activity in the sub-continent. While the Banks of Bengal and Bombay were engaged in the financing of large modern manufacturing industries, the Bank of Madras went into the financing of large modern manufacturing industries, the Bank of Madras went into the financing of small-scale industries in a way which had no parallel elsewhere. But the three banks were rigorously excluded from any business involving foreign exchange. Not only was such business considered risky for these banks, which held government deposits, it was also feared that these banks enjoying government patronage would offer unfair competition to the exchange banks which had by then arrived in India. This exclusion continued till the creation of the Reserve Bank of India in 1935.
Bank of Bombay
The presidency Banks of Bengal, Bombay and Madras with their 70 branches were merged in 1921 to form the Imperial Bank of India. The triad had been transformed into a monolith and a giant among Indian commercial banks had emerged. The new bank took on the triple role of a commercial bank, a banker's bank and a banker to the government.
But this creation was preceded by years of deliberations on the need for a 'State Bank of India'. What eventually emerged was a 'half-way house' combining the functions of a commercial bank and a quasi-central bank.
The establishment of the Reserve Bank of India as the central bank of the country in 1935 ended the quasi-central banking role of the Imperial Bank. The latter ceased to be bankers to the Government of India and instead became agent of the Reserve Bank for the transaction of government business at centres at which the central bank was not established. But it continued to maintain currency chests and small coin depots and operate the remittance facilities scheme for other banks and the public on terms stipulated by the Reserve Bank. It also acted as a bankers' bank by holding their surplus cash and granting them advances against authorised securities. The management of the bank clearing houses also continued with it at many places where the Reserve Bank did not have offices. The bank was also the biggest tenderer at the Treasury bill auctions conducted by the Reserve Bank on behalf of the Government.
The establishment of the Reserve Bank simultaneously saw important amendments being made to the constitution of the Imperial Bank converting it into a purely commercial bank. The earlier restrictions on its business were removed and the bank was permitted to undertake foreign exchange business and executor and trustee business for the first time.
The Imperial Bank during the three and a half decades of its existence recorded an impressive growth in terms of offices, reserves, deposits, investments and advances, the increases in some cases amounting to more than six-fold. The financial status and security inherited from its forerunners no doubt provided a firm and durable platform. But the lofty traditions of banking which the Imperial Bank consistently maintained and the high standard of integrity it observed in its operations inspired confidence in its depositors that no other bank in India could perhaps then equal. All these enabled the Imperial Bank to acquire a pre-eminent position in the Indian banking industry and also secure a vital place in the country's economic life.
Imperial Bank of India
When India attained freedom, the Imperial Bank had a capital base (including reserves) of Rs.11.85 crores, deposits and advances of Rs.275.14 crores and Rs.72.94 crores respectively and a network of 172 branches and more than 200 sub offices extending all over the country.
In 1951, when the First Five Year Plan was launched, the development of rural India was given the highest priority. The commercial banks of the country including the Imperial Bank of India had till then confined their operations to the urban sector and were not equipped to respond to the emergent needs of economic regeneration of the rural areas. In order, therefore, to serve the economy in general and the rural sector in particular, the All India Rural Credit Survey Committee recommended the creation of a state-partnered and state-sponsored bank by taking over the Imperial Bank of India, and integrating with it, the former state-owned or state-associate banks. An act was accordingly passed in Parliament in May 1955 and the State Bank of India was constituted on 1 July 1955. More than a quarter of the resources of the Indian banking system thus passed under the direct control of the State. Later, the State Bank of India (Subsidiary Banks) Act was passed in 1959, enabling the State Bank of India to take over eight former State-associated banks as its subsidiaries (later named Associates).
The State Bank of India was thus born with a new sense of social purpose aided by the 480 offices comprising branches, sub offices and three Local Head Offices inherited from the Imperial Bank. The concept of banking as mere repositories of the community's savings and lenders to creditworthy parties was soon to give way to the concept of purposeful banking subserving the growing and diversified financial needs of planned economic development. The State Bank of India was destined to act as the pacesetter in this respect and lead the Indian banking system into the exciting field of national development.
TECHNOLOGY UPGRADATION HIGHLIGHTS
SBI’s Information Technology Programme aims at achieving efficiency in operations, meeting customer and market expectations and facing competition. Our achievements are summarized below:*
FULL BRANCH COMPUTERISATION (FCBs): All the branches of the Bank are now fully computerized. This strategy has contributed to improvement in customer service.
ATM SERVICES: There are 4633 ATMs on the ATM Network including 3181 ATMs of SBI and 1452 from the 7 Associate Banks and Subsidiaries. These ATMs are located in 1521 centres spread across the length and breadth of the country, thereby creating a truly national network of ATMs with an unparalleled reach. Value added services like ATM locator, payment of fees for college students, multilingual screens, voice over and drawal of cash advance by SBI credit card holders have been introduced.
INTERNET BANKING (INB): This on-line channel enables customers to access their account information and initiate transactions on a 24x7, boundary less basis. 1994 branches, covering 555 centres, are extending INB service to their customers. All functionalities other than Cash and Clearing have been extended to individual retail customers. A separate Internet Banking Module for Corporate customers has been launched and available at 1305 branches. Bulk upload of data for Corporate, Inter-branch funds transfer for Retail customers, online payment of Customs duty and Govt. tax, Electronic Bill Payment, SMS Alerts, E-Poll, IIT GATE Fee Collection, Off-line Customer Registration Process and Railway Ticket Booking are the new features deployed.
GOVT. BUSINESS: Software has been developed and rolled out at 7785 fully computerised branches. Electronic generation of all reports for reporting, settlement and reconciliation of Govt. funds, is available.
STEPS: Under STEPS, the bank’s electronic funds transfer system, the Products offered are eTransfer (eT), eRealisation (eR), eDebit (CMP) and ATM reconciliation. STEPS handles payment messages and reconciliation simultaneously.
SEFT: SBI has launched the Special Electronic Fund Transfer (SEFT) Scheme of RBI, to facilitate efficient and expeditious Inter-bank transfer of funds. 241 branches of our Bank in various LHO Centres are participating in the scheme. Security of message transmission has been enhanced.
MICR Centres: MICR Cheque Processing systems are operational at 16 centres viz. Mumbai, New Delhi, Chennai, Kolkata, Vadodara, Surat, Patna, Jabalpur, Gwalior, Jodhpur, Trichur, Calicut, Nasik, Raipur, Bhubaneswar and Dehradun.
Core Banking : The Core Banking Solution provides the state-of-the-art anywhere anytime banking for our customers. The facility is available at 574 branches.
Trade Finance: The solution has been implemented, providing efficiency in handling Trade Finance transactions with Internet access to customers and greatly enhances the bank’s services to Corporates and Commercial Network branches. This new Trade Finance solution, EXIMBILLS, will be implemented at all domestic branches as well as at Foreign offices engaged in trade finance business during the year.
WAN: The bank has set up a Wide Area Network, known as SBI connect, which provides connectivity to 4819 branches/offices of SB Group across 306 cities. This network provides across the board benefits by providing nationwide connectivity for its business applications.
PROFILE OF HDFC BANK
The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in-principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalisation of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. *
Promoter
HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain a market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment.
Business Focus
HDFC Bank's mission is to be a World-Class Indian Bank. The Bank's aim is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services in the segments that the bank operates in and to achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank is committed to maintain the highest level of ethical standards professional integrity and regulatory compliance. HDFC Bank's business philosophy is based on four core values: Operational Excellence, Customer Focus, Product Leadership and People.
Capital Structure
The authorized capital of HDFC Bank is Rs.450 crore (Rs.45 billion). The paid-up capital is Rs.282 crore (Rs.28.2 billion). The HDFC Group holds 24.2% of the bank's equity while about 13.1% of the equity is held by the depository in respect of the bank's issue of American Depository Shares (ADS/ADR Issue). The Indian Private Equity Fund, Mauritius (IPEF) and Indocean Financial Holdings Ltd., Mauritius (IFHL) (both funds advised by J P Morgan Partners, formerly Chase Capital Partners) together hold about 5.5% of the bank's equity. Roughly 27.5% of the equity is held by FIIs, NRIs/OCBs while the balance is widely held by about 214,000 shareholders. The shares are listed on The Stock Exchange, Mumbai and the National Stock Exchange. The bank's American Depository Shares are listed on the New York Stock Exchange (NYSE) under the symbol "HDB".
TimesBank Amalgamation
In a milestone transaction in the Indian banking industry, TimesBank Limited (another new private sector bank promoted by Bennett, Coleman & Co./Times Group) was merged with HDFC Bank Ltd., effective February 26, 2000. As per the scheme of amalgamation approved by the shareholders of both banks and the Reserve Bank of India, shareholders of TimesBank received 1 share of HDFC Bank for every 5.75 shares of TimesBank. The amalgamation added significant value to HDFC Bank in terms of increased branch network, expanded geographic reach, enhanced customer base, skilled manpower and the opportunity to cross-sell and leverage alternative delivery channels.
Distribution Network
HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of over 451 branches spread over 205 cities across the country. All branches are linked on an online real-time basis. Customers in 90 locations are also serviced through Phone Banking. The Bank's expansion plans take into account the need to have a presence in all major industrial and commercial centres where its corporate customers are located as well as the need to build a strong retail customer base for both deposits and loan products. Being a clearing/settlement bank to various leading stock exchanges , , the Bank has branches in the centres where the NSE/BSE has a strong and active member base.
The Bank also has a network of over 1054 networked ATMs across these cities. Moreover, HDFC Bank's ATM network can be accessed by all domestic and international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders.
Management
Mr. Jagdish Capoor took over as the bank's Chairman in July 2001. Prior to this, Mr. Capoor was a Deputy Governor of the Reserve Bank of India.
The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25 years and before joining HDFC Bank in 1994 was heading Citibank's operations in Malaysia.
The Bank's Board of Directors is composed of eminent individuals with a wealth of experience in public policy, administration, industry and commercial banking. Senior executives representing HDFC are also on the Board.
Senior banking professionals with substantial experience in India and abroad head various businesses and functions and report to the Managing Director. Given the professional expertise of the management team and the overall focus on recruiting and retaining the best talent in the industry, the bank believes that its people are a significant competitive strength.
Technology
HDFC Bank operates in a highly automated environment in terms of information technology and communication systems. All the bank's branches have connectivity which enables the bank to offer speedy funds transfer facilities to its customers. Multi-branch access is also provided to retail customers through the branch network and Automated Teller Machines (ATMs).
The Bank has made substantial efforts and investments in acquiring the best technology available internationally to build the infrastructure for a world-class bank. In terms of software, the Corporate Banking business is supported by Flexcube, while the Retail Banking business by Finware, both from i-flex Solutions Ltd. The systems are open, scaleable and web-enabled.
The Bank has prioritized its engagement in technology and the internet as one of its key goals and has already made significant progress in web-enabling its core businesses. In each of its businesses, the Bank has succeeded in leveraging its market position, expertise and technology to create a competitive advantage and build market share.
Business Profile
HDFC Bank caters to a wide range of banking services covering commercial and investment banking on the wholesale side and transactional / branch banking on the retail side. The bank has three key business areas :-
a) Wholesale Banking Services
The Bank's target market is primarily large, blue-chip manufacturing companies in the Indian corporate sector and to a lesser extent, emerging mid-sized corporates. For these corporates, the Bank provides a wide range of commercial and transactional banking services, including working capital finance, trade services, transactional services, cash management, etc. The bank is also a leading provider of structured solutions which combine cash management services with vendor and distributor finance for facilitating superior supply chain management for its corporate customers. Based on its superior product delivery / service levels and strong customer orientation, the Bank has made significant inroads into the banking consortia of a number of leading Indian corporates including multinationals, companies from the domestic business houses and prime Public Sector companies. It is recognised as a leading provider of cash management and transactional banking solutions to corporate customers, mutual funds, stock exchange members and banks.
b) Retail Banking Services
The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements. The products are backed by world-class service and delivered to the customers through the growing branch network, as well as through alternative delivery channels like ATMs, PhoneBanking, NetBanking and MobileBanking.
The HDFC Bank preferred program for high net worth individuals, the HDFC Bank Plus and the Investment Advisory Services programs have been designed keeping in mind needs of customers who seek distinct financial solutions, information and advice on various investment avenues. The Bank also has a wide array of retail loan products including Auto Loans, Loans against marketable securities, Personal Loans and Loans for Two-wheelers. It is also a leading provider of Depository Services to retail customers, offering customers the facility to hold their investments in electronic form. HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA Electron) and issues the Mastercard Maestro debit card as well. The debit card allows the user to directly debit his account at the point of purchase at a merchant establishment, in India and overseas. The Bank launched its credit card in association with VISA in November 2001. The Bank is also one of the leading players in the "merchant acquiring" business with over 25,000 Point-of-Sale (POS) terminals for debit / credit cards
acceptance at merchant establishments. The Bank is well positioned as a leader in various net-based B2C opportunities including a wide range of internet banking services for Fixed Deposits, Loans, Bill Payments, etc.
c) Treasury Operations
Within this business, the bank has three main product areas - Foreign Exchange and Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the liberalisation of the financial markets in India, corporates need more sophisticated risk management information, advice and product structures. These and fine pricing on various treasury products are provided through the bank's Treasury team. To comply with statutory reserve requirements, the bank is required to hold 25% of its deposits in government securities. The Treasury business is responsible for managing the returns and market risk on this investment portfolio.
Rating
HDFC Bank has its deposit programmes rated by two rating agencies - Credit Analysis & Research Limited (CARE) and Fitch Ratings India Pvt. Ltd. The Bank's Fixed Deposit programme has been rated 'CARE AAA (FD)' [Triple A] by CARE, which represents instruments considered to be "of the best quality, carrying negligible investment risk". CARE has also rated the Bank's Certificate of Deposit (CD) programme "PR 1+" which represents "superior capacity for repayment of short term promissory obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has assigned the "tAAA (ind)" rating to the Bank's deposit programme, with the outlook on the rating as "stable". This rating indicates "highest credit quality" where "protection factors are very high". HDFC Bank also has its long-term unsecured, subordinated (Tier-II) Bonds rated by CARE and Fitch Ratings India Pvt. Ltd. CARE has assigned the rating of "CARE AAA" for the Tier-II Bonds while Fitch Ratings India Pvt. Ltd. has assigned the rating "AAA (ind)" with the outlook on the rating as "stable". In each case referred to above, the ratings awarded were the highest assigned by the rating agency for those instruments.
Corporate Governance Rating
The bank was one of the first four companies which subjected itself to a Corporate Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating Information Services of India Limited (CRISIL). The rating provides an independent assessment of an entity’s current performance and an expectation on its "balanced value creation and corporate governance practices" in future. The bank has been assigned a ‘CRISIL GVC Level 1' rating which indicates that the bank's capability with respect to wealth creation for all its stakeholders while adopting sound corporate governance practices is the highest.
Product Range
Savings, Fixed Deposits, Current and Demat Accounts
Savings Account: Apart from the usual facilities, the customer gets a free ATM Card, Interbranch banking, NetBanking, BillPay, PhoneBanking, Debit Card and MobileBanking, among others.
HDFC Bank Preferred: A preferential Savings Account where the customer is assigned a dedicated Relationship Manager, who is the customer’s one-point contact. The customer also get privileges like fee waivers, enhanced ATM withdrawal limit, priority locker allotment, free Demat Account and lower interest rates on loans, to name a few.
Sweep-In Account: A fixed deposit linked to the customer’s Savings Account. So, even if the customer’s Savings Account runs a bit short, he/she can issue a cheque (or use your ATM Card). The money is automatically swept in from his/her fixed deposit into his/her Savings Account.
Super Saver Account: It gives the customer an overdraft facility up to 75% of his/her Fixed Deposit. In an emergency, the customer can access his/her funds while his/her Fixed Deposit continues to earn high interest.
HDFC Bank Plus: Apart from Regular and Premium Current accounts the bank also has HDFC Bank Plus, a Current Account and then some more. The customer can transfer up to Rs. 50 lakh per month at no extra charge, between the four metros. The customer can also avail of cheque clearing between the four metros, get cash delivery/pickup upto Rs. 25,000/-, home delivery of Demand Drafts, at-par cheques, outstation cheque clearance facility, etc.
Demat Account: The customer can conduct hassle-free transactions on his/her shares. The customer can also access his/her Demat Account on the Internet.
Innovative services for your convenience...
PhoneBanking: 24-hour automated banking services with 39 PhoneBanking numbers available.
ATM 24-hour banking: Apart from routine transactions, the customer can also pay his/her utility bills and transfer funds, at any of the bank’s ATMs across the country all year round.
Inter-city/Inter-branch Banking:The customer can access his/her account from any of the bank’s 451 branches in 205 cities.
NetBanking: The customer can access his/her bank account from anywhere in the world, at anytime, at his/her own convenience. The customer can also view his/her Demat Account through NetBanking.
International Debit Card: With an ATM card the customer can shop with all over the country and in over 140 countries with. The customer can spend in any currency, and pay in Rupees.
MobileBanking: The customer can access his/her account on his/her mobile phone screen at no airtime cost. The customer can use SMS technology to conduct his/her banking transactions from his/her cellphone.
BillPay: The customer can pay his/her telephone, electricity and mobilephone bills through the bank’s ATMs, Internet, phone or mobile phone.
Loans for every need
Now, the bank’s loans come to the customerin easy-to-pay monthly instalments, and are available with easy documentation and quick delivery.
Personal Loans: The customer can now take a loan of up to Rs. 3 lakh for a wedding, education, purchase of a computer or an exciting holiday.
New Car Loans and Used Car Loans: The customer can now avail finance up to 90% of the cost of a car, new or used! And the loans come to the customer with easy documentation and speedy processing at attractive interest rates.
Loans Against Shares: The customer can get an overdraft up to Rs. 10 lakh at an attractive interest rate against physical shares, up to 50% of the market value of his/her shares. In case of Demat Shares, the customer can get a Loan Against Shares of up to 65% of the market value of his/her shares, till Rs. 20 lakh.
Two Wheeler & Consumer Loans: It is to help the customer to buy the best durables for his/her home.
Demat Account: The customer can now protect his/her shares from damage, loss and theft, by maintaining the customer’s shares in electronic form. The customer can also access his/her demat account on the internet.
Current Account: The customer can get a personalised cheque book, monthly account statements, inter-branch banking and much more.
Mutual Funds: Apart from a wide choice of mutual funds to suit the customer’s needs the customer benefits from expert advice on choosing the right funds based on in-depth market analysis.
International Credit Card: The customer can get an option of Silver, Gold, or Health Plus Credit card, accepted worldwide from a world-class bank. If the the customer has an outstanding balance on his/her credit card the customer can transfer that balance to this card at a lower interest rate.
NRI Services: A comprehensive range, backed by unmatched features and world-class service, ensures NRIs all the banking support they need.
Forex Facilities: The customer can avail foreign currency, travellers cheques, foreign exchange demand drafts, to meet his/her travel needs.
Insurance*: HDFC Bank now brings its customers Life Insurance and Pension Solutions like Risk Cover Scheme, Savings Scheme, Children’s Plan and Personal Plan from HDFC Standard Life Insurance Co. Ltd.
*Insurance is the subject matter of solicitation.
PROFILE OF ICICI BANK
ICICI Bank is India's second-largest bank with total assets of about Rs.146,214 crore at December 31, 2004 and profit after tax of Rs. 1,391 crore in the nine months ended December 31, 2004 (Rs. 1,637 crore in fiscal 2004). ICICI Bank has a network of about 505 branches and extension counters and about 1,850 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank set up its international banking group in fiscal 2002 to cater to the cross-border needs of clients and leverage on its domestic banking strengths to offer products internationally. ICICI Bank currently has subsidiaries in the United Kingdom and Canada, branches in Singapore and Bahrain and representative offices in the United States, China, United Arab Emirates and Bangladesh.*
ICICI Bank's equity shares are listed in India on the Stock Exchange, Mumbai and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).
As required by the stock exchanges, ICICI Bank has formulated a Code of Business Conduct and Ethics for its directors and employees.
At October 31, 2004, ICICI Bank, with free float market capitalisation* of about Rs. 220.00 billion (US$ 5.00 billion) ranked third amongst all the companies listed on the Indian stock exchanges.
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE.
After consideration of various corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would create the optimal legal structure for the ICICI group's universal banking strategy. The merger would enhance value for ICICI shareholders through the merged entity's access to low-cost deposits, greater opportunities for earning fee-based income and the ability to participate in the payments system and provide transaction-banking services. The merger would enhance value for ICICI Bank shareholders through a large capital base and scale of operations, seamless access to ICICI's strong corporate relationships built up over five decades, entry into new business segments, higher market share in various business segments, particularly fee-based services, and access to the vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's financing and banking operations, both wholesale and retail, have been integrated in a single entity.
*Free float holding excludes all promoter holdings, strategic investments and cross holdings among public sector entities.
CHAPTER-3
E-BANKING SERVICES PROVIDED BY VARIOUS BANKS
INTERNET BANKING SERVICES PROVIDED BY VARIOUS BANKS
Internet Banking Services provided by STATE BANK OF INDIA:*
1. BILL PAYMENT
About Bill Payment
SBI e-PAY - A simple and convenient service for receiving and paying the customer’s bills online
• No more late payments
• No more queues
• No more hassles of depositing cheques
OnlinePay: Using SBI e-PAY the customer can 'see and pay' his/her various bills online, directly from his/her SBI Account. The customer can pay telephone, electricity, insurance, credit card and other bills - from the comfort of his/her house or office, 24 hours a day, 365 days a year! He/she will simply have to logon to http://www.onlinesbi.com/ to 'see and pay' their bills. The customer can also get an electronic acknowledgment for every bill paid by him/her using e-PAY.
AutoPay: The customer can also set up AutoPay instructions with an upper limit to ensure that his/her bills are paid automatically whenever they are due. The upper limit ensures that only bills within the specified limit are paid automatically, thereby providing the customer complete control over these payments.
The e-PAY service is available in various cities across the country and the customer can now make payments to several billers in his/her region.
To start receiving and paying their bills online, the customers will simply have to login to http://www.onlinesbi.com and use the 'Add Biller' feature to select the billers they wish to make payments to. Alternately, the customers can also fill out the SBI e-PAY Registration Form (SeRF) available at their SBI branch, complete it and submit it to the branch.
2. SMS ALERTS
SMS Alerts are the fashionable way to keep track of critical activity on one’s accounts. In a significant step towards enabling anytime-anywhere banking, OnlineSBI.com now enables its customers to receive alerts on his/her mobile phone. The customer can ask to be alerted when the balance on his/her account goes above or below a particular amount; or when a transaction of greater than a specified amount hits the customer’s account; or when an interest is applied on the customer’s accounts more.Receiving alerts on your mobile phone is a two-step process.
1. Set your mobile number. Be sure to correctly select the country the mobile number belongs to.
2. Define your alert criteria; be it balance alert or a transaction alert or an interest alert.
The bank will now do the hard work of alerting when these events happen to his/her account.
3. ONLINE BOOKING OF RAILWAY TICKETS
The customer should follow under noted process for booking of railway tickets.
• Logon to the site of IRCTC www.irctc.co.in
• Register yourself on the site (if first time user) or log on with
Username and Password (meant for IRCTC site).
• Provide the requisite information i.e. stations (departure & arrival),
date and class of the journey under option of "Plan My Travel and Book
Ticket"
• Select your train from the list of trains displayed by IRCTC and click
on "Book Ticket"
• Provide passenger details and confirm your address for getting delivery
of tickets . The amount of ticket will be displayed for payment.
• Choose payment option "State Bank of India". You will be taken to our
site onlineSBI.
• Log in with Username and Password (meant for onlineSBI ) and confirm
the payment.
• On successful transaction, you will be provided with Transaction Id and
date of transaction.
• The ticket will be delivered by IRCTC at your place of choice. Delivery
of ticket is sole responsibility of IRCTC.
• For cancellation of ticket, submit your ticket at a computerized counter
of Railways. On cancellation of ticket by Railways, the amount shall be
credited back to your account.
State Bank of India.
4. MUTUAL FUNDS
SBI Mutual Fund has grown tremendously in terms of corpus as well as number of investors. Today it is one of the largest Bank sponsored Mutual Fund in the country. The bank has launched 35 Schemes, of which 15 have been redeemed, yielding handsome returns to investors. The fund has over Rs. 5,500 Crores as assets under management.
SBI is also the first Bank sponsored Mutual Fund to launch an offshore fund, the India Magnum Fund, with a corpus of around Rs. 225 Crores.
Today the Fund has an investor base of over 8 Lacs spread over 18 schemes. With a large network over 35 collection branches, 26 Investor Service Centres, 19 Investor Service Desks and 21 District Organizers, the SBI is constantly endeavouring to get closer to the bank’s growing family of investors.
INTERNET BANKING SERVICES PROVIDED BY ICICI BANK
1. BILL PAYMENT
ICICI Bank Internet Banking is the most convenient channel to manage and pay the bills anytime, anywhere. No more hassles of personally visiting the Biller to pay the bills. Its free for all the Customers. The bank has enabled the billers in following two modes:
• Presentment Type Billers: For these billers, the bill amount and due date will be presented to them online on http://www.icicibank.com/ and a reminder will be sent to their on Email.
• Payment Type Billers: For these billers the customer’s can register and pay any amount immediately
2. ONLINE SHOPPING*
ICICI Bank has tied up with more than 75 organizations to facilitate online shopping for all its Internet Banking Customers. The customer’s
Have to choose their products online and pay conveniently through ICICI Bank Internet Banking Service.
Online Shopping Process
Their esteemed partners are:
ICICI Bank brings Insurance products to the customer’s door-step. The customers can buy Insurance products from ICICI Lombard General Insurance and pay through the bank’s Internet Banking. Details...
The customer’s can book their Air Tickets online at http://www.icicibank.com/pfsuser/icicibank/online/shopping/online_shopping.htm# and pay through Internet Banking. The customer’s can also take a print of their ticket instanteneously.Details...
The customer’s can book their railway ticket through http://www.icicibank.com/pfsuser/icicibank/online/shopping/online_shopping.htm# using ICICI Bank Internet Banking. IRCTC will deliver ticket to delivery address mentioned by the customer. Details...
The customer’s can pay their Reliance Infocom bills through Internet Banking. The customer’s can visit Reliance Infocomm, view their bill details and make instantaneous payments.
3. TICKET BOOKING
Ticket Booking
The customer’s can now book their Railways and Air Tickets Online
The customer’s can now buy their tickets online and pay using the bank’s Internet Banking Facility. ICICI Bank has tied up with IRCTC (for Railway Ticket Booking) and Air Deccan (for Air Ticket booking).
The salient features of the facility are as under:
1. All internet banking customers can use the facility.
2. For booking tickets, please visit www.irctc.co.in (for railway tickets) and http://www.airdeccan.net/ (for air tickets). Select your journey date and other details.
3. On payment option, select ICICI Bank for making the payment. The customer will be redirected to secured login page of ICICI Bank. After logging on to the site the customer can see his/her displayed payment amount, and Payee Details.
4. The customer will be required to confirm the transaction by entering transaction password. On successful authentication, the customer’s Bank Account will be immediately debited and payment confirmation number will be provided. Within some time the customer will also receive online confirmation from IRCTC/ Air Deccan website. Tickets are booked immediately and PNR number is provided online at Partner's website.
Cancellation of tickets: No cash will be paid at the time of cancellation. The customer’s bank account will be credited with the ticket amount less cancellation charges as levied by IRCTC/ Air Deccan. ICICI Bank does not levy any cancellation charges.
4. INSURANCE POLICIES OFFERED BY ICICI BANK *
Convenience has always been synonymous with ICICI Bank and keeping in line with this, icici bank now offers it’s customers, the most comprehensive suite of General Insurance products from ICICI Lombard, to cater to their insurance needs and that too online.
10K Tax Saver Health Insurance Family Floater Health Insurance
For the first time in India ICICI Lombard introduces, 10K Tax Saver Health Insurance plan. This fixed premium Family Floater Health plan is designed to give the maximum tax benefit u/s Sec. 80D
For the First time in India, Family Floater Health Plan, a single health insurance cover that takes care of the customer’s entire family’s medical expenses during sudden illness, surgeries and accidents.
• Maximum tax benefit. Rs.10,000 deduction u/s 80 D.
• Fixed premium plan where the insured amount changes with no. of members.
• Family Floater advantage. One policy for entire family.
• Special covers (Double & Convalescence benefits) in addition to the regular health cover. • A single policy covers the entire family's health needs
• Covers expenses towards cost of hospital room/bed during illness, surgeries & accidents
• Cashless facility at more than 1100 network hospitals across 214 cities in India
• 5 % No - Claim discount on renewal premium
Overseas Travel Insurance Student Travel Insurance
ICICI Lombard Overseas Travel Insurance charges it’s customer’s on a ‘Pay Per Day’ basis.
ICICI Lombard’s Comprehensive Overseas Student Travel Insurance.
• Protection against all list of emergencies that may occur whilst traveling abroad
• Premium on a "Pay Per Day" basis instead of slab rates
• Cashless hospitalisation benefit available globally
• Cover available for a maximum period of 6 months with an extension option
• Dedicated toll-free help line number across all countries • Protection against all list of emergencies that may occur whilst traveling abroad
• Customer can pay in rupees, and can save valuable dollars.
• Plan meets foreign universities insurance requirements
• No documentation. No health check-up. Instant policy issuance
• Policy is renewable for the second year
3. ICICI BANK’S ONLINE SHARE TRADING.
ICICI bank also provides the service of online share trading to its customers through www.icicidirect.com.
INTERNET BANKING SERVICES PROVIDED BY HDFC BANK
NETBANKING FEATURES*
1.Credit card Payment
Customers can pay their HDFC Bank Credit card dues through this option.
2.Statement Download
The customers can download their account statement onto their PC for the period of 5 months from the given date.
3.Change Customer profile
The customers can update their mailing address and all their communication from bank will go to this new address.
4. Funds Transfer
The customers cant transfer funds between their accounts, even if they are in different branches/cities. The customer can also transfer funds to any person having an HDFC Bank account anytime, anywhere, using our Third Party Funds Transfer option. To avail of TPT facility, customer will have to sign the declaration form, which is available on the Net or at any of the bank’s branches.
5. New Fixed Deposit Request*
The customer can open a Fixed Deposit Account on the Internet. He will just have to give details regarding the account from which he/she wants to transfer funds, the amount and terms for the Fixed Deposit, the branch and the relevant maturity instructions.
6. Fixed Deposit Inquiry
The customers can access details of their Fixed Deposit Account such as Principal Balance, Term of Deposit, Rate of Interest, Maturity Date, Maturity Amount and Instructions for Payment.
7. Demand Draft* Request
The customers can issue a DD from their account at special rates. They will just have to select the account to be debited from and give the bank details of the amount, location and beneficiary. The bank will even have the Demand Draft couriered to the customer’s mailing address. (DDs will be issued only where the bank has a branch or has an arrangement with a local bank).
8. Demand Draft Request at Beneficiary's address
NetBanking offers a new facility to all its customers. The customer can issue a Demand Draft on the Beneficiary's name and address of his/her choice. He/she will just have to just select the account to be debited from and give the bank the details of the amount and beneficiary's name & address where the customer want the Demand Draft to be delivered. The Demand Drafts would only be delivered within India. (DDs will be issued only where the Bank has a branch or has an arrangement with a local Bank).
Note : 1) This facility is only open to users who have registered for Third Party Transfer (TPT).
9. TDS Inquiry
the customer can access information on Tax Deducted at Source for all their deposits for the current or previous financial year.
10. Stop Payment Request
The customer can request Stop Payment on a cheque or series of cheques online by just entering the cheque number and the reason for stopping payment.
11. Cheque Status Inquiry
The customer can view the status of a specific cheque issued on any of his/her accounts.
12. Cheque Book Request
The customer can request for a new cheque book online. His/Her cheque book will be couriered to the address on the bank’s records.
13. Account Balance Inquiry
The customer can check his/her savings or current account balance, including information regarding Uncleared Funds, Ledger Balances, Overdraft Limits and Sweep-In Amounts.
14. Account Statement Inquiry
The customer can view all the transactions on his/her account for either the current period (i.e. from date of last statement mailed to him/her), or a specific period determined by him/her/. The customer can also request his/her statement via mail (mailing address will be as per bank records).
15. Customer Support
The customer can use this option to communicate with the Bank for requests, instructions and queries.
16. Demat on the NET
If the customer also holds a Demat Account with the bank, he/she can now access his/her account online. Through Demat on the Internet, he/she can see his/her holdings as on the close of the last business day.He/She can view his/her your transactions for the last 7 days. Check the status of the shares submitted for Demat in the last one month. The bank will also provide the customer with an ISIN search and a calendar to know the various settlement details on various exchanges.
17. Direct Pay
An option exclusively for HDFC Bank NetBanking customers, which allows online purchases in a safe and secure environment. Shop online at websites, which offer our Direct Pay facility, such as Sify.com, Fabmart.com, VSNL.com and many more. Through Direct Pay, the customer’s account would be debited and the merchant's/ website's account gets credited instantaneously.
18. BillPay
The customer can pay his/her mobile phone, electricity and telephone bills through the Internet using the BillPay facility.
19. Security
With NetBanking, the customer can carry out all his/her banking and shopping transactions safely and with total confidentiality. The entire system is secured, using the whole gamut of security architecture including firewalls, filtering routers, 128-bit encryption and digital certification. So the customer is absolutely sure that all his/her online transactions are safe and protected.
* New Fixed Deposit Request/DD Request will be processed only during banking hours on the next working day.
Who Can Apply
All the customer need to access NetBanking is have a savings or current or fixed deposit account. Financial transactions can be made by savings account holders (with an either or survivor mandate), individual current account holders and sole proprietorship account holders.
Now Kartas of HUF, Patnerships and authorised signatories of Partnership Concerns and Private Limited Companies can do financial transactions by filling up a special imdemnity. The customer can download the form from website or contact your nearest branch.
REGISTRATION FOR NETBANKING
If the cutomer is a HDFC Bank customer, he/she can register for NetBanking by Calling PhoneBanking if he/she has a Telephone Identification Number (TIN)
OR
downloading an e-Age Banking form. The completed form can be submitted at the nearest branch.
The IPIN (password) will be mailed to the customer’s correspondence address.
NetBanking form for Individuals
NetBanking form for Corporates
If the customer does not have an HDFC Bank Account he/she can download* the relevant Account Opening Form print it, fill in the details along with his/her signature and drop it off the nearest HDFCBank branch. This form includes the NetBanking registration form.
Account Opening Form for Individuals
Account Opening Form for Companies
* The customer will need Adobe Acrobat Reader to read the Account Opening and NetBanking Application forms. If the customer does not have Adobe Acrobat Reader, download it. After the customer have downloaded and installed Adobe Acrobat Reader, the customer will need to restart his/her browser.
INTERNET BANKING SERVICES PROVIDED BY HDFC BANK INCLUDES THE FOLLOWING SERVICES:
1. ATM FACILITY
ATM in India for 24 Hour Banking
Now, the customer’s money is accessible to him/her 24 hours a day, 7 days a week, 365 days a year from any of the bank’s over 1054 ATM across India.
2. BILL PAYMENT
BillPay - Bill Payments Service
Now, the customer can have the luxury of paying his/her telephone, electricity and mobile phone bills at your convenience. Through the Internet, ATMs, his/her mobile phone and telephone. LIC insurance premiums can also be paid through this facility. The customer can also Renew your VSNL Internet Account and even Register for a New VSNL Internet Account using BillPay, a comprehensive bill payments solution. The customer can check the bill amount before he/she makes any payments ensuring that he/she always pays the right amount. BillPay has made all your bill payments easy. It gets even better if the customer is a resident of Hyderabad or Secunderabad and registered for the bank’s NetBanking service. Thanks to the bank’s tie-up with eseva, a unique integrated service launched by the government of Andhra Pradesh, the customer can now pay his/her electricity bills, water bills and municipal taxes (telephones to be introduced shortly) through the Internet using the Direct Debit option. The most important aspect of this service is that the payments made are updated in the database of the utility companies on an online and real-time basis.
3 DEBIT CARD
EasyShop Gold Debit Card
HDFC Bank proudly presents the EasyShop Gold Debit Card. The EasyShop Gold Debit Card is the first Gold Debit Card in India. Not only does it replace the customer’s ATM card, it also revolutionises the way he/she spends through a Debit Card and The customer also gets the benefits that as a Gold Debit Card Customer.
• Cash back*
For every Rs. 100 that the customer will spend, he/she will receive Re. 1 as cash back. This cash back is valid on all purchases made through the card, at all times of the year!!!
• Zero surcharge at Petrol Pumps*
The customer can now use his/her Debit Card at the Petrol Pumps. As a Gold Card holder, no surcharge would be levied on the customer at the petrol pumps.
• Special Offers at Premium Outlets, Hotels and Restaurants*
The bank has arranged for special offers for its customers, the details of which are available in the Merchant Booklet.
• Insurance covers*
The following are included in the insurance covers
o Death Cover by Air / Road - Sum assured Rs. 5,00,000
o Fire & Burglary for the items purchased under Debit Card (upto 6 months) - Sum assured Rs. 50,000
Loss of Baggage Insurance - Sum assured Rs. 20,000
4. INTERNATIONAL DEBIT CARD
Easyshop International Debit Card
Easyshop International Debit Card lets the customer shop and do much more than he/she could do with his/her ATM Card. It replaces cash, so when one goes shopping, the customer no longer need to carry cash with him/her. This card can be used in India and abroad at merchant locations such as shops and restaurants and to withdraw cash from a widespread network of ATMs. The value of the payment made or cash withdrawn is instantly debited from his/her account. What's more, while all purchases and cash withdrawals of the customer are in the currency of the country he/she is in, his/her account is debited in Rupees!
HDFC Bank offers the following Debit Card programmes in India:
1. Visa in association with Visa International
2. Maestro in association with MasterCard International
5. ONLINE SHOPPING
NetSafe, is a unique online payment solution that offers the customer’s complete security while shopping on the Internet. With NetSafe, they can now shop online without revealing their HDFC Bank Credit Card number. They can now use their HDFC Bank Debit Card also for online purchases.
The customers will have to follow a simple 3-step process to register for NetSafe using either his/her HDFC Bank Visa Credit or Debit Card. Once registered, the customer will have to choose the amount and account he/she wish to debit and create as many NetSafe cards as he/she wants. And after the transaction or a max of 48 hours, the card will cease to exist. All this comes FREE with the customer’s HDFC Bank Credit / Debit Card.
*
Step1:OnetimeRegistration
NetSafe requires a one-time registration. After accepting the Terms and Conditions, the customer will need to key in his/her Debit / Credit card number , his/her ATM PIN and the date of expiry of your card.He/She can then generate his/her own Login Id and Password after adding his/her personal details. The Registration process is complete and the customer can Login to NetSafe !
Step2:YourfirstNetSafecard
The customer will have to create a NetSafe card drawing funds from his/her existing HDFC Bank Debit or Credit card accounts . All the customer needs to do is specify the account to be debited and the required value( limit ) of his/her NetSafe card.
Step3:ShoppingwithNetSafe
The customer can use his/her NetSafe card to make purchases online in 2 ways
• He should copy the NetSafe Card Number as the Card Number required in the payment screen of his/her shopping site.
• The customer should download the Plug-In during the Registration process.
6. DIRECT PAY FACILITY
HDFC Bank's Direct Pay facility is an e-Age Banking Channel where the purchases are debited directly to the customer’s account and credited to the account of the establishment (or the website where the purchases were made). If the customer is an account holder with HDFC Bank, all he/she will have to do is to register for the NetBanking facility to use this option.
However, shopping is not the only option that the customer has. If the customer is a resident of Hyderabad or Secunderabad, it gets even better. Thanks to the bank's tie-up with Eseva, a unique integrated service launched by the government of Andhra Pradesh, you can now pay your electricity, water bills and municipal taxes (telephones to be introduced shortly) using the Direct Pay option. The most important aspect of this service is that the payments made are updated in the database of the utility companies on an online and real-time basis.
What's more, both the Direct Pay and NetBanking facilities are available FREE of cost.
HDFC Bank offers the highest level of security available today - 128-bit SSL (Secure Socket Layer) encryption. The customer’s NetBanking details (Customer ID and password) are kept confidential and cannot be viewed by the merchant.
7. INSTA-ALERT
HDFC Bank has made its customers life easier than ever before. Because with the bank’s new InstaAlert service the customer can get regular updates on you’re his/her bank account via SMS or e-mail.
I
- 1 Credit in account greater than Rs. 5,000/ Rs.10, 000/ Rs. 20,000/Rs. 50,000
- 2 Account Balance below Rs. 5,000/ Rs.10, 000/ Rs. 20,000/Rs. 50,000
- 3 Weekly account balance
- 4 Salary Credits*
- 5 Utility bill payment due Alert**
*The customer needs to have a Corporate Salary account with HDFC Bank
** To avail this alert the customer needs to be registered for the Bill Pay service. Also, this is applicable only to the presentment/biller companies.
8. REFILL OF PREPAID CARD THROUGH SMS
HDFC Bank introduces refill of prepaid card through SMS
All the customer need to have is an HDFC Bank Account and be a prepaid customer.
Pre-paid Refill through SMS
Pre-paid Refill through ATM
Pre-paid Refill through SMS :
The customer needs to be registered for this service.But for once the bank has taken the pain of filling up a form away.The customer can now just have to walk across to an HDFC Bank ATM and do the following.
1. Select 'Prepaid Refill/Bill Pay'option
2. Select 'SMS refill registration'
3. Enter your 10 digit mobile number and confirm
Within seconds the customer will receive an SMS confirming his/her registration, giving the customer a code number and also the syntax of the message that the customer needs to send for getting a refill done. The number to which the message needs to be sent will also be a part of this message that the customer receives.
So now a refill is just an SMS away.
How much does it cost ? *
This service is absolutely free from HDFC Bank! The customer will only have to pay the regular SMS charge for the customer’s SMS request.
Where can I access this service ?
Operator Name Circle
Airtel Mumbai
Orange Mumbai
Prepaid refill through ATM :
It's actually very easy to refill your prepaid card. The customer just needs to walk into an ATM.
1. Select 'Prepaid Refill/Bill Pay'
2. Then select Pre-paid Refill
3. Enter the 10 digit mobile number and confirm
4. Fill the amount you want your card to be re-filled for
Within seconds the customer will get an SMS confirming the refill for the asked amount!
How much does it cost ?
This service is absolutely free from HDFC Bank! The customer will only have to go to the ATM and use his/her card. It's a service that has been introduced for the first time in India, just to make the customer’s world easier.
Where can I access this service ?
Operator Name Circle
Airtel
Andhra Pradesh, Chennai, Delhi, Gujarat, Haryana, Himachal Pradesh, Karnataka, Kerala, Kolkata, Madhya Pradesh, Maharashtra, Mumbai, Punjab, Tamil Nadu, Uttar Pradesh (West)
Hutch Andhra Pradesh, Chennai, Delhi, Gujarat, Haryana, Karnataka, Kolkata, Punjab, Rajasthan, Uttar Pradesh
Idea Andhra Pradesh, Delhi, Gujarat, Haryana, Kerala, Madhya Pradesh, Maharashtra, Uttar Pradesh (West)
Orange Mumbai
9. ONEVIEW OF ONE’S ACCOUNTS IN 6 BANKS
OneView. For the first time in India, this convenient service brings together the customer’s online bank accounts (including those of family members), in one place, in total security.
Now, OneView puts it all on one screen for its customer, so that tracking and managing his/her online accounts becomes quicker and easier than ever before. It gives its customer a complete picture of his/her finances across multiple accounts.
If the customer has one or more accounts with HDFC Bank, Citibank, ICICI Bank, HSBC India, Standard Chartered Bank and/or Global Trust Bank then OneView is just right for him/her. Best of all, it's absolutely free!
Simply register for Internet banking with these banks and use OneView to get a single window acess to :
1. Current/Savings account balances
2. Current/Savings account transaction history
3. Fixed deposit summary
4. Saving/Fixed deposit summary
5. Citibank Credit Card
6. Citibank Credit Card transaction history
7. Hdfcbank Demat Profile
8. Hdfcbank Demat Holdings
9. Hdfcbank Demat Status
It will provide the comprehensive information the customer needs at one place. So get the convenience of OneView now and get into 6 banks.
CHAPTER-4
PROMISES OF
E-BANKING
PROMISES OF INTERNET BANKING
As the potential that the internet held to transform different aspects of our lives manifested itself, it was forecast that its impact on financial services such as stock-broking and banking would be especially profound. Banking transactions could be conducted entirely in a virtual context with no physical exchange necessary. Also transactions are to a large extent standard with little, apart from price, difference between banks. For both these reasons banking was especially well suited to use the Internet. It promised to create a perfectly competitive electronic marketplace for banking products- with perfect information about products ;larger number of buyers and sellers; and reduced transaction costs.*
1. No physical change
Historically, as the means of payment substituted gold by paper currency and paper currency by plastic and finally plastic by direct debits, the information intensity kept increasing. In the case of buying physical goods online, a large portion of the value to the customer is derived only after the goods are physically delivered. The internet brings supplemental value by aiding the search process, making comparisons efficient and automating order placement and billing. On the other hand, in determining which bank to place a deposit with, not only can the search be done online but the actual product delivery (deposit booking) can also be affected online. Since there is high information intensity and no physical exchange, the internet as a delivery channel is responsible for delivering a large portion of the value for a customer. More importantly, the end-to-end process can be completed entirely online.
2. Reduced transaction costs
Additionally various studies showed that as a delivery or distribution channel, the Internet could bring substantial cost advantages for banks. Consultants Booz-Allen & Hamilton estimated that whereas the cost of a customer walking into the branch and using a teller is USD 1.01 , the cost of conducting the same transaction on the internet is a tenth of that and is close to USD 0.10.This was also considerably lower than the cost of conducting the transaction over the telephone(USD 0.52) or having a customer visit an ATM (USD 0.27). Significantly, transaction costs over the internet are also lower than the cost of a customer accessing the bank over a dedicated telephone line using a modem.
The Booz-Allen study was quoted in many commentaries that described the impact of the Internet on banking, included one by the United States Department of Commerce. There was a similar study on the costs of delivering banking services across different channels conducted by the IBM Consultancy Group. Although the absolute costs that they estimated for each channel were different from Booz-Allen , the message was the same- banking transactions on the Internet would cost banks a fraction of what a physical branch would.
3. Double-edged Sword
Reduced delivery costs and the absence of physical exchange is indicative of why the Internet held so much promise to turn banking upside down. In theory, physical branches were not required and the transaction costs over the Internet were much lower. It was almost obvious that from a bank’s perspective this was the way to go. However, the promise of the Internet was a double-edged sword.
While it held the opportunity to lower costs and do away with costly branches and staff, it also posed the threat of compressing profit margins by making it easier and more efficient for customers to search and get comparative information on the offerings of various providers. Another threat that loomed in the distance was that this new electronic marketplace for banking products would directly link the savers in the economy with the borrowers and ultimately diminish the role of intermediaries like banks.
3. Perfect Information
One of the things that the Internet does extremely well is make perfect information available to all market participants by bringing about efficiencies in the search process. For buyers of banking services, there are sites that aggregate information on product offerings from different providers at a single location. By merely making information available to customers about multiple providers, these sites perform the function of dismantling the oligopoly of a few providers and bringing about a structure tending towards perfect competition. A good example of this would be E-loan, an online aggregator of loans. It allows potential borrowers to search and compare the offerings of thousands of providers. Obviously, this is something that a borrower cannot efficiently accomplish by walking around branches, researching product catalogues or calling.
Eliminating the agent’s commission effects a further reduction in mortgage cost. As a further value addition to the client (and to the obvious detriment of the bank’s profitability), E-loan monitors the mortgage over its life and continually alerts the borrower to cheaper refinance options.
Perfect information would be available to the banks as well. The Internet makes it
less likely that, for example, an individual could hide a bad credit history from prospective providers and beat the system by switching providers frequently. To that extent this superior information-set would enable banks to move away from portfolio-pricing, where good credits subsidise the bad ones, to a pricing structure that is based on the customer’s credit history.
4. Reduced role for intermediaries
One of the most successful companies on the Internet is eBay. It offers visitors the ability to participate in online auctions hawking everything from a used car to a perfume bottle collection. More than 60 million auctions have been completed to eBay on an average basis set a new record of 1.782 million. For the first quarter of 2000, eBay generated net revenues of USD 85.8 million, a 100 % increase over the earlier year.
The likely reason for eBay’s success is that it offers visitors an electronic marketplace that is tending towards perfect competition. This is achieved by two economic functions that eBay is providing. The first is
aggregation of buyers and sellers and facilitating a search function. The second is bringing about efficiency in determining price that is enabled by the online auction mechanism which makes pricing transparent and also makes it dynamic since it is now driven by market conditions of ‘demand and supply’.
An eBay online auction model applied to banking services could have a potentially devastating effect on banks. On the corporate baking side, the Internet could replace expensive teams of bankers whose job is to link the companies in need of capital with the providers of capital (and, in the process slice-off banking fees). By creating competition among the providers of capital, the Internet could help companies raise money at much finer spreads. Investment banks using the Internet such as WR Hambrecht have pioneered the use of online auctions to determine prices for initial public offerings (IPOs).
Hambrecht’s trademarked OpenIPO is based on a Dutch auction system designed by Noble Prize winner economist Vickrey and allows individual and institutional investors to bid online for shares of an IPO. Participation is not based on who you know-qualified investor can open an account and place a bid. The auction treats all bids equally, whether from qualified individual investors or from a large institutional investor. The allocation is based on what the bidder is willing to pay rather than on the preferential treatment. This creates a market driven by supply and demand rather than influence or artificial demand.
INTERNET ENABLED BANKING MODEL
The new banking business model coalesces around the ‘6 Cs’ which are summarized below.*
The 6 Cs
Traditional Model
Internet Enabled
Cross-sell
Product Driven
Relationship value driven
Connectivity
Stand-alone
Connected
Channels
Few
Multiple
Consolidation
Low
High-across products and banks
Competition
Within Industry
Outside Industry
Convenience
Short time window
24*7*365
1. Cross-sell
Traditionally, banks have organized themselves along product/relationship lines. The product teams are responsible for the revenues on the portfolios of products managed by them-across the customers of the bank. They also manage brand equity and track market share. The relationship teams are responsible for the revenues on the set of customers managed by them – across the products offered by the bank.
Managing a bank on a product profitability basis is fine when there are few providers and competition is limited. When product competition intensifies, it becomes important to view ‘relationship profitability’. This means that some products might be loss-leaders that enable the bank an entry into the customer relationship and cross-sell other, often more profitable, products. Foe example, a bank provides fine pricing on trade services to get the customer’s foreign exchange business.
In the emerging business model, individual product profitability will become less important and a cross-sell strategy will drive marketing efforts. One of the drivers of this change will be eroding profit-margins at a product level. As the margins get compressed, cross-sell of various products will become essential to achieve a viable level of profitability at a customer relationship management (CRM) tools will become important in identifying cross-sell opportunities and tracking their conversion.
2. Connectivity
In comparison with the stand-alone high street branch of the traditional business model, the emerging business model will have a high degree of connectivity across its branches and products. In part, this will be driven by the market, with customers seeking to seamlessly access their account across locations. It will also be driven by the need to monitor the customer buying behavior and include all possible data points so that cross-sell opportunities are identified.
Connectivity in the emerging business model will also imply electronic linkages between the bank and its customers, especially on the corporate side. Already, many bank-processing platforms on the corporate side. Already, many bank-processing platforms integrate electronically with customer back end systems such as an enterprise resource planning(ERP) software. Data on accounts payable, foe example may be electronically accessed by the bank to process payments (in a straight through manner) to the customer’s suppliers.
Developments in the Internet, especially expansions of coverage and increase in bandwidth have made connectivity logistically possible and economically feasible.
3. Channels
Not so ling ago, customers had to conduct a banking transaction by physically going across to a branch within a limited time window. More recently, new channels such as telebanking and ATM have also been offered by banks and have become popular with customers. There will be a multitude of channels in the internet enabled banking model through which a customer can reach a bank. Not only will access increasingly be online via a PC, it will quickly become wireless via mobile phone or personal digital assistant.
The context of the physical branch will also change. From the imposing banking halls on main high streets, branches will increasingly be a counter at a supermarket. In the United Kingdom, Tesco and Sainsbury already have banking kiosks within their supermarkets that carry their brand names. In the United States, the Canadian Imperial Bank of Commerce is setting up banking services in the 1400 odd outlets of the safeway supermarket chain. The emphasis of the model is thus changing from symbolising
Stability to a more functional and convenience driven one. It is also possible that the physical branch may not be a bank at all. Online banks such as Juniper allow their customers to drop deposits off at any of the 3400 United States outlets of Mail Boxes Etc, a San Diego based private postal outlet.
4. Consolidation
Traditionally, a customer who purchased more than one product from a bank probably had to interface with two different departments. It is also likely that these departments had no idea of what other banks’ products and services the customer avails of. Consolidation (or aggregation) of accounts for a customer across products within the same bank is taking place.
The primary driver of this consolidation is customer convenience and at a mere click, a customer can view all her account statements. However, the signs for bank profitability are ominous. Consolidation means that information to a customer is now readily available. It follows that it is unlikely that a customer would be paying interest on a credit balance while having idle money in a checking account.
Taking consolidation a step further is aggregation of accounts across banks. This means that a customer can view her savings accounts, credit cards and mortgage all in one place even though the providers of those products may be different. In such a scenario, the ownership of the customer will shift from the banks providing the products to the banks aggregating them because of the latter’s control over the customer’s access to information.
5. Competition
In the last decade, there has been a surfeit of deregulation of banking activity across the world, the most prominent being the Gramm-Leach-Bliley Act in the United States. Banks have seen lowering of the barriers to enter the banking sector or expand within it. Competition has not only come in the form of new entrants setting up shop-incumbent banks have seen erosion of their monopoly over customers by non-traditional competitors from other parts of the financial services industry such as mutual funds who have out-competed them for surpluses.
There is more competition to come and the Internet enabled bank will see threats from new competitors that come from outside the financial services industry. In the United Kingdom, the Post Office made a foray into banking by launching its ‘Universal Bank’. As technology and telecommunications increase their weightage as critical success factors, players in these areas will look for a slice of the action. Many a banker’s nightmare is the threat of a software powerhouse such as Microsoft integrating forward and providing a banking service. There are already a plethora of alliances and strategic partnerships between the telecom players and banks to jointly offer customers a mobile banking proposition. This is driven in part by the need of the telecom companies to recoup some of their own capital investments by providing new services as their traditional voice and data services suffer declining margins.
6. Comfort
It follows from the multiplicity of channels and the underlying technologies the Internet enabled banking model will have far higher customer convenience. The model envisages basing the service offerings around the convenience paradigm. Access the bank anytime (on 24*7*365 basis); anywhere (from across the globe) and anyhow (through whichever preferred channel).
The Internet is likely to make the term ‘bank holiday’ redundant. Its capabilities will make possible ‘around the year and around the clock’ access to the bank. Importantly, it will do so at a cost that will not inhibit delivery. In the bricks and mortar world, an anytime service offering came at additional cost for the bank because of the utility and overtime expenses of a teller or call centre respondent. And ‘anywhere’ meant opening branches to service customers that may not have been profitable at the margin. The Internet does change everything.
CHAPTER-5
IMPACT OF INTERNET ON DELIVERY OF BANKING PRODUCTS
IMPACT OF INTERNET ON DELIVERY OF BANKING PRODUCTS:*
1. Credit cards:Nextcard
2. Consumer Loan Origination-loan
3. Corporate Treasury:FXall
1. Credit cards:Nextcard
Winning a customer in a heartbeat - Launched in 1998 in United States, NextCard exemplifies the potential of the internet to force a paradigm shift in the distribution of financial products. Existing processes for approval (or declines) of credit cards take up to three weeks time. NextCard announced its arrival rather dramatically by granting approvals (or declines) for its online credit card applications in less than 30 seconds. Approved customers could even start shopping online the same day and need not wait for the physical card to arrive. By the second quarter of 2001, NextCard crossed the one-million milestone and established itself as one of the leaders in the online credit card market.
At the heart of the NextCard instant approval process is a proprietary engine, RapidResults , which integrates logic and data from the major credit bureaux, national fraud databases and NextCard’s own databases. When a prospective customer provides brief details online- name, address, income and social security number- NextCard’s approval engine checks the cudstomer’s record in these databases and creates two credit scores. One is the industry-recognized score developed by Fair, Isaac & Company (FICO) and another is an internally developed score. The application is approved or rejected by the computer almost instantaneously based on the set decision criteria.
Market Segment of One
The internet has allowed NextCard to customize its card offering to each customer as if they were a segment on their own. Importantly, it has afforded this without adversely impacting the cost base. NextCard’s computers search from among an array of thousands of options and provide the customer with combinations that best suit her credit profile and requirements. For example ,a customer who is willing to transfer a higher balance may be enticed to do so by being offered a better rate.
This automated methodology of providing alternate credit card pricing terms based on balance transfers from other credit cards in real time over the Internet is now patented. Significantly, the algorithm is able to sniff out those applicants who are prone to moving their balances at the prospect of a better ‘teaser rate’ elsewhere. The average NextCard customer keeps a balance in excess of USD 1700 on their card which is higher than industry average of about USD 1500.
Customization implies that each NextCard customer has differential pricing that is based on her individual risk profile and profitability dimensions such as balances held. This is opposed to a traditionally used portfolio approach to credit card pricing that involves some customers being subsidized by others. In a portfolio, profitable customers such as those who keep high balances on their cards routinely subsidise those unprofitable customers who pay-off their outstanding balances in time.
The impact of this differential pricing is quite profound. It allows the issuer to broaden the catchment area of potential customers. This is especially for the so-called ‘sub-prime’ segment which is usually considered to be high-risk in terms of their credit-worthiness. Using a portfolio approach, these ‘sub-prime’ customers would have fallen through the credit sieve. Under an information-led customized approach, these customers have the opportunity to get credit cards and the issuer is rewarded for the higher risk by a higher interest rate.
Furthermore, continuous mining of the card spend data allows the issuer to pick up any early warning signals.
Differential pricing also improves the quality of the credit in the portfolio of the customers. It does this by avoiding the problems of what economists term ‘adverse selection’, whereby a lowering of the portfolio interest rate makes the card attractive for customers who would otherwise be unable to afford the terms. Moving away from the portfolio approach allows the issuer to adopt an aggressive approach to interest rates to expand market-share by signing-up customers who are desirable while simultaneously ensuring that the lower quality credits continue to be priced in accordance with the higher credit risk they pose.
e-service
NextCard uses the Internet to provide superior service that is also customized for each customer such as putting a picture of the customer’s kids as wallpaper for the card. This creates affinity and, as a JP Morgan analyst noted, this makes it less likely that the customer will cut up her card and send it back.
Customers can also set automated e-mail alerts that send them an e-mail when, for example, a specific merchant posts a transaction into a account. Each customer gets a concierge, an online shopping ‘bot’, which remembers passwords, fills up forms and searches the web for the best prices. Yet another innovation is the active credit card statement which provides exclusive merchant offers to cardholders. These offers can be availed by a simple click on the site.
2. Customer Loan Origination: E-loan
Empowering the customer
E-loan is online lender that burst onto the scene in 1997 with a promise of offering the customers the best loans at the lowest cost. Founded by Chris Larsen and Janina Pawlowski who met while working at a mortgage brokerage in Palo Alto, California, their vision was to transform the inefficient mortgage industry and create an information resource that would put up the customer in charge of the process of securing a loan.
This was an Internet venture that took shape more by accident than by design. Larsen and Powlowski who had computer backgrounds and had written software that compared different mortgage products for their clients, founded the Palo Alto Funding Group in 1992. The infant E-loan went to the Internet as www.pafg.com as a part of a pilot project on e-commerce funded by a Silicon valley consortium. When 12 applications were received in less than a week, the founders realized that they were on to something.
Trends in online mortgage
In the United States, it is estimated that in year 2000, about 1% of the total mortgages were originated online. Predictions by TowerGroup and Forrester Research vary, but broadly, online mortgages are expected to reach 10% of the total mortgage value over the next few years.
Trends in searching and applying for a mortgage online are fuelled by growth in use of the Internet in the process of buying or selling a home. Consultants, Gomez Advisors conducted a survey of about 4000 real-estate agents and 17000 adult Internet users. More than two-thirds of the respondents believe that the Internet will alter the way homes are bought and sold; that it will make the process quicker and there will also be likely declines in the standard 6% commission rate currently payable to agents. Using the Internet to search and apply for a mortgage is a natural extension of searching foe homes online.
E-loan has sold mortgages for a dollar value in excess of a billion dollars each in the years 1998-2000. In 2001, it experienced rapid growth and sold as many mortgages as the cumulative value of mortgages sold in the previous three years. It is to be noted that the actual value of loans sold by E-loan is higher, given the auto loans that it also sells. This was a product line that got a kick-start when E-loan acquired carfinance.com from Bank of America.
Putting the Customer in Charge-Enabling Search
E-loan enables customers to perform an automated search for the most suitable loan from over 50000 products provided by more than 70 lending sources. It matches the customer’s risk profile, debt objectives, repayment capacity and other borrowing criteria with the products available and offers the most competitively priced loans. The customer can apply for the loan online and also track the status online. Through this process, traditional intermediaries in the loan process such as the mortgage broker or commissioned loan agent are eliminated.
The most revolutionary part of the E-loan offering, however, is the proactive management of the loan for the customer. Computers continually scout around for better refinance opportunities and alert the customer as they arise over the entire lifetime of the loan. By alerting the customer about the potentials savings from refinancing an existing mortgage and making it easier for the transaction to close, E-loan is threatening to erode the profitability of incumbent loan providers.
The Internet Powered value proposition
E-loan is leveraging the power of the Internet for lowering the costs of search. These costs are defined as those borne by customers who include the time and effort involved in searching for a new supplier.
It also creates a situation of more perfect information between providers of the loan and the customer and drives the interest rate and other terms down to competitive levels. Over the life of the loan, the Internet enabled processing engines proactively manage the loan and alert the customer regarding cheaper finance options. There are also savings in the E-loan business model owing to a reduction of transaction costs by eliminating paper during the application process. Without the Internet, it is unlikely that such a service could be offered without substantial cost.
3. Corporate Treasury: FXall*
Even though global foreign exchange markets are the largest and the most liquid, tracing on the market by corporate customers has remained untouched by technology. According to the Bank for International Settlements (BIS), the average daily turnover on foreign exchange markets was estimated to be USD 1200 billion in April 2001. This trading volume is almost six times higher than the combined global debt and equity markets. Of the total turnover, four-fifths, is comprised of interbank transactions between banks and their customers.
In this day and age, customers trading currencies do so by calling their bank and asking for the rates. Banks quote with a spread that is determined by the size of the transaction and the overall corporate banking relationship. Price discovery takes place, in the most primitive way, only if the customer calls multiple banks and compares rates. This is especially cumbersome when the market is volatile and moves before a trade is consummated. If there is agreement on the price, a deal is closed and, this leads to a complicated, manual and paper-based chain of events that constitute the trade settlement process. This lack of automation has resulted in the market being inefficient, opaque and costly.
In an attempt to improve this situation, the year 2001 saw the launch of two competing electronic trading systems for foreign exchange, Fxall and Atriax. Consortia of leading banks sponsored both these systems. FXall has been supported by a group of 14 banks such as Bank of America, Credit Suisse First Boston, Goldman Sachs, and Morgan Stanley Dean Witter. On the other hand, Citigroup, Deutsche Bank, JP MOrganChase and Reuters backed Atriax.However, in may 2002 , Atriax ceased operations after in conclusive merger talks with Fxall and Citigroup , Deutsche Bank and JP MorganChase moved their liquidity commitments to FXall.
Greater transparency, finer spreads
The Electronic trading systems such as FXall allow a customer to complete the price discovery , trade and settlement online and automate the FX lifecycle. Customers log on and are offered quotes from either a single bank or multiple banks and these quotes can be either one or two-way. The customer can maintain rules that enable the automatic identification of the best competing price. These rules include highest bid/lowest offer; tightest bid/offer spread; fastest quote; favorite bank.
These systems allow for straight through processing (STP).While they allow the customer to input deals manually or by importing a spreadsheet they are designed to seamlessly integrate with the customer processing system. Also they provide economic research, market news and currency forecasts, and post-MIS.
A natural consequence of the greater transparency that characterizes electronic trading is:
• A narrowing of the bid/ask spread.
• Customers are able to estimate better the liquidity available in the market.
• Transactions are not only cheaper as paper is eliminated and STP is enabled but they are also less error prone.
Adoption Rates
In the backdrop of these multiple benefits to customers, it is perhaps not surprising that the share of electronic trading of foreign exchange by bank customers is expected to sharply increase. From levels of about 5%in 2001, the share of electronic trading of foreign exchange by value is expected to increase to about 35% by 2004. Technology consultancy, TowerGroup, has a far more optimistic projection of more than 75%.
MOBILE BANKING :
Mobile operators may place their bets on financial content and, in doing so, enable the adoption of mobile banking. The mobile devices are eminently suited for the most basic banking transactions such as viewing the account balance ,ordering cheque books and accessing ( a limited number of )past transactions. These are services that customers may or may not pay for. However, a mobile device can support even more complex transactions such as share trading , bill payment and can be used to effect other payments. These are services that customers are not only willing to pay for explicitly, but they also create opportunities for implicit revenue generation, such as earnings on float.
Indicative of the suitability of the mobile device for banking is report by Durlacher, which cites that 90% of banks in Europe were offering some form of mobile banking in as early as 1999. Surveys by Nokia and IDC reveal that banking is the foremost mobile application which is demanded by users of mobile phones and other wireless devices. Banks find that offering mobile services is a good way to improve the positioning of their offering as encompassing ‘cutting edge technology’. Unlike PC based Internet banking, rudimentary mobile banking services can be operationalised within a short time frame and with small outlays. Apart from providing another channel, the mobile phone offers the prospect of value added services if combined with positioning technologies. Furthermore, the mobile payments proposition promises to vastly improve banks’ service delivery in the micropayments area by reducing the need for handling physical cash.
A combination of all these factors has led to great optimism about the penetration of mobile banking. The estimates of mobile banking users vary of wireless financial services by 2004, which is double the number they predict in 2003. Meridien Research, on the other hand, estimates that there will be only 40 million users by 2003.
Significantly, most of the growth in customer adoption is predicted to be in the Asia-Pacific region. In some countries such as Japan, the relatively advanced network is driving growth. In others, fixed line telephone penetration has been abysmal and mobile telephony is the only viable option. The US, in particular, is not seeing such growth because the country is a patchwork of three different mobile protocols –GSM, TDMA and CDMA. The lack of interoperability across territories is an inherent disadvantage for a mobile customer since it undermines the core mobility proposition itself. In contrast, most of the Asia-Pacific region as well as Europe is on a GSM network. Another factor discouraging penetration in the US is that the mobile customer receiving the call pays for the call, whereas almost everywhere else the ‘calling party pays.
Phone Banking in the Internet Age
Product Information
Mobile devices can provide users with a wide variety of information from the public domain which can range from foreign exchange rates to the list of ATM’s in a city. Customers can also get information that is not in the public domain and which is specific to them. An example would be the ability to access their last five transactions. The customer can pull out this product information on demand- by accessing the website of the bank. It can also be pushed out to the customer in the form of customised alerts. A customer can get an SMS alert when the dollar/euro breaches a certain level or when an item of an unusually high value is debited to the account.
There are a few new banking applications that the ubiquity of the mobile-device and location-based services combine to provide. One of these involves helping customers go beyond finding an ATM- the network uses location-based technologies to indicate to the customer the nearest ATM. Another application adds to security-it sends the customer an SMS message alerting him or her of a transaction on the credit card or money withdrawn using the ATM card.
Transaction Initiation
The size of the mobile device makes it amenable to conduct most banking transactions. These include transferring funds between accounts, issuing instructions to book a certificate of deposit for a specific tenor or to order a cheque book. One of the applications that have been widely believed to be the ‘killer application’ for PC based Internet banking as well as mobile banking is bill presentation and payment. MeritaNordbanken (one of the entities that merged to form Nordea) has offered this to customers as early as 1992 and more recently, the UK building society Woolwich also announced an application. Over a mobile, a composite bill cannot be presented and only a summary is sent to the user.
Since the device is ubiquitous, a mobile can also be used to validate transactions. For example, large credit card payments could be validated electronically by the customer by inputting a secret pin number. Or, a call could be made to the customer on the mobile reconfirming that they are in the process of buying a large ticket item using their credit card.
However, within banking, the application that holds the largest potential is payments. Initially, it is expected that these will be of small value or micropayments but over a period of time, all payments could be made using the mobile device. There are multiple reasons to expect that the initial application will be focused on micropayments . Firstly, this is an area that is not currently addressed by the present card forms and hence will face least resistance as it entails no substitution. Smart cards that function as stand-alone stored value e-wallets have had a limited penetration, that too, only within closed communities such as a university campus. Currently micropayments are settled by exchanging physical currency. This is something that banks would be more than happy to substitute given the costs of handling, storage and issuance (not considering that some of the current infrastructure for mobile payments is not fail proof and, therefore, makes its unsuitable for large value payments).
Cash, card or mobile?
In order to complete a payment transaction, there are four steps that need to be fulfilled.
• The transaction needs to nr initiated with the customer account number, the merchant account number and the amount.
• It needs to be routed to a payment server that will affect the entries.
• If the payments are for amounts that are not insignificant then the payment amount needs to be validated by the customer.
• Also, the merchant needs to receive a confirmation that he has been/will be credited so that the goods can be released.
Banks want to play too:
Dual slot/chip systems
Payment solutions that involve an active partnership between the mobile operator and a bank include those that involve a dual slot phone. In this case, the customer selects an item to be purchased on the website of the merchant. The merchant then sends an authorization request the customer with the product’s price. The customer inserts his or her plastic card into the second slot of the mobile phone and enters a transaction PIN number to authorize the payment. In effect, the mobile phone becomes a POS terminal. Advantages of this system are the incremental security since, in addition to the SIM of the phone, there is a payment card that is required. However, the second slot and card reader in the mobile phone makes it heavier and more expensive –and limits widespread adoption.
The Iti Achat system that is in operation in France is based on this mobile payment model. It is the outcome of alliance between Mastercard , Oberthur smart cards , France Telecom , Europay and Motorola (which provides the dual slot Motorola StarTac hanset). The debit/credit card used is called the CB or cartes bancaires. A variation of this system is for the amount to be debited to a wallet with value stored on a smart card (prepaid).
It is crucial to understand that the real motivation behind the slot phones is not security but rather considerations of banks and credit card companies to retain their dominance over payment systems. An embellishment to the system is the development of phones with dual chips (as opposed to the dual slots). This involves a chip card issued by bank that is in addition to the GSM card issued by the mobile operator. The bank issued card acts as the plastic debit/credit card that provides the security without the incremental weight of a dual slot phone and the added step of inserting and taking the payment the card out of the slot. The chip insures that the payment transaction is independent of the operator. Having the payment card ‘always in’ also enables loyalty programs to be administered and interactive shopping such as pay per view.
Nokia, Nordea and Visa have come together to provide customers an Electronic Mobile Payment Services (EMPS) based on dual chip technology. A limited number of specially designed Nokia phones were issued to customers in Helsinki in late 2001.During the pilot, payments could be made online at a designated Internet grocery store and in the real world, at a movie theatre.
Banks get revenues from payments explicitly from fees and commissions and implicitly from the floats. According to the Boston Consultancy Group (BCG), a payments revenue pie currently worth USD 300 billion is at stake. They estimate that because mobile payments will be cheaper for both merchants and consumers as compared to conventional payments effected by cheque or card, the pie could shrink overall. For banks, the bad news is compounded because mobile operators could gobble up a slice as large as 20% of the (smaller) revenue pie from the banks.
Partner or perish*
It is imperative that the mobile operators increase revenue by providing content such as banking applications. On their part, the banks would strive to protect their payments revenues from attack by outsiders. With both banks and mobile operators focusing on mobile banking, is a showdown in the offing? Perhaps not – if the slew of alliances seen recently is considered – it is likely that more cooperation will be seen between them.
Country Bank Mobile Operator
Finland Leonia/various Sonera
Germany Deutshe Mannesmann
Direkt Anlage T-Mobil
Hypo Vereinsbank Viag Interkom
LBBW MobilCom
Italy Banca Intesa Omnitel
Banco di Roma/Fineco Telecom Italia
Japan Sakura Bank NTT DoCoMo
Norway Den Norske Bank Telenor
Spain BBVA Telefonica Moviles
Sweden Swed Bank Telenor
England Llod’s BT-Cellnet
Natwest Orange
MOBILE OPERATORS AND BANKS: JOINING HANDS
This cooperation emerges from the strategies of both banks and mobile operators to ‘buy’ rather than ‘build’. From the banks’ perspective, an alliance allows them to continue to provide the core value proposition in the payments process. As noted, mobile operators have a relationship with the customer and could relegate banks to performing peripheral functions of becoming a final clearing and settlement bank.
For a variety of reasons, banks are unlikely to consider getting control of mobile telecom assets themselves. Efforts to mandate bank-friendly industry standards such as the EPMS based on dual chip technology are dependent on customer adoption and cannot be entirely relied upon to ensure that disintermediation does not take place. For example, the Danish operator Mobilix has already piloted a system in partnership with a card-processing firm that provides customers with a mobile wallet. Since customers receive a new SIM card that stores a confidential PIN code, neither is a dual slot necessary nor is a dual chip phone.
For the mobile operators, an alliance strategy works better than the other option of building a bank from scratch or acquiring one. Post the 3G licensing, the capital outlays are just not available to mobile operators for acquisitions. Building a bank from requires investments and domain expertise-again, the operators have neither. Alliances are a good way to provide customers with a banking service without significant outlays of capital.
In summary – the till is not ringing, it is beeping
There are significant factors that are driving the increased penetration of mobile banking, both on demand and supply side. The penetration of mobile devices is experiencing exponential growth. Under pressure to arrest declines in voice revenues, mobile operators are adding value added services, primary among which are banking applications.
The mobile device takes the concept of anywhere banking to the next level and presents a whole host of new product opportunities for banks to make available to their customers. Much like a double-edged sword, mobile banking also presents a threat to those banks that ignore it. Payments for small value purchases are one such area where the available value can be competed away by nimble-footed groups of mobile telecom companies and banks acting in unison. Various mobile payment solutions are currently being piloted. It is just a matter of time before the clinker of coins is replaced by the beep of a mobile device.
CHAPTER-6
FOLLOWING TRIOKA OF PRODUCTS USE THE INTERNET
FOLLOWING TRIOKA OF PRODUCTS USE THE INTERNET TO MOVE BEYOND THE PURE EFFICIENCY GAINS AND WHICH PORTEND A PARADIGM SHIFT IN THE WAY BANKING IS DONE:*
1. ACCOUNT AGGREGATION: Hailed as the “most significant financial innovation in 2000”, account aggregation is a relatively recent product that has been enabled by the internet. The product involves aggregating information from a customer’s different financial accounts maintained with multiple providers and presenting them to the customer on a single website. The customer can access the information seamlessly by using a single username and password.
Most customers have relationships with more than one bank and use more than one banking product. For example, in the United States, a Banking Industry Technology Secretariat (BITS) estimate says that households in the US use an average of 3.6 financial institutions. Account aggregation allows these customers to better manage their money without the bother of collating information from different websites. Aggregation can also involve non-financial products such as frequent flyer miles and e-mail.
The initial customer interest in account aggregation is very high. In the United States, the first customers were signed up in 2000 and these have risen to about 5million in 2001.Citibank, which was one of the first large institutions to offer aggregation, saw almost 2000 customers sign-up daily for its service branded myciti.com. In the UK, the number of customers has touched a million and it is reported that the aggregation launch has generated at least half of new-to-bank customers.
There are varying estimates about how many customers are predicted to embrace aggregation but all of the studies indicate explosive growth. Datamonitor for example, forecasts that within the US and Europe, aggregation users could touch 30million each by 2005. These numbers represent almost 65% of e-banking users in the US and 40% of the users in Europe.
ENABLED BY THE INTERNET
In, personal finance managers (PFM) such as Quicken and Microsoft Money have allowed customers to aggregate their financial data from multiple sources onto their PC. However, this is a little cumbersome- the data has to be entered into the PFM since only a few financial institutions enable data downloads. The high rates of adoption are premised on Internet enabled aggregation on a website. This can be at the website of the customer’s financial institution, at the website of an independent aggregator such as Yodlee or at the customer’s point of access to the Internet such as America Online (AOL) or Yahoo.
How Aggregation Takes Place
Screen Scrapping: Screen scrapping involves the use of software robots or ‘bots’ that go into the financial institution’s website, masquerading as the customer, and extract static financial data. The customer’s username and password are stored with the aggregator and usually the financial institution cannot tell whether it is the actual customer or the ‘bot’ which has visited the site. The data so obtained is then translated by the aggregator into a standard format and stored in a central server for presentation to the customer.
The scraping begins by mapping the HTML of the website but data layouts and formats can change and so the website being aggregated needs to be constantly monitored for any changes. The technology is unsuitable for applications where the data is time-sensitive, since it works on a batch-basis and mostly scrapes once a day.
Though the technology is admittedly clumsy, it works. Embellishments to the technology have come in the form of more ‘intelligent’ scraping where the ‘bots’ are configured , using object-based parsing, to specifically find the financial information they need.
Direct Feeds
Direct Feeds involve the active participation and consent of the financial institution in the aggregation process. This is also the reason why some observers refer to the technology as ‘permissive aggregation’. Based on a customer’s standing instruction, the financial institution provides a direct datafeed to the aggregator using a normal communication protocol. This may be converted into a standard format by the aggregator using simple conversion routines and displayed on its website. The data can be provided on real time basis.
Most financial institutions wherewithal to provide these feeds since existing channels such as ATM network or electronic inputs use similar inputs. Direct feed is an obviously more robust process for collating data and affords greater security and integrity. While a real time feed is possible in technological terms, the costs may outweigh the customer benefits. Though both screen scraping and direct feeds are important in their own right, there was widespread opposition by financial institutions to the nascent screen scraping aggregation service. Screen scraping helped to jumpstart the industry by obviating the need for the buy-in of the financial institution. It is still possibly the more efficient way to look at aggregating simple things like account balances especially as the adoption of a standard such as OFX becomes more widespread.
Direct feeds are costly to negotiate, set up and operationalise but obviously provide data that is rich in content and can be trusted. They can be used to move aggregation beyond the level of a commodity and enable value added applications such as advisory services.
BUILD VALUE ADDED SERVICES
Aggregation on its own is a commodity service. Customers want information relating to all their accounts in one place, but importantly, once they have the information, they want to be able to act on it. To be able to attract customers, and keep them coming back, aggregators must jump to the next level of functionality.
One of the obvious features that the aggregation services should look at next is the transfer of funds between accounts. If a customer ahs money in a savings account and an outstanding credit card balance or loans, then it is important that the aggregator allows the transfer between these two accounts. The ability to initiate payments would also help settle credit card utility bills that have been aggregated at the site.
Once a customer’s banking, brokerage and insurance products are aggregated at one place, one of the obvious value additions for an aggregator is financial advisory services. The access to customer information in terms of its breadth and depth would be unique and would enable the delivery of advice that is more closely aligned with the customer’s risk-return preferences and financial priorities. It is important to note that for the high level applications such as wealth management, the underlying technology must change to direct feeds as opposed to screen scraping. The latter will fall short of the task when required to get security prices, which may be an important input into the wealth management process.
2. ELECTRONIC BILL PRESENTATION AND PAYMENT (EBPP)
Electronic bill presentation and payment (EBPP) involves the delivery of bills (or invoices) over the Internet and also affords consumers the opportunity to review and pay these items electronically. By eliminating paper and the delays associated with physical bills and payments, EBPP delivers value in terms of reduces time and lower costs.
EBPP has been described as the ‘killer application’ for banks, which promises to redefine value propositions and transform the competitive landscape by a radical and creative combination of technology, product and service. According to Forrester Research, there will be 21 million households using EBPP by 2005 and paying about 13% of all their bills by using their product. These estimates are broadly similar to those provided by Jupiter Communications (25 million households) and TowerGroup (9% of bills paid) for the same time frame.
ENABLED BY THE INTERNET
The electronic exchange of invoices has existed for a while between trading partners operating within a closed loop network. This involved electronic data interchange (EDI) and participants had to sign up for expensive, proprietary software. There were also recurring costs of network linkage and usage.
The Internet affords an EBPP solution that is easy to implement and comes at a low cost. Even a minor examination of the dynamics of EBPP, reveals that there are substantial benefits that accrue to the billers and the payers. It is therefore not surprising that there is so much optimism about EBPP . TowerGroup , for example, estimates that some banks are expected to spend up to a quarter of their IT budgets on electronic billing between 2001 and 2005. Meridien Research also predicts an increase in expenditure on EBPP solutions along broadly the same time frame.
VALUE PROPOSITION
EBPP delivers its value from reductions in cost and time in the billing process. For billers, EBPP reduces bill presentation expense by avoiding the need for printing and mailing of physical bills. Eliminating mailing delays and allowing an almost instantaneous presentation reduces cycle time. EBPP also fosters better customer service by removing ambiguities on the dispatch or receipt of bills. For payers, EBPP affords the ability to review bills and make payments on 24*7*365 basis from the convenience of their personal Internet device. Savings accrue because mail float on the payment leg can be avoided as also the costs of cheques, postage and envelopes. It is also possible to wait till the very last day to initiate an electronic payment and be confident that it is not late. Finally, for both billers and payers EBPP offers simplification of record retention and retrieval.
As an illustration, households in the US pay an estimated 20 billion bills each year. Of these, 15billion are fixed amount payments representing flows like mortgage and loan repayments and 5 billion are variable such as credit card bills. Assuming that the time spent by the consumer (payer) to review and process the payment of the electronic bill is the same as that for a physical bill, and also ignoring maul float, consumers save USD 5 billion on stamps alone. Gartner Group has estimated that 20% of bills are currently paid electronically and taking this estimate is into account, the potential savings are a healthy USD 4 billion.
By the same logic, billers not only save the costly of posting but also save the printing costs. The estimates for the cost of printing and distributing a bill vary between USD 0.85 to 1.5. Both of these costs imply, on an average, savings of another USD 15 billion for billers. A study by McKinsey estimated the benefits to billers to be even higher, at about USD 2, for an average bill size of USD 100 with more than 60% of the savings coming from elimination of paper processing and postage.
3. PERSON-TO-PERSON (P2P) PAYMENTS
It has the elements of the proverbial Silicon Valley start-up in a garage. Russian Max Levchin , an expert in security applications for palmtops, and American Peter Thiel who is a nationally ranked chess grand master, fund manager and author first met at a Stanford lecture and set up a company , PayPal , which launched an e-mail payment service in the summer of 1999. There is also a third player, Elon Musk , who left South Africa to avoid a compulsory stint in the military . Musk sold his first start-up called Zip2 to Compaq for USD 307 million and the forayed into financial services and set up X.Com intending it to be a financial supermarket. In March 2000, X.Com and PayPal , the two biggest players in the person-to-person (P2P) payments space merged.
The average age of the three players is just about 30, and with the exception of a summer internship that Musk had, none of them have any experience with a bank. Yet, the e-mail based payment service that they have created has been huge adoption for P2P small value payments. In late 2001, PayPal had a customer base of more than twelve million and was transferring more than USD 3.5 billion for its customers in a year. According to its website, PayPal constitutes over 10% of the Internet traffic in the financial services category, more than Citibank, wells Fargo and Bank of America combined. Not own P2P services in an attempt to build their own “consumer payment engines of the Internet”.
THE CHEQUES IS IN THE E-MAIL
P2P payments are strikingly simple in how they work. If you use PayPal , which is the first mover and is currently almost synonymous with P2P payments , all need to know is the e-mail address of the person to whom you want to send money. You have the choice of paying by credit-card, existing bank account or PayPal account (which recently started paying interest on balances). The recipient will be notified by e-mail(You’ve Got Cash!) that someone has sent them money and has the option of asking PayPal to send them a physical cheque, directly credit their bank account or their PayPal account.
BENEFITS OF P2P PAYMENTS
This is a key reason why P2P payments have had a healthy adoption rate –simplicity of the proposition and delivery method. P2P payments can be made between people as long as they use e-mail. No plastic needs to be issued, no point of sale machine needs to be swiped and neither does any expensive software need to be installed. The power of this proposition cannot be underestimated since e-mail is the most used application on the Internet with an exponential rate of growth.
In order to establish the identity of its first time user, PayPal deposits a random amount between 1and 99 cents into the user’s checking account. It then asks the user to verify the amount deposited. In so doing, it piggy-backs on the established and sophisticated controls that a customer is subject to before opening a checking account in the real world. Since a payment system is as good as the number of people using it, PayPAl employed the viral marketing technique is to get network economies. It paid new users a sign on bonus of USD 5 and also every time they brought a referral. As an analyst observed, much like Western Union, the wire transfer specialists, PayPal pulls users to sign up because they have money waiting for them rather than pushing people to do so.
The services make money in two ways:
• One is to charge a fee for the actual transfer itself. Citigroup’s c2it, for example, started at a flat USD 2% transfer but now charges a percentage of the money sent. PayPal does not charge if the money transferred is less than USD 300 per year and beyond that only a small amount. It has also a charge for merchants, at 1.9% of the transaction value, which is lower than the corresponding charges for mainstream credit card companies.
• The second source of revenue is the float on the payment. As noted, the sender gets debited for the money upfront and float is earned on the money since the recipient does not get the money straightaway. In the case of PayPal revenues were about USD 30 million for the quarter ended September 30, 2001.
CHAPTER-7
COMPARISON OF VARIOUS
E-BANKING SERVICES
COMPARISON OF VARIOUS INTERNET BANKING SERVICES PROVIDED BY ICICI BANK, SBI BANK AND HDFC BANK :
1. BILL PAYMENT
ICICI BANK
ICICI Bank has tied up with more than 60 organizations across the country to facilitate payment of bills for Utility Companies (Electricity and Telephone) Bills, ICICI Bank credit card, Mobile Phone and Insurance Premium bills.
For the customers ease the bank has enabled the billers in following two modes:
• Presentment Type Billers: For these billers, the bill amount and due date will be presented to the customers online on http://www.icicibank.com/ and a reminder will be sent to them on Email.
• Payment Type Billers: For these billers the customers can register and pay any amount immediately
SBI BANK
SBI e-PAY - It provides a simple and convenient service for receiving and paying of bills online
OnlinePay: By using SBI e-PAY the customers can 'see and pay' their various bills online, directly from their SBI Account. The customers can pay telephone, electricity, insurance, credit card and other bills - from the comfort of their house or office, 24 hours a day, 365 days a year! They will have to just logon to http://www.onlinesbi.com/ to 'see and pay' their bills. They will also get an electronic acknowledgment for every bill paid by them using e-PAY.
AutoPay: The customers can also set up AutoPay instructions with an upper limit to ensure that their bills are paid automatically whenever they are due. The upper limit ensures that only bills within the specified limit are paid automatically, thereby providing the customers complete control over these payments.
HDFC BANK
HDFC Bank provides the luxury of paying its customer’s telephone, electricity and mobile phone bills at their convenience. Through the Internet, ATMs, your mobile phone and telephone. LIC insurance premiums can also be paid through this facility.
It is better for the residents of Hyderabad or Secunderabad and registered for Hdfc NetBanking service. Thanks to the bank’s tie-up with eseva, a unique integrated service launched by the government of Andhra Pradesh, now these residents can pay their electricity bills, water bills and municipal taxes (telephones to be introduced shortly) through the Internet using the Direct Debit option. The most important aspect of this service is that the payments made are updated in the database of the utility companies on an online and real-time basis.
2. ONLINE SHOPPING
ICICI BANK
ICICI Bank has tied up with more than 75 organizations to facilitate online shopping for all its Internet Banking Customers. They can now choose their products online and pay conveniently through ICICI Bank Internet Banking Service.
ICICI Bank has teamed up with four partners to buy various products/ services online.
• ICICI Bank has brought Insurance products to one’s door-step. Now one can buy Insurance products from ICICI Lombard General Insurance and pay through ICICI Bank’s Internet Banking.
• ICICI Bank has teamed up with AIR DECCAN SIMPLIFY so one can now Book his/her Air Tickets online and pay through Internet Banking.
• ICICI Bank has teamed up with INDIAN RAILWAYS so now one can book his railway tickets using ICICI Bank Internet Banking. IRCTC will deliver ticket to delivery address mentioned by the person on whose name the tickets are booked.
• ICICI Bank has teamed up with RELIANCE INFOCOMM and now one can pay his/her Reliance Infocom bills through Internet Banking.
SBI BANK
It does not provide online shopping service.
HDFC BANK
HDFC Bank proudly presents the EasyShop Gold Debit Card. The EasyShop Gold Debit Card is the first Gold Debit Card in India. Not only does it replaces the customer’s ATM card, it also revolutionises the way the customers spend through a Debit Card.
Easyshop International Debit Card : This card can be used in India and abroad at merchant locations such as shops and restaurants and to withdraw cash from a widespread network of ATMs. The value of the payment made or cash withdrawn is instantly debited from customer’s account. While all the purchases and cash withdrawals are in the currency of the country in which the customer is in, the customer’s account is debited in Rupees!
NetSafe, is a unique online payment solution that offers the customers complete security while shopping on the Internet. With NetSafe, the customers can now shop online without revealing their HDFC Bank Credit Card number. They can now use their HDFC Bank Debit Card also for online purchases.
Follow a simple 3-step process to register for NetSafe using either your HDFC Bank Visa Credit or Debit Card. Once registered, the customers can choose the amount and account they wish to debit and create as many NetSafe cards as they want. And after the transaction or a max of 48 hours, the card will cease to exist. All this comes FREE with HDFC Bank Credit / Debit Card.
3. TICKET BOOKING
ICICI BANK
With ICICI Bank one need not visit Train/ Air ticket booking reservation centers any more. One can now buy your tickets online and pay using ICICI Bank’s Internet Banking Facility. ICICI Bank has tied up with IRCTC (for Railway Ticket Booking) and Air Deccan (for Air Ticket booking).
SBI BANK
SBI bank also provides online railway booking and for this one has to log on to www.irctc.co.in and register their on this site and further one has to follow the procedure as given in SBI’s site.
HDFC BANK
It does not provide online booking of tickets.
4. INSURANCE SERVICE
ICICI BANK
ICICI BANK NOW offers its customers the most comprehensive suite of General Insurance products from ICICI Lombard, to cater to their insurance needs and that too online.
It offers the following products:
• 10K TAX SAVER HEALTH INSURANCE
• FAMILY FLOATER HEALTH INSURANCE
• OVERSEAS TRAVEL INSURANCE
• STUDENT TRAVEL INSURANCE
• 4 WHEELER INSURANCE
• 2 WHEELER INSURANCE
• HOME INSURANCE
SBI BANK
It does not provide online INSURANCE SERVICE to its customers.
HDFC BANK
It does not provide online INSURANCE SERVICE to its customers.
5. ONLINE SHARE TRADING
ICICI BANK
It offers online share trading service to its customers through ICICI direct.com.
SBI BANK
It does not provide ONLINE SHARE TRADING services to its customers.
HDFC BANK
HDFC BANK does not provide ONLINE SHARE TRADING services to its customers but it provides advice on direct equity through research reports based on fundamental and technical parameters across individual stocks / model portfolio / customized client portfolios.
Research recommendations are generated by bank’s Equity Research team and cover different risk parameters and time horizons.
6. SMS ALERTS
ICICI BANK
ICICI Bank offers Mobile Banking facility to all its Bank, Credit Card and Demat customers. ICICI Bank Mobile Banking enables its customers to bank while being on the move.
ICICI Bank Mobile Banking can be divided into two broad categories
• Requests
• Alerts
Mobile Banking Requests:
ICICI Bank Mobile requests provides its customers with the following requests:
a)Bank Requests
b) Credit Card Requests
c) Demat Requests
Mobile Banking Alerts:
ICICI Bank Mobile alerts provides its customers with the following alerts:
a) Bank Alerts
b) Credit Card Alerts
b) Demat Alerts
Charges:
All ICICI Bank Mobile Banking services are currently FREE. For charges on sending SMS Requests to ICICI Bank, the customers will have to check with their mobile phone Service Provider. All updates of the fees would be put up on the bank’s site page for the customer’s reference. ICICI Bank reserves the right to change the charges for this facility.
SBI BANK
In a significant step towards enabling anytime-anywhere banking, OnlineSBI.com now enables its customers to receive alerts on their mobile phone. The customers can ask to be alerted when the balance on their account goes above or below a particular amount; or when a transaction of greater than a specified amount hits their account; or when an interest is applied on their account.
HDFC BANK
HDFC Bank presents Mobile Banking service. Now one can access his/her bank account and conduct a host of banking transactions and inquiries through the bank’s Mobile Banking service. One can check his/her balance, stop a cheque payment, or even pay your utility bills. This bank’s Mobile Banking service gives account information and real-time transaction capabilities from the mobile phones at a true "anywhere, anytime, anyhow" convenience.
All this through SMS or WAP or R World ( for Reliance India Mobile customers). SMS Banking brings the customer’s bank accounts to his/her fingertips. It works using Short Messaging Service (SMS) technology. With SMS one can perform a wide range of query-based transactions from his/her mobile phone, without even making a call.
7. ATM SERVICE
ICICI BANK
ICICI Bank's 24 Hour ATM network is one of the largest and most widespread ATM Network in India. ICICI Bank’s ATMs are located in commercial areas, residential localities, major petrol pumps, airports, near railway stations and other places which are conveniently accessible to the customers.
ICICI Bank ATMs features user-friendly graphic screens with easy to follow instructions. The bank has introduced ATMs which interact with customers in their local language for increased convenience.
SBI BANK
State Bank offers its customers the convenience of over 5067 ATMs in India. This means that one can transact free of cost at the ATMs of State Bank Group (This includes the ATMs of State Bank of India as well as the Associate Banks – namely, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, State Bank of Mysore, State Bank of Patiala, State Bank of Saurashtra, and State Bank of Travancore), using the State Bank Cash Plus card.
State Bank Cash Plus Domestic Card: It offers its customers the latest in banning convenience viz. State Bank Cash Plus card. With this card, there is no need to carry cash in one’s wallet and one need not fear overspending on his/her credit card. One can now withdraw cash and make purchases anytime he/she wishes to. One can get a FREE ATM-cum-Debit card with which one can transact for FREE at any of the 5067 ATMs of State Bank Group within our country.
HDFC BANK
HDFC bank provides ATM services 24 hours a day, 7 days a week, 365 days a year from any of their over 1054 ATM across India.
8. ONEVIEW SERVICE
ICICI BANK
It does not provide oneview service to its customers.
SBI BANK
It does not provide oneview service to its customers.
HDFC BANK
For the first time in India, this convenient service brings together one’s online bank accounts (including those of family members), in one place, in total security. OneView puts it all on one screen for the customer , so that tracking and managing His/her online accounts becomes quicker and easier than ever before. It gives the customer a complete picture of his/her finances across multiple accounts.
If the customer has one or more accounts with HDFC Bank, Citibank, ICICI Bank, HSBC India, Standard Chartered Bank and/or Global Trust Bank then OneView is just right for him, it's absolutely free!
9. PREPAID REFILL OF SIM CARD
ICICI BANK
It does not provide this service to its customers.
SBI BANK
It does not provide this service to its customers.
HDFC BANK
Pre-paid Refill through SMS :
A customer needs to be registered for this service. Now one will just have to walk across to an HDFC Bank ATM and do the following.
1. Select 'Prepaid Refill/Bill Pay’ option
2. Select 'SMS refill registration'
3. Enter his/her 10 digit mobile number and confirm
Within seconds he/she will receive an SMS confirming his/her registration, giving his/her a code number and also the syntax of the message that he/she needs to send for getting a refill done. The number to which the message needs to be sent will also be a part of this message that he/she receives. So now a refill is just an SMS away.
How much does it cost ?
This service is absolutely free from HDFC Bank! One will only have to pay the regular SMS charge for his/her SMS request.
Where can one access this service ?
Operator Name Circle
Airtel Mumbai
Orange Mumbai
10. MUTUAL FUND SERVICE
ICICI BANK
One can invest in mutual funds through ICICIdirect.com.
SBI BANK
It provides this service through SBI Mutual Fund (a partner for life).It offers both open-ended as well as closed-ended schemes.
HDFC BANK
It does not provide investing in mutual funds through its website.
11. ONLINE DEMAT SERVICES
ICICI BANK
ICICI Bank Demat Services boasts of an ever-growing customer base of over 7 lacs account holders. In their continuous endeavor to offer best of the class services
to their customers they offer the following features:
• Online access to his/her demat account. The customers can check their holdings, transactions, details of bills and status of requests and much more.
• Digitally signed transaction statement by e-mail.
• Corporate benefit tracking.
• e-Instruction facility - facility to transfer securities 24 hours a day, 7 days a week through Internet & Interactive Voice Response (IVR) at a lower cost.
• Dedicated specially trained customer care executives at the bank’s call centre, to handle all queries of the customer’s
SBI BANK
It does not provide ONLINE DEMAT SERVICES to its customers.
HDFC BANK
HDFC Bank provides its customers with online access to his/her Demat Account, so that they can check their holdings using the NetBanking facility. Now the customer can convert his/her securities to electronic format with the HDFC Bank Demat Account.
CONCLUSION:
From this comparison of online internet banking services provided by ICICI BANK, STATE BANK OF INDIA (SBI) and HDFC BANK, I have drawn a conclusion that as compared to ICICI BANK and HDFC BANK, SBI provides less online internet banking services.
When I compared the online internet banking services provided by ICICI BANK and HDFC BANK, I came to the conclusion that these banks provided online internet banking services almost at the same level.
Therefore, the GENERALISED CONCLUSION drawn by me is that the private banks provide more online internet banking services than the public sector banks, so the public sector banks should also start providing more online internet banking services and should expand these services to most of its branches, this will enable them to expand their customer base and to face the competition in a better way.
CHAPTER - 8
ANALYSIS OF THE DATA COLLECTED
ANALYSIS OF THE DATA COLLECTED THROUGH THE QUESTIONNAIRE
I have analyzed the data collected through the questionnaire and have classified the data into tables.
TABLE-I
NO. OF USERS WHO HAVE AVAILED THE ATM FACILITY OF ANY BANK
AVAILED THE FACILITY
NO.OF USERS
YES
90%
NO
10%
TABLE-II
The users have used the ATM facility of the following banks:
NAME OF THE BANK
NO. OF USERS IN PERCENTAGE
HDFC BANK
25
STATE BANK OF PATIALA
25
ICICI BANK
10
BANK OF PUNJAB
15
STATE BANK OF INDIA
15
NOT USED THE FACILITY OF ATM
OF ANY BANK
10
TABLE-III
THE SATISFACTION LEVEL EXPERIENCED BY THE ATM USERS
LEVEL OF SATISFACTION
NO. OF USERS IN PERCENTAGE
HIGHLY SATISFIED
20
SATISFIED
70
INDIFFERENT
0
DISSATISFIED
0
HIGHLY DISSATISFIED
0
USERS NOT AVAILING THE FACILITY
10
TABLE-IV
Following number of times in a week the users have used the ATM:
NUMBER OF TIMES NUMBER OF USERS IN PERCENTAGE
1
60
2
20
3
5
5
5
USERS NOT AVAILING THE FACILITY OF ATM
10
TABLE-V
Preference of the users of ATM card of the benefits of ATM:
BENEFITS OF ATM
NUMBER OF USERS IN PERCENTAGE
It is time-saving
20
It is beneficial when cash is needed
Urgently
60
It is convenient
20
TABLE-VI
WHETHER THE USERS OF ATM CARD HAVE FACED ANY PROBLEM WHILE USING THE ATM CARD:
YES
40% (No. of users)
NO
60% (No. of users)
PROBLEMS FACED BY THE USERS:
NATURE OF PROBLEM
NO. OF USERS IN PERCENTAGE
The card got withheld in the machine
25
ATM was not working
63
Instructions to use the ATM were not clear and received no help from employees of the bank
12
TABLE-VII
Other Internet Banking Services availed by the respondents:
NATURE OF SERVICE
NO. OF USERS IN PERCENTAGE
Credit card
15
Transferring one’s money from one city to any other branch in a city
5
Opening Fixed Deposit account via
The Internet
10
Inquire about the balance in one’s saving, Current and FD account
0
Tax deducted at source on one’s FD account for current financial year
0
Giving instructions over the internet for stopping payments on cheques
0
Request for a cheque book via the internet
5
View all transactions on an account for a specified period and get a copy via e-mail
0
None of the above
65
TABLE-VIII
Whether the respondents ever had any grievance against the bank providing Internet Banking Services to it:
YES
5% (NO. OF USERS)
NO
95% (NO. OF USERS)
TABLE-IX
Level of satisfaction experienced by the respondents of the grievance handling procedure of the bank:
LEVEL OF SATISFACTION
NO. OF USERS IN PERCENTAGE
Highly Satisfied
0
Satisfied
100
Indifferent
0
Dissatisfied
0
Highly Dissatisfied
0
TABLE-X
Respondent’s opinion of the weaknesses of Internet Banking Services:
NATURE OF WEAKNESS
NO. OF USERS IN PERCENTAGE
There is only one way communication
44
The security is not flawless
30
Lack of first hand experience gained by a person by visiting a bank is not there
26
TABLE-XI
Respondent’s view of the security of the Internet Banking Services:
It is secure
45% (No. of respondents)
It is not secure
55% (No. of respondents)
It is secure because
The security systems are reliable
89% ( No. OF RESPONDENTS)
There are firewalls which strengthens the security system
11% ( No. OF RESPONDENTS)
It is not secure because there is always a risk from the hackers who may hack the password of one’s account and may manhandle one’s account or transfer money from one’s account to their own account-------- THIS OPINION IS SUPPORTED BY 100% OF THE RESPONDENTS WHO ARE OF THE OPINION THAT THE INTERNET BANKING IS NOT SECURE.
TABLE-XII
Opinion of the respondent’s on whether all public sector banks should start providing Internet Banking Services to survive in the market:
ANSWER OF THE RESPONDENTS
NO. OF USERS IN PERCENTAGE
YES
75
NO
25
RESPONDENT’S REASON FOR SAYING YES IN THE ABOVE TABLE:
RESPONDENT’S REASONS
NO. OF USERS IN PERCENTAGE
Internet Banking is time-saving
20
To face the competition
50
Internet Banking is convenient and hassle-free
20
Customer preference and increasing number of people using the internet
10
FINDINGS EXTRACTED OUT OF THE INFORMATION COLLECTED THROUGH A QUESTIONNAIRE
1. Most of the respondents used ATM facility (90% of them availed this facility.)
2. Respondents were using the ATM facility of private banks more than the public sector banks.
3. Most of the respondents were satisfied by the ATM facility being used by them.
4. Most of the respondents used ATM facility once in a week.
5. Most of the respondents feel that the benefit of the ATM card is that it comes handy when cash is needed urgently.
7.60% of the respondents faced using the ATM faced no problem in using the ATM while 40% of the respondents faced a problem while using the ATM.
8.e major problem faced by the respondents while availing ATM card facility was that the ATM was not working and the second common problem was that the card got withheld in the machine.
9. Most of the respondents used very less Internet Banking facilities other than the ATM. Out of the other facilities, credit card was the most commonly used service and the second service used was opening a Fixed Deposit account via the internet.
10.95% of the respondents didn’t have any grievance against the bank providing them the internet services and the 5% respondents which had a grievance against bank providing them the internet banking services were satisfied with the grievance handling procedure of the bank.
11. Most of the respondents felt that the weakness of internet banking is that it is a one way communication and the second most commonly held weakness was that it is not secure.
12. 55% of the respondents felt that Internet Banking is not secure and the reason behind this is that hackers may hack the password of one’s account and this may result in huge losses to the user of Internet Banking.
13. Most of the respondents felt that the public sector banks should start providing the Internet Banking services in order to face the competition from the private banks and also because Internet Banking is time-saving and hassle-free.
SUMMARY AND CONCLUSION
E-commerce is rapidly expanding its wings across the globe and India is no exception to this phenomenon. Now, several banks have put their electronic banking facilities on the Internet and are providing many facilities like adopting ECS and EDI for knowing account-status , funds transfer between accounts , Billing payments, Web-shopping, Railway and air-ticket booking, etc to their customers at the click of a button. But since Web is a public space open to all , THESE INTENET BASED SERVICES ALSO RAISE NEW THREATS FOR THE BANKS. Financial institutions like banks and merchant websites like Rediff , Amazon , payment sites like PayPal etc,. by virtue of the value of information , their customers share with them are becoming the most lucrative target for the attackers. Attackers are formulating newer strategies for attack and one such attack is Phishing.
The use of ‘Ph’ in the word instead of ‘f’ has come from the word “Phreaks” who were involved in “Phreaking” which was a type of attack on telephone system in 1970’s. Later in the 1990’s the term was used for the hackers who used these techniques for stealing passwords and user-id’s for ISP’s. It is believed that the term became popular after its use in the famous hacker newletter “alt.2600” in January 1996.*
Phishing is based on impersonating, which has been one of the most popular types of trickery used by people and the instances of which are available in plenty, even in our mythology. Phishing can be considered as an e-avatar of tricking by impersonating. Like all identity based attacks , Phishing also takes the help of impersonating and social engineering to divulge confidential information like account details;passwords;PINs etc. from the users , for various nefarious activities.
Most common Phishing attacks are HTML based and are use e-mail as the medium to propagate. Such attacks are easy to perpetrate and enjoy a good success rate. Phishing is “The act of sending e-mail to a user falsely claiming to be an established legitimate enterprise in an attempt to scam the user into surrendering private information that will be used for identity theft.” It is also called carding or brand spoofing.
According to recent studies by Gartner , 57milllion US Internet users have identified the receipt of e-mail as linked to Phishing scams , and about 11million US adult Internet users have clicked in the link in a Phishing email and out of these around 1.78 million are thought to have succumbed to the convincing attacks , which made them divulge their personal information.
ANATOMY OF THE ATTACK
Phishing attacks are a combination of technical loophole exploits and social engineering, which trigger a series of actions by the user or victim and make him furnish his confidential details to the attacker. One fine day the user gets a mail from his bank that his account has been compromised or his password has leaked or a compulsory security update needs to be done etc. The content ca vary depending on the skill of the fraudster in the field of social engineering. The mail will contain company logos, watermarks, a familiar language and almost everything just perfect so that a naïve user could think of a possibility that this is not a genuine mail. Here the attacker adopts two kinds of strategies.
2. Either the user will be prompted to click an embedded URL in the email, in order to make any entries.
3. The user is prompted to fill a HTML form and submit.
THREATS TO THE BANKS DUE TO PHISHING
The first and foremost threat is loss of customer faith in technology. Such attacks could make customers shun e-banking and reverts towards tradition brick and mortar banking. So, the banks will not be able to leverage the benefits from huge investments they have made for adopting technology. This threat thus spans the whole industry rather than any particular bank. Many a times banks have compensation policies for such cases where customer credit cards are used fraudulently using any of the techniques. If such attacks increase beyond a proportion the banks will lose control over the provisioning done for compensatory expenses. The bank may face lawsuits filed by customers under various legislatures like Privacy under IT Act 2000. There can be significant wastage of productive resources in handling such attacks and their consequences in the form of lawsuits etc. Another very important threat to banks is Reputation Threat. This is a threat which no bank can afford in today’s competitive scenario. The ultimate threat is loss of business, profits, profitability and loss of customers.
PREVENTING BEING PHISHED
In order to device methods and doing research in the identity frauds a cross-industry organization called “Anti-Phishing Working Group” (APWG) has been formed recently .
• Strong website client authentication.
• Mail server authentication.
• Digitally signing e-mails.
These strategies though, if implemented will help solving this problem to a great extent but there are practical difficulties in implementing them (many web-based mail clients e.g. Hotmail, Yahoo! Mail etc. so not support S/MIME ; most users do not have smart cards or tokens ). We can safely assume that these will not be possible in the Indian Scenario in the immediate future. Thus a more prudent approach at present should be one based on education and awareness.
STEPS TO BE TAKEN BY BANKS
• EDUCATION AND AWARENESS
The banks need to generate awareness among its employees and customers about the attack. Banks need to educate their customers as well as customer facing employees about Phishing, types of attacks, countermeasures etc. Information can be given on the website of the bank regarding handling e-mails that appear to come from legitimate sources.
Further in order to give the customer a real idea of how the attack actually occur the bank can give a demo on its site. The customer will click a given URL and he will go through the steps similar to those in an actual attack. In this way by simulating the attack customers can be better educated.
• PROTECTING PRIVACY
The banks should ensure that customer contact information like e-mail addresses should never fall in wrong hands since this betrays the customer trust and is against the basic protocols of banking.
• MONITORING
Banks can develop some intelligent fraud detection tools to trace fraudulent behaviors by noticing the activities done by an attacker once he gets access to other’s personal information. This can be integrated with the existing fraud detection and money laundering systems.
• LOGIN REPORTS
On logging in his account on the website the customer should be provided his last three login times/dates including the exact duration. Also the bank may send monthly login information to the customers.
• OTHER APPROACHES
Banks can become a member to organizations like APWG, in order to get latest updates about the modus operandi of the attack and countermeasures. Also it can hire the services of third party vendors, like a web server monitoring company. These companies examine contents and looks of websites, which look similar to the organization’s site. Another approach can be, to have a PassMark security, which is a new initiative by a Silicon Valley, based company. It works in reverse manner to passwords in the sense that instead of user having confidential information in order to prove his identity, the institution shares an image uniquely with each user. These personalized images can be embedded in outgoing e-mails and on their website logon pages to provide a higher level of assurance to the customer that the e-mail or website is authentic and not a rogue. Customers should ensure the correct PassMark before entering their personal information on Web pages.
• FRAUD RESPONSE
Banks should formulate strategies for responding to such frauds when they occur, so as to minimize the losses. The customer should be educated to immediately inform the bank, in such a case. The bank can then immediately freeze that account and try to catch the fraudster. These response actions should be well understood and documented.
So, Internet Banking is the need of the hour and private banks are already providing efficient Internet Banking Services to their customers. Although Public sector banks are also providing Internet Banking Services but the number of their branches facilitating such services are less as compared to private banks. So, the Public sector banks should concentrate more on providing Internet Banking services. By taking the above measures Internet Banking will become more secure and will help the banks to become more competitive and profitable.
BIBLIOGRAPHY
Library Sources
1. Internet Banking-The Second Wave: By Sanjeev Singhal,Tata Mcgraw Hill Publication , 2003
2. Management Trends (A Journal of Department of Business Management)
Article- Internet Banking by Kavita Kshatriya Sep 2004
3. Indian Banking 2005 , The ICFAI University Press Publication
4. The Journal of Internet Banking and Commerce ( Published by Array Development of Ottawa )
5. International Journal of Business Performance Management 2002 (Published by InderScience publishers)
6. The Small Business Guide to Internet Banking by – Ray Hurst
7. Internet Banking Shopping for the Older Generation by ---- Greg Chapman
8. Internet Banking :Strategies, Tools and Best Practices – by Mona Brewer
(Published by Sheshunoff and Co.)
10. Banking and Finance on the Internet (Internet Management Series ) by Mary J. Cronin
(Published by John Wiley and Sons )
11. Successful Web Portals in Retail Banking by--- Daniel Singer, Douglas Ross, Albert Avery
(Published by --- Wiley)
Internet Sources
www.sbi.com
www.hdfcbank.com
www.icicibank.com
www.firstib.com
www.nationalcity.com
www.netbanker.com
Annexure
FORMS OF SBI OF VARIOUS INTERNET BANKING SERVICES
STATE BANK OF INDIA
INTERNET BANKING
" OnlineSBI "
Registration Form
(for Corporations / firms)
To
The Branch Manager
State Bank of India
________________
We wish to register our firm / company / corporation for availing of the Bank's Internet Banking Service ~ "OnlineSBI". *
Our firm / company / corporation has already been registered for availing of the Bank's Internet Banking Service ~ "OnlineSBI". * (*Strike off whichever is inapplicable)
We request you to register the below named official / employee as an authorised USER on behalf of the firm / company / corporation* for accessing its account(s). We confirm having read and understood the document containing the "Terms of Service" governing the SBI's Internet Banking Service and we accept them.
Name of firm / company / corporation :
Name of the Official / employee being authorised :
(Any official / employee of the firm / company / corporation may be nominated to use the OnlineSBI Service for Enquiry purposes only)
Designation & Official Address of the Official : e-mail Address
____________________ _________________
____________________________________
____________________________________ Tel. No._________________
Pin : _____________
Account Numbers : (Please mention 11 / 13 digit A/c No. as mentioned in your Statement of Account)
For Firm / Company / Corporation,
Date : _________________________ ________________________
(Signature of Official being Authorised) (Authorised Signatory / Signatories)
For office use
SIGNATURE(S) OF AUTHORISED SIGNATORY(IES) OF FIRM/COMPANY/CORPORATION VERIFIED
OFFICER
FOR OFFICE USE
Application Serial Number :
PARTICULARS DATE SIGNATURE OF AUTHORISED OFFICIAL
The account numbers and the account name quoted in the registration form tallied with branch records.
Rights of the Signatory(ies) on the registration form for authorizing access to the accounts of the firm / company / corporation verified and found to be correct & in order.
Notes:
(a) The Account Numbers and Name of Firm should appear in the same manner and form, as it is stored in Bankmaster.
(b) Name of the authorised official must be entered as appearing in the registration form.
(c) Authorised Signatory means those person(s) who are authorised to conduct operations on the account. A separate resolution for using OnlineSBI services is not necessary.
Authorised Official/user means any official/employee of the corporate/ firm who is authorised to use OnlineSBI services by the Authorised Signatories.
Recommended for providing/ rejecting Internet Access Internet Access permitted/rejected
DATE : OFFICER DATE BRANCH MANAGER/
MANAGER OF DIVISION
Reason(s) for rejecting the INB Service (if any)
DATE SIGNATURE OF OFFICIAL
Reason(s) advised to the Applicant
INB Service approved and INB Customer Flag set to "Y" in the Bankmaster *
User Details Uploaded
* This is necessary only at the time of registration of the First Authorised User and not for the subsequent authorised users of the firm/Company/Corporation.
CINB – C3
STATE BANK OF INDIA
FOR OFFICE USE
Application Serial number:
CORPORATE INTERNET BANKING (VYAPAR)
" OnlineSBI "
Registration of Local Admin
To
The Branch Manager
State Bank of India
________________
We have been registered for accessing "OnlineSBI".
The Corporate ID allotted to us is
We request you to register the executive named herein as a Local Admin for the accounts listed below.
Name of company:
Name of the Local Admin:
Address for despatch of User-ID/Password
Line 1
Line 2
City
District
State
Pin code.
Designation: ……………………
Department:…………………….
e-mail address :…………………
Tel. No…………………………..
List of Account Numbers :
Please mention the 11 or13 digit A/c number as mentioned in your Statement of Account. Use additional sheets if necessary. It will suffice if one account number per Customer-ID is mentioned. See note below for further information on Customer-IDs.
* “Company” used here includes a Corporate, (Signature of Local Admin)
Firm, Institution, Association, Local Body or any such Signature of Local Admin attested
Entity operating accounts in the Bank. For
Date : ________________________
(Authorised Signatory / Signatories)
_
Note on the account numbering system followed by the SBI:
a. The Account number assigned by SBI to a Company’s bank account has 11 to 13 digits. Digits 6 to 11 (both inclusive) form the customer ID.
b. Accounts opened in future bearing these customer-IDs will automatically get assigned to this Local Admin.
For Branch Use
Application Serial Number :
Requirement Yes/ No SIGNATURE OF OFFICIAL
The Account Name tallies with Branch Record
Signature of authorised signatories on Registration Form verified and found correct
Corporate ID quoted in the application form verified with web interface and confirm that the ID is valid for the Corporate
Recommended for Providing Access to OnlineSBI..
Internet Access Permitted
Local Admin’s details uploaded
Notes:
(d) Name of Corporate should appear in the same style and form, as it is stored in Bankmaster.
(e) Name of the Local Admin must be entered in the web interface strictly as it appears in the Registration Form.
(f) Authorised Signatory means those person(s) who are authorised by a Board Resolution/ Mandate to operate on the account.
(g) A Board resolution/ Mandate for using OnlineSBI services has already been obtained while registering Corporate ID and hence a Board Resolution for this application is not necessary.
(h) While uploading data it would be sufficient if one account per customer ID is uploaded.
If rejected, then please enter reasons for rejection on the application form.
Form C5
Format of Board Resolution to be submitted by the Company alongwith the Corporate Internet Banking Registration Form
Resolved that:
The Company do avail the ‘Corporate Internet Banking Service’ over Internet Channel with State Bank of India (SBI) at their various Branches and the Company accepts such “Terms of Service” for Corporate Internet Banking laid down by SBI from time to time for the purpose.
Resolved further that each of the officials as empowered by the Company to operate the Company’s accounts with SBI either singly or jointly as the case may be, is hereby authorized to apply for and avail of the ‘Corporate Internet Banking’ facility offered by SBI and do all they have been authorized, electronically, using their user name and password.
Accepted
Signature
Authorised Signatory of the Company
Place Date
CINB – C1
STATE BANK OF INDIA
CORPORATE INTERNET BANKING (VISTAR)
" OnlineSBI "
Registration Form
To
The Branch Manager
State Bank of India
________________
OnlineSBI : Corporate Internet Banking
We wish to register for the Bank's Corporate Internet Banking Service ~ "OnlineSBI".
We confirm having read and understood the document containing the "Terms of Service" governing the SBI's Internet Banking Service. A copy of the document is enclosed duly authenticated by the authorised signatories in token of having accepted the terms of the service contained therein.
The Board Resolution for the purpose is enclosed.
Name of Company:
Address of the Registered office:
____________________________________
____________________________________
____________________________________ Tel. No._________________
Pin Code: _____________
For use only when registration of Regulator is not contemplated immediately.
We request the Bank to set up the following parameters for our company. We are aware that we can change these when a Regulator is appointed:
1. Upper Limit for issue of DD/TT Rs………………
(Default Value – Rs.0.00)
2. Upper Limit on request for third party transfer Rs……………… (Default Value – Rs.0.00)
4. Whether Audit User feature is required Yes/No
(Default Value – No)
If Yes,
a. Upper Limit for Un-audited E-Cheques ………………..
b. Threshold value (amount) of E-Cheques for Audit Rs…………….
For
Date : ________________________
(Authorised Signatory / Signatories)
Should be a senior corporate level person authorised by the Board to operate on Company’s account.
This Registration Form need be submitted only ONCE to the SBI Branch where the Company’s principal account is maintained.
For Branch Use
Application Serial Number :
Requirement Yes / No SIGNATURE OF OFFICIAL
The Account Name tallies with Bankmaster Record
Signature on Registration Form Verified
Recommended for Providing Internet Access
Corporate Details Uploaded
Corporate ID Generated
Corporate ID Advised
Notes:
(i) Name of Company should appear in the same style and form as it appears in Bankmaster records.
(j) A separate Board resolution for using OnlineSBI services as per the format enclosed to Terms of Service and a copy of CINB- C4 recording acceptance of Terms of Service must have been received, scrutinized and attached to Account Opening Form.
Corporate-ID No
If application is rejected, then please enter reasons for rejection on the application form
CINB – C2
STATE BANK OF INDIA
FOR OFFICE USE
Application Serial number:
CORPORATE INTERNET BANKING
(VISTAR)
" OnlineSBI "
Registration of Regulator
To
The Branch Manager
State Bank of India
________________
OnlineSBI: Corporate Internet Banking
We have registered for accessing "OnlineSBI".
The Corporate-ID allotted to us is
We request you to register the executive named herein as the Regulator.
Name of the Corporate:
Name of the Executive:
Designation : e-mail address :
Employee Number: Tel. No.
Address for Despatch of User-ID/Password
Line 1
Line 2
City
District
State
Pin code.
(Signature of Regulator)
Signature of Regulator attested.
For
(Authorised Signatory / Signatories)
Date:
For Branch Use
Application Serial Number :
Requirement Yes / No SIGNATURE OF OFFICIAL
Signature on Registration Form Verified
Corporate-ID quoted in the application Form verified on web Interface and confirm that the ID is valid for the applicant corporate.
Recommended for Providing Access to Internet Banking.
Internet Access Permitted
Regulators’ details uploaded
Notes:
(k) Name of Corporate should appear in the same style and form, as it is stored in Bankmaster.
(l) Name of the INB Regulator must be entered on the web interface as appearing in this Registration Form.
(m) Authorised Signatory means those person(s) who are authorised by a Board Resolution to operate on the account. The regulator himself can sign this form if he is an authorised signatory.
If rejected, then please enter reasons for rejection on the application form.
CINB – C3
STATE BANK OF INDIA
CORPORATE INTERNET BANKING
(VISTAR)
" OnlineSBI "
Registration of Local Admin
To
The Branch Manager
State Bank of India
________________
We have been registered for accessing "OnlineSBI".
The Corporate ID allotted to us is
We request you to register the executive named herein as a Local Admin for the accounts listed below.
Name of company:
Name of the Local Admin:
Address for despatch of User-ID/Password
Line 1
Line 2
City
District
State
Pin code.
Designation: ……………………
Department:…………………….
e-mail address :…………………
Tel. No…………………………..
List of Account Numbers :
Please mention the 11 or13 digit A/c number as mentioned in your Statement of Account. Use additional sheets if necessary. It will suffice if one account number per Customer-ID is mentioned. See note below for further information on Customer-IDs.
(Signature of Local Admin)
Signature of Local Admin attested
For
Date : ________________________
(Authorised Signatory / Signatories)
_________________________________________________________________________
Note on the account numbering system followed by the SBI:
c. The Account number assigned by SBI to a Corporate’s bank account has 11 to 13 digits. Digits 6 to 11 (both inclusive) form the customer ID.
d. Customer ID is the only basis for assigning accounts to a Local Admin.
e. Accounts opened in future bearing the same customer-ID will automatically get assigned to this Local Admin.
For Branch Use
Application Serial Number :
Requirement Yes/ No SIGNATURE OF OFFICIAL
The Account Name tallies with Branch Record
Signature of authorised signatories on Registration Form verified and found correct
Corporate ID quoted in the application form verified with web interface and confirm that the ID is valid for the Corporate
Recommended for Providing Access to OnlineSBI..
Internet Access Permitted
Local Admin’s details uploaded
Notes:
Name of Corporate should appear in the same style and form, as it is stored in Bankmaster.
(o) Name of the Local Admin must be entered in the web interface strictly as it appears in the Registration Form.
(p) Authorised Signatory means those person(s) who are authorised by a Board Resolution to operate on the account.
(q) A Board resolution for using OnlineSBI services has already been obtained while registering Corporate ID and hence a Board Resolution for this application is not necessary.
(r) While uploading data it would be sufficient if one account per customer ID is uploaded.
If rejected, then please enter reasons for rejection on the application form.
Form C5
Format of Board Resolution to be submitted by the Company alongwith the Corporate Internet Banking Registration Form
Resolved that:
The Company do avail the ‘Corporate Internet Banking Service’ over Internet Channel with State Bank of India (SBI) at their various Branches and the Company accepts such “Terms of Service” for Corporate Internet Banking laid down by SBI from time to time for the purpose.
Resolved further that each of the officials as empowered by the Company to operate the Company’s accounts with SBI either singly or jointly as the case may be, is hereby authorized to apply for and avail of the ‘Corporate Internet Banking’ facility offered by SBI and do all they have been authorized, electronically, using their user name and password.
Accepted
Signature
Authorised Signatory of the Company
Place Date
QUESTIONNAIRE
CONSUMER PERCEPTION ABOUT INTERNET BANKING
1. Name:
2. Age :
3.Occupation: : ______________________________________________________
4. Do you avail the ATM facility of any bank :
Yes No
( If yes, then proceed to Q:5 otherwise move to Q:10)
5. You are using the ATM facility of which bank ?
6. What is the satisfaction level experienced by you with the ATM facility being used by you ?
Highly Satisfied
Satisfied
Indifferent
Dissatisfied
Highly Dissatisfied
7. How many times in a week do you use your ATM card?
8. Rank in order of preference the benefits of ATM card in your opinion :
It is time-saving
It is beneficial when cash is needed urgently
It is convenient
9. Have you ever faced any problem while using your ATM card
Yes No
If yes , the select any of the following problems which you have faced
The card got withheld in the machine
ATM was not working
While using it for the first time , you faced a problem while understanding the instructions and there was no employee of the bank to help you
10. Which of the following Internet Banking Services are you availing?
Credit card
Tranferring one’s money from one city to any other branch in a city
Open Fixed Deposit (FD) account via the internet
Inquire about balance in one’s saving , current and FD account and also on
the tax Deducted at source on one’s FD account for the current and financial year
Giving instructions over the internet for stopping payment on cheques
Request for a cheque book via the internet
View all transactions on an account for a specified period and get a copy via e-mail
None of the above
11. Did you ever had any grievances against the bank providing you Internet Banking service regarding
the Internet Banking service provided by it?
Yes No
( If yes then answer the next question , If no then move on to Q:13)
12. What was the level of satisfaction experienced by you of the grievance handling procedure of the Bank?
Highly Satisfied
Satisfied
Indifferent
Dissatisfied
Highly Dissatisfied
13. What is in your opinion the weakness of Internet Banking?
There is only one way communication
The security is not flawless
Lack of first-hand experience gained by a person visiting a bank is not there
14. Do you think Internet Banking is secure?
Yes No
Give a reason for your anwer
15. Do you think that all public sector banks in India should start providing Internet Banking Services to
Survive in the market?
Yes No
If Yes, why?
This is to certify that the project entitled “ E-Banking: A Disguise or Boom” is a bonafide record of work done by Rajni Sharma, a student of M.B.A and submitted to RIMT Engineering College, Mandi Gobindgarh in partial fulfillment of the requirements for the Degree.
This work has never been submitted to any educational institution as per good of my knowledge.
Miss. Kavita
RIMT, Engineering College
Mandi Gobindgarh
ACKNOWLEDGEMENT
Often words are too inadequate to serve as a mode of expression of one’s inner feelings, especially the sense of indebt ness and gratitude to all those who help in accomplishing the goal one has set before oneself. I shall be failing in my duty if I don’t acknowledge my sincerest gratitude to all those who assisted and guided me in completing this project report.
I acknowledge my indebtness to my erudite learned and revert guide Miss. Kavita for her valuable guidance, suggestions, constructive criticism and thought provoking discussions for completion of the task. It would not have been possible for me to complete the work without his encouragement and unfailing help.
I also want to thank all my respondent who took time for showing a great interest in the subject and extending invaluable help.
Rajni Sharma
Univ. Roll No. 42259124
CHAPTER- 1
INTRODUCTION
INTRODUCTION
Earlier people would be tired standing in along queue waiting for a passbook to be updated or they would wait for the next day for the demand draft to be prepared but now Internet Technology has invaded the portals of our banking institutions and as the cliché goes everything will just be a click away. No doubt, innovations like telebanking and automated teller machines (ATM’s) have considerably put customers at ease on the recent past. But with net banking the customer will be able to transact with the help of a mouse and his visits to the neighbourhood bank will become a thing of the past.
In the age of electronic technology the regular application of computing, wireless communication, networking, etc, in the banking field has brought revolutionary change in the traditional ways banks do business. Today, your bank can serve you at home, or allow you to serve yourself from anywhere. You can draw your money from ATM’s, you can check your accounts through the Internet, and you can phone the bank to send you a representative. Not only that, your physical bank which is still around-suddenly seems to be doing a lot more things than just banking. It is technology that is making all this possible. Internet banking has gained wide acceptance internationally and seems to be fast catching up in India with more and more banks entering the fray. This is why, most, most modern banks instead of merely dealing with financial deposits and loan apply promote, and distribute the want-satisfying products, services and ideas to start its journey towards development of computer and other technology based digital economy since 1960 to ensure quality service to its customers.
TECHNOLOGY –THE GOVERNING FACTOR:
It is the technology that is making easy operation of banks. Even 10 years back, banks would have found it impossible to provide even basic banking services to millions of small and medium customers with all their branches. At the back end technology is freeing bank employees to concentrate on value-added work rather than just mundane necessities. Today, technology offers options where banks can almost literally address a market of one with a customized product or service. Though a modest start has been made in India, net banking has still a long way to go. This development has been acknowledged by the latest Online Banking Report, which features a listing for ICICI Bank .Some others have also endeavored to make real time banking a reality before this century closes.
Reasons why new private and multi-national banks have been able to survive, thrive, and adapt in an increasingly competitive space.
These banks were able to leverage on low-cost channels such as ATM’s and Net Banking to the optimum levels contributing to reduced operating costs. The cost of transactions over channels like ATM’s and the Internet are lower than doing it through the branches-Banks have realized that shifting customer access to lower cost channels can help bring down operating costs. These channels are used not only to improve customer service but also to divert traffic from the branches.
Customers using ATM’s, phones and the Internet not only allow banking transactions, but also cross-selling of other financial products and services. For example, if the cost of a branch banking transaction is taken at Rs100/-, the cost of an ATM transaction would be around Rs30/-, phone banking around Rs20/-, and internet banking around Rs5/-.But this does not mean that branch banking is obsolete. Rather, banks are reinventing their business models to offer new financial services through its branches.
At the back-end, technology is freeing bank employees to concentrate on value-added work rather than just mundane necessities. In computerized banks, once a transaction is posted it is auto-reconciled. This system is easy and frees people to concentrate on other customer services.
NEW HORIZONS
The important factor that is causing a shift in the industry is that of conveniences for the consumer. People need timely access to banking services, and have less time to spend at banks, and prefer the convenience of long distance banking. Of course, society’s view of what is convenient is changing .People were accustomed to associating convenience with doing business in their neighbourhood, and not traveling to a bank across town. Now, however, society has a different definition of bank convenience. Also, we should mention it is directly due to mergers that banks are able to offer more full service branches, and ATM machines. This is more convenient to the customers, and creates bank loyalty.
Increased use in ATM’s , the growing use of home and office computers, fax machines, and point of sale terminals allowing consumers to make transaction electronically is now considered convenient. Thus, branch location is no longer a priority from the consumer’s view.
The various banks which have adopted with corporate giving software and solution and services as of date are as follows: *
BANK NAME TECHNOLOGY VENDOR SERVICE OFFERING
ABN AMRO Bank
Infosys (Bank Away)
Net Banking
Abu Dhabi Commercial
Bank
Infosys (Bank Away)
ADCB NetLink
Bank of India
I-Flex
BOIonline
Centurian Bank
Logica
MyCBOL
Citibank
Orbitech (now Polaris)
Citibank Online
Corporation Bank
I-Flex
CorpNet
Deutche Bank
Db direct
Federal Bank
Sanchez
FedNet
Global Trust Bank
Infosys (Bank Away)
ibank@gtb
HDFC Bank
i-flex / Satyam
NetBanking
HSBC
Online@hsbc
ICICI Bank
Infosys, ICICI Infotech
Infinity
IDBI Bank
Infosys (Bank Away)
i-net banking
IndusInd Bank
CR2
IndusNet
Punjab National Bank
Infosys (Bank Away)
Saraswat Bank
Standard Chartered Bank
In-House
Me Standard Chartered Online
State Bank of India
Satyam / Broadvision
Onlinesbi.com
UTI Bank
Infosys (Bank Away)
Iconnect
PIVOTAL ROLE OF IT :
A look at the above mentioned various associative banks have entered into and it is obvious that IT is central to banking. The perceptions and the expectation of the customers have undergone a sea change, with the availability of banking services to the customers at their doorsteps through the help of technology. As per IDC estimates, the total number of registered users and multiple accounts (a user having accounts with more than one bank).India has a little less than a million active Internet banking users .And though this is just 0.096 % of the total population. Thus indicating that the concept of Internet Banking is surely catching on.
Impressive as these figures might be, the truth is that India lags behind other countries in Internet Banking. In the US , the number of commercial banks with transactional websites is 1, 275 or 12% of the total number of banks.
At present, in the US approximately 78% of all commercial banks with assets more than $5 billion, 43% of banks with $ 500 million to $ 5 billion in assets, and 10% of banks under $ 500 million in assets have transactional websites.
In contrast, Indian Banks have an insignificant Internet Banking record. ICICI Bank kicked off online banking way back in 1996 and a host of other banks soon followed suit. But even for the Internet as a whole, 1996 to 1998 marked the adoption phase, while usage increased only in 1999-due to lower ISP online charges, increased PC penetration and a tech-friendly atmosphere.
Today, Banks are looking at newer ways to make a customer’s banking experience more convenient, efficient and effective. They are using new technology tools and techniques to identify customer needs and are offering tailor-made products to match them. Says C N Ram, head, Information technology, HDFC Bank, “Our vision was very clear, we were not enamored by the concept of Internet Banking but looked at it more as an add-on service which our customers should gradually adopt.”
Earlier, banks could decide when and where they wanted customer interfaces, now customers decide when and where they will access banking channels. The services, which can be availed of as of date, centralized operations and process automation using core-banking applications and IP-based networks improve efficiency and productivity levels tremendously. Core banking applications help a bank to shift from ‘Branch Banking’ to ‘Bank Banking’.
Internet Banking not only helps in acquiring more customers but it also reduces problems if customer visits bank physically. This basically means that a customer will be treated as a bank’s customer than just the customer of a particular branch, which was the case earlier. Also, I{-networks let a bank offer multiple services over the same network , resulting in costs savings.
Earlier banks could decide when and where the wanted customer interfaces. Now, the customers decide when and where they will access banking channels.
THE SERVICES, WHICH CAN BE AVAILED AS OF DATE, ARE:
• Transfer one’s money from one city to any other branch in a city.
• Open a Fixed deposit (FD) account via the net. One needs to provide data regarding the amount and term of the deposit and also the branch in which the account is opened.
• Order for an issue of a demand draft can be delivered only to the customer’s address and not to any other party.
• Inquire on the balance in one’s saving , current and FD account and also on the tax deducted at source on one’s FD account for the current and financial year.
• Give instructions over the net for stopping payment on a cheque/s .-Request for a chequebook via the Internet , which will take three days to come.
• View all the transactions completed on an account for a specified period and get a copy via e-mail.
Though relationship tends to look impersonal the customers should feel it personal. The customers need not necessarily positively evaluate the personalized services offered by the bank. Therefore bank should be cautious to ensure that customers feel the services as personal and useful. With the aid of technology they should further mechanize and automate the services offered to customers.
OBJECTIVE OF THE STUDY
1. To access the present scenario of the services of Internet Banking.
2. To study the scope of Internet Banking in future.
3. To study the problems faced by the consumers in availing the Internet
Banking Services.
4. To access the satisfaction level experienced by the users of Internet
Banking Services.
RESEARCH METHODOLOGY
Problem Defining: The project was mainly concerned with evaluating the performance of Internet Banking Services and finding out the scope of Internet Banking Services by doing a comparative analysis of the Internet Banking Services provided by ICICI BANK, SBI BANK, HDFC BANK.
Sample Unit: Individuals who are avaling Internet Banking Services.
Sample Size: 40 respondents
Sampling Method: Non-Probabilistic convenience sampling.
Sampling Area: Patiala
Sources of Data: The data was collected from both primary and secondary sources.
Primary Data: The primary data collection was done through the survey method. The survey was conducted using the questionnaire method.
Secondary Data: Secondary data was collected from the following sources:
a) Books on Internet Banking
b) Internet
c) Journals
CHAPTER-2
PROFILES OF VARIOUS BANKS
PROFILES OF VARIOUS BANKS
PROFILE OF SBI
Evolution of SBI
The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later the bank received its charter and was re-designed as the Bank of Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of British India sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained at the apex of modern banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921.*
Primarily Anglo-Indian creations, the three presidency banks came into existence either as a result of the compulsions of imperial finance or by the felt needs of local European commerce and were not imposed from outside in an arbitrary manner to modernise India's economy. Their evolution was, however, shaped by ideas culled from similar developments in Europe and England, and was influenced by changes occurring in the structure of both the local trading environment and those in the relations of the Indian economy to the economy of Europe and the global economic framework.
* reference- www.sbi.com
Bank of Bengal H.O.
The establishment of the Bank of Bengal marked the advent of limited liability, joint-stock banking in India. So was the associated innovation in banking, viz. the decision to allow the Bank of Bengal to issue notes, which would be accepted for payment of public revenues within a restricted geographical area. This right of note issue was very valuable not only for the Bank of Bengal but also its two siblings, the Banks of Bombay and Madras. It meant an accretion to the capital of the banks, a capital on which the proprietors did not have to pay any interest. The concept of deposit banking was also an innovation because the practice of accepting money for safekeeping (and in some cases, even investment on behalf of the clients) by the indigenous bankers had not spread as a general habit in most parts of India. But, for a long time, and especially upto the time that the three presidency banks had a right of note issue, bank notes and government balances made up the bulk of the investible resources of the banks.
The three banks were governed by royal charters, which were revised from time to time. Each charter provided for a share capital, four-fifth of which were privately subscribed and the rest owned by the provincial government. The members of the board of directors, which managed the affairs of each bank, were mostly proprietary directors representing the large European managing agency houses in India. The rest were government nominees, invariably civil servants, one of whom was elected as the president of the board.
Group Photogaph of Central Board (1921)
The business of the banks was initially confined to discounting of bills of exchange or other negotiable private securities, keeping cash accounts and receiving deposits and issuing and circulating cash notes. Loans were restricted to Rs.one lakh and the period of accommodation confined to three months only. The security for such loans was public securities, commonly called Company's Paper, bullion, treasure, plate, jewels, or goods 'not of a perishable nature' and no interest could be charged beyond a rate of twelve per cent. Loans against goods like opium, indigo, salt woollens, cotton, cotton piece goods, mule twist and silk goods were also granted but such finance by way of cash credits gained momentum only from the third decade of the nineteenth century. All commodities, including tea, sugar and jute, which began to be financed later, were either pledged or hypothecated to the bank. Demand promissory notes were signed by the borrower in favour of the guarantor, which was in turn endorsed to the bank. Lending against shares of the banks or on the mortgage of houses, land or other real property was, however, forbidden.
Indians were the principal borrowers against deposit of Company's paper, while the business of discounts on private as well as salary bills was almost the exclusive monopoly of individuals Europeans and their partnership firms. But the main function of the three banks, as far as the government was concerned, was to help the latter raise loans from time to time and also provide a degree of stability to the prices of government securities.
Old Bank of Bengal
A major change in the conditions of operation of the Banks of Bengal, Bombay and Madras occurred after 1860. With the passing of the Paper Currency Act of 1861, the right of note issue of the presidency banks was abolished and the Government of India assumed from 1 March 1862 the sole power of issuing paper currency within British India.
The task of management and circulation of the new currency notes was conferred on the presidency banks and the Government undertook to transfer the Treasury balances to the banks at places where the banks would open branches. None of the three banks had till then any branches (except the sole attempt and that too a short-lived one by the Bank of Bengal at Mirzapore in 1839) although the charters had given them such authority. But as soon as the three presidency bands were assured of the free use of government Treasury balances at places where they would open branches, they embarked on branch expansion at a rapid pace. By 1876, the branches, agencies and sub agencies of the three presidency banks covered most of the major parts and many of the inland trade centres in India. While the Bank of Bengal had eighteen branches including its head office, seasonal branches and sub agencies, the Banks of Bombay and Madras had fifteen each.
Bank of Madras Note Dated 1861 for Rs.10
The presidency Banks Act, which came into operation on 1 May 1876, brought the three presidency banks under a common statute with similar restrictions on business. The proprietary connection of the Government was, however, terminated, though the banks continued to hold charge of the public debt offices in the three presidency towns, and the custody of a part of the government balances. The Act also stipulated the creation of Reserve Treasuries at Calcutta, Bombay and Madras into which sums above the specified minimum balances promised to the presidency banks at only their head offices were to be lodged. The Government could lend to the presidency banks from such Reserve Treasuries but the latter could look upon them more as a favour than as a right.
Bank of Madras
The decision of the Government to keep the surplus balances in Reserve Treasuries outside the normal control of the presidency banks and the connected decision not to guarantee minimum government balances at new places where branches were to be opened effectively checked the growth of new branches after 1876. The pace of expansion witnessed in the previous decade fell sharply although, in the case of the Bank of Madras, it continued on a modest scale as the profits of that bank were mainly derived from trade dispersed among a number of port towns and inland centres of the presidency.
India witnessed rapid commercialisation in the last quarter of the nineteenth century as its railway network expanded to cover all the major regions of the country. New irrigation networks in Madras, Punjab and Sind accelerated the process of conversion of subsistence crops into cash crops, a portion of which found its way into the foreign markets. Tea and coffee plantations transformed large areas of the eastern Terais, the hills of Assam and the Nilgiris into regions of estate agriculture par excellence. All these resulted in the expansion of India's international trade more than six-fold. The three presidency banks were both beneficiaries and promoters of this commercialisation process as they became involved in the financing of practically every trading, manufacturing and mining activity in the sub-continent. While the Banks of Bengal and Bombay were engaged in the financing of large modern manufacturing industries, the Bank of Madras went into the financing of large modern manufacturing industries, the Bank of Madras went into the financing of small-scale industries in a way which had no parallel elsewhere. But the three banks were rigorously excluded from any business involving foreign exchange. Not only was such business considered risky for these banks, which held government deposits, it was also feared that these banks enjoying government patronage would offer unfair competition to the exchange banks which had by then arrived in India. This exclusion continued till the creation of the Reserve Bank of India in 1935.
Bank of Bombay
The presidency Banks of Bengal, Bombay and Madras with their 70 branches were merged in 1921 to form the Imperial Bank of India. The triad had been transformed into a monolith and a giant among Indian commercial banks had emerged. The new bank took on the triple role of a commercial bank, a banker's bank and a banker to the government.
But this creation was preceded by years of deliberations on the need for a 'State Bank of India'. What eventually emerged was a 'half-way house' combining the functions of a commercial bank and a quasi-central bank.
The establishment of the Reserve Bank of India as the central bank of the country in 1935 ended the quasi-central banking role of the Imperial Bank. The latter ceased to be bankers to the Government of India and instead became agent of the Reserve Bank for the transaction of government business at centres at which the central bank was not established. But it continued to maintain currency chests and small coin depots and operate the remittance facilities scheme for other banks and the public on terms stipulated by the Reserve Bank. It also acted as a bankers' bank by holding their surplus cash and granting them advances against authorised securities. The management of the bank clearing houses also continued with it at many places where the Reserve Bank did not have offices. The bank was also the biggest tenderer at the Treasury bill auctions conducted by the Reserve Bank on behalf of the Government.
The establishment of the Reserve Bank simultaneously saw important amendments being made to the constitution of the Imperial Bank converting it into a purely commercial bank. The earlier restrictions on its business were removed and the bank was permitted to undertake foreign exchange business and executor and trustee business for the first time.
The Imperial Bank during the three and a half decades of its existence recorded an impressive growth in terms of offices, reserves, deposits, investments and advances, the increases in some cases amounting to more than six-fold. The financial status and security inherited from its forerunners no doubt provided a firm and durable platform. But the lofty traditions of banking which the Imperial Bank consistently maintained and the high standard of integrity it observed in its operations inspired confidence in its depositors that no other bank in India could perhaps then equal. All these enabled the Imperial Bank to acquire a pre-eminent position in the Indian banking industry and also secure a vital place in the country's economic life.
Imperial Bank of India
When India attained freedom, the Imperial Bank had a capital base (including reserves) of Rs.11.85 crores, deposits and advances of Rs.275.14 crores and Rs.72.94 crores respectively and a network of 172 branches and more than 200 sub offices extending all over the country.
In 1951, when the First Five Year Plan was launched, the development of rural India was given the highest priority. The commercial banks of the country including the Imperial Bank of India had till then confined their operations to the urban sector and were not equipped to respond to the emergent needs of economic regeneration of the rural areas. In order, therefore, to serve the economy in general and the rural sector in particular, the All India Rural Credit Survey Committee recommended the creation of a state-partnered and state-sponsored bank by taking over the Imperial Bank of India, and integrating with it, the former state-owned or state-associate banks. An act was accordingly passed in Parliament in May 1955 and the State Bank of India was constituted on 1 July 1955. More than a quarter of the resources of the Indian banking system thus passed under the direct control of the State. Later, the State Bank of India (Subsidiary Banks) Act was passed in 1959, enabling the State Bank of India to take over eight former State-associated banks as its subsidiaries (later named Associates).
The State Bank of India was thus born with a new sense of social purpose aided by the 480 offices comprising branches, sub offices and three Local Head Offices inherited from the Imperial Bank. The concept of banking as mere repositories of the community's savings and lenders to creditworthy parties was soon to give way to the concept of purposeful banking subserving the growing and diversified financial needs of planned economic development. The State Bank of India was destined to act as the pacesetter in this respect and lead the Indian banking system into the exciting field of national development.
TECHNOLOGY UPGRADATION HIGHLIGHTS
SBI’s Information Technology Programme aims at achieving efficiency in operations, meeting customer and market expectations and facing competition. Our achievements are summarized below:*
FULL BRANCH COMPUTERISATION (FCBs): All the branches of the Bank are now fully computerized. This strategy has contributed to improvement in customer service.
ATM SERVICES: There are 4633 ATMs on the ATM Network including 3181 ATMs of SBI and 1452 from the 7 Associate Banks and Subsidiaries. These ATMs are located in 1521 centres spread across the length and breadth of the country, thereby creating a truly national network of ATMs with an unparalleled reach. Value added services like ATM locator, payment of fees for college students, multilingual screens, voice over and drawal of cash advance by SBI credit card holders have been introduced.
INTERNET BANKING (INB): This on-line channel enables customers to access their account information and initiate transactions on a 24x7, boundary less basis. 1994 branches, covering 555 centres, are extending INB service to their customers. All functionalities other than Cash and Clearing have been extended to individual retail customers. A separate Internet Banking Module for Corporate customers has been launched and available at 1305 branches. Bulk upload of data for Corporate, Inter-branch funds transfer for Retail customers, online payment of Customs duty and Govt. tax, Electronic Bill Payment, SMS Alerts, E-Poll, IIT GATE Fee Collection, Off-line Customer Registration Process and Railway Ticket Booking are the new features deployed.
GOVT. BUSINESS: Software has been developed and rolled out at 7785 fully computerised branches. Electronic generation of all reports for reporting, settlement and reconciliation of Govt. funds, is available.
STEPS: Under STEPS, the bank’s electronic funds transfer system, the Products offered are eTransfer (eT), eRealisation (eR), eDebit (CMP) and ATM reconciliation. STEPS handles payment messages and reconciliation simultaneously.
SEFT: SBI has launched the Special Electronic Fund Transfer (SEFT) Scheme of RBI, to facilitate efficient and expeditious Inter-bank transfer of funds. 241 branches of our Bank in various LHO Centres are participating in the scheme. Security of message transmission has been enhanced.
MICR Centres: MICR Cheque Processing systems are operational at 16 centres viz. Mumbai, New Delhi, Chennai, Kolkata, Vadodara, Surat, Patna, Jabalpur, Gwalior, Jodhpur, Trichur, Calicut, Nasik, Raipur, Bhubaneswar and Dehradun.
Core Banking : The Core Banking Solution provides the state-of-the-art anywhere anytime banking for our customers. The facility is available at 574 branches.
Trade Finance: The solution has been implemented, providing efficiency in handling Trade Finance transactions with Internet access to customers and greatly enhances the bank’s services to Corporates and Commercial Network branches. This new Trade Finance solution, EXIMBILLS, will be implemented at all domestic branches as well as at Foreign offices engaged in trade finance business during the year.
WAN: The bank has set up a Wide Area Network, known as SBI connect, which provides connectivity to 4819 branches/offices of SB Group across 306 cities. This network provides across the board benefits by providing nationwide connectivity for its business applications.
PROFILE OF HDFC BANK
The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in-principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalisation of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. *
Promoter
HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain a market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment.
Business Focus
HDFC Bank's mission is to be a World-Class Indian Bank. The Bank's aim is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services in the segments that the bank operates in and to achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank is committed to maintain the highest level of ethical standards professional integrity and regulatory compliance. HDFC Bank's business philosophy is based on four core values: Operational Excellence, Customer Focus, Product Leadership and People.
Capital Structure
The authorized capital of HDFC Bank is Rs.450 crore (Rs.45 billion). The paid-up capital is Rs.282 crore (Rs.28.2 billion). The HDFC Group holds 24.2% of the bank's equity while about 13.1% of the equity is held by the depository in respect of the bank's issue of American Depository Shares (ADS/ADR Issue). The Indian Private Equity Fund, Mauritius (IPEF) and Indocean Financial Holdings Ltd., Mauritius (IFHL) (both funds advised by J P Morgan Partners, formerly Chase Capital Partners) together hold about 5.5% of the bank's equity. Roughly 27.5% of the equity is held by FIIs, NRIs/OCBs while the balance is widely held by about 214,000 shareholders. The shares are listed on The Stock Exchange, Mumbai and the National Stock Exchange. The bank's American Depository Shares are listed on the New York Stock Exchange (NYSE) under the symbol "HDB".
TimesBank Amalgamation
In a milestone transaction in the Indian banking industry, TimesBank Limited (another new private sector bank promoted by Bennett, Coleman & Co./Times Group) was merged with HDFC Bank Ltd., effective February 26, 2000. As per the scheme of amalgamation approved by the shareholders of both banks and the Reserve Bank of India, shareholders of TimesBank received 1 share of HDFC Bank for every 5.75 shares of TimesBank. The amalgamation added significant value to HDFC Bank in terms of increased branch network, expanded geographic reach, enhanced customer base, skilled manpower and the opportunity to cross-sell and leverage alternative delivery channels.
Distribution Network
HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of over 451 branches spread over 205 cities across the country. All branches are linked on an online real-time basis. Customers in 90 locations are also serviced through Phone Banking. The Bank's expansion plans take into account the need to have a presence in all major industrial and commercial centres where its corporate customers are located as well as the need to build a strong retail customer base for both deposits and loan products. Being a clearing/settlement bank to various leading stock exchanges , , the Bank has branches in the centres where the NSE/BSE has a strong and active member base.
The Bank also has a network of over 1054 networked ATMs across these cities. Moreover, HDFC Bank's ATM network can be accessed by all domestic and international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders.
Management
Mr. Jagdish Capoor took over as the bank's Chairman in July 2001. Prior to this, Mr. Capoor was a Deputy Governor of the Reserve Bank of India.
The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25 years and before joining HDFC Bank in 1994 was heading Citibank's operations in Malaysia.
The Bank's Board of Directors is composed of eminent individuals with a wealth of experience in public policy, administration, industry and commercial banking. Senior executives representing HDFC are also on the Board.
Senior banking professionals with substantial experience in India and abroad head various businesses and functions and report to the Managing Director. Given the professional expertise of the management team and the overall focus on recruiting and retaining the best talent in the industry, the bank believes that its people are a significant competitive strength.
Technology
HDFC Bank operates in a highly automated environment in terms of information technology and communication systems. All the bank's branches have connectivity which enables the bank to offer speedy funds transfer facilities to its customers. Multi-branch access is also provided to retail customers through the branch network and Automated Teller Machines (ATMs).
The Bank has made substantial efforts and investments in acquiring the best technology available internationally to build the infrastructure for a world-class bank. In terms of software, the Corporate Banking business is supported by Flexcube, while the Retail Banking business by Finware, both from i-flex Solutions Ltd. The systems are open, scaleable and web-enabled.
The Bank has prioritized its engagement in technology and the internet as one of its key goals and has already made significant progress in web-enabling its core businesses. In each of its businesses, the Bank has succeeded in leveraging its market position, expertise and technology to create a competitive advantage and build market share.
Business Profile
HDFC Bank caters to a wide range of banking services covering commercial and investment banking on the wholesale side and transactional / branch banking on the retail side. The bank has three key business areas :-
a) Wholesale Banking Services
The Bank's target market is primarily large, blue-chip manufacturing companies in the Indian corporate sector and to a lesser extent, emerging mid-sized corporates. For these corporates, the Bank provides a wide range of commercial and transactional banking services, including working capital finance, trade services, transactional services, cash management, etc. The bank is also a leading provider of structured solutions which combine cash management services with vendor and distributor finance for facilitating superior supply chain management for its corporate customers. Based on its superior product delivery / service levels and strong customer orientation, the Bank has made significant inroads into the banking consortia of a number of leading Indian corporates including multinationals, companies from the domestic business houses and prime Public Sector companies. It is recognised as a leading provider of cash management and transactional banking solutions to corporate customers, mutual funds, stock exchange members and banks.
b) Retail Banking Services
The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements. The products are backed by world-class service and delivered to the customers through the growing branch network, as well as through alternative delivery channels like ATMs, PhoneBanking, NetBanking and MobileBanking.
The HDFC Bank preferred program for high net worth individuals, the HDFC Bank Plus and the Investment Advisory Services programs have been designed keeping in mind needs of customers who seek distinct financial solutions, information and advice on various investment avenues. The Bank also has a wide array of retail loan products including Auto Loans, Loans against marketable securities, Personal Loans and Loans for Two-wheelers. It is also a leading provider of Depository Services to retail customers, offering customers the facility to hold their investments in electronic form. HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA Electron) and issues the Mastercard Maestro debit card as well. The debit card allows the user to directly debit his account at the point of purchase at a merchant establishment, in India and overseas. The Bank launched its credit card in association with VISA in November 2001. The Bank is also one of the leading players in the "merchant acquiring" business with over 25,000 Point-of-Sale (POS) terminals for debit / credit cards
acceptance at merchant establishments. The Bank is well positioned as a leader in various net-based B2C opportunities including a wide range of internet banking services for Fixed Deposits, Loans, Bill Payments, etc.
c) Treasury Operations
Within this business, the bank has three main product areas - Foreign Exchange and Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the liberalisation of the financial markets in India, corporates need more sophisticated risk management information, advice and product structures. These and fine pricing on various treasury products are provided through the bank's Treasury team. To comply with statutory reserve requirements, the bank is required to hold 25% of its deposits in government securities. The Treasury business is responsible for managing the returns and market risk on this investment portfolio.
Rating
HDFC Bank has its deposit programmes rated by two rating agencies - Credit Analysis & Research Limited (CARE) and Fitch Ratings India Pvt. Ltd. The Bank's Fixed Deposit programme has been rated 'CARE AAA (FD)' [Triple A] by CARE, which represents instruments considered to be "of the best quality, carrying negligible investment risk". CARE has also rated the Bank's Certificate of Deposit (CD) programme "PR 1+" which represents "superior capacity for repayment of short term promissory obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has assigned the "tAAA (ind)" rating to the Bank's deposit programme, with the outlook on the rating as "stable". This rating indicates "highest credit quality" where "protection factors are very high". HDFC Bank also has its long-term unsecured, subordinated (Tier-II) Bonds rated by CARE and Fitch Ratings India Pvt. Ltd. CARE has assigned the rating of "CARE AAA" for the Tier-II Bonds while Fitch Ratings India Pvt. Ltd. has assigned the rating "AAA (ind)" with the outlook on the rating as "stable". In each case referred to above, the ratings awarded were the highest assigned by the rating agency for those instruments.
Corporate Governance Rating
The bank was one of the first four companies which subjected itself to a Corporate Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating Information Services of India Limited (CRISIL). The rating provides an independent assessment of an entity’s current performance and an expectation on its "balanced value creation and corporate governance practices" in future. The bank has been assigned a ‘CRISIL GVC Level 1' rating which indicates that the bank's capability with respect to wealth creation for all its stakeholders while adopting sound corporate governance practices is the highest.
Product Range
Savings, Fixed Deposits, Current and Demat Accounts
Savings Account: Apart from the usual facilities, the customer gets a free ATM Card, Interbranch banking, NetBanking, BillPay, PhoneBanking, Debit Card and MobileBanking, among others.
HDFC Bank Preferred: A preferential Savings Account where the customer is assigned a dedicated Relationship Manager, who is the customer’s one-point contact. The customer also get privileges like fee waivers, enhanced ATM withdrawal limit, priority locker allotment, free Demat Account and lower interest rates on loans, to name a few.
Sweep-In Account: A fixed deposit linked to the customer’s Savings Account. So, even if the customer’s Savings Account runs a bit short, he/she can issue a cheque (or use your ATM Card). The money is automatically swept in from his/her fixed deposit into his/her Savings Account.
Super Saver Account: It gives the customer an overdraft facility up to 75% of his/her Fixed Deposit. In an emergency, the customer can access his/her funds while his/her Fixed Deposit continues to earn high interest.
HDFC Bank Plus: Apart from Regular and Premium Current accounts the bank also has HDFC Bank Plus, a Current Account and then some more. The customer can transfer up to Rs. 50 lakh per month at no extra charge, between the four metros. The customer can also avail of cheque clearing between the four metros, get cash delivery/pickup upto Rs. 25,000/-, home delivery of Demand Drafts, at-par cheques, outstation cheque clearance facility, etc.
Demat Account: The customer can conduct hassle-free transactions on his/her shares. The customer can also access his/her Demat Account on the Internet.
Innovative services for your convenience...
PhoneBanking: 24-hour automated banking services with 39 PhoneBanking numbers available.
ATM 24-hour banking: Apart from routine transactions, the customer can also pay his/her utility bills and transfer funds, at any of the bank’s ATMs across the country all year round.
Inter-city/Inter-branch Banking:The customer can access his/her account from any of the bank’s 451 branches in 205 cities.
NetBanking: The customer can access his/her bank account from anywhere in the world, at anytime, at his/her own convenience. The customer can also view his/her Demat Account through NetBanking.
International Debit Card: With an ATM card the customer can shop with all over the country and in over 140 countries with. The customer can spend in any currency, and pay in Rupees.
MobileBanking: The customer can access his/her account on his/her mobile phone screen at no airtime cost. The customer can use SMS technology to conduct his/her banking transactions from his/her cellphone.
BillPay: The customer can pay his/her telephone, electricity and mobilephone bills through the bank’s ATMs, Internet, phone or mobile phone.
Loans for every need
Now, the bank’s loans come to the customerin easy-to-pay monthly instalments, and are available with easy documentation and quick delivery.
Personal Loans: The customer can now take a loan of up to Rs. 3 lakh for a wedding, education, purchase of a computer or an exciting holiday.
New Car Loans and Used Car Loans: The customer can now avail finance up to 90% of the cost of a car, new or used! And the loans come to the customer with easy documentation and speedy processing at attractive interest rates.
Loans Against Shares: The customer can get an overdraft up to Rs. 10 lakh at an attractive interest rate against physical shares, up to 50% of the market value of his/her shares. In case of Demat Shares, the customer can get a Loan Against Shares of up to 65% of the market value of his/her shares, till Rs. 20 lakh.
Two Wheeler & Consumer Loans: It is to help the customer to buy the best durables for his/her home.
Demat Account: The customer can now protect his/her shares from damage, loss and theft, by maintaining the customer’s shares in electronic form. The customer can also access his/her demat account on the internet.
Current Account: The customer can get a personalised cheque book, monthly account statements, inter-branch banking and much more.
Mutual Funds: Apart from a wide choice of mutual funds to suit the customer’s needs the customer benefits from expert advice on choosing the right funds based on in-depth market analysis.
International Credit Card: The customer can get an option of Silver, Gold, or Health Plus Credit card, accepted worldwide from a world-class bank. If the the customer has an outstanding balance on his/her credit card the customer can transfer that balance to this card at a lower interest rate.
NRI Services: A comprehensive range, backed by unmatched features and world-class service, ensures NRIs all the banking support they need.
Forex Facilities: The customer can avail foreign currency, travellers cheques, foreign exchange demand drafts, to meet his/her travel needs.
Insurance*: HDFC Bank now brings its customers Life Insurance and Pension Solutions like Risk Cover Scheme, Savings Scheme, Children’s Plan and Personal Plan from HDFC Standard Life Insurance Co. Ltd.
*Insurance is the subject matter of solicitation.
PROFILE OF ICICI BANK
ICICI Bank is India's second-largest bank with total assets of about Rs.146,214 crore at December 31, 2004 and profit after tax of Rs. 1,391 crore in the nine months ended December 31, 2004 (Rs. 1,637 crore in fiscal 2004). ICICI Bank has a network of about 505 branches and extension counters and about 1,850 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank set up its international banking group in fiscal 2002 to cater to the cross-border needs of clients and leverage on its domestic banking strengths to offer products internationally. ICICI Bank currently has subsidiaries in the United Kingdom and Canada, branches in Singapore and Bahrain and representative offices in the United States, China, United Arab Emirates and Bangladesh.*
ICICI Bank's equity shares are listed in India on the Stock Exchange, Mumbai and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).
As required by the stock exchanges, ICICI Bank has formulated a Code of Business Conduct and Ethics for its directors and employees.
At October 31, 2004, ICICI Bank, with free float market capitalisation* of about Rs. 220.00 billion (US$ 5.00 billion) ranked third amongst all the companies listed on the Indian stock exchanges.
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE.
After consideration of various corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would create the optimal legal structure for the ICICI group's universal banking strategy. The merger would enhance value for ICICI shareholders through the merged entity's access to low-cost deposits, greater opportunities for earning fee-based income and the ability to participate in the payments system and provide transaction-banking services. The merger would enhance value for ICICI Bank shareholders through a large capital base and scale of operations, seamless access to ICICI's strong corporate relationships built up over five decades, entry into new business segments, higher market share in various business segments, particularly fee-based services, and access to the vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's financing and banking operations, both wholesale and retail, have been integrated in a single entity.
*Free float holding excludes all promoter holdings, strategic investments and cross holdings among public sector entities.
CHAPTER-3
E-BANKING SERVICES PROVIDED BY VARIOUS BANKS
INTERNET BANKING SERVICES PROVIDED BY VARIOUS BANKS
Internet Banking Services provided by STATE BANK OF INDIA:*
1. BILL PAYMENT
About Bill Payment
SBI e-PAY - A simple and convenient service for receiving and paying the customer’s bills online
• No more late payments
• No more queues
• No more hassles of depositing cheques
OnlinePay: Using SBI e-PAY the customer can 'see and pay' his/her various bills online, directly from his/her SBI Account. The customer can pay telephone, electricity, insurance, credit card and other bills - from the comfort of his/her house or office, 24 hours a day, 365 days a year! He/she will simply have to logon to http://www.onlinesbi.com/ to 'see and pay' their bills. The customer can also get an electronic acknowledgment for every bill paid by him/her using e-PAY.
AutoPay: The customer can also set up AutoPay instructions with an upper limit to ensure that his/her bills are paid automatically whenever they are due. The upper limit ensures that only bills within the specified limit are paid automatically, thereby providing the customer complete control over these payments.
The e-PAY service is available in various cities across the country and the customer can now make payments to several billers in his/her region.
To start receiving and paying their bills online, the customers will simply have to login to http://www.onlinesbi.com and use the 'Add Biller' feature to select the billers they wish to make payments to. Alternately, the customers can also fill out the SBI e-PAY Registration Form (SeRF) available at their SBI branch, complete it and submit it to the branch.
2. SMS ALERTS
SMS Alerts are the fashionable way to keep track of critical activity on one’s accounts. In a significant step towards enabling anytime-anywhere banking, OnlineSBI.com now enables its customers to receive alerts on his/her mobile phone. The customer can ask to be alerted when the balance on his/her account goes above or below a particular amount; or when a transaction of greater than a specified amount hits the customer’s account; or when an interest is applied on the customer’s accounts more.Receiving alerts on your mobile phone is a two-step process.
1. Set your mobile number. Be sure to correctly select the country the mobile number belongs to.
2. Define your alert criteria; be it balance alert or a transaction alert or an interest alert.
The bank will now do the hard work of alerting when these events happen to his/her account.
3. ONLINE BOOKING OF RAILWAY TICKETS
The customer should follow under noted process for booking of railway tickets.
• Logon to the site of IRCTC www.irctc.co.in
• Register yourself on the site (if first time user) or log on with
Username and Password (meant for IRCTC site).
• Provide the requisite information i.e. stations (departure & arrival),
date and class of the journey under option of "Plan My Travel and Book
Ticket"
• Select your train from the list of trains displayed by IRCTC and click
on "Book Ticket"
• Provide passenger details and confirm your address for getting delivery
of tickets . The amount of ticket will be displayed for payment.
• Choose payment option "State Bank of India". You will be taken to our
site onlineSBI.
• Log in with Username and Password (meant for onlineSBI ) and confirm
the payment.
• On successful transaction, you will be provided with Transaction Id and
date of transaction.
• The ticket will be delivered by IRCTC at your place of choice. Delivery
of ticket is sole responsibility of IRCTC.
• For cancellation of ticket, submit your ticket at a computerized counter
of Railways. On cancellation of ticket by Railways, the amount shall be
credited back to your account.
State Bank of India.
4. MUTUAL FUNDS
SBI Mutual Fund has grown tremendously in terms of corpus as well as number of investors. Today it is one of the largest Bank sponsored Mutual Fund in the country. The bank has launched 35 Schemes, of which 15 have been redeemed, yielding handsome returns to investors. The fund has over Rs. 5,500 Crores as assets under management.
SBI is also the first Bank sponsored Mutual Fund to launch an offshore fund, the India Magnum Fund, with a corpus of around Rs. 225 Crores.
Today the Fund has an investor base of over 8 Lacs spread over 18 schemes. With a large network over 35 collection branches, 26 Investor Service Centres, 19 Investor Service Desks and 21 District Organizers, the SBI is constantly endeavouring to get closer to the bank’s growing family of investors.
INTERNET BANKING SERVICES PROVIDED BY ICICI BANK
1. BILL PAYMENT
ICICI Bank Internet Banking is the most convenient channel to manage and pay the bills anytime, anywhere. No more hassles of personally visiting the Biller to pay the bills. Its free for all the Customers. The bank has enabled the billers in following two modes:
• Presentment Type Billers: For these billers, the bill amount and due date will be presented to them online on http://www.icicibank.com/ and a reminder will be sent to their on Email.
• Payment Type Billers: For these billers the customer’s can register and pay any amount immediately
2. ONLINE SHOPPING*
ICICI Bank has tied up with more than 75 organizations to facilitate online shopping for all its Internet Banking Customers. The customer’s
Have to choose their products online and pay conveniently through ICICI Bank Internet Banking Service.
Online Shopping Process
Their esteemed partners are:
ICICI Bank brings Insurance products to the customer’s door-step. The customers can buy Insurance products from ICICI Lombard General Insurance and pay through the bank’s Internet Banking. Details...
The customer’s can book their Air Tickets online at http://www.icicibank.com/pfsuser/icicibank/online/shopping/online_shopping.htm# and pay through Internet Banking. The customer’s can also take a print of their ticket instanteneously.Details...
The customer’s can book their railway ticket through http://www.icicibank.com/pfsuser/icicibank/online/shopping/online_shopping.htm# using ICICI Bank Internet Banking. IRCTC will deliver ticket to delivery address mentioned by the customer. Details...
The customer’s can pay their Reliance Infocom bills through Internet Banking. The customer’s can visit Reliance Infocomm, view their bill details and make instantaneous payments.
3. TICKET BOOKING
Ticket Booking
The customer’s can now book their Railways and Air Tickets Online
The customer’s can now buy their tickets online and pay using the bank’s Internet Banking Facility. ICICI Bank has tied up with IRCTC (for Railway Ticket Booking) and Air Deccan (for Air Ticket booking).
The salient features of the facility are as under:
1. All internet banking customers can use the facility.
2. For booking tickets, please visit www.irctc.co.in (for railway tickets) and http://www.airdeccan.net/ (for air tickets). Select your journey date and other details.
3. On payment option, select ICICI Bank for making the payment. The customer will be redirected to secured login page of ICICI Bank. After logging on to the site the customer can see his/her displayed payment amount, and Payee Details.
4. The customer will be required to confirm the transaction by entering transaction password. On successful authentication, the customer’s Bank Account will be immediately debited and payment confirmation number will be provided. Within some time the customer will also receive online confirmation from IRCTC/ Air Deccan website. Tickets are booked immediately and PNR number is provided online at Partner's website.
Cancellation of tickets: No cash will be paid at the time of cancellation. The customer’s bank account will be credited with the ticket amount less cancellation charges as levied by IRCTC/ Air Deccan. ICICI Bank does not levy any cancellation charges.
4. INSURANCE POLICIES OFFERED BY ICICI BANK *
Convenience has always been synonymous with ICICI Bank and keeping in line with this, icici bank now offers it’s customers, the most comprehensive suite of General Insurance products from ICICI Lombard, to cater to their insurance needs and that too online.
10K Tax Saver Health Insurance Family Floater Health Insurance
For the first time in India ICICI Lombard introduces, 10K Tax Saver Health Insurance plan. This fixed premium Family Floater Health plan is designed to give the maximum tax benefit u/s Sec. 80D
For the First time in India, Family Floater Health Plan, a single health insurance cover that takes care of the customer’s entire family’s medical expenses during sudden illness, surgeries and accidents.
• Maximum tax benefit. Rs.10,000 deduction u/s 80 D.
• Fixed premium plan where the insured amount changes with no. of members.
• Family Floater advantage. One policy for entire family.
• Special covers (Double & Convalescence benefits) in addition to the regular health cover. • A single policy covers the entire family's health needs
• Covers expenses towards cost of hospital room/bed during illness, surgeries & accidents
• Cashless facility at more than 1100 network hospitals across 214 cities in India
• 5 % No - Claim discount on renewal premium
Overseas Travel Insurance Student Travel Insurance
ICICI Lombard Overseas Travel Insurance charges it’s customer’s on a ‘Pay Per Day’ basis.
ICICI Lombard’s Comprehensive Overseas Student Travel Insurance.
• Protection against all list of emergencies that may occur whilst traveling abroad
• Premium on a "Pay Per Day" basis instead of slab rates
• Cashless hospitalisation benefit available globally
• Cover available for a maximum period of 6 months with an extension option
• Dedicated toll-free help line number across all countries • Protection against all list of emergencies that may occur whilst traveling abroad
• Customer can pay in rupees, and can save valuable dollars.
• Plan meets foreign universities insurance requirements
• No documentation. No health check-up. Instant policy issuance
• Policy is renewable for the second year
3. ICICI BANK’S ONLINE SHARE TRADING.
ICICI bank also provides the service of online share trading to its customers through www.icicidirect.com.
INTERNET BANKING SERVICES PROVIDED BY HDFC BANK
NETBANKING FEATURES*
1.Credit card Payment
Customers can pay their HDFC Bank Credit card dues through this option.
2.Statement Download
The customers can download their account statement onto their PC for the period of 5 months from the given date.
3.Change Customer profile
The customers can update their mailing address and all their communication from bank will go to this new address.
4. Funds Transfer
The customers cant transfer funds between their accounts, even if they are in different branches/cities. The customer can also transfer funds to any person having an HDFC Bank account anytime, anywhere, using our Third Party Funds Transfer option. To avail of TPT facility, customer will have to sign the declaration form, which is available on the Net or at any of the bank’s branches.
5. New Fixed Deposit Request*
The customer can open a Fixed Deposit Account on the Internet. He will just have to give details regarding the account from which he/she wants to transfer funds, the amount and terms for the Fixed Deposit, the branch and the relevant maturity instructions.
6. Fixed Deposit Inquiry
The customers can access details of their Fixed Deposit Account such as Principal Balance, Term of Deposit, Rate of Interest, Maturity Date, Maturity Amount and Instructions for Payment.
7. Demand Draft* Request
The customers can issue a DD from their account at special rates. They will just have to select the account to be debited from and give the bank details of the amount, location and beneficiary. The bank will even have the Demand Draft couriered to the customer’s mailing address. (DDs will be issued only where the bank has a branch or has an arrangement with a local bank).
8. Demand Draft Request at Beneficiary's address
NetBanking offers a new facility to all its customers. The customer can issue a Demand Draft on the Beneficiary's name and address of his/her choice. He/she will just have to just select the account to be debited from and give the bank the details of the amount and beneficiary's name & address where the customer want the Demand Draft to be delivered. The Demand Drafts would only be delivered within India. (DDs will be issued only where the Bank has a branch or has an arrangement with a local Bank).
Note : 1) This facility is only open to users who have registered for Third Party Transfer (TPT).
9. TDS Inquiry
the customer can access information on Tax Deducted at Source for all their deposits for the current or previous financial year.
10. Stop Payment Request
The customer can request Stop Payment on a cheque or series of cheques online by just entering the cheque number and the reason for stopping payment.
11. Cheque Status Inquiry
The customer can view the status of a specific cheque issued on any of his/her accounts.
12. Cheque Book Request
The customer can request for a new cheque book online. His/Her cheque book will be couriered to the address on the bank’s records.
13. Account Balance Inquiry
The customer can check his/her savings or current account balance, including information regarding Uncleared Funds, Ledger Balances, Overdraft Limits and Sweep-In Amounts.
14. Account Statement Inquiry
The customer can view all the transactions on his/her account for either the current period (i.e. from date of last statement mailed to him/her), or a specific period determined by him/her/. The customer can also request his/her statement via mail (mailing address will be as per bank records).
15. Customer Support
The customer can use this option to communicate with the Bank for requests, instructions and queries.
16. Demat on the NET
If the customer also holds a Demat Account with the bank, he/she can now access his/her account online. Through Demat on the Internet, he/she can see his/her holdings as on the close of the last business day.He/She can view his/her your transactions for the last 7 days. Check the status of the shares submitted for Demat in the last one month. The bank will also provide the customer with an ISIN search and a calendar to know the various settlement details on various exchanges.
17. Direct Pay
An option exclusively for HDFC Bank NetBanking customers, which allows online purchases in a safe and secure environment. Shop online at websites, which offer our Direct Pay facility, such as Sify.com, Fabmart.com, VSNL.com and many more. Through Direct Pay, the customer’s account would be debited and the merchant's/ website's account gets credited instantaneously.
18. BillPay
The customer can pay his/her mobile phone, electricity and telephone bills through the Internet using the BillPay facility.
19. Security
With NetBanking, the customer can carry out all his/her banking and shopping transactions safely and with total confidentiality. The entire system is secured, using the whole gamut of security architecture including firewalls, filtering routers, 128-bit encryption and digital certification. So the customer is absolutely sure that all his/her online transactions are safe and protected.
* New Fixed Deposit Request/DD Request will be processed only during banking hours on the next working day.
Who Can Apply
All the customer need to access NetBanking is have a savings or current or fixed deposit account. Financial transactions can be made by savings account holders (with an either or survivor mandate), individual current account holders and sole proprietorship account holders.
Now Kartas of HUF, Patnerships and authorised signatories of Partnership Concerns and Private Limited Companies can do financial transactions by filling up a special imdemnity. The customer can download the form from website or contact your nearest branch.
REGISTRATION FOR NETBANKING
If the cutomer is a HDFC Bank customer, he/she can register for NetBanking by Calling PhoneBanking if he/she has a Telephone Identification Number (TIN)
OR
downloading an e-Age Banking form. The completed form can be submitted at the nearest branch.
The IPIN (password) will be mailed to the customer’s correspondence address.
NetBanking form for Individuals
NetBanking form for Corporates
If the customer does not have an HDFC Bank Account he/she can download* the relevant Account Opening Form print it, fill in the details along with his/her signature and drop it off the nearest HDFCBank branch. This form includes the NetBanking registration form.
Account Opening Form for Individuals
Account Opening Form for Companies
* The customer will need Adobe Acrobat Reader to read the Account Opening and NetBanking Application forms. If the customer does not have Adobe Acrobat Reader, download it. After the customer have downloaded and installed Adobe Acrobat Reader, the customer will need to restart his/her browser.
INTERNET BANKING SERVICES PROVIDED BY HDFC BANK INCLUDES THE FOLLOWING SERVICES:
1. ATM FACILITY
ATM in India for 24 Hour Banking
Now, the customer’s money is accessible to him/her 24 hours a day, 7 days a week, 365 days a year from any of the bank’s over 1054 ATM across India.
2. BILL PAYMENT
BillPay - Bill Payments Service
Now, the customer can have the luxury of paying his/her telephone, electricity and mobile phone bills at your convenience. Through the Internet, ATMs, his/her mobile phone and telephone. LIC insurance premiums can also be paid through this facility. The customer can also Renew your VSNL Internet Account and even Register for a New VSNL Internet Account using BillPay, a comprehensive bill payments solution. The customer can check the bill amount before he/she makes any payments ensuring that he/she always pays the right amount. BillPay has made all your bill payments easy. It gets even better if the customer is a resident of Hyderabad or Secunderabad and registered for the bank’s NetBanking service. Thanks to the bank’s tie-up with eseva, a unique integrated service launched by the government of Andhra Pradesh, the customer can now pay his/her electricity bills, water bills and municipal taxes (telephones to be introduced shortly) through the Internet using the Direct Debit option. The most important aspect of this service is that the payments made are updated in the database of the utility companies on an online and real-time basis.
3 DEBIT CARD
EasyShop Gold Debit Card
HDFC Bank proudly presents the EasyShop Gold Debit Card. The EasyShop Gold Debit Card is the first Gold Debit Card in India. Not only does it replace the customer’s ATM card, it also revolutionises the way he/she spends through a Debit Card and The customer also gets the benefits that as a Gold Debit Card Customer.
• Cash back*
For every Rs. 100 that the customer will spend, he/she will receive Re. 1 as cash back. This cash back is valid on all purchases made through the card, at all times of the year!!!
• Zero surcharge at Petrol Pumps*
The customer can now use his/her Debit Card at the Petrol Pumps. As a Gold Card holder, no surcharge would be levied on the customer at the petrol pumps.
• Special Offers at Premium Outlets, Hotels and Restaurants*
The bank has arranged for special offers for its customers, the details of which are available in the Merchant Booklet.
• Insurance covers*
The following are included in the insurance covers
o Death Cover by Air / Road - Sum assured Rs. 5,00,000
o Fire & Burglary for the items purchased under Debit Card (upto 6 months) - Sum assured Rs. 50,000
Loss of Baggage Insurance - Sum assured Rs. 20,000
4. INTERNATIONAL DEBIT CARD
Easyshop International Debit Card
Easyshop International Debit Card lets the customer shop and do much more than he/she could do with his/her ATM Card. It replaces cash, so when one goes shopping, the customer no longer need to carry cash with him/her. This card can be used in India and abroad at merchant locations such as shops and restaurants and to withdraw cash from a widespread network of ATMs. The value of the payment made or cash withdrawn is instantly debited from his/her account. What's more, while all purchases and cash withdrawals of the customer are in the currency of the country he/she is in, his/her account is debited in Rupees!
HDFC Bank offers the following Debit Card programmes in India:
1. Visa in association with Visa International
2. Maestro in association with MasterCard International
5. ONLINE SHOPPING
NetSafe, is a unique online payment solution that offers the customer’s complete security while shopping on the Internet. With NetSafe, they can now shop online without revealing their HDFC Bank Credit Card number. They can now use their HDFC Bank Debit Card also for online purchases.
The customers will have to follow a simple 3-step process to register for NetSafe using either his/her HDFC Bank Visa Credit or Debit Card. Once registered, the customer will have to choose the amount and account he/she wish to debit and create as many NetSafe cards as he/she wants. And after the transaction or a max of 48 hours, the card will cease to exist. All this comes FREE with the customer’s HDFC Bank Credit / Debit Card.
*
Step1:OnetimeRegistration
NetSafe requires a one-time registration. After accepting the Terms and Conditions, the customer will need to key in his/her Debit / Credit card number , his/her ATM PIN and the date of expiry of your card.He/She can then generate his/her own Login Id and Password after adding his/her personal details. The Registration process is complete and the customer can Login to NetSafe !
Step2:YourfirstNetSafecard
The customer will have to create a NetSafe card drawing funds from his/her existing HDFC Bank Debit or Credit card accounts . All the customer needs to do is specify the account to be debited and the required value( limit ) of his/her NetSafe card.
Step3:ShoppingwithNetSafe
The customer can use his/her NetSafe card to make purchases online in 2 ways
• He should copy the NetSafe Card Number as the Card Number required in the payment screen of his/her shopping site.
• The customer should download the Plug-In during the Registration process.
6. DIRECT PAY FACILITY
HDFC Bank's Direct Pay facility is an e-Age Banking Channel where the purchases are debited directly to the customer’s account and credited to the account of the establishment (or the website where the purchases were made). If the customer is an account holder with HDFC Bank, all he/she will have to do is to register for the NetBanking facility to use this option.
However, shopping is not the only option that the customer has. If the customer is a resident of Hyderabad or Secunderabad, it gets even better. Thanks to the bank's tie-up with Eseva, a unique integrated service launched by the government of Andhra Pradesh, you can now pay your electricity, water bills and municipal taxes (telephones to be introduced shortly) using the Direct Pay option. The most important aspect of this service is that the payments made are updated in the database of the utility companies on an online and real-time basis.
What's more, both the Direct Pay and NetBanking facilities are available FREE of cost.
HDFC Bank offers the highest level of security available today - 128-bit SSL (Secure Socket Layer) encryption. The customer’s NetBanking details (Customer ID and password) are kept confidential and cannot be viewed by the merchant.
7. INSTA-ALERT
HDFC Bank has made its customers life easier than ever before. Because with the bank’s new InstaAlert service the customer can get regular updates on you’re his/her bank account via SMS or e-mail.
I
- 1 Credit in account greater than Rs. 5,000/ Rs.10, 000/ Rs. 20,000/Rs. 50,000
- 2 Account Balance below Rs. 5,000/ Rs.10, 000/ Rs. 20,000/Rs. 50,000
- 3 Weekly account balance
- 4 Salary Credits*
- 5 Utility bill payment due Alert**
*The customer needs to have a Corporate Salary account with HDFC Bank
** To avail this alert the customer needs to be registered for the Bill Pay service. Also, this is applicable only to the presentment/biller companies.
8. REFILL OF PREPAID CARD THROUGH SMS
HDFC Bank introduces refill of prepaid card through SMS
All the customer need to have is an HDFC Bank Account and be a prepaid customer.
Pre-paid Refill through SMS
Pre-paid Refill through ATM
Pre-paid Refill through SMS :
The customer needs to be registered for this service.But for once the bank has taken the pain of filling up a form away.The customer can now just have to walk across to an HDFC Bank ATM and do the following.
1. Select 'Prepaid Refill/Bill Pay'option
2. Select 'SMS refill registration'
3. Enter your 10 digit mobile number and confirm
Within seconds the customer will receive an SMS confirming his/her registration, giving the customer a code number and also the syntax of the message that the customer needs to send for getting a refill done. The number to which the message needs to be sent will also be a part of this message that the customer receives.
So now a refill is just an SMS away.
How much does it cost ? *
This service is absolutely free from HDFC Bank! The customer will only have to pay the regular SMS charge for the customer’s SMS request.
Where can I access this service ?
Operator Name Circle
Airtel Mumbai
Orange Mumbai
Prepaid refill through ATM :
It's actually very easy to refill your prepaid card. The customer just needs to walk into an ATM.
1. Select 'Prepaid Refill/Bill Pay'
2. Then select Pre-paid Refill
3. Enter the 10 digit mobile number and confirm
4. Fill the amount you want your card to be re-filled for
Within seconds the customer will get an SMS confirming the refill for the asked amount!
How much does it cost ?
This service is absolutely free from HDFC Bank! The customer will only have to go to the ATM and use his/her card. It's a service that has been introduced for the first time in India, just to make the customer’s world easier.
Where can I access this service ?
Operator Name Circle
Airtel
Andhra Pradesh, Chennai, Delhi, Gujarat, Haryana, Himachal Pradesh, Karnataka, Kerala, Kolkata, Madhya Pradesh, Maharashtra, Mumbai, Punjab, Tamil Nadu, Uttar Pradesh (West)
Hutch Andhra Pradesh, Chennai, Delhi, Gujarat, Haryana, Karnataka, Kolkata, Punjab, Rajasthan, Uttar Pradesh
Idea Andhra Pradesh, Delhi, Gujarat, Haryana, Kerala, Madhya Pradesh, Maharashtra, Uttar Pradesh (West)
Orange Mumbai
9. ONEVIEW OF ONE’S ACCOUNTS IN 6 BANKS
OneView. For the first time in India, this convenient service brings together the customer’s online bank accounts (including those of family members), in one place, in total security.
Now, OneView puts it all on one screen for its customer, so that tracking and managing his/her online accounts becomes quicker and easier than ever before. It gives its customer a complete picture of his/her finances across multiple accounts.
If the customer has one or more accounts with HDFC Bank, Citibank, ICICI Bank, HSBC India, Standard Chartered Bank and/or Global Trust Bank then OneView is just right for him/her. Best of all, it's absolutely free!
Simply register for Internet banking with these banks and use OneView to get a single window acess to :
1. Current/Savings account balances
2. Current/Savings account transaction history
3. Fixed deposit summary
4. Saving/Fixed deposit summary
5. Citibank Credit Card
6. Citibank Credit Card transaction history
7. Hdfcbank Demat Profile
8. Hdfcbank Demat Holdings
9. Hdfcbank Demat Status
It will provide the comprehensive information the customer needs at one place. So get the convenience of OneView now and get into 6 banks.
CHAPTER-4
PROMISES OF
E-BANKING
PROMISES OF INTERNET BANKING
As the potential that the internet held to transform different aspects of our lives manifested itself, it was forecast that its impact on financial services such as stock-broking and banking would be especially profound. Banking transactions could be conducted entirely in a virtual context with no physical exchange necessary. Also transactions are to a large extent standard with little, apart from price, difference between banks. For both these reasons banking was especially well suited to use the Internet. It promised to create a perfectly competitive electronic marketplace for banking products- with perfect information about products ;larger number of buyers and sellers; and reduced transaction costs.*
1. No physical change
Historically, as the means of payment substituted gold by paper currency and paper currency by plastic and finally plastic by direct debits, the information intensity kept increasing. In the case of buying physical goods online, a large portion of the value to the customer is derived only after the goods are physically delivered. The internet brings supplemental value by aiding the search process, making comparisons efficient and automating order placement and billing. On the other hand, in determining which bank to place a deposit with, not only can the search be done online but the actual product delivery (deposit booking) can also be affected online. Since there is high information intensity and no physical exchange, the internet as a delivery channel is responsible for delivering a large portion of the value for a customer. More importantly, the end-to-end process can be completed entirely online.
2. Reduced transaction costs
Additionally various studies showed that as a delivery or distribution channel, the Internet could bring substantial cost advantages for banks. Consultants Booz-Allen & Hamilton estimated that whereas the cost of a customer walking into the branch and using a teller is USD 1.01 , the cost of conducting the same transaction on the internet is a tenth of that and is close to USD 0.10.This was also considerably lower than the cost of conducting the transaction over the telephone(USD 0.52) or having a customer visit an ATM (USD 0.27). Significantly, transaction costs over the internet are also lower than the cost of a customer accessing the bank over a dedicated telephone line using a modem.
The Booz-Allen study was quoted in many commentaries that described the impact of the Internet on banking, included one by the United States Department of Commerce. There was a similar study on the costs of delivering banking services across different channels conducted by the IBM Consultancy Group. Although the absolute costs that they estimated for each channel were different from Booz-Allen , the message was the same- banking transactions on the Internet would cost banks a fraction of what a physical branch would.
3. Double-edged Sword
Reduced delivery costs and the absence of physical exchange is indicative of why the Internet held so much promise to turn banking upside down. In theory, physical branches were not required and the transaction costs over the Internet were much lower. It was almost obvious that from a bank’s perspective this was the way to go. However, the promise of the Internet was a double-edged sword.
While it held the opportunity to lower costs and do away with costly branches and staff, it also posed the threat of compressing profit margins by making it easier and more efficient for customers to search and get comparative information on the offerings of various providers. Another threat that loomed in the distance was that this new electronic marketplace for banking products would directly link the savers in the economy with the borrowers and ultimately diminish the role of intermediaries like banks.
3. Perfect Information
One of the things that the Internet does extremely well is make perfect information available to all market participants by bringing about efficiencies in the search process. For buyers of banking services, there are sites that aggregate information on product offerings from different providers at a single location. By merely making information available to customers about multiple providers, these sites perform the function of dismantling the oligopoly of a few providers and bringing about a structure tending towards perfect competition. A good example of this would be E-loan, an online aggregator of loans. It allows potential borrowers to search and compare the offerings of thousands of providers. Obviously, this is something that a borrower cannot efficiently accomplish by walking around branches, researching product catalogues or calling.
Eliminating the agent’s commission effects a further reduction in mortgage cost. As a further value addition to the client (and to the obvious detriment of the bank’s profitability), E-loan monitors the mortgage over its life and continually alerts the borrower to cheaper refinance options.
Perfect information would be available to the banks as well. The Internet makes it
less likely that, for example, an individual could hide a bad credit history from prospective providers and beat the system by switching providers frequently. To that extent this superior information-set would enable banks to move away from portfolio-pricing, where good credits subsidise the bad ones, to a pricing structure that is based on the customer’s credit history.
4. Reduced role for intermediaries
One of the most successful companies on the Internet is eBay. It offers visitors the ability to participate in online auctions hawking everything from a used car to a perfume bottle collection. More than 60 million auctions have been completed to eBay on an average basis set a new record of 1.782 million. For the first quarter of 2000, eBay generated net revenues of USD 85.8 million, a 100 % increase over the earlier year.
The likely reason for eBay’s success is that it offers visitors an electronic marketplace that is tending towards perfect competition. This is achieved by two economic functions that eBay is providing. The first is
aggregation of buyers and sellers and facilitating a search function. The second is bringing about efficiency in determining price that is enabled by the online auction mechanism which makes pricing transparent and also makes it dynamic since it is now driven by market conditions of ‘demand and supply’.
An eBay online auction model applied to banking services could have a potentially devastating effect on banks. On the corporate baking side, the Internet could replace expensive teams of bankers whose job is to link the companies in need of capital with the providers of capital (and, in the process slice-off banking fees). By creating competition among the providers of capital, the Internet could help companies raise money at much finer spreads. Investment banks using the Internet such as WR Hambrecht have pioneered the use of online auctions to determine prices for initial public offerings (IPOs).
Hambrecht’s trademarked OpenIPO is based on a Dutch auction system designed by Noble Prize winner economist Vickrey and allows individual and institutional investors to bid online for shares of an IPO. Participation is not based on who you know-qualified investor can open an account and place a bid. The auction treats all bids equally, whether from qualified individual investors or from a large institutional investor. The allocation is based on what the bidder is willing to pay rather than on the preferential treatment. This creates a market driven by supply and demand rather than influence or artificial demand.
INTERNET ENABLED BANKING MODEL
The new banking business model coalesces around the ‘6 Cs’ which are summarized below.*
The 6 Cs
Traditional Model
Internet Enabled
Cross-sell
Product Driven
Relationship value driven
Connectivity
Stand-alone
Connected
Channels
Few
Multiple
Consolidation
Low
High-across products and banks
Competition
Within Industry
Outside Industry
Convenience
Short time window
24*7*365
1. Cross-sell
Traditionally, banks have organized themselves along product/relationship lines. The product teams are responsible for the revenues on the portfolios of products managed by them-across the customers of the bank. They also manage brand equity and track market share. The relationship teams are responsible for the revenues on the set of customers managed by them – across the products offered by the bank.
Managing a bank on a product profitability basis is fine when there are few providers and competition is limited. When product competition intensifies, it becomes important to view ‘relationship profitability’. This means that some products might be loss-leaders that enable the bank an entry into the customer relationship and cross-sell other, often more profitable, products. Foe example, a bank provides fine pricing on trade services to get the customer’s foreign exchange business.
In the emerging business model, individual product profitability will become less important and a cross-sell strategy will drive marketing efforts. One of the drivers of this change will be eroding profit-margins at a product level. As the margins get compressed, cross-sell of various products will become essential to achieve a viable level of profitability at a customer relationship management (CRM) tools will become important in identifying cross-sell opportunities and tracking their conversion.
2. Connectivity
In comparison with the stand-alone high street branch of the traditional business model, the emerging business model will have a high degree of connectivity across its branches and products. In part, this will be driven by the market, with customers seeking to seamlessly access their account across locations. It will also be driven by the need to monitor the customer buying behavior and include all possible data points so that cross-sell opportunities are identified.
Connectivity in the emerging business model will also imply electronic linkages between the bank and its customers, especially on the corporate side. Already, many bank-processing platforms on the corporate side. Already, many bank-processing platforms integrate electronically with customer back end systems such as an enterprise resource planning(ERP) software. Data on accounts payable, foe example may be electronically accessed by the bank to process payments (in a straight through manner) to the customer’s suppliers.
Developments in the Internet, especially expansions of coverage and increase in bandwidth have made connectivity logistically possible and economically feasible.
3. Channels
Not so ling ago, customers had to conduct a banking transaction by physically going across to a branch within a limited time window. More recently, new channels such as telebanking and ATM have also been offered by banks and have become popular with customers. There will be a multitude of channels in the internet enabled banking model through which a customer can reach a bank. Not only will access increasingly be online via a PC, it will quickly become wireless via mobile phone or personal digital assistant.
The context of the physical branch will also change. From the imposing banking halls on main high streets, branches will increasingly be a counter at a supermarket. In the United Kingdom, Tesco and Sainsbury already have banking kiosks within their supermarkets that carry their brand names. In the United States, the Canadian Imperial Bank of Commerce is setting up banking services in the 1400 odd outlets of the safeway supermarket chain. The emphasis of the model is thus changing from symbolising
Stability to a more functional and convenience driven one. It is also possible that the physical branch may not be a bank at all. Online banks such as Juniper allow their customers to drop deposits off at any of the 3400 United States outlets of Mail Boxes Etc, a San Diego based private postal outlet.
4. Consolidation
Traditionally, a customer who purchased more than one product from a bank probably had to interface with two different departments. It is also likely that these departments had no idea of what other banks’ products and services the customer avails of. Consolidation (or aggregation) of accounts for a customer across products within the same bank is taking place.
The primary driver of this consolidation is customer convenience and at a mere click, a customer can view all her account statements. However, the signs for bank profitability are ominous. Consolidation means that information to a customer is now readily available. It follows that it is unlikely that a customer would be paying interest on a credit balance while having idle money in a checking account.
Taking consolidation a step further is aggregation of accounts across banks. This means that a customer can view her savings accounts, credit cards and mortgage all in one place even though the providers of those products may be different. In such a scenario, the ownership of the customer will shift from the banks providing the products to the banks aggregating them because of the latter’s control over the customer’s access to information.
5. Competition
In the last decade, there has been a surfeit of deregulation of banking activity across the world, the most prominent being the Gramm-Leach-Bliley Act in the United States. Banks have seen lowering of the barriers to enter the banking sector or expand within it. Competition has not only come in the form of new entrants setting up shop-incumbent banks have seen erosion of their monopoly over customers by non-traditional competitors from other parts of the financial services industry such as mutual funds who have out-competed them for surpluses.
There is more competition to come and the Internet enabled bank will see threats from new competitors that come from outside the financial services industry. In the United Kingdom, the Post Office made a foray into banking by launching its ‘Universal Bank’. As technology and telecommunications increase their weightage as critical success factors, players in these areas will look for a slice of the action. Many a banker’s nightmare is the threat of a software powerhouse such as Microsoft integrating forward and providing a banking service. There are already a plethora of alliances and strategic partnerships between the telecom players and banks to jointly offer customers a mobile banking proposition. This is driven in part by the need of the telecom companies to recoup some of their own capital investments by providing new services as their traditional voice and data services suffer declining margins.
6. Comfort
It follows from the multiplicity of channels and the underlying technologies the Internet enabled banking model will have far higher customer convenience. The model envisages basing the service offerings around the convenience paradigm. Access the bank anytime (on 24*7*365 basis); anywhere (from across the globe) and anyhow (through whichever preferred channel).
The Internet is likely to make the term ‘bank holiday’ redundant. Its capabilities will make possible ‘around the year and around the clock’ access to the bank. Importantly, it will do so at a cost that will not inhibit delivery. In the bricks and mortar world, an anytime service offering came at additional cost for the bank because of the utility and overtime expenses of a teller or call centre respondent. And ‘anywhere’ meant opening branches to service customers that may not have been profitable at the margin. The Internet does change everything.
CHAPTER-5
IMPACT OF INTERNET ON DELIVERY OF BANKING PRODUCTS
IMPACT OF INTERNET ON DELIVERY OF BANKING PRODUCTS:*
1. Credit cards:Nextcard
2. Consumer Loan Origination-loan
3. Corporate Treasury:FXall
1. Credit cards:Nextcard
Winning a customer in a heartbeat - Launched in 1998 in United States, NextCard exemplifies the potential of the internet to force a paradigm shift in the distribution of financial products. Existing processes for approval (or declines) of credit cards take up to three weeks time. NextCard announced its arrival rather dramatically by granting approvals (or declines) for its online credit card applications in less than 30 seconds. Approved customers could even start shopping online the same day and need not wait for the physical card to arrive. By the second quarter of 2001, NextCard crossed the one-million milestone and established itself as one of the leaders in the online credit card market.
At the heart of the NextCard instant approval process is a proprietary engine, RapidResults , which integrates logic and data from the major credit bureaux, national fraud databases and NextCard’s own databases. When a prospective customer provides brief details online- name, address, income and social security number- NextCard’s approval engine checks the cudstomer’s record in these databases and creates two credit scores. One is the industry-recognized score developed by Fair, Isaac & Company (FICO) and another is an internally developed score. The application is approved or rejected by the computer almost instantaneously based on the set decision criteria.
Market Segment of One
The internet has allowed NextCard to customize its card offering to each customer as if they were a segment on their own. Importantly, it has afforded this without adversely impacting the cost base. NextCard’s computers search from among an array of thousands of options and provide the customer with combinations that best suit her credit profile and requirements. For example ,a customer who is willing to transfer a higher balance may be enticed to do so by being offered a better rate.
This automated methodology of providing alternate credit card pricing terms based on balance transfers from other credit cards in real time over the Internet is now patented. Significantly, the algorithm is able to sniff out those applicants who are prone to moving their balances at the prospect of a better ‘teaser rate’ elsewhere. The average NextCard customer keeps a balance in excess of USD 1700 on their card which is higher than industry average of about USD 1500.
Customization implies that each NextCard customer has differential pricing that is based on her individual risk profile and profitability dimensions such as balances held. This is opposed to a traditionally used portfolio approach to credit card pricing that involves some customers being subsidized by others. In a portfolio, profitable customers such as those who keep high balances on their cards routinely subsidise those unprofitable customers who pay-off their outstanding balances in time.
The impact of this differential pricing is quite profound. It allows the issuer to broaden the catchment area of potential customers. This is especially for the so-called ‘sub-prime’ segment which is usually considered to be high-risk in terms of their credit-worthiness. Using a portfolio approach, these ‘sub-prime’ customers would have fallen through the credit sieve. Under an information-led customized approach, these customers have the opportunity to get credit cards and the issuer is rewarded for the higher risk by a higher interest rate.
Furthermore, continuous mining of the card spend data allows the issuer to pick up any early warning signals.
Differential pricing also improves the quality of the credit in the portfolio of the customers. It does this by avoiding the problems of what economists term ‘adverse selection’, whereby a lowering of the portfolio interest rate makes the card attractive for customers who would otherwise be unable to afford the terms. Moving away from the portfolio approach allows the issuer to adopt an aggressive approach to interest rates to expand market-share by signing-up customers who are desirable while simultaneously ensuring that the lower quality credits continue to be priced in accordance with the higher credit risk they pose.
e-service
NextCard uses the Internet to provide superior service that is also customized for each customer such as putting a picture of the customer’s kids as wallpaper for the card. This creates affinity and, as a JP Morgan analyst noted, this makes it less likely that the customer will cut up her card and send it back.
Customers can also set automated e-mail alerts that send them an e-mail when, for example, a specific merchant posts a transaction into a account. Each customer gets a concierge, an online shopping ‘bot’, which remembers passwords, fills up forms and searches the web for the best prices. Yet another innovation is the active credit card statement which provides exclusive merchant offers to cardholders. These offers can be availed by a simple click on the site.
2. Customer Loan Origination: E-loan
Empowering the customer
E-loan is online lender that burst onto the scene in 1997 with a promise of offering the customers the best loans at the lowest cost. Founded by Chris Larsen and Janina Pawlowski who met while working at a mortgage brokerage in Palo Alto, California, their vision was to transform the inefficient mortgage industry and create an information resource that would put up the customer in charge of the process of securing a loan.
This was an Internet venture that took shape more by accident than by design. Larsen and Powlowski who had computer backgrounds and had written software that compared different mortgage products for their clients, founded the Palo Alto Funding Group in 1992. The infant E-loan went to the Internet as www.pafg.com as a part of a pilot project on e-commerce funded by a Silicon valley consortium. When 12 applications were received in less than a week, the founders realized that they were on to something.
Trends in online mortgage
In the United States, it is estimated that in year 2000, about 1% of the total mortgages were originated online. Predictions by TowerGroup and Forrester Research vary, but broadly, online mortgages are expected to reach 10% of the total mortgage value over the next few years.
Trends in searching and applying for a mortgage online are fuelled by growth in use of the Internet in the process of buying or selling a home. Consultants, Gomez Advisors conducted a survey of about 4000 real-estate agents and 17000 adult Internet users. More than two-thirds of the respondents believe that the Internet will alter the way homes are bought and sold; that it will make the process quicker and there will also be likely declines in the standard 6% commission rate currently payable to agents. Using the Internet to search and apply for a mortgage is a natural extension of searching foe homes online.
E-loan has sold mortgages for a dollar value in excess of a billion dollars each in the years 1998-2000. In 2001, it experienced rapid growth and sold as many mortgages as the cumulative value of mortgages sold in the previous three years. It is to be noted that the actual value of loans sold by E-loan is higher, given the auto loans that it also sells. This was a product line that got a kick-start when E-loan acquired carfinance.com from Bank of America.
Putting the Customer in Charge-Enabling Search
E-loan enables customers to perform an automated search for the most suitable loan from over 50000 products provided by more than 70 lending sources. It matches the customer’s risk profile, debt objectives, repayment capacity and other borrowing criteria with the products available and offers the most competitively priced loans. The customer can apply for the loan online and also track the status online. Through this process, traditional intermediaries in the loan process such as the mortgage broker or commissioned loan agent are eliminated.
The most revolutionary part of the E-loan offering, however, is the proactive management of the loan for the customer. Computers continually scout around for better refinance opportunities and alert the customer as they arise over the entire lifetime of the loan. By alerting the customer about the potentials savings from refinancing an existing mortgage and making it easier for the transaction to close, E-loan is threatening to erode the profitability of incumbent loan providers.
The Internet Powered value proposition
E-loan is leveraging the power of the Internet for lowering the costs of search. These costs are defined as those borne by customers who include the time and effort involved in searching for a new supplier.
It also creates a situation of more perfect information between providers of the loan and the customer and drives the interest rate and other terms down to competitive levels. Over the life of the loan, the Internet enabled processing engines proactively manage the loan and alert the customer regarding cheaper finance options. There are also savings in the E-loan business model owing to a reduction of transaction costs by eliminating paper during the application process. Without the Internet, it is unlikely that such a service could be offered without substantial cost.
3. Corporate Treasury: FXall*
Even though global foreign exchange markets are the largest and the most liquid, tracing on the market by corporate customers has remained untouched by technology. According to the Bank for International Settlements (BIS), the average daily turnover on foreign exchange markets was estimated to be USD 1200 billion in April 2001. This trading volume is almost six times higher than the combined global debt and equity markets. Of the total turnover, four-fifths, is comprised of interbank transactions between banks and their customers.
In this day and age, customers trading currencies do so by calling their bank and asking for the rates. Banks quote with a spread that is determined by the size of the transaction and the overall corporate banking relationship. Price discovery takes place, in the most primitive way, only if the customer calls multiple banks and compares rates. This is especially cumbersome when the market is volatile and moves before a trade is consummated. If there is agreement on the price, a deal is closed and, this leads to a complicated, manual and paper-based chain of events that constitute the trade settlement process. This lack of automation has resulted in the market being inefficient, opaque and costly.
In an attempt to improve this situation, the year 2001 saw the launch of two competing electronic trading systems for foreign exchange, Fxall and Atriax. Consortia of leading banks sponsored both these systems. FXall has been supported by a group of 14 banks such as Bank of America, Credit Suisse First Boston, Goldman Sachs, and Morgan Stanley Dean Witter. On the other hand, Citigroup, Deutsche Bank, JP MOrganChase and Reuters backed Atriax.However, in may 2002 , Atriax ceased operations after in conclusive merger talks with Fxall and Citigroup , Deutsche Bank and JP MorganChase moved their liquidity commitments to FXall.
Greater transparency, finer spreads
The Electronic trading systems such as FXall allow a customer to complete the price discovery , trade and settlement online and automate the FX lifecycle. Customers log on and are offered quotes from either a single bank or multiple banks and these quotes can be either one or two-way. The customer can maintain rules that enable the automatic identification of the best competing price. These rules include highest bid/lowest offer; tightest bid/offer spread; fastest quote; favorite bank.
These systems allow for straight through processing (STP).While they allow the customer to input deals manually or by importing a spreadsheet they are designed to seamlessly integrate with the customer processing system. Also they provide economic research, market news and currency forecasts, and post-MIS.
A natural consequence of the greater transparency that characterizes electronic trading is:
• A narrowing of the bid/ask spread.
• Customers are able to estimate better the liquidity available in the market.
• Transactions are not only cheaper as paper is eliminated and STP is enabled but they are also less error prone.
Adoption Rates
In the backdrop of these multiple benefits to customers, it is perhaps not surprising that the share of electronic trading of foreign exchange by bank customers is expected to sharply increase. From levels of about 5%in 2001, the share of electronic trading of foreign exchange by value is expected to increase to about 35% by 2004. Technology consultancy, TowerGroup, has a far more optimistic projection of more than 75%.
MOBILE BANKING :
Mobile operators may place their bets on financial content and, in doing so, enable the adoption of mobile banking. The mobile devices are eminently suited for the most basic banking transactions such as viewing the account balance ,ordering cheque books and accessing ( a limited number of )past transactions. These are services that customers may or may not pay for. However, a mobile device can support even more complex transactions such as share trading , bill payment and can be used to effect other payments. These are services that customers are not only willing to pay for explicitly, but they also create opportunities for implicit revenue generation, such as earnings on float.
Indicative of the suitability of the mobile device for banking is report by Durlacher, which cites that 90% of banks in Europe were offering some form of mobile banking in as early as 1999. Surveys by Nokia and IDC reveal that banking is the foremost mobile application which is demanded by users of mobile phones and other wireless devices. Banks find that offering mobile services is a good way to improve the positioning of their offering as encompassing ‘cutting edge technology’. Unlike PC based Internet banking, rudimentary mobile banking services can be operationalised within a short time frame and with small outlays. Apart from providing another channel, the mobile phone offers the prospect of value added services if combined with positioning technologies. Furthermore, the mobile payments proposition promises to vastly improve banks’ service delivery in the micropayments area by reducing the need for handling physical cash.
A combination of all these factors has led to great optimism about the penetration of mobile banking. The estimates of mobile banking users vary of wireless financial services by 2004, which is double the number they predict in 2003. Meridien Research, on the other hand, estimates that there will be only 40 million users by 2003.
Significantly, most of the growth in customer adoption is predicted to be in the Asia-Pacific region. In some countries such as Japan, the relatively advanced network is driving growth. In others, fixed line telephone penetration has been abysmal and mobile telephony is the only viable option. The US, in particular, is not seeing such growth because the country is a patchwork of three different mobile protocols –GSM, TDMA and CDMA. The lack of interoperability across territories is an inherent disadvantage for a mobile customer since it undermines the core mobility proposition itself. In contrast, most of the Asia-Pacific region as well as Europe is on a GSM network. Another factor discouraging penetration in the US is that the mobile customer receiving the call pays for the call, whereas almost everywhere else the ‘calling party pays.
Phone Banking in the Internet Age
Product Information
Mobile devices can provide users with a wide variety of information from the public domain which can range from foreign exchange rates to the list of ATM’s in a city. Customers can also get information that is not in the public domain and which is specific to them. An example would be the ability to access their last five transactions. The customer can pull out this product information on demand- by accessing the website of the bank. It can also be pushed out to the customer in the form of customised alerts. A customer can get an SMS alert when the dollar/euro breaches a certain level or when an item of an unusually high value is debited to the account.
There are a few new banking applications that the ubiquity of the mobile-device and location-based services combine to provide. One of these involves helping customers go beyond finding an ATM- the network uses location-based technologies to indicate to the customer the nearest ATM. Another application adds to security-it sends the customer an SMS message alerting him or her of a transaction on the credit card or money withdrawn using the ATM card.
Transaction Initiation
The size of the mobile device makes it amenable to conduct most banking transactions. These include transferring funds between accounts, issuing instructions to book a certificate of deposit for a specific tenor or to order a cheque book. One of the applications that have been widely believed to be the ‘killer application’ for PC based Internet banking as well as mobile banking is bill presentation and payment. MeritaNordbanken (one of the entities that merged to form Nordea) has offered this to customers as early as 1992 and more recently, the UK building society Woolwich also announced an application. Over a mobile, a composite bill cannot be presented and only a summary is sent to the user.
Since the device is ubiquitous, a mobile can also be used to validate transactions. For example, large credit card payments could be validated electronically by the customer by inputting a secret pin number. Or, a call could be made to the customer on the mobile reconfirming that they are in the process of buying a large ticket item using their credit card.
However, within banking, the application that holds the largest potential is payments. Initially, it is expected that these will be of small value or micropayments but over a period of time, all payments could be made using the mobile device. There are multiple reasons to expect that the initial application will be focused on micropayments . Firstly, this is an area that is not currently addressed by the present card forms and hence will face least resistance as it entails no substitution. Smart cards that function as stand-alone stored value e-wallets have had a limited penetration, that too, only within closed communities such as a university campus. Currently micropayments are settled by exchanging physical currency. This is something that banks would be more than happy to substitute given the costs of handling, storage and issuance (not considering that some of the current infrastructure for mobile payments is not fail proof and, therefore, makes its unsuitable for large value payments).
Cash, card or mobile?
In order to complete a payment transaction, there are four steps that need to be fulfilled.
• The transaction needs to nr initiated with the customer account number, the merchant account number and the amount.
• It needs to be routed to a payment server that will affect the entries.
• If the payments are for amounts that are not insignificant then the payment amount needs to be validated by the customer.
• Also, the merchant needs to receive a confirmation that he has been/will be credited so that the goods can be released.
Banks want to play too:
Dual slot/chip systems
Payment solutions that involve an active partnership between the mobile operator and a bank include those that involve a dual slot phone. In this case, the customer selects an item to be purchased on the website of the merchant. The merchant then sends an authorization request the customer with the product’s price. The customer inserts his or her plastic card into the second slot of the mobile phone and enters a transaction PIN number to authorize the payment. In effect, the mobile phone becomes a POS terminal. Advantages of this system are the incremental security since, in addition to the SIM of the phone, there is a payment card that is required. However, the second slot and card reader in the mobile phone makes it heavier and more expensive –and limits widespread adoption.
The Iti Achat system that is in operation in France is based on this mobile payment model. It is the outcome of alliance between Mastercard , Oberthur smart cards , France Telecom , Europay and Motorola (which provides the dual slot Motorola StarTac hanset). The debit/credit card used is called the CB or cartes bancaires. A variation of this system is for the amount to be debited to a wallet with value stored on a smart card (prepaid).
It is crucial to understand that the real motivation behind the slot phones is not security but rather considerations of banks and credit card companies to retain their dominance over payment systems. An embellishment to the system is the development of phones with dual chips (as opposed to the dual slots). This involves a chip card issued by bank that is in addition to the GSM card issued by the mobile operator. The bank issued card acts as the plastic debit/credit card that provides the security without the incremental weight of a dual slot phone and the added step of inserting and taking the payment the card out of the slot. The chip insures that the payment transaction is independent of the operator. Having the payment card ‘always in’ also enables loyalty programs to be administered and interactive shopping such as pay per view.
Nokia, Nordea and Visa have come together to provide customers an Electronic Mobile Payment Services (EMPS) based on dual chip technology. A limited number of specially designed Nokia phones were issued to customers in Helsinki in late 2001.During the pilot, payments could be made online at a designated Internet grocery store and in the real world, at a movie theatre.
Banks get revenues from payments explicitly from fees and commissions and implicitly from the floats. According to the Boston Consultancy Group (BCG), a payments revenue pie currently worth USD 300 billion is at stake. They estimate that because mobile payments will be cheaper for both merchants and consumers as compared to conventional payments effected by cheque or card, the pie could shrink overall. For banks, the bad news is compounded because mobile operators could gobble up a slice as large as 20% of the (smaller) revenue pie from the banks.
Partner or perish*
It is imperative that the mobile operators increase revenue by providing content such as banking applications. On their part, the banks would strive to protect their payments revenues from attack by outsiders. With both banks and mobile operators focusing on mobile banking, is a showdown in the offing? Perhaps not – if the slew of alliances seen recently is considered – it is likely that more cooperation will be seen between them.
Country Bank Mobile Operator
Finland Leonia/various Sonera
Germany Deutshe Mannesmann
Direkt Anlage T-Mobil
Hypo Vereinsbank Viag Interkom
LBBW MobilCom
Italy Banca Intesa Omnitel
Banco di Roma/Fineco Telecom Italia
Japan Sakura Bank NTT DoCoMo
Norway Den Norske Bank Telenor
Spain BBVA Telefonica Moviles
Sweden Swed Bank Telenor
England Llod’s BT-Cellnet
Natwest Orange
MOBILE OPERATORS AND BANKS: JOINING HANDS
This cooperation emerges from the strategies of both banks and mobile operators to ‘buy’ rather than ‘build’. From the banks’ perspective, an alliance allows them to continue to provide the core value proposition in the payments process. As noted, mobile operators have a relationship with the customer and could relegate banks to performing peripheral functions of becoming a final clearing and settlement bank.
For a variety of reasons, banks are unlikely to consider getting control of mobile telecom assets themselves. Efforts to mandate bank-friendly industry standards such as the EPMS based on dual chip technology are dependent on customer adoption and cannot be entirely relied upon to ensure that disintermediation does not take place. For example, the Danish operator Mobilix has already piloted a system in partnership with a card-processing firm that provides customers with a mobile wallet. Since customers receive a new SIM card that stores a confidential PIN code, neither is a dual slot necessary nor is a dual chip phone.
For the mobile operators, an alliance strategy works better than the other option of building a bank from scratch or acquiring one. Post the 3G licensing, the capital outlays are just not available to mobile operators for acquisitions. Building a bank from requires investments and domain expertise-again, the operators have neither. Alliances are a good way to provide customers with a banking service without significant outlays of capital.
In summary – the till is not ringing, it is beeping
There are significant factors that are driving the increased penetration of mobile banking, both on demand and supply side. The penetration of mobile devices is experiencing exponential growth. Under pressure to arrest declines in voice revenues, mobile operators are adding value added services, primary among which are banking applications.
The mobile device takes the concept of anywhere banking to the next level and presents a whole host of new product opportunities for banks to make available to their customers. Much like a double-edged sword, mobile banking also presents a threat to those banks that ignore it. Payments for small value purchases are one such area where the available value can be competed away by nimble-footed groups of mobile telecom companies and banks acting in unison. Various mobile payment solutions are currently being piloted. It is just a matter of time before the clinker of coins is replaced by the beep of a mobile device.
CHAPTER-6
FOLLOWING TRIOKA OF PRODUCTS USE THE INTERNET
FOLLOWING TRIOKA OF PRODUCTS USE THE INTERNET TO MOVE BEYOND THE PURE EFFICIENCY GAINS AND WHICH PORTEND A PARADIGM SHIFT IN THE WAY BANKING IS DONE:*
1. ACCOUNT AGGREGATION: Hailed as the “most significant financial innovation in 2000”, account aggregation is a relatively recent product that has been enabled by the internet. The product involves aggregating information from a customer’s different financial accounts maintained with multiple providers and presenting them to the customer on a single website. The customer can access the information seamlessly by using a single username and password.
Most customers have relationships with more than one bank and use more than one banking product. For example, in the United States, a Banking Industry Technology Secretariat (BITS) estimate says that households in the US use an average of 3.6 financial institutions. Account aggregation allows these customers to better manage their money without the bother of collating information from different websites. Aggregation can also involve non-financial products such as frequent flyer miles and e-mail.
The initial customer interest in account aggregation is very high. In the United States, the first customers were signed up in 2000 and these have risen to about 5million in 2001.Citibank, which was one of the first large institutions to offer aggregation, saw almost 2000 customers sign-up daily for its service branded myciti.com. In the UK, the number of customers has touched a million and it is reported that the aggregation launch has generated at least half of new-to-bank customers.
There are varying estimates about how many customers are predicted to embrace aggregation but all of the studies indicate explosive growth. Datamonitor for example, forecasts that within the US and Europe, aggregation users could touch 30million each by 2005. These numbers represent almost 65% of e-banking users in the US and 40% of the users in Europe.
ENABLED BY THE INTERNET
In, personal finance managers (PFM) such as Quicken and Microsoft Money have allowed customers to aggregate their financial data from multiple sources onto their PC. However, this is a little cumbersome- the data has to be entered into the PFM since only a few financial institutions enable data downloads. The high rates of adoption are premised on Internet enabled aggregation on a website. This can be at the website of the customer’s financial institution, at the website of an independent aggregator such as Yodlee or at the customer’s point of access to the Internet such as America Online (AOL) or Yahoo.
How Aggregation Takes Place
Screen Scrapping: Screen scrapping involves the use of software robots or ‘bots’ that go into the financial institution’s website, masquerading as the customer, and extract static financial data. The customer’s username and password are stored with the aggregator and usually the financial institution cannot tell whether it is the actual customer or the ‘bot’ which has visited the site. The data so obtained is then translated by the aggregator into a standard format and stored in a central server for presentation to the customer.
The scraping begins by mapping the HTML of the website but data layouts and formats can change and so the website being aggregated needs to be constantly monitored for any changes. The technology is unsuitable for applications where the data is time-sensitive, since it works on a batch-basis and mostly scrapes once a day.
Though the technology is admittedly clumsy, it works. Embellishments to the technology have come in the form of more ‘intelligent’ scraping where the ‘bots’ are configured , using object-based parsing, to specifically find the financial information they need.
Direct Feeds
Direct Feeds involve the active participation and consent of the financial institution in the aggregation process. This is also the reason why some observers refer to the technology as ‘permissive aggregation’. Based on a customer’s standing instruction, the financial institution provides a direct datafeed to the aggregator using a normal communication protocol. This may be converted into a standard format by the aggregator using simple conversion routines and displayed on its website. The data can be provided on real time basis.
Most financial institutions wherewithal to provide these feeds since existing channels such as ATM network or electronic inputs use similar inputs. Direct feed is an obviously more robust process for collating data and affords greater security and integrity. While a real time feed is possible in technological terms, the costs may outweigh the customer benefits. Though both screen scraping and direct feeds are important in their own right, there was widespread opposition by financial institutions to the nascent screen scraping aggregation service. Screen scraping helped to jumpstart the industry by obviating the need for the buy-in of the financial institution. It is still possibly the more efficient way to look at aggregating simple things like account balances especially as the adoption of a standard such as OFX becomes more widespread.
Direct feeds are costly to negotiate, set up and operationalise but obviously provide data that is rich in content and can be trusted. They can be used to move aggregation beyond the level of a commodity and enable value added applications such as advisory services.
BUILD VALUE ADDED SERVICES
Aggregation on its own is a commodity service. Customers want information relating to all their accounts in one place, but importantly, once they have the information, they want to be able to act on it. To be able to attract customers, and keep them coming back, aggregators must jump to the next level of functionality.
One of the obvious features that the aggregation services should look at next is the transfer of funds between accounts. If a customer ahs money in a savings account and an outstanding credit card balance or loans, then it is important that the aggregator allows the transfer between these two accounts. The ability to initiate payments would also help settle credit card utility bills that have been aggregated at the site.
Once a customer’s banking, brokerage and insurance products are aggregated at one place, one of the obvious value additions for an aggregator is financial advisory services. The access to customer information in terms of its breadth and depth would be unique and would enable the delivery of advice that is more closely aligned with the customer’s risk-return preferences and financial priorities. It is important to note that for the high level applications such as wealth management, the underlying technology must change to direct feeds as opposed to screen scraping. The latter will fall short of the task when required to get security prices, which may be an important input into the wealth management process.
2. ELECTRONIC BILL PRESENTATION AND PAYMENT (EBPP)
Electronic bill presentation and payment (EBPP) involves the delivery of bills (or invoices) over the Internet and also affords consumers the opportunity to review and pay these items electronically. By eliminating paper and the delays associated with physical bills and payments, EBPP delivers value in terms of reduces time and lower costs.
EBPP has been described as the ‘killer application’ for banks, which promises to redefine value propositions and transform the competitive landscape by a radical and creative combination of technology, product and service. According to Forrester Research, there will be 21 million households using EBPP by 2005 and paying about 13% of all their bills by using their product. These estimates are broadly similar to those provided by Jupiter Communications (25 million households) and TowerGroup (9% of bills paid) for the same time frame.
ENABLED BY THE INTERNET
The electronic exchange of invoices has existed for a while between trading partners operating within a closed loop network. This involved electronic data interchange (EDI) and participants had to sign up for expensive, proprietary software. There were also recurring costs of network linkage and usage.
The Internet affords an EBPP solution that is easy to implement and comes at a low cost. Even a minor examination of the dynamics of EBPP, reveals that there are substantial benefits that accrue to the billers and the payers. It is therefore not surprising that there is so much optimism about EBPP . TowerGroup , for example, estimates that some banks are expected to spend up to a quarter of their IT budgets on electronic billing between 2001 and 2005. Meridien Research also predicts an increase in expenditure on EBPP solutions along broadly the same time frame.
VALUE PROPOSITION
EBPP delivers its value from reductions in cost and time in the billing process. For billers, EBPP reduces bill presentation expense by avoiding the need for printing and mailing of physical bills. Eliminating mailing delays and allowing an almost instantaneous presentation reduces cycle time. EBPP also fosters better customer service by removing ambiguities on the dispatch or receipt of bills. For payers, EBPP affords the ability to review bills and make payments on 24*7*365 basis from the convenience of their personal Internet device. Savings accrue because mail float on the payment leg can be avoided as also the costs of cheques, postage and envelopes. It is also possible to wait till the very last day to initiate an electronic payment and be confident that it is not late. Finally, for both billers and payers EBPP offers simplification of record retention and retrieval.
As an illustration, households in the US pay an estimated 20 billion bills each year. Of these, 15billion are fixed amount payments representing flows like mortgage and loan repayments and 5 billion are variable such as credit card bills. Assuming that the time spent by the consumer (payer) to review and process the payment of the electronic bill is the same as that for a physical bill, and also ignoring maul float, consumers save USD 5 billion on stamps alone. Gartner Group has estimated that 20% of bills are currently paid electronically and taking this estimate is into account, the potential savings are a healthy USD 4 billion.
By the same logic, billers not only save the costly of posting but also save the printing costs. The estimates for the cost of printing and distributing a bill vary between USD 0.85 to 1.5. Both of these costs imply, on an average, savings of another USD 15 billion for billers. A study by McKinsey estimated the benefits to billers to be even higher, at about USD 2, for an average bill size of USD 100 with more than 60% of the savings coming from elimination of paper processing and postage.
3. PERSON-TO-PERSON (P2P) PAYMENTS
It has the elements of the proverbial Silicon Valley start-up in a garage. Russian Max Levchin , an expert in security applications for palmtops, and American Peter Thiel who is a nationally ranked chess grand master, fund manager and author first met at a Stanford lecture and set up a company , PayPal , which launched an e-mail payment service in the summer of 1999. There is also a third player, Elon Musk , who left South Africa to avoid a compulsory stint in the military . Musk sold his first start-up called Zip2 to Compaq for USD 307 million and the forayed into financial services and set up X.Com intending it to be a financial supermarket. In March 2000, X.Com and PayPal , the two biggest players in the person-to-person (P2P) payments space merged.
The average age of the three players is just about 30, and with the exception of a summer internship that Musk had, none of them have any experience with a bank. Yet, the e-mail based payment service that they have created has been huge adoption for P2P small value payments. In late 2001, PayPal had a customer base of more than twelve million and was transferring more than USD 3.5 billion for its customers in a year. According to its website, PayPal constitutes over 10% of the Internet traffic in the financial services category, more than Citibank, wells Fargo and Bank of America combined. Not own P2P services in an attempt to build their own “consumer payment engines of the Internet”.
THE CHEQUES IS IN THE E-MAIL
P2P payments are strikingly simple in how they work. If you use PayPal , which is the first mover and is currently almost synonymous with P2P payments , all need to know is the e-mail address of the person to whom you want to send money. You have the choice of paying by credit-card, existing bank account or PayPal account (which recently started paying interest on balances). The recipient will be notified by e-mail(You’ve Got Cash!) that someone has sent them money and has the option of asking PayPal to send them a physical cheque, directly credit their bank account or their PayPal account.
BENEFITS OF P2P PAYMENTS
This is a key reason why P2P payments have had a healthy adoption rate –simplicity of the proposition and delivery method. P2P payments can be made between people as long as they use e-mail. No plastic needs to be issued, no point of sale machine needs to be swiped and neither does any expensive software need to be installed. The power of this proposition cannot be underestimated since e-mail is the most used application on the Internet with an exponential rate of growth.
In order to establish the identity of its first time user, PayPal deposits a random amount between 1and 99 cents into the user’s checking account. It then asks the user to verify the amount deposited. In so doing, it piggy-backs on the established and sophisticated controls that a customer is subject to before opening a checking account in the real world. Since a payment system is as good as the number of people using it, PayPAl employed the viral marketing technique is to get network economies. It paid new users a sign on bonus of USD 5 and also every time they brought a referral. As an analyst observed, much like Western Union, the wire transfer specialists, PayPal pulls users to sign up because they have money waiting for them rather than pushing people to do so.
The services make money in two ways:
• One is to charge a fee for the actual transfer itself. Citigroup’s c2it, for example, started at a flat USD 2% transfer but now charges a percentage of the money sent. PayPal does not charge if the money transferred is less than USD 300 per year and beyond that only a small amount. It has also a charge for merchants, at 1.9% of the transaction value, which is lower than the corresponding charges for mainstream credit card companies.
• The second source of revenue is the float on the payment. As noted, the sender gets debited for the money upfront and float is earned on the money since the recipient does not get the money straightaway. In the case of PayPal revenues were about USD 30 million for the quarter ended September 30, 2001.
CHAPTER-7
COMPARISON OF VARIOUS
E-BANKING SERVICES
COMPARISON OF VARIOUS INTERNET BANKING SERVICES PROVIDED BY ICICI BANK, SBI BANK AND HDFC BANK :
1. BILL PAYMENT
ICICI BANK
ICICI Bank has tied up with more than 60 organizations across the country to facilitate payment of bills for Utility Companies (Electricity and Telephone) Bills, ICICI Bank credit card, Mobile Phone and Insurance Premium bills.
For the customers ease the bank has enabled the billers in following two modes:
• Presentment Type Billers: For these billers, the bill amount and due date will be presented to the customers online on http://www.icicibank.com/ and a reminder will be sent to them on Email.
• Payment Type Billers: For these billers the customers can register and pay any amount immediately
SBI BANK
SBI e-PAY - It provides a simple and convenient service for receiving and paying of bills online
OnlinePay: By using SBI e-PAY the customers can 'see and pay' their various bills online, directly from their SBI Account. The customers can pay telephone, electricity, insurance, credit card and other bills - from the comfort of their house or office, 24 hours a day, 365 days a year! They will have to just logon to http://www.onlinesbi.com/ to 'see and pay' their bills. They will also get an electronic acknowledgment for every bill paid by them using e-PAY.
AutoPay: The customers can also set up AutoPay instructions with an upper limit to ensure that their bills are paid automatically whenever they are due. The upper limit ensures that only bills within the specified limit are paid automatically, thereby providing the customers complete control over these payments.
HDFC BANK
HDFC Bank provides the luxury of paying its customer’s telephone, electricity and mobile phone bills at their convenience. Through the Internet, ATMs, your mobile phone and telephone. LIC insurance premiums can also be paid through this facility.
It is better for the residents of Hyderabad or Secunderabad and registered for Hdfc NetBanking service. Thanks to the bank’s tie-up with eseva, a unique integrated service launched by the government of Andhra Pradesh, now these residents can pay their electricity bills, water bills and municipal taxes (telephones to be introduced shortly) through the Internet using the Direct Debit option. The most important aspect of this service is that the payments made are updated in the database of the utility companies on an online and real-time basis.
2. ONLINE SHOPPING
ICICI BANK
ICICI Bank has tied up with more than 75 organizations to facilitate online shopping for all its Internet Banking Customers. They can now choose their products online and pay conveniently through ICICI Bank Internet Banking Service.
ICICI Bank has teamed up with four partners to buy various products/ services online.
• ICICI Bank has brought Insurance products to one’s door-step. Now one can buy Insurance products from ICICI Lombard General Insurance and pay through ICICI Bank’s Internet Banking.
• ICICI Bank has teamed up with AIR DECCAN SIMPLIFY so one can now Book his/her Air Tickets online and pay through Internet Banking.
• ICICI Bank has teamed up with INDIAN RAILWAYS so now one can book his railway tickets using ICICI Bank Internet Banking. IRCTC will deliver ticket to delivery address mentioned by the person on whose name the tickets are booked.
• ICICI Bank has teamed up with RELIANCE INFOCOMM and now one can pay his/her Reliance Infocom bills through Internet Banking.
SBI BANK
It does not provide online shopping service.
HDFC BANK
HDFC Bank proudly presents the EasyShop Gold Debit Card. The EasyShop Gold Debit Card is the first Gold Debit Card in India. Not only does it replaces the customer’s ATM card, it also revolutionises the way the customers spend through a Debit Card.
Easyshop International Debit Card : This card can be used in India and abroad at merchant locations such as shops and restaurants and to withdraw cash from a widespread network of ATMs. The value of the payment made or cash withdrawn is instantly debited from customer’s account. While all the purchases and cash withdrawals are in the currency of the country in which the customer is in, the customer’s account is debited in Rupees!
NetSafe, is a unique online payment solution that offers the customers complete security while shopping on the Internet. With NetSafe, the customers can now shop online without revealing their HDFC Bank Credit Card number. They can now use their HDFC Bank Debit Card also for online purchases.
Follow a simple 3-step process to register for NetSafe using either your HDFC Bank Visa Credit or Debit Card. Once registered, the customers can choose the amount and account they wish to debit and create as many NetSafe cards as they want. And after the transaction or a max of 48 hours, the card will cease to exist. All this comes FREE with HDFC Bank Credit / Debit Card.
3. TICKET BOOKING
ICICI BANK
With ICICI Bank one need not visit Train/ Air ticket booking reservation centers any more. One can now buy your tickets online and pay using ICICI Bank’s Internet Banking Facility. ICICI Bank has tied up with IRCTC (for Railway Ticket Booking) and Air Deccan (for Air Ticket booking).
SBI BANK
SBI bank also provides online railway booking and for this one has to log on to www.irctc.co.in and register their on this site and further one has to follow the procedure as given in SBI’s site.
HDFC BANK
It does not provide online booking of tickets.
4. INSURANCE SERVICE
ICICI BANK
ICICI BANK NOW offers its customers the most comprehensive suite of General Insurance products from ICICI Lombard, to cater to their insurance needs and that too online.
It offers the following products:
• 10K TAX SAVER HEALTH INSURANCE
• FAMILY FLOATER HEALTH INSURANCE
• OVERSEAS TRAVEL INSURANCE
• STUDENT TRAVEL INSURANCE
• 4 WHEELER INSURANCE
• 2 WHEELER INSURANCE
• HOME INSURANCE
SBI BANK
It does not provide online INSURANCE SERVICE to its customers.
HDFC BANK
It does not provide online INSURANCE SERVICE to its customers.
5. ONLINE SHARE TRADING
ICICI BANK
It offers online share trading service to its customers through ICICI direct.com.
SBI BANK
It does not provide ONLINE SHARE TRADING services to its customers.
HDFC BANK
HDFC BANK does not provide ONLINE SHARE TRADING services to its customers but it provides advice on direct equity through research reports based on fundamental and technical parameters across individual stocks / model portfolio / customized client portfolios.
Research recommendations are generated by bank’s Equity Research team and cover different risk parameters and time horizons.
6. SMS ALERTS
ICICI BANK
ICICI Bank offers Mobile Banking facility to all its Bank, Credit Card and Demat customers. ICICI Bank Mobile Banking enables its customers to bank while being on the move.
ICICI Bank Mobile Banking can be divided into two broad categories
• Requests
• Alerts
Mobile Banking Requests:
ICICI Bank Mobile requests provides its customers with the following requests:
a)Bank Requests
b) Credit Card Requests
c) Demat Requests
Mobile Banking Alerts:
ICICI Bank Mobile alerts provides its customers with the following alerts:
a) Bank Alerts
b) Credit Card Alerts
b) Demat Alerts
Charges:
All ICICI Bank Mobile Banking services are currently FREE. For charges on sending SMS Requests to ICICI Bank, the customers will have to check with their mobile phone Service Provider. All updates of the fees would be put up on the bank’s site page for the customer’s reference. ICICI Bank reserves the right to change the charges for this facility.
SBI BANK
In a significant step towards enabling anytime-anywhere banking, OnlineSBI.com now enables its customers to receive alerts on their mobile phone. The customers can ask to be alerted when the balance on their account goes above or below a particular amount; or when a transaction of greater than a specified amount hits their account; or when an interest is applied on their account.
HDFC BANK
HDFC Bank presents Mobile Banking service. Now one can access his/her bank account and conduct a host of banking transactions and inquiries through the bank’s Mobile Banking service. One can check his/her balance, stop a cheque payment, or even pay your utility bills. This bank’s Mobile Banking service gives account information and real-time transaction capabilities from the mobile phones at a true "anywhere, anytime, anyhow" convenience.
All this through SMS or WAP or R World ( for Reliance India Mobile customers). SMS Banking brings the customer’s bank accounts to his/her fingertips. It works using Short Messaging Service (SMS) technology. With SMS one can perform a wide range of query-based transactions from his/her mobile phone, without even making a call.
7. ATM SERVICE
ICICI BANK
ICICI Bank's 24 Hour ATM network is one of the largest and most widespread ATM Network in India. ICICI Bank’s ATMs are located in commercial areas, residential localities, major petrol pumps, airports, near railway stations and other places which are conveniently accessible to the customers.
ICICI Bank ATMs features user-friendly graphic screens with easy to follow instructions. The bank has introduced ATMs which interact with customers in their local language for increased convenience.
SBI BANK
State Bank offers its customers the convenience of over 5067 ATMs in India. This means that one can transact free of cost at the ATMs of State Bank Group (This includes the ATMs of State Bank of India as well as the Associate Banks – namely, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, State Bank of Mysore, State Bank of Patiala, State Bank of Saurashtra, and State Bank of Travancore), using the State Bank Cash Plus card.
State Bank Cash Plus Domestic Card: It offers its customers the latest in banning convenience viz. State Bank Cash Plus card. With this card, there is no need to carry cash in one’s wallet and one need not fear overspending on his/her credit card. One can now withdraw cash and make purchases anytime he/she wishes to. One can get a FREE ATM-cum-Debit card with which one can transact for FREE at any of the 5067 ATMs of State Bank Group within our country.
HDFC BANK
HDFC bank provides ATM services 24 hours a day, 7 days a week, 365 days a year from any of their over 1054 ATM across India.
8. ONEVIEW SERVICE
ICICI BANK
It does not provide oneview service to its customers.
SBI BANK
It does not provide oneview service to its customers.
HDFC BANK
For the first time in India, this convenient service brings together one’s online bank accounts (including those of family members), in one place, in total security. OneView puts it all on one screen for the customer , so that tracking and managing His/her online accounts becomes quicker and easier than ever before. It gives the customer a complete picture of his/her finances across multiple accounts.
If the customer has one or more accounts with HDFC Bank, Citibank, ICICI Bank, HSBC India, Standard Chartered Bank and/or Global Trust Bank then OneView is just right for him, it's absolutely free!
9. PREPAID REFILL OF SIM CARD
ICICI BANK
It does not provide this service to its customers.
SBI BANK
It does not provide this service to its customers.
HDFC BANK
Pre-paid Refill through SMS :
A customer needs to be registered for this service. Now one will just have to walk across to an HDFC Bank ATM and do the following.
1. Select 'Prepaid Refill/Bill Pay’ option
2. Select 'SMS refill registration'
3. Enter his/her 10 digit mobile number and confirm
Within seconds he/she will receive an SMS confirming his/her registration, giving his/her a code number and also the syntax of the message that he/she needs to send for getting a refill done. The number to which the message needs to be sent will also be a part of this message that he/she receives. So now a refill is just an SMS away.
How much does it cost ?
This service is absolutely free from HDFC Bank! One will only have to pay the regular SMS charge for his/her SMS request.
Where can one access this service ?
Operator Name Circle
Airtel Mumbai
Orange Mumbai
10. MUTUAL FUND SERVICE
ICICI BANK
One can invest in mutual funds through ICICIdirect.com.
SBI BANK
It provides this service through SBI Mutual Fund (a partner for life).It offers both open-ended as well as closed-ended schemes.
HDFC BANK
It does not provide investing in mutual funds through its website.
11. ONLINE DEMAT SERVICES
ICICI BANK
ICICI Bank Demat Services boasts of an ever-growing customer base of over 7 lacs account holders. In their continuous endeavor to offer best of the class services
to their customers they offer the following features:
• Online access to his/her demat account. The customers can check their holdings, transactions, details of bills and status of requests and much more.
• Digitally signed transaction statement by e-mail.
• Corporate benefit tracking.
• e-Instruction facility - facility to transfer securities 24 hours a day, 7 days a week through Internet & Interactive Voice Response (IVR) at a lower cost.
• Dedicated specially trained customer care executives at the bank’s call centre, to handle all queries of the customer’s
SBI BANK
It does not provide ONLINE DEMAT SERVICES to its customers.
HDFC BANK
HDFC Bank provides its customers with online access to his/her Demat Account, so that they can check their holdings using the NetBanking facility. Now the customer can convert his/her securities to electronic format with the HDFC Bank Demat Account.
CONCLUSION:
From this comparison of online internet banking services provided by ICICI BANK, STATE BANK OF INDIA (SBI) and HDFC BANK, I have drawn a conclusion that as compared to ICICI BANK and HDFC BANK, SBI provides less online internet banking services.
When I compared the online internet banking services provided by ICICI BANK and HDFC BANK, I came to the conclusion that these banks provided online internet banking services almost at the same level.
Therefore, the GENERALISED CONCLUSION drawn by me is that the private banks provide more online internet banking services than the public sector banks, so the public sector banks should also start providing more online internet banking services and should expand these services to most of its branches, this will enable them to expand their customer base and to face the competition in a better way.
CHAPTER - 8
ANALYSIS OF THE DATA COLLECTED
ANALYSIS OF THE DATA COLLECTED THROUGH THE QUESTIONNAIRE
I have analyzed the data collected through the questionnaire and have classified the data into tables.
TABLE-I
NO. OF USERS WHO HAVE AVAILED THE ATM FACILITY OF ANY BANK
AVAILED THE FACILITY
NO.OF USERS
YES
90%
NO
10%
TABLE-II
The users have used the ATM facility of the following banks:
NAME OF THE BANK
NO. OF USERS IN PERCENTAGE
HDFC BANK
25
STATE BANK OF PATIALA
25
ICICI BANK
10
BANK OF PUNJAB
15
STATE BANK OF INDIA
15
NOT USED THE FACILITY OF ATM
OF ANY BANK
10
TABLE-III
THE SATISFACTION LEVEL EXPERIENCED BY THE ATM USERS
LEVEL OF SATISFACTION
NO. OF USERS IN PERCENTAGE
HIGHLY SATISFIED
20
SATISFIED
70
INDIFFERENT
0
DISSATISFIED
0
HIGHLY DISSATISFIED
0
USERS NOT AVAILING THE FACILITY
10
TABLE-IV
Following number of times in a week the users have used the ATM:
NUMBER OF TIMES NUMBER OF USERS IN PERCENTAGE
1
60
2
20
3
5
5
5
USERS NOT AVAILING THE FACILITY OF ATM
10
TABLE-V
Preference of the users of ATM card of the benefits of ATM:
BENEFITS OF ATM
NUMBER OF USERS IN PERCENTAGE
It is time-saving
20
It is beneficial when cash is needed
Urgently
60
It is convenient
20
TABLE-VI
WHETHER THE USERS OF ATM CARD HAVE FACED ANY PROBLEM WHILE USING THE ATM CARD:
YES
40% (No. of users)
NO
60% (No. of users)
PROBLEMS FACED BY THE USERS:
NATURE OF PROBLEM
NO. OF USERS IN PERCENTAGE
The card got withheld in the machine
25
ATM was not working
63
Instructions to use the ATM were not clear and received no help from employees of the bank
12
TABLE-VII
Other Internet Banking Services availed by the respondents:
NATURE OF SERVICE
NO. OF USERS IN PERCENTAGE
Credit card
15
Transferring one’s money from one city to any other branch in a city
5
Opening Fixed Deposit account via
The Internet
10
Inquire about the balance in one’s saving, Current and FD account
0
Tax deducted at source on one’s FD account for current financial year
0
Giving instructions over the internet for stopping payments on cheques
0
Request for a cheque book via the internet
5
View all transactions on an account for a specified period and get a copy via e-mail
0
None of the above
65
TABLE-VIII
Whether the respondents ever had any grievance against the bank providing Internet Banking Services to it:
YES
5% (NO. OF USERS)
NO
95% (NO. OF USERS)
TABLE-IX
Level of satisfaction experienced by the respondents of the grievance handling procedure of the bank:
LEVEL OF SATISFACTION
NO. OF USERS IN PERCENTAGE
Highly Satisfied
0
Satisfied
100
Indifferent
0
Dissatisfied
0
Highly Dissatisfied
0
TABLE-X
Respondent’s opinion of the weaknesses of Internet Banking Services:
NATURE OF WEAKNESS
NO. OF USERS IN PERCENTAGE
There is only one way communication
44
The security is not flawless
30
Lack of first hand experience gained by a person by visiting a bank is not there
26
TABLE-XI
Respondent’s view of the security of the Internet Banking Services:
It is secure
45% (No. of respondents)
It is not secure
55% (No. of respondents)
It is secure because
The security systems are reliable
89% ( No. OF RESPONDENTS)
There are firewalls which strengthens the security system
11% ( No. OF RESPONDENTS)
It is not secure because there is always a risk from the hackers who may hack the password of one’s account and may manhandle one’s account or transfer money from one’s account to their own account-------- THIS OPINION IS SUPPORTED BY 100% OF THE RESPONDENTS WHO ARE OF THE OPINION THAT THE INTERNET BANKING IS NOT SECURE.
TABLE-XII
Opinion of the respondent’s on whether all public sector banks should start providing Internet Banking Services to survive in the market:
ANSWER OF THE RESPONDENTS
NO. OF USERS IN PERCENTAGE
YES
75
NO
25
RESPONDENT’S REASON FOR SAYING YES IN THE ABOVE TABLE:
RESPONDENT’S REASONS
NO. OF USERS IN PERCENTAGE
Internet Banking is time-saving
20
To face the competition
50
Internet Banking is convenient and hassle-free
20
Customer preference and increasing number of people using the internet
10
FINDINGS EXTRACTED OUT OF THE INFORMATION COLLECTED THROUGH A QUESTIONNAIRE
1. Most of the respondents used ATM facility (90% of them availed this facility.)
2. Respondents were using the ATM facility of private banks more than the public sector banks.
3. Most of the respondents were satisfied by the ATM facility being used by them.
4. Most of the respondents used ATM facility once in a week.
5. Most of the respondents feel that the benefit of the ATM card is that it comes handy when cash is needed urgently.
7.60% of the respondents faced using the ATM faced no problem in using the ATM while 40% of the respondents faced a problem while using the ATM.
8.e major problem faced by the respondents while availing ATM card facility was that the ATM was not working and the second common problem was that the card got withheld in the machine.
9. Most of the respondents used very less Internet Banking facilities other than the ATM. Out of the other facilities, credit card was the most commonly used service and the second service used was opening a Fixed Deposit account via the internet.
10.95% of the respondents didn’t have any grievance against the bank providing them the internet services and the 5% respondents which had a grievance against bank providing them the internet banking services were satisfied with the grievance handling procedure of the bank.
11. Most of the respondents felt that the weakness of internet banking is that it is a one way communication and the second most commonly held weakness was that it is not secure.
12. 55% of the respondents felt that Internet Banking is not secure and the reason behind this is that hackers may hack the password of one’s account and this may result in huge losses to the user of Internet Banking.
13. Most of the respondents felt that the public sector banks should start providing the Internet Banking services in order to face the competition from the private banks and also because Internet Banking is time-saving and hassle-free.
SUMMARY AND CONCLUSION
E-commerce is rapidly expanding its wings across the globe and India is no exception to this phenomenon. Now, several banks have put their electronic banking facilities on the Internet and are providing many facilities like adopting ECS and EDI for knowing account-status , funds transfer between accounts , Billing payments, Web-shopping, Railway and air-ticket booking, etc to their customers at the click of a button. But since Web is a public space open to all , THESE INTENET BASED SERVICES ALSO RAISE NEW THREATS FOR THE BANKS. Financial institutions like banks and merchant websites like Rediff , Amazon , payment sites like PayPal etc,. by virtue of the value of information , their customers share with them are becoming the most lucrative target for the attackers. Attackers are formulating newer strategies for attack and one such attack is Phishing.
The use of ‘Ph’ in the word instead of ‘f’ has come from the word “Phreaks” who were involved in “Phreaking” which was a type of attack on telephone system in 1970’s. Later in the 1990’s the term was used for the hackers who used these techniques for stealing passwords and user-id’s for ISP’s. It is believed that the term became popular after its use in the famous hacker newletter “alt.2600” in January 1996.*
Phishing is based on impersonating, which has been one of the most popular types of trickery used by people and the instances of which are available in plenty, even in our mythology. Phishing can be considered as an e-avatar of tricking by impersonating. Like all identity based attacks , Phishing also takes the help of impersonating and social engineering to divulge confidential information like account details;passwords;PINs etc. from the users , for various nefarious activities.
Most common Phishing attacks are HTML based and are use e-mail as the medium to propagate. Such attacks are easy to perpetrate and enjoy a good success rate. Phishing is “The act of sending e-mail to a user falsely claiming to be an established legitimate enterprise in an attempt to scam the user into surrendering private information that will be used for identity theft.” It is also called carding or brand spoofing.
According to recent studies by Gartner , 57milllion US Internet users have identified the receipt of e-mail as linked to Phishing scams , and about 11million US adult Internet users have clicked in the link in a Phishing email and out of these around 1.78 million are thought to have succumbed to the convincing attacks , which made them divulge their personal information.
ANATOMY OF THE ATTACK
Phishing attacks are a combination of technical loophole exploits and social engineering, which trigger a series of actions by the user or victim and make him furnish his confidential details to the attacker. One fine day the user gets a mail from his bank that his account has been compromised or his password has leaked or a compulsory security update needs to be done etc. The content ca vary depending on the skill of the fraudster in the field of social engineering. The mail will contain company logos, watermarks, a familiar language and almost everything just perfect so that a naïve user could think of a possibility that this is not a genuine mail. Here the attacker adopts two kinds of strategies.
2. Either the user will be prompted to click an embedded URL in the email, in order to make any entries.
3. The user is prompted to fill a HTML form and submit.
THREATS TO THE BANKS DUE TO PHISHING
The first and foremost threat is loss of customer faith in technology. Such attacks could make customers shun e-banking and reverts towards tradition brick and mortar banking. So, the banks will not be able to leverage the benefits from huge investments they have made for adopting technology. This threat thus spans the whole industry rather than any particular bank. Many a times banks have compensation policies for such cases where customer credit cards are used fraudulently using any of the techniques. If such attacks increase beyond a proportion the banks will lose control over the provisioning done for compensatory expenses. The bank may face lawsuits filed by customers under various legislatures like Privacy under IT Act 2000. There can be significant wastage of productive resources in handling such attacks and their consequences in the form of lawsuits etc. Another very important threat to banks is Reputation Threat. This is a threat which no bank can afford in today’s competitive scenario. The ultimate threat is loss of business, profits, profitability and loss of customers.
PREVENTING BEING PHISHED
In order to device methods and doing research in the identity frauds a cross-industry organization called “Anti-Phishing Working Group” (APWG) has been formed recently .
• Strong website client authentication.
• Mail server authentication.
• Digitally signing e-mails.
These strategies though, if implemented will help solving this problem to a great extent but there are practical difficulties in implementing them (many web-based mail clients e.g. Hotmail, Yahoo! Mail etc. so not support S/MIME ; most users do not have smart cards or tokens ). We can safely assume that these will not be possible in the Indian Scenario in the immediate future. Thus a more prudent approach at present should be one based on education and awareness.
STEPS TO BE TAKEN BY BANKS
• EDUCATION AND AWARENESS
The banks need to generate awareness among its employees and customers about the attack. Banks need to educate their customers as well as customer facing employees about Phishing, types of attacks, countermeasures etc. Information can be given on the website of the bank regarding handling e-mails that appear to come from legitimate sources.
Further in order to give the customer a real idea of how the attack actually occur the bank can give a demo on its site. The customer will click a given URL and he will go through the steps similar to those in an actual attack. In this way by simulating the attack customers can be better educated.
• PROTECTING PRIVACY
The banks should ensure that customer contact information like e-mail addresses should never fall in wrong hands since this betrays the customer trust and is against the basic protocols of banking.
• MONITORING
Banks can develop some intelligent fraud detection tools to trace fraudulent behaviors by noticing the activities done by an attacker once he gets access to other’s personal information. This can be integrated with the existing fraud detection and money laundering systems.
• LOGIN REPORTS
On logging in his account on the website the customer should be provided his last three login times/dates including the exact duration. Also the bank may send monthly login information to the customers.
• OTHER APPROACHES
Banks can become a member to organizations like APWG, in order to get latest updates about the modus operandi of the attack and countermeasures. Also it can hire the services of third party vendors, like a web server monitoring company. These companies examine contents and looks of websites, which look similar to the organization’s site. Another approach can be, to have a PassMark security, which is a new initiative by a Silicon Valley, based company. It works in reverse manner to passwords in the sense that instead of user having confidential information in order to prove his identity, the institution shares an image uniquely with each user. These personalized images can be embedded in outgoing e-mails and on their website logon pages to provide a higher level of assurance to the customer that the e-mail or website is authentic and not a rogue. Customers should ensure the correct PassMark before entering their personal information on Web pages.
• FRAUD RESPONSE
Banks should formulate strategies for responding to such frauds when they occur, so as to minimize the losses. The customer should be educated to immediately inform the bank, in such a case. The bank can then immediately freeze that account and try to catch the fraudster. These response actions should be well understood and documented.
So, Internet Banking is the need of the hour and private banks are already providing efficient Internet Banking Services to their customers. Although Public sector banks are also providing Internet Banking Services but the number of their branches facilitating such services are less as compared to private banks. So, the Public sector banks should concentrate more on providing Internet Banking services. By taking the above measures Internet Banking will become more secure and will help the banks to become more competitive and profitable.
BIBLIOGRAPHY
Library Sources
1. Internet Banking-The Second Wave: By Sanjeev Singhal,Tata Mcgraw Hill Publication , 2003
2. Management Trends (A Journal of Department of Business Management)
Article- Internet Banking by Kavita Kshatriya Sep 2004
3. Indian Banking 2005 , The ICFAI University Press Publication
4. The Journal of Internet Banking and Commerce ( Published by Array Development of Ottawa )
5. International Journal of Business Performance Management 2002 (Published by InderScience publishers)
6. The Small Business Guide to Internet Banking by – Ray Hurst
7. Internet Banking Shopping for the Older Generation by ---- Greg Chapman
8. Internet Banking :Strategies, Tools and Best Practices – by Mona Brewer
(Published by Sheshunoff and Co.)
10. Banking and Finance on the Internet (Internet Management Series ) by Mary J. Cronin
(Published by John Wiley and Sons )
11. Successful Web Portals in Retail Banking by--- Daniel Singer, Douglas Ross, Albert Avery
(Published by --- Wiley)
Internet Sources
www.sbi.com
www.hdfcbank.com
www.icicibank.com
www.firstib.com
www.nationalcity.com
www.netbanker.com
Annexure
FORMS OF SBI OF VARIOUS INTERNET BANKING SERVICES
STATE BANK OF INDIA
INTERNET BANKING
" OnlineSBI "
Registration Form
(for Corporations / firms)
To
The Branch Manager
State Bank of India
________________
We wish to register our firm / company / corporation for availing of the Bank's Internet Banking Service ~ "OnlineSBI". *
Our firm / company / corporation has already been registered for availing of the Bank's Internet Banking Service ~ "OnlineSBI". * (*Strike off whichever is inapplicable)
We request you to register the below named official / employee as an authorised USER on behalf of the firm / company / corporation* for accessing its account(s). We confirm having read and understood the document containing the "Terms of Service" governing the SBI's Internet Banking Service and we accept them.
Name of firm / company / corporation :
Name of the Official / employee being authorised :
(Any official / employee of the firm / company / corporation may be nominated to use the OnlineSBI Service for Enquiry purposes only)
Designation & Official Address of the Official : e-mail Address
____________________ _________________
____________________________________
____________________________________ Tel. No._________________
Pin : _____________
Account Numbers : (Please mention 11 / 13 digit A/c No. as mentioned in your Statement of Account)
For Firm / Company / Corporation,
Date : _________________________ ________________________
(Signature of Official being Authorised) (Authorised Signatory / Signatories)
For office use
SIGNATURE(S) OF AUTHORISED SIGNATORY(IES) OF FIRM/COMPANY/CORPORATION VERIFIED
OFFICER
FOR OFFICE USE
Application Serial Number :
PARTICULARS DATE SIGNATURE OF AUTHORISED OFFICIAL
The account numbers and the account name quoted in the registration form tallied with branch records.
Rights of the Signatory(ies) on the registration form for authorizing access to the accounts of the firm / company / corporation verified and found to be correct & in order.
Notes:
(a) The Account Numbers and Name of Firm should appear in the same manner and form, as it is stored in Bankmaster.
(b) Name of the authorised official must be entered as appearing in the registration form.
(c) Authorised Signatory means those person(s) who are authorised to conduct operations on the account. A separate resolution for using OnlineSBI services is not necessary.
Authorised Official/user means any official/employee of the corporate/ firm who is authorised to use OnlineSBI services by the Authorised Signatories.
Recommended for providing/ rejecting Internet Access Internet Access permitted/rejected
DATE : OFFICER DATE BRANCH MANAGER/
MANAGER OF DIVISION
Reason(s) for rejecting the INB Service (if any)
DATE SIGNATURE OF OFFICIAL
Reason(s) advised to the Applicant
INB Service approved and INB Customer Flag set to "Y" in the Bankmaster *
User Details Uploaded
* This is necessary only at the time of registration of the First Authorised User and not for the subsequent authorised users of the firm/Company/Corporation.
CINB – C3
STATE BANK OF INDIA
FOR OFFICE USE
Application Serial number:
CORPORATE INTERNET BANKING (VYAPAR)
" OnlineSBI "
Registration of Local Admin
To
The Branch Manager
State Bank of India
________________
We have been registered for accessing "OnlineSBI".
The Corporate ID allotted to us is
We request you to register the executive named herein as a Local Admin for the accounts listed below.
Name of company:
Name of the Local Admin:
Address for despatch of User-ID/Password
Line 1
Line 2
City
District
State
Pin code.
Designation: ……………………
Department:…………………….
e-mail address :…………………
Tel. No…………………………..
List of Account Numbers :
Please mention the 11 or13 digit A/c number as mentioned in your Statement of Account. Use additional sheets if necessary. It will suffice if one account number per Customer-ID is mentioned. See note below for further information on Customer-IDs.
* “Company” used here includes a Corporate, (Signature of Local Admin)
Firm, Institution, Association, Local Body or any such Signature of Local Admin attested
Entity operating accounts in the Bank. For
Date : ________________________
(Authorised Signatory / Signatories)
_
Note on the account numbering system followed by the SBI:
a. The Account number assigned by SBI to a Company’s bank account has 11 to 13 digits. Digits 6 to 11 (both inclusive) form the customer ID.
b. Accounts opened in future bearing these customer-IDs will automatically get assigned to this Local Admin.
For Branch Use
Application Serial Number :
Requirement Yes/ No SIGNATURE OF OFFICIAL
The Account Name tallies with Branch Record
Signature of authorised signatories on Registration Form verified and found correct
Corporate ID quoted in the application form verified with web interface and confirm that the ID is valid for the Corporate
Recommended for Providing Access to OnlineSBI..
Internet Access Permitted
Local Admin’s details uploaded
Notes:
(d) Name of Corporate should appear in the same style and form, as it is stored in Bankmaster.
(e) Name of the Local Admin must be entered in the web interface strictly as it appears in the Registration Form.
(f) Authorised Signatory means those person(s) who are authorised by a Board Resolution/ Mandate to operate on the account.
(g) A Board resolution/ Mandate for using OnlineSBI services has already been obtained while registering Corporate ID and hence a Board Resolution for this application is not necessary.
(h) While uploading data it would be sufficient if one account per customer ID is uploaded.
If rejected, then please enter reasons for rejection on the application form.
Form C5
Format of Board Resolution to be submitted by the Company alongwith the Corporate Internet Banking Registration Form
Resolved that:
The Company do avail the ‘Corporate Internet Banking Service’ over Internet Channel with State Bank of India (SBI) at their various Branches and the Company accepts such “Terms of Service” for Corporate Internet Banking laid down by SBI from time to time for the purpose.
Resolved further that each of the officials as empowered by the Company to operate the Company’s accounts with SBI either singly or jointly as the case may be, is hereby authorized to apply for and avail of the ‘Corporate Internet Banking’ facility offered by SBI and do all they have been authorized, electronically, using their user name and password.
Accepted
Signature
Authorised Signatory of the Company
Place Date
CINB – C1
STATE BANK OF INDIA
CORPORATE INTERNET BANKING (VISTAR)
" OnlineSBI "
Registration Form
To
The Branch Manager
State Bank of India
________________
OnlineSBI : Corporate Internet Banking
We wish to register for the Bank's Corporate Internet Banking Service ~ "OnlineSBI".
We confirm having read and understood the document containing the "Terms of Service" governing the SBI's Internet Banking Service. A copy of the document is enclosed duly authenticated by the authorised signatories in token of having accepted the terms of the service contained therein.
The Board Resolution for the purpose is enclosed.
Name of Company:
Address of the Registered office:
____________________________________
____________________________________
____________________________________ Tel. No._________________
Pin Code: _____________
For use only when registration of Regulator is not contemplated immediately.
We request the Bank to set up the following parameters for our company. We are aware that we can change these when a Regulator is appointed:
1. Upper Limit for issue of DD/TT Rs………………
(Default Value – Rs.0.00)
2. Upper Limit on request for third party transfer Rs……………… (Default Value – Rs.0.00)
4. Whether Audit User feature is required Yes/No
(Default Value – No)
If Yes,
a. Upper Limit for Un-audited E-Cheques ………………..
b. Threshold value (amount) of E-Cheques for Audit Rs…………….
For
Date : ________________________
(Authorised Signatory / Signatories)
Should be a senior corporate level person authorised by the Board to operate on Company’s account.
This Registration Form need be submitted only ONCE to the SBI Branch where the Company’s principal account is maintained.
For Branch Use
Application Serial Number :
Requirement Yes / No SIGNATURE OF OFFICIAL
The Account Name tallies with Bankmaster Record
Signature on Registration Form Verified
Recommended for Providing Internet Access
Corporate Details Uploaded
Corporate ID Generated
Corporate ID Advised
Notes:
(i) Name of Company should appear in the same style and form as it appears in Bankmaster records.
(j) A separate Board resolution for using OnlineSBI services as per the format enclosed to Terms of Service and a copy of CINB- C4 recording acceptance of Terms of Service must have been received, scrutinized and attached to Account Opening Form.
Corporate-ID No
If application is rejected, then please enter reasons for rejection on the application form
CINB – C2
STATE BANK OF INDIA
FOR OFFICE USE
Application Serial number:
CORPORATE INTERNET BANKING
(VISTAR)
" OnlineSBI "
Registration of Regulator
To
The Branch Manager
State Bank of India
________________
OnlineSBI: Corporate Internet Banking
We have registered for accessing "OnlineSBI".
The Corporate-ID allotted to us is
We request you to register the executive named herein as the Regulator.
Name of the Corporate:
Name of the Executive:
Designation : e-mail address :
Employee Number: Tel. No.
Address for Despatch of User-ID/Password
Line 1
Line 2
City
District
State
Pin code.
(Signature of Regulator)
Signature of Regulator attested.
For
(Authorised Signatory / Signatories)
Date:
For Branch Use
Application Serial Number :
Requirement Yes / No SIGNATURE OF OFFICIAL
Signature on Registration Form Verified
Corporate-ID quoted in the application Form verified on web Interface and confirm that the ID is valid for the applicant corporate.
Recommended for Providing Access to Internet Banking.
Internet Access Permitted
Regulators’ details uploaded
Notes:
(k) Name of Corporate should appear in the same style and form, as it is stored in Bankmaster.
(l) Name of the INB Regulator must be entered on the web interface as appearing in this Registration Form.
(m) Authorised Signatory means those person(s) who are authorised by a Board Resolution to operate on the account. The regulator himself can sign this form if he is an authorised signatory.
If rejected, then please enter reasons for rejection on the application form.
CINB – C3
STATE BANK OF INDIA
CORPORATE INTERNET BANKING
(VISTAR)
" OnlineSBI "
Registration of Local Admin
To
The Branch Manager
State Bank of India
________________
We have been registered for accessing "OnlineSBI".
The Corporate ID allotted to us is
We request you to register the executive named herein as a Local Admin for the accounts listed below.
Name of company:
Name of the Local Admin:
Address for despatch of User-ID/Password
Line 1
Line 2
City
District
State
Pin code.
Designation: ……………………
Department:…………………….
e-mail address :…………………
Tel. No…………………………..
List of Account Numbers :
Please mention the 11 or13 digit A/c number as mentioned in your Statement of Account. Use additional sheets if necessary. It will suffice if one account number per Customer-ID is mentioned. See note below for further information on Customer-IDs.
(Signature of Local Admin)
Signature of Local Admin attested
For
Date : ________________________
(Authorised Signatory / Signatories)
_________________________________________________________________________
Note on the account numbering system followed by the SBI:
c. The Account number assigned by SBI to a Corporate’s bank account has 11 to 13 digits. Digits 6 to 11 (both inclusive) form the customer ID.
d. Customer ID is the only basis for assigning accounts to a Local Admin.
e. Accounts opened in future bearing the same customer-ID will automatically get assigned to this Local Admin.
For Branch Use
Application Serial Number :
Requirement Yes/ No SIGNATURE OF OFFICIAL
The Account Name tallies with Branch Record
Signature of authorised signatories on Registration Form verified and found correct
Corporate ID quoted in the application form verified with web interface and confirm that the ID is valid for the Corporate
Recommended for Providing Access to OnlineSBI..
Internet Access Permitted
Local Admin’s details uploaded
Notes:
Name of Corporate should appear in the same style and form, as it is stored in Bankmaster. (o) Name of the Local Admin must be entered in the web interface strictly as it appears in the Registration Form.
(p) Authorised Signatory means those person(s) who are authorised by a Board Resolution to operate on the account.
(q) A Board resolution for using OnlineSBI services has already been obtained while registering Corporate ID and hence a Board Resolution for this application is not necessary.
(r) While uploading data it would be sufficient if one account per customer ID is uploaded.
If rejected, then please enter reasons for rejection on the application form.
Form C5
Format of Board Resolution to be submitted by the Company alongwith the Corporate Internet Banking Registration Form
Resolved that:
The Company do avail the ‘Corporate Internet Banking Service’ over Internet Channel with State Bank of India (SBI) at their various Branches and the Company accepts such “Terms of Service” for Corporate Internet Banking laid down by SBI from time to time for the purpose.
Resolved further that each of the officials as empowered by the Company to operate the Company’s accounts with SBI either singly or jointly as the case may be, is hereby authorized to apply for and avail of the ‘Corporate Internet Banking’ facility offered by SBI and do all they have been authorized, electronically, using their user name and password.
Accepted
Signature
Authorised Signatory of the Company
Place Date
QUESTIONNAIRE
CONSUMER PERCEPTION ABOUT INTERNET BANKING
1. Name:
2. Age :
3.Occupation: : ______________________________________________________
4. Do you avail the ATM facility of any bank :
Yes No
( If yes, then proceed to Q:5 otherwise move to Q:10)
5. You are using the ATM facility of which bank ?
6. What is the satisfaction level experienced by you with the ATM facility being used by you ?
Highly Satisfied
Satisfied
Indifferent
Dissatisfied
Highly Dissatisfied
7. How many times in a week do you use your ATM card?
8. Rank in order of preference the benefits of ATM card in your opinion :
It is time-saving
It is beneficial when cash is needed urgently
It is convenient
9. Have you ever faced any problem while using your ATM card
Yes No
If yes , the select any of the following problems which you have faced
The card got withheld in the machine
ATM was not working
While using it for the first time , you faced a problem while understanding the instructions and there was no employee of the bank to help you
10. Which of the following Internet Banking Services are you availing?
Credit card
Tranferring one’s money from one city to any other branch in a city
Open Fixed Deposit (FD) account via the internet
Inquire about balance in one’s saving , current and FD account and also on
the tax Deducted at source on one’s FD account for the current and financial year
Giving instructions over the internet for stopping payment on cheques
Request for a cheque book via the internet
View all transactions on an account for a specified period and get a copy via e-mail
None of the above
11. Did you ever had any grievances against the bank providing you Internet Banking service regarding
the Internet Banking service provided by it?
Yes No
( If yes then answer the next question , If no then move on to Q:13)
12. What was the level of satisfaction experienced by you of the grievance handling procedure of the Bank?
Highly Satisfied
Satisfied
Indifferent
Dissatisfied
Highly Dissatisfied
13. What is in your opinion the weakness of Internet Banking?
There is only one way communication
The security is not flawless
Lack of first-hand experience gained by a person visiting a bank is not there
14. Do you think Internet Banking is secure?
Yes No
Give a reason for your anwer
15. Do you think that all public sector banks in India should start providing Internet Banking Services to
Survive in the market?
Yes No
If Yes, why?
CERTIFICATE
This is to certify that the project entitled “ E-Banking: A Disguise or Boom” is a bonafide record of work done by Rajni Sharma, a student of M.B.A and submitted to RIMT Engineering College, Mandi Gobindgarh in partial fulfillment of the requirements for the Degree.
This work has never been submitted to any educational institution as per good of my knowledge.
Miss. Kavita
RIMT, Engineering College
Mandi Gobindgarh
ACKNOWLEDGEMENT
Often words are too inadequate to serve as a mode of expression of one’s inner feelings, especially the sense of indebt ness and gratitude to all those who help in accomplishing the goal one has set before oneself. I shall be failing in my duty if I don’t acknowledge my sincerest gratitude to all those who assisted and guided me in completing this project report.
I acknowledge my indebtness to my erudite learned and revert guide Miss. Kavita for her valuable guidance, suggestions, constructive criticism and thought provoking discussions for completion of the task. It would not have been possible for me to complete the work without his encouragement and unfailing help.
I also want to thank all my respondent who took time for showing a great interest in the subject and extending invaluable help.
Rajni Sharma
Univ. Roll No. 42259124
CHAPTER- 1
INTRODUCTION
INTRODUCTION
Earlier people would be tired standing in along queue waiting for a passbook to be updated or they would wait for the next day for the demand draft to be prepared but now Internet Technology has invaded the portals of our banking institutions and as the cliché goes everything will just be a click away. No doubt, innovations like telebanking and automated teller machines (ATM’s) have considerably put customers at ease on the recent past. But with net banking the customer will be able to transact with the help of a mouse and his visits to the neighbourhood bank will become a thing of the past.
In the age of electronic technology the regular application of computing, wireless communication, networking, etc, in the banking field has brought revolutionary change in the traditional ways banks do business. Today, your bank can serve you at home, or allow you to serve yourself from anywhere. You can draw your money from ATM’s, you can check your accounts through the Internet, and you can phone the bank to send you a representative. Not only that, your physical bank which is still around-suddenly seems to be doing a lot more things than just banking. It is technology that is making all this possible. Internet banking has gained wide acceptance internationally and seems to be fast catching up in India with more and more banks entering the fray. This is why, most, most modern banks instead of merely dealing with financial deposits and loan apply promote, and distribute the want-satisfying products, services and ideas to start its journey towards development of computer and other technology based digital economy since 1960 to ensure quality service to its customers.
TECHNOLOGY –THE GOVERNING FACTOR:
It is the technology that is making easy operation of banks. Even 10 years back, banks would have found it impossible to provide even basic banking services to millions of small and medium customers with all their branches. At the back end technology is freeing bank employees to concentrate on value-added work rather than just mundane necessities. Today, technology offers options where banks can almost literally address a market of one with a customized product or service. Though a modest start has been made in India, net banking has still a long way to go. This development has been acknowledged by the latest Online Banking Report, which features a listing for ICICI Bank .Some others have also endeavored to make real time banking a reality before this century closes.
Reasons why new private and multi-national banks have been able to survive, thrive, and adapt in an increasingly competitive space.
These banks were able to leverage on low-cost channels such as ATM’s and Net Banking to the optimum levels contributing to reduced operating costs. The cost of transactions over channels like ATM’s and the Internet are lower than doing it through the branches-Banks have realized that shifting customer access to lower cost channels can help bring down operating costs. These channels are used not only to improve customer service but also to divert traffic from the branches.
Customers using ATM’s, phones and the Internet not only allow banking transactions, but also cross-selling of other financial products and services. For example, if the cost of a branch banking transaction is taken at Rs100/-, the cost of an ATM transaction would be around Rs30/-, phone banking around Rs20/-, and internet banking around Rs5/-.But this does not mean that branch banking is obsolete. Rather, banks are reinventing their business models to offer new financial services through its branches.
At the back-end, technology is freeing bank employees to concentrate on value-added work rather than just mundane necessities. In computerized banks, once a transaction is posted it is auto-reconciled. This system is easy and frees people to concentrate on other customer services.
NEW HORIZONS
The important factor that is causing a shift in the industry is that of conveniences for the consumer. People need timely access to banking services, and have less time to spend at banks, and prefer the convenience of long distance banking. Of course, society’s view of what is convenient is changing .People were accustomed to associating convenience with doing business in their neighbourhood, and not traveling to a bank across town. Now, however, society has a different definition of bank convenience. Also, we should mention it is directly due to mergers that banks are able to offer more full service branches, and ATM machines. This is more convenient to the customers, and creates bank loyalty.
Increased use in ATM’s , the growing use of home and office computers, fax machines, and point of sale terminals allowing consumers to make transaction electronically is now considered convenient. Thus, branch location is no longer a priority from the consumer’s view.
The various banks which have adopted with corporate giving software and solution and services as of date are as follows: *
BANK NAME TECHNOLOGY VENDOR SERVICE OFFERING
ABN AMRO Bank
Infosys (Bank Away)
Net Banking
Abu Dhabi Commercial
Bank
Infosys (Bank Away)
ADCB NetLink
Bank of India
I-Flex
BOIonline
Centurian Bank
Logica
MyCBOL
Citibank
Orbitech (now Polaris)
Citibank Online
Corporation Bank
I-Flex
CorpNet
Deutche Bank
Db direct
Federal Bank
Sanchez
FedNet
Global Trust Bank
Infosys (Bank Away)
ibank@gtb
HDFC Bank
i-flex / Satyam
NetBanking
HSBC
Online@hsbc
ICICI Bank
Infosys, ICICI Infotech
Infinity
IDBI Bank
Infosys (Bank Away)
i-net banking
IndusInd Bank
CR2
IndusNet
Punjab National Bank
Infosys (Bank Away)
Saraswat Bank
Standard Chartered Bank
In-House
Me Standard Chartered Online
State Bank of India
Satyam / Broadvision
Onlinesbi.com
UTI Bank
Infosys (Bank Away)
Iconnect
PIVOTAL ROLE OF IT :
A look at the above mentioned various associative banks have entered into and it is obvious that IT is central to banking. The perceptions and the expectation of the customers have undergone a sea change, with the availability of banking services to the customers at their doorsteps through the help of technology. As per IDC estimates, the total number of registered users and multiple accounts (a user having accounts with more than one bank).India has a little less than a million active Internet banking users .And though this is just 0.096 % of the total population. Thus indicating that the concept of Internet Banking is surely catching on.
Impressive as these figures might be, the truth is that India lags behind other countries in Internet Banking. In the US , the number of commercial banks with transactional websites is 1, 275 or 12% of the total number of banks.
At present, in the US approximately 78% of all commercial banks with assets more than $5 billion, 43% of banks with $ 500 million to $ 5 billion in assets, and 10% of banks under $ 500 million in assets have transactional websites.
In contrast, Indian Banks have an insignificant Internet Banking record. ICICI Bank kicked off online banking way back in 1996 and a host of other banks soon followed suit. But even for the Internet as a whole, 1996 to 1998 marked the adoption phase, while usage increased only in 1999-due to lower ISP online charges, increased PC penetration and a tech-friendly atmosphere.
Today, Banks are looking at newer ways to make a customer’s banking experience more convenient, efficient and effective. They are using new technology tools and techniques to identify customer needs and are offering tailor-made products to match them. Says C N Ram, head, Information technology, HDFC Bank, “Our vision was very clear, we were not enamored by the concept of Internet Banking but looked at it more as an add-on service which our customers should gradually adopt.”
Earlier, banks could decide when and where they wanted customer interfaces, now customers decide when and where they will access banking channels. The services, which can be availed of as of date, centralized operations and process automation using core-banking applications and IP-based networks improve efficiency and productivity levels tremendously. Core banking applications help a bank to shift from ‘Branch Banking’ to ‘Bank Banking’.
Internet Banking not only helps in acquiring more customers but it also reduces problems if customer visits bank physically. This basically means that a customer will be treated as a bank’s customer than just the customer of a particular branch, which was the case earlier. Also, I{-networks let a bank offer multiple services over the same network , resulting in costs savings.
Earlier banks could decide when and where the wanted customer interfaces. Now, the customers decide when and where they will access banking channels.
THE SERVICES, WHICH CAN BE AVAILED AS OF DATE, ARE:
• Transfer one’s money from one city to any other branch in a city.
• Open a Fixed deposit (FD) account via the net. One needs to provide data regarding the amount and term of the deposit and also the branch in which the account is opened.
• Order for an issue of a demand draft can be delivered only to the customer’s address and not to any other party.
• Inquire on the balance in one’s saving , current and FD account and also on the tax deducted at source on one’s FD account for the current and financial year.
• Give instructions over the net for stopping payment on a cheque/s .-Request for a chequebook via the Internet , which will take three days to come.
• View all the transactions completed on an account for a specified period and get a copy via e-mail.
Though relationship tends to look impersonal the customers should feel it personal. The customers need not necessarily positively evaluate the personalized services offered by the bank. Therefore bank should be cautious to ensure that customers feel the services as personal and useful. With the aid of technology they should further mechanize and automate the services offered to customers.
OBJECTIVE OF THE STUDY
1. To access the present scenario of the services of Internet Banking.
2. To study the scope of Internet Banking in future.
3. To study the problems faced by the consumers in availing the Internet
Banking Services.
4. To access the satisfaction level experienced by the users of Internet
Banking Services.
RESEARCH METHODOLOGY
Problem Defining: The project was mainly concerned with evaluating the performance of Internet Banking Services and finding out the scope of Internet Banking Services by doing a comparative analysis of the Internet Banking Services provided by ICICI BANK, SBI BANK, HDFC BANK.
Sample Unit: Individuals who are avaling Internet Banking Services.
Sample Size: 40 respondents
Sampling Method: Non-Probabilistic convenience sampling.
Sampling Area: Patiala
Sources of Data: The data was collected from both primary and secondary sources.
Primary Data: The primary data collection was done through the survey method. The survey was conducted using the questionnaire method.
Secondary Data: Secondary data was collected from the following sources:
a) Books on Internet Banking
b) Internet
c) Journals
CHAPTER-2
PROFILES OF VARIOUS BANKS
PROFILES OF VARIOUS BANKS
PROFILE OF SBI
Evolution of SBI
The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later the bank received its charter and was re-designed as the Bank of Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of British India sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained at the apex of modern banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921.*
Primarily Anglo-Indian creations, the three presidency banks came into existence either as a result of the compulsions of imperial finance or by the felt needs of local European commerce and were not imposed from outside in an arbitrary manner to modernise India's economy. Their evolution was, however, shaped by ideas culled from similar developments in Europe and England, and was influenced by changes occurring in the structure of both the local trading environment and those in the relations of the Indian economy to the economy of Europe and the global economic framework.
* reference- www.sbi.com
Bank of Bengal H.O.
The establishment of the Bank of Bengal marked the advent of limited liability, joint-stock banking in India. So was the associated innovation in banking, viz. the decision to allow the Bank of Bengal to issue notes, which would be accepted for payment of public revenues within a restricted geographical area. This right of note issue was very valuable not only for the Bank of Bengal but also its two siblings, the Banks of Bombay and Madras. It meant an accretion to the capital of the banks, a capital on which the proprietors did not have to pay any interest. The concept of deposit banking was also an innovation because the practice of accepting money for safekeeping (and in some cases, even investment on behalf of the clients) by the indigenous bankers had not spread as a general habit in most parts of India. But, for a long time, and especially upto the time that the three presidency banks had a right of note issue, bank notes and government balances made up the bulk of the investible resources of the banks.
The three banks were governed by royal charters, which were revised from time to time. Each charter provided for a share capital, four-fifth of which were privately subscribed and the rest owned by the provincial government. The members of the board of directors, which managed the affairs of each bank, were mostly proprietary directors representing the large European managing agency houses in India. The rest were government nominees, invariably civil servants, one of whom was elected as the president of the board.
Group Photogaph of Central Board (1921)
The business of the banks was initially confined to discounting of bills of exchange or other negotiable private securities, keeping cash accounts and receiving deposits and issuing and circulating cash notes. Loans were restricted to Rs.one lakh and the period of accommodation confined to three months only. The security for such loans was public securities, commonly called Company's Paper, bullion, treasure, plate, jewels, or goods 'not of a perishable nature' and no interest could be charged beyond a rate of twelve per cent. Loans against goods like opium, indigo, salt woollens, cotton, cotton piece goods, mule twist and silk goods were also granted but such finance by way of cash credits gained momentum only from the third decade of the nineteenth century. All commodities, including tea, sugar and jute, which began to be financed later, were either pledged or hypothecated to the bank. Demand promissory notes were signed by the borrower in favour of the guarantor, which was in turn endorsed to the bank. Lending against shares of the banks or on the mortgage of houses, land or other real property was, however, forbidden.
Indians were the principal borrowers against deposit of Company's paper, while the business of discounts on private as well as salary bills was almost the exclusive monopoly of individuals Europeans and their partnership firms. But the main function of the three banks, as far as the government was concerned, was to help the latter raise loans from time to time and also provide a degree of stability to the prices of government securities.
Old Bank of Bengal
A major change in the conditions of operation of the Banks of Bengal, Bombay and Madras occurred after 1860. With the passing of the Paper Currency Act of 1861, the right of note issue of the presidency banks was abolished and the Government of India assumed from 1 March 1862 the sole power of issuing paper currency within British India.
The task of management and circulation of the new currency notes was conferred on the presidency banks and the Government undertook to transfer the Treasury balances to the banks at places where the banks would open branches. None of the three banks had till then any branches (except the sole attempt and that too a short-lived one by the Bank of Bengal at Mirzapore in 1839) although the charters had given them such authority. But as soon as the three presidency bands were assured of the free use of government Treasury balances at places where they would open branches, they embarked on branch expansion at a rapid pace. By 1876, the branches, agencies and sub agencies of the three presidency banks covered most of the major parts and many of the inland trade centres in India. While the Bank of Bengal had eighteen branches including its head office, seasonal branches and sub agencies, the Banks of Bombay and Madras had fifteen each.
Bank of Madras Note Dated 1861 for Rs.10
The presidency Banks Act, which came into operation on 1 May 1876, brought the three presidency banks under a common statute with similar restrictions on business. The proprietary connection of the Government was, however, terminated, though the banks continued to hold charge of the public debt offices in the three presidency towns, and the custody of a part of the government balances. The Act also stipulated the creation of Reserve Treasuries at Calcutta, Bombay and Madras into which sums above the specified minimum balances promised to the presidency banks at only their head offices were to be lodged. The Government could lend to the presidency banks from such Reserve Treasuries but the latter could look upon them more as a favour than as a right.
Bank of Madras
The decision of the Government to keep the surplus balances in Reserve Treasuries outside the normal control of the presidency banks and the connected decision not to guarantee minimum government balances at new places where branches were to be opened effectively checked the growth of new branches after 1876. The pace of expansion witnessed in the previous decade fell sharply although, in the case of the Bank of Madras, it continued on a modest scale as the profits of that bank were mainly derived from trade dispersed among a number of port towns and inland centres of the presidency.
India witnessed rapid commercialisation in the last quarter of the nineteenth century as its railway network expanded to cover all the major regions of the country. New irrigation networks in Madras, Punjab and Sind accelerated the process of conversion of subsistence crops into cash crops, a portion of which found its way into the foreign markets. Tea and coffee plantations transformed large areas of the eastern Terais, the hills of Assam and the Nilgiris into regions of estate agriculture par excellence. All these resulted in the expansion of India's international trade more than six-fold. The three presidency banks were both beneficiaries and promoters of this commercialisation process as they became involved in the financing of practically every trading, manufacturing and mining activity in the sub-continent. While the Banks of Bengal and Bombay were engaged in the financing of large modern manufacturing industries, the Bank of Madras went into the financing of large modern manufacturing industries, the Bank of Madras went into the financing of small-scale industries in a way which had no parallel elsewhere. But the three banks were rigorously excluded from any business involving foreign exchange. Not only was such business considered risky for these banks, which held government deposits, it was also feared that these banks enjoying government patronage would offer unfair competition to the exchange banks which had by then arrived in India. This exclusion continued till the creation of the Reserve Bank of India in 1935.
Bank of Bombay
The presidency Banks of Bengal, Bombay and Madras with their 70 branches were merged in 1921 to form the Imperial Bank of India. The triad had been transformed into a monolith and a giant among Indian commercial banks had emerged. The new bank took on the triple role of a commercial bank, a banker's bank and a banker to the government.
But this creation was preceded by years of deliberations on the need for a 'State Bank of India'. What eventually emerged was a 'half-way house' combining the functions of a commercial bank and a quasi-central bank.
The establishment of the Reserve Bank of India as the central bank of the country in 1935 ended the quasi-central banking role of the Imperial Bank. The latter ceased to be bankers to the Government of India and instead became agent of the Reserve Bank for the transaction of government business at centres at which the central bank was not established. But it continued to maintain currency chests and small coin depots and operate the remittance facilities scheme for other banks and the public on terms stipulated by the Reserve Bank. It also acted as a bankers' bank by holding their surplus cash and granting them advances against authorised securities. The management of the bank clearing houses also continued with it at many places where the Reserve Bank did not have offices. The bank was also the biggest tenderer at the Treasury bill auctions conducted by the Reserve Bank on behalf of the Government.
The establishment of the Reserve Bank simultaneously saw important amendments being made to the constitution of the Imperial Bank converting it into a purely commercial bank. The earlier restrictions on its business were removed and the bank was permitted to undertake foreign exchange business and executor and trustee business for the first time.
The Imperial Bank during the three and a half decades of its existence recorded an impressive growth in terms of offices, reserves, deposits, investments and advances, the increases in some cases amounting to more than six-fold. The financial status and security inherited from its forerunners no doubt provided a firm and durable platform. But the lofty traditions of banking which the Imperial Bank consistently maintained and the high standard of integrity it observed in its operations inspired confidence in its depositors that no other bank in India could perhaps then equal. All these enabled the Imperial Bank to acquire a pre-eminent position in the Indian banking industry and also secure a vital place in the country's economic life.
Imperial Bank of India
When India attained freedom, the Imperial Bank had a capital base (including reserves) of Rs.11.85 crores, deposits and advances of Rs.275.14 crores and Rs.72.94 crores respectively and a network of 172 branches and more than 200 sub offices extending all over the country.
In 1951, when the First Five Year Plan was launched, the development of rural India was given the highest priority. The commercial banks of the country including the Imperial Bank of India had till then confined their operations to the urban sector and were not equipped to respond to the emergent needs of economic regeneration of the rural areas. In order, therefore, to serve the economy in general and the rural sector in particular, the All India Rural Credit Survey Committee recommended the creation of a state-partnered and state-sponsored bank by taking over the Imperial Bank of India, and integrating with it, the former state-owned or state-associate banks. An act was accordingly passed in Parliament in May 1955 and the State Bank of India was constituted on 1 July 1955. More than a quarter of the resources of the Indian banking system thus passed under the direct control of the State. Later, the State Bank of India (Subsidiary Banks) Act was passed in 1959, enabling the State Bank of India to take over eight former State-associated banks as its subsidiaries (later named Associates).
The State Bank of India was thus born with a new sense of social purpose aided by the 480 offices comprising branches, sub offices and three Local Head Offices inherited from the Imperial Bank. The concept of banking as mere repositories of the community's savings and lenders to creditworthy parties was soon to give way to the concept of purposeful banking subserving the growing and diversified financial needs of planned economic development. The State Bank of India was destined to act as the pacesetter in this respect and lead the Indian banking system into the exciting field of national development.
TECHNOLOGY UPGRADATION HIGHLIGHTS
SBI’s Information Technology Programme aims at achieving efficiency in operations, meeting customer and market expectations and facing competition. Our achievements are summarized below:*
FULL BRANCH COMPUTERISATION (FCBs): All the branches of the Bank are now fully computerized. This strategy has contributed to improvement in customer service.
ATM SERVICES: There are 4633 ATMs on the ATM Network including 3181 ATMs of SBI and 1452 from the 7 Associate Banks and Subsidiaries. These ATMs are located in 1521 centres spread across the length and breadth of the country, thereby creating a truly national network of ATMs with an unparalleled reach. Value added services like ATM locator, payment of fees for college students, multilingual screens, voice over and drawal of cash advance by SBI credit card holders have been introduced.
INTERNET BANKING (INB): This on-line channel enables customers to access their account information and initiate transactions on a 24x7, boundary less basis. 1994 branches, covering 555 centres, are extending INB service to their customers. All functionalities other than Cash and Clearing have been extended to individual retail customers. A separate Internet Banking Module for Corporate customers has been launched and available at 1305 branches. Bulk upload of data for Corporate, Inter-branch funds transfer for Retail customers, online payment of Customs duty and Govt. tax, Electronic Bill Payment, SMS Alerts, E-Poll, IIT GATE Fee Collection, Off-line Customer Registration Process and Railway Ticket Booking are the new features deployed.
GOVT. BUSINESS: Software has been developed and rolled out at 7785 fully computerised branches. Electronic generation of all reports for reporting, settlement and reconciliation of Govt. funds, is available.
STEPS: Under STEPS, the bank’s electronic funds transfer system, the Products offered are eTransfer (eT), eRealisation (eR), eDebit (CMP) and ATM reconciliation. STEPS handles payment messages and reconciliation simultaneously.
SEFT: SBI has launched the Special Electronic Fund Transfer (SEFT) Scheme of RBI, to facilitate efficient and expeditious Inter-bank transfer of funds. 241 branches of our Bank in various LHO Centres are participating in the scheme. Security of message transmission has been enhanced.
MICR Centres: MICR Cheque Processing systems are operational at 16 centres viz. Mumbai, New Delhi, Chennai, Kolkata, Vadodara, Surat, Patna, Jabalpur, Gwalior, Jodhpur, Trichur, Calicut, Nasik, Raipur, Bhubaneswar and Dehradun.
Core Banking : The Core Banking Solution provides the state-of-the-art anywhere anytime banking for our customers. The facility is available at 574 branches.
Trade Finance: The solution has been implemented, providing efficiency in handling Trade Finance transactions with Internet access to customers and greatly enhances the bank’s services to Corporates and Commercial Network branches. This new Trade Finance solution, EXIMBILLS, will be implemented at all domestic branches as well as at Foreign offices engaged in trade finance business during the year.
WAN: The bank has set up a Wide Area Network, known as SBI connect, which provides connectivity to 4819 branches/offices of SB Group across 306 cities. This network provides across the board benefits by providing nationwide connectivity for its business applications.
PROFILE OF HDFC BANK
The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in-principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalisation of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. *
Promoter
HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain a market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment.
Business Focus
HDFC Bank's mission is to be a World-Class Indian Bank. The Bank's aim is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services in the segments that the bank operates in and to achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank is committed to maintain the highest level of ethical standards professional integrity and regulatory compliance. HDFC Bank's business philosophy is based on four core values: Operational Excellence, Customer Focus, Product Leadership and People.
Capital Structure
The authorized capital of HDFC Bank is Rs.450 crore (Rs.45 billion). The paid-up capital is Rs.282 crore (Rs.28.2 billion). The HDFC Group holds 24.2% of the bank's equity while about 13.1% of the equity is held by the depository in respect of the bank's issue of American Depository Shares (ADS/ADR Issue). The Indian Private Equity Fund, Mauritius (IPEF) and Indocean Financial Holdings Ltd., Mauritius (IFHL) (both funds advised by J P Morgan Partners, formerly Chase Capital Partners) together hold about 5.5% of the bank's equity. Roughly 27.5% of the equity is held by FIIs, NRIs/OCBs while the balance is widely held by about 214,000 shareholders. The shares are listed on The Stock Exchange, Mumbai and the National Stock Exchange. The bank's American Depository Shares are listed on the New York Stock Exchange (NYSE) under the symbol "HDB".
TimesBank Amalgamation
In a milestone transaction in the Indian banking industry, TimesBank Limited (another new private sector bank promoted by Bennett, Coleman & Co./Times Group) was merged with HDFC Bank Ltd., effective February 26, 2000. As per the scheme of amalgamation approved by the shareholders of both banks and the Reserve Bank of India, shareholders of TimesBank received 1 share of HDFC Bank for every 5.75 shares of TimesBank. The amalgamation added significant value to HDFC Bank in terms of increased branch network, expanded geographic reach, enhanced customer base, skilled manpower and the opportunity to cross-sell and leverage alternative delivery channels.
Distribution Network
HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of over 451 branches spread over 205 cities across the country. All branches are linked on an online real-time basis. Customers in 90 locations are also serviced through Phone Banking. The Bank's expansion plans take into account the need to have a presence in all major industrial and commercial centres where its corporate customers are located as well as the need to build a strong retail customer base for both deposits and loan products. Being a clearing/settlement bank to various leading stock exchanges , , the Bank has branches in the centres where the NSE/BSE has a strong and active member base.
The Bank also has a network of over 1054 networked ATMs across these cities. Moreover, HDFC Bank's ATM network can be accessed by all domestic and international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders.
Management
Mr. Jagdish Capoor took over as the bank's Chairman in July 2001. Prior to this, Mr. Capoor was a Deputy Governor of the Reserve Bank of India.
The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25 years and before joining HDFC Bank in 1994 was heading Citibank's operations in Malaysia.
The Bank's Board of Directors is composed of eminent individuals with a wealth of experience in public policy, administration, industry and commercial banking. Senior executives representing HDFC are also on the Board.
Senior banking professionals with substantial experience in India and abroad head various businesses and functions and report to the Managing Director. Given the professional expertise of the management team and the overall focus on recruiting and retaining the best talent in the industry, the bank believes that its people are a significant competitive strength.
Technology
HDFC Bank operates in a highly automated environment in terms of information technology and communication systems. All the bank's branches have connectivity which enables the bank to offer speedy funds transfer facilities to its customers. Multi-branch access is also provided to retail customers through the branch network and Automated Teller Machines (ATMs).
The Bank has made substantial efforts and investments in acquiring the best technology available internationally to build the infrastructure for a world-class bank. In terms of software, the Corporate Banking business is supported by Flexcube, while the Retail Banking business by Finware, both from i-flex Solutions Ltd. The systems are open, scaleable and web-enabled.
The Bank has prioritized its engagement in technology and the internet as one of its key goals and has already made significant progress in web-enabling its core businesses. In each of its businesses, the Bank has succeeded in leveraging its market position, expertise and technology to create a competitive advantage and build market share.
Business Profile
HDFC Bank caters to a wide range of banking services covering commercial and investment banking on the wholesale side and transactional / branch banking on the retail side. The bank has three key business areas :-
a) Wholesale Banking Services
The Bank's target market is primarily large, blue-chip manufacturing companies in the Indian corporate sector and to a lesser extent, emerging mid-sized corporates. For these corporates, the Bank provides a wide range of commercial and transactional banking services, including working capital finance, trade services, transactional services, cash management, etc. The bank is also a leading provider of structured solutions which combine cash management services with vendor and distributor finance for facilitating superior supply chain management for its corporate customers. Based on its superior product delivery / service levels and strong customer orientation, the Bank has made significant inroads into the banking consortia of a number of leading Indian corporates including multinationals, companies from the domestic business houses and prime Public Sector companies. It is recognised as a leading provider of cash management and transactional banking solutions to corporate customers, mutual funds, stock exchange members and banks.
b) Retail Banking Services
The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements. The products are backed by world-class service and delivered to the customers through the growing branch network, as well as through alternative delivery channels like ATMs, PhoneBanking, NetBanking and MobileBanking.
The HDFC Bank preferred program for high net worth individuals, the HDFC Bank Plus and the Investment Advisory Services programs have been designed keeping in mind needs of customers who seek distinct financial solutions, information and advice on various investment avenues. The Bank also has a wide array of retail loan products including Auto Loans, Loans against marketable securities, Personal Loans and Loans for Two-wheelers. It is also a leading provider of Depository Services to retail customers, offering customers the facility to hold their investments in electronic form. HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA Electron) and issues the Mastercard Maestro debit card as well. The debit card allows the user to directly debit his account at the point of purchase at a merchant establishment, in India and overseas. The Bank launched its credit card in association with VISA in November 2001. The Bank is also one of the leading players in the "merchant acquiring" business with over 25,000 Point-of-Sale (POS) terminals for debit / credit cards
acceptance at merchant establishments. The Bank is well positioned as a leader in various net-based B2C opportunities including a wide range of internet banking services for Fixed Deposits, Loans, Bill Payments, etc.
c) Treasury Operations
Within this business, the bank has three main product areas - Foreign Exchange and Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the liberalisation of the financial markets in India, corporates need more sophisticated risk management information, advice and product structures. These and fine pricing on various treasury products are provided through the bank's Treasury team. To comply with statutory reserve requirements, the bank is required to hold 25% of its deposits in government securities. The Treasury business is responsible for managing the returns and market risk on this investment portfolio.
Rating
HDFC Bank has its deposit programmes rated by two rating agencies - Credit Analysis & Research Limited (CARE) and Fitch Ratings India Pvt. Ltd. The Bank's Fixed Deposit programme has been rated 'CARE AAA (FD)' [Triple A] by CARE, which represents instruments considered to be "of the best quality, carrying negligible investment risk". CARE has also rated the Bank's Certificate of Deposit (CD) programme "PR 1+" which represents "superior capacity for repayment of short term promissory obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has assigned the "tAAA (ind)" rating to the Bank's deposit programme, with the outlook on the rating as "stable". This rating indicates "highest credit quality" where "protection factors are very high". HDFC Bank also has its long-term unsecured, subordinated (Tier-II) Bonds rated by CARE and Fitch Ratings India Pvt. Ltd. CARE has assigned the rating of "CARE AAA" for the Tier-II Bonds while Fitch Ratings India Pvt. Ltd. has assigned the rating "AAA (ind)" with the outlook on the rating as "stable". In each case referred to above, the ratings awarded were the highest assigned by the rating agency for those instruments.
Corporate Governance Rating
The bank was one of the first four companies which subjected itself to a Corporate Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating Information Services of India Limited (CRISIL). The rating provides an independent assessment of an entity’s current performance and an expectation on its "balanced value creation and corporate governance practices" in future. The bank has been assigned a ‘CRISIL GVC Level 1' rating which indicates that the bank's capability with respect to wealth creation for all its stakeholders while adopting sound corporate governance practices is the highest.
Product Range
Savings, Fixed Deposits, Current and Demat Accounts
Savings Account: Apart from the usual facilities, the customer gets a free ATM Card, Interbranch banking, NetBanking, BillPay, PhoneBanking, Debit Card and MobileBanking, among others.
HDFC Bank Preferred: A preferential Savings Account where the customer is assigned a dedicated Relationship Manager, who is the customer’s one-point contact. The customer also get privileges like fee waivers, enhanced ATM withdrawal limit, priority locker allotment, free Demat Account and lower interest rates on loans, to name a few.
Sweep-In Account: A fixed deposit linked to the customer’s Savings Account. So, even if the customer’s Savings Account runs a bit short, he/she can issue a cheque (or use your ATM Card). The money is automatically swept in from his/her fixed deposit into his/her Savings Account.
Super Saver Account: It gives the customer an overdraft facility up to 75% of his/her Fixed Deposit. In an emergency, the customer can access his/her funds while his/her Fixed Deposit continues to earn high interest.
HDFC Bank Plus: Apart from Regular and Premium Current accounts the bank also has HDFC Bank Plus, a Current Account and then some more. The customer can transfer up to Rs. 50 lakh per month at no extra charge, between the four metros. The customer can also avail of cheque clearing between the four metros, get cash delivery/pickup upto Rs. 25,000/-, home delivery of Demand Drafts, at-par cheques, outstation cheque clearance facility, etc.
Demat Account: The customer can conduct hassle-free transactions on his/her shares. The customer can also access his/her Demat Account on the Internet.
Innovative services for your convenience...
PhoneBanking: 24-hour automated banking services with 39 PhoneBanking numbers available.
ATM 24-hour banking: Apart from routine transactions, the customer can also pay his/her utility bills and transfer funds, at any of the bank’s ATMs across the country all year round.
Inter-city/Inter-branch Banking:The customer can access his/her account from any of the bank’s 451 branches in 205 cities.
NetBanking: The customer can access his/her bank account from anywhere in the world, at anytime, at his/her own convenience. The customer can also view his/her Demat Account through NetBanking.
International Debit Card: With an ATM card the customer can shop with all over the country and in over 140 countries with. The customer can spend in any currency, and pay in Rupees.
MobileBanking: The customer can access his/her account on his/her mobile phone screen at no airtime cost. The customer can use SMS technology to conduct his/her banking transactions from his/her cellphone.
BillPay: The customer can pay his/her telephone, electricity and mobilephone bills through the bank’s ATMs, Internet, phone or mobile phone.
Loans for every need
Now, the bank’s loans come to the customerin easy-to-pay monthly instalments, and are available with easy documentation and quick delivery.
Personal Loans: The customer can now take a loan of up to Rs. 3 lakh for a wedding, education, purchase of a computer or an exciting holiday.
New Car Loans and Used Car Loans: The customer can now avail finance up to 90% of the cost of a car, new or used! And the loans come to the customer with easy documentation and speedy processing at attractive interest rates.
Loans Against Shares: The customer can get an overdraft up to Rs. 10 lakh at an attractive interest rate against physical shares, up to 50% of the market value of his/her shares. In case of Demat Shares, the customer can get a Loan Against Shares of up to 65% of the market value of his/her shares, till Rs. 20 lakh.
Two Wheeler & Consumer Loans: It is to help the customer to buy the best durables for his/her home.
Demat Account: The customer can now protect his/her shares from damage, loss and theft, by maintaining the customer’s shares in electronic form. The customer can also access his/her demat account on the internet.
Current Account: The customer can get a personalised cheque book, monthly account statements, inter-branch banking and much more.
Mutual Funds: Apart from a wide choice of mutual funds to suit the customer’s needs the customer benefits from expert advice on choosing the right funds based on in-depth market analysis.
International Credit Card: The customer can get an option of Silver, Gold, or Health Plus Credit card, accepted worldwide from a world-class bank. If the the customer has an outstanding balance on his/her credit card the customer can transfer that balance to this card at a lower interest rate.
NRI Services: A comprehensive range, backed by unmatched features and world-class service, ensures NRIs all the banking support they need.
Forex Facilities: The customer can avail foreign currency, travellers cheques, foreign exchange demand drafts, to meet his/her travel needs.
Insurance*: HDFC Bank now brings its customers Life Insurance and Pension Solutions like Risk Cover Scheme, Savings Scheme, Children’s Plan and Personal Plan from HDFC Standard Life Insurance Co. Ltd.
*Insurance is the subject matter of solicitation.
PROFILE OF ICICI BANK
ICICI Bank is India's second-largest bank with total assets of about Rs.146,214 crore at December 31, 2004 and profit after tax of Rs. 1,391 crore in the nine months ended December 31, 2004 (Rs. 1,637 crore in fiscal 2004). ICICI Bank has a network of about 505 branches and extension counters and about 1,850 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank set up its international banking group in fiscal 2002 to cater to the cross-border needs of clients and leverage on its domestic banking strengths to offer products internationally. ICICI Bank currently has subsidiaries in the United Kingdom and Canada, branches in Singapore and Bahrain and representative offices in the United States, China, United Arab Emirates and Bangladesh.*
ICICI Bank's equity shares are listed in India on the Stock Exchange, Mumbai and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).
As required by the stock exchanges, ICICI Bank has formulated a Code of Business Conduct and Ethics for its directors and employees.
At October 31, 2004, ICICI Bank, with free float market capitalisation* of about Rs. 220.00 billion (US$ 5.00 billion) ranked third amongst all the companies listed on the Indian stock exchanges.
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE.
After consideration of various corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would create the optimal legal structure for the ICICI group's universal banking strategy. The merger would enhance value for ICICI shareholders through the merged entity's access to low-cost deposits, greater opportunities for earning fee-based income and the ability to participate in the payments system and provide transaction-banking services. The merger would enhance value for ICICI Bank shareholders through a large capital base and scale of operations, seamless access to ICICI's strong corporate relationships built up over five decades, entry into new business segments, higher market share in various business segments, particularly fee-based services, and access to the vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's financing and banking operations, both wholesale and retail, have been integrated in a single entity.
*Free float holding excludes all promoter holdings, strategic investments and cross holdings among public sector entities.
CHAPTER-3
E-BANKING SERVICES PROVIDED BY VARIOUS BANKS
INTERNET BANKING SERVICES PROVIDED BY VARIOUS BANKS
Internet Banking Services provided by STATE BANK OF INDIA:*
1. BILL PAYMENT
About Bill Payment
SBI e-PAY - A simple and convenient service for receiving and paying the customer’s bills online
• No more late payments
• No more queues
• No more hassles of depositing cheques
OnlinePay: Using SBI e-PAY the customer can 'see and pay' his/her various bills online, directly from his/her SBI Account. The customer can pay telephone, electricity, insurance, credit card and other bills - from the comfort of his/her house or office, 24 hours a day, 365 days a year! He/she will simply have to logon to http://www.onlinesbi.com/ to 'see and pay' their bills. The customer can also get an electronic acknowledgment for every bill paid by him/her using e-PAY.
AutoPay: The customer can also set up AutoPay instructions with an upper limit to ensure that his/her bills are paid automatically whenever they are due. The upper limit ensures that only bills within the specified limit are paid automatically, thereby providing the customer complete control over these payments.
The e-PAY service is available in various cities across the country and the customer can now make payments to several billers in his/her region.
To start receiving and paying their bills online, the customers will simply have to login to http://www.onlinesbi.com and use the 'Add Biller' feature to select the billers they wish to make payments to. Alternately, the customers can also fill out the SBI e-PAY Registration Form (SeRF) available at their SBI branch, complete it and submit it to the branch.
2. SMS ALERTS
SMS Alerts are the fashionable way to keep track of critical activity on one’s accounts. In a significant step towards enabling anytime-anywhere banking, OnlineSBI.com now enables its customers to receive alerts on his/her mobile phone. The customer can ask to be alerted when the balance on his/her account goes above or below a particular amount; or when a transaction of greater than a specified amount hits the customer’s account; or when an interest is applied on the customer’s accounts more.Receiving alerts on your mobile phone is a two-step process.
1. Set your mobile number. Be sure to correctly select the country the mobile number belongs to.
2. Define your alert criteria; be it balance alert or a transaction alert or an interest alert.
The bank will now do the hard work of alerting when these events happen to his/her account.
3. ONLINE BOOKING OF RAILWAY TICKETS
The customer should follow under noted process for booking of railway tickets.
• Logon to the site of IRCTC www.irctc.co.in
• Register yourself on the site (if first time user) or log on with
Username and Password (meant for IRCTC site).
• Provide the requisite information i.e. stations (departure & arrival),
date and class of the journey under option of "Plan My Travel and Book
Ticket"
• Select your train from the list of trains displayed by IRCTC and click
on "Book Ticket"
• Provide passenger details and confirm your address for getting delivery
of tickets . The amount of ticket will be displayed for payment.
• Choose payment option "State Bank of India". You will be taken to our
site onlineSBI.
• Log in with Username and Password (meant for onlineSBI ) and confirm
the payment.
• On successful transaction, you will be provided with Transaction Id and
date of transaction.
• The ticket will be delivered by IRCTC at your place of choice. Delivery
of ticket is sole responsibility of IRCTC.
• For cancellation of ticket, submit your ticket at a computerized counter
of Railways. On cancellation of ticket by Railways, the amount shall be
credited back to your account.
State Bank of India.
4. MUTUAL FUNDS
SBI Mutual Fund has grown tremendously in terms of corpus as well as number of investors. Today it is one of the largest Bank sponsored Mutual Fund in the country. The bank has launched 35 Schemes, of which 15 have been redeemed, yielding handsome returns to investors. The fund has over Rs. 5,500 Crores as assets under management.
SBI is also the first Bank sponsored Mutual Fund to launch an offshore fund, the India Magnum Fund, with a corpus of around Rs. 225 Crores.
Today the Fund has an investor base of over 8 Lacs spread over 18 schemes. With a large network over 35 collection branches, 26 Investor Service Centres, 19 Investor Service Desks and 21 District Organizers, the SBI is constantly endeavouring to get closer to the bank’s growing family of investors.
INTERNET BANKING SERVICES PROVIDED BY ICICI BANK
1. BILL PAYMENT
ICICI Bank Internet Banking is the most convenient channel to manage and pay the bills anytime, anywhere. No more hassles of personally visiting the Biller to pay the bills. Its free for all the Customers. The bank has enabled the billers in following two modes:
• Presentment Type Billers: For these billers, the bill amount and due date will be presented to them online on http://www.icicibank.com/ and a reminder will be sent to their on Email.
• Payment Type Billers: For these billers the customer’s can register and pay any amount immediately
2. ONLINE SHOPPING*
ICICI Bank has tied up with more than 75 organizations to facilitate online shopping for all its Internet Banking Customers. The customer’s
Have to choose their products online and pay conveniently through ICICI Bank Internet Banking Service.
Online Shopping Process
Their esteemed partners are:
ICICI Bank brings Insurance products to the customer’s door-step. The customers can buy Insurance products from ICICI Lombard General Insurance and pay through the bank’s Internet Banking. Details...
The customer’s can book their Air Tickets online at http://www.icicibank.com/pfsuser/icicibank/online/shopping/online_shopping.htm# and pay through Internet Banking. The customer’s can also take a print of their ticket instanteneously.Details...
The customer’s can book their railway ticket through http://www.icicibank.com/pfsuser/icicibank/online/shopping/online_shopping.htm# using ICICI Bank Internet Banking. IRCTC will deliver ticket to delivery address mentioned by the customer. Details...
The customer’s can pay their Reliance Infocom bills through Internet Banking. The customer’s can visit Reliance Infocomm, view their bill details and make instantaneous payments.
3. TICKET BOOKING
Ticket Booking
The customer’s can now book their Railways and Air Tickets Online
The customer’s can now buy their tickets online and pay using the bank’s Internet Banking Facility. ICICI Bank has tied up with IRCTC (for Railway Ticket Booking) and Air Deccan (for Air Ticket booking).
The salient features of the facility are as under:
1. All internet banking customers can use the facility.
2. For booking tickets, please visit www.irctc.co.in (for railway tickets) and http://www.airdeccan.net/ (for air tickets). Select your journey date and other details.
3. On payment option, select ICICI Bank for making the payment. The customer will be redirected to secured login page of ICICI Bank. After logging on to the site the customer can see his/her displayed payment amount, and Payee Details.
4. The customer will be required to confirm the transaction by entering transaction password. On successful authentication, the customer’s Bank Account will be immediately debited and payment confirmation number will be provided. Within some time the customer will also receive online confirmation from IRCTC/ Air Deccan website. Tickets are booked immediately and PNR number is provided online at Partner's website.
Cancellation of tickets: No cash will be paid at the time of cancellation. The customer’s bank account will be credited with the ticket amount less cancellation charges as levied by IRCTC/ Air Deccan. ICICI Bank does not levy any cancellation charges.
4. INSURANCE POLICIES OFFERED BY ICICI BANK *
Convenience has always been synonymous with ICICI Bank and keeping in line with this, icici bank now offers it’s customers, the most comprehensive suite of General Insurance products from ICICI Lombard, to cater to their insurance needs and that too online.
10K Tax Saver Health Insurance Family Floater Health Insurance
For the first time in India ICICI Lombard introduces, 10K Tax Saver Health Insurance plan. This fixed premium Family Floater Health plan is designed to give the maximum tax benefit u/s Sec. 80D
For the First time in India, Family Floater Health Plan, a single health insurance cover that takes care of the customer’s entire family’s medical expenses during sudden illness, surgeries and accidents.
• Maximum tax benefit. Rs.10,000 deduction u/s 80 D.
• Fixed premium plan where the insured amount changes with no. of members.
• Family Floater advantage. One policy for entire family.
• Special covers (Double & Convalescence benefits) in addition to the regular health cover. • A single policy covers the entire family's health needs
• Covers expenses towards cost of hospital room/bed during illness, surgeries & accidents
• Cashless facility at more than 1100 network hospitals across 214 cities in India
• 5 % No - Claim discount on renewal premium
Overseas Travel Insurance Student Travel Insurance
ICICI Lombard Overseas Travel Insurance charges it’s customer’s on a ‘Pay Per Day’ basis.
ICICI Lombard’s Comprehensive Overseas Student Travel Insurance.
• Protection against all list of emergencies that may occur whilst traveling abroad
• Premium on a "Pay Per Day" basis instead of slab rates
• Cashless hospitalisation benefit available globally
• Cover available for a maximum period of 6 months with an extension option
• Dedicated toll-free help line number across all countries • Protection against all list of emergencies that may occur whilst traveling abroad
• Customer can pay in rupees, and can save valuable dollars.
• Plan meets foreign universities insurance requirements
• No documentation. No health check-up. Instant policy issuance
• Policy is renewable for the second year
3. ICICI BANK’S ONLINE SHARE TRADING.
ICICI bank also provides the service of online share trading to its customers through www.icicidirect.com.
INTERNET BANKING SERVICES PROVIDED BY HDFC BANK
NETBANKING FEATURES*
1.Credit card Payment
Customers can pay their HDFC Bank Credit card dues through this option.
2.Statement Download
The customers can download their account statement onto their PC for the period of 5 months from the given date.
3.Change Customer profile
The customers can update their mailing address and all their communication from bank will go to this new address.
4. Funds Transfer
The customers cant transfer funds between their accounts, even if they are in different branches/cities. The customer can also transfer funds to any person having an HDFC Bank account anytime, anywhere, using our Third Party Funds Transfer option. To avail of TPT facility, customer will have to sign the declaration form, which is available on the Net or at any of the bank’s branches.
5. New Fixed Deposit Request*
The customer can open a Fixed Deposit Account on the Internet. He will just have to give details regarding the account from which he/she wants to transfer funds, the amount and terms for the Fixed Deposit, the branch and the relevant maturity instructions.
6. Fixed Deposit Inquiry
The customers can access details of their Fixed Deposit Account such as Principal Balance, Term of Deposit, Rate of Interest, Maturity Date, Maturity Amount and Instructions for Payment.
7. Demand Draft* Request
The customers can issue a DD from their account at special rates. They will just have to select the account to be debited from and give the bank details of the amount, location and beneficiary. The bank will even have the Demand Draft couriered to the customer’s mailing address. (DDs will be issued only where the bank has a branch or has an arrangement with a local bank).
8. Demand Draft Request at Beneficiary's address
NetBanking offers a new facility to all its customers. The customer can issue a Demand Draft on the Beneficiary's name and address of his/her choice. He/she will just have to just select the account to be debited from and give the bank the details of the amount and beneficiary's name & address where the customer want the Demand Draft to be delivered. The Demand Drafts would only be delivered within India. (DDs will be issued only where the Bank has a branch or has an arrangement with a local Bank).
Note : 1) This facility is only open to users who have registered for Third Party Transfer (TPT).
9. TDS Inquiry
the customer can access information on Tax Deducted at Source for all their deposits for the current or previous financial year.
10. Stop Payment Request
The customer can request Stop Payment on a cheque or series of cheques online by just entering the cheque number and the reason for stopping payment.
11. Cheque Status Inquiry
The customer can view the status of a specific cheque issued on any of his/her accounts.
12. Cheque Book Request
The customer can request for a new cheque book online. His/Her cheque book will be couriered to the address on the bank’s records.
13. Account Balance Inquiry
The customer can check his/her savings or current account balance, including information regarding Uncleared Funds, Ledger Balances, Overdraft Limits and Sweep-In Amounts.
14. Account Statement Inquiry
The customer can view all the transactions on his/her account for either the current period (i.e. from date of last statement mailed to him/her), or a specific period determined by him/her/. The customer can also request his/her statement via mail (mailing address will be as per bank records).
15. Customer Support
The customer can use this option to communicate with the Bank for requests, instructions and queries.
16. Demat on the NET
If the customer also holds a Demat Account with the bank, he/she can now access his/her account online. Through Demat on the Internet, he/she can see his/her holdings as on the close of the last business day.He/She can view his/her your transactions for the last 7 days. Check the status of the shares submitted for Demat in the last one month. The bank will also provide the customer with an ISIN search and a calendar to know the various settlement details on various exchanges.
17. Direct Pay
An option exclusively for HDFC Bank NetBanking customers, which allows online purchases in a safe and secure environment. Shop online at websites, which offer our Direct Pay facility, such as Sify.com, Fabmart.com, VSNL.com and many more. Through Direct Pay, the customer’s account would be debited and the merchant's/ website's account gets credited instantaneously.
18. BillPay
The customer can pay his/her mobile phone, electricity and telephone bills through the Internet using the BillPay facility.
19. Security
With NetBanking, the customer can carry out all his/her banking and shopping transactions safely and with total confidentiality. The entire system is secured, using the whole gamut of security architecture including firewalls, filtering routers, 128-bit encryption and digital certification. So the customer is absolutely sure that all his/her online transactions are safe and protected.
* New Fixed Deposit Request/DD Request will be processed only during banking hours on the next working day.
Who Can Apply
All the customer need to access NetBanking is have a savings or current or fixed deposit account. Financial transactions can be made by savings account holders (with an either or survivor mandate), individual current account holders and sole proprietorship account holders.
Now Kartas of HUF, Patnerships and authorised signatories of Partnership Concerns and Private Limited Companies can do financial transactions by filling up a special imdemnity. The customer can download the form from website or contact your nearest branch.
REGISTRATION FOR NETBANKING
If the cutomer is a HDFC Bank customer, he/she can register for NetBanking by Calling PhoneBanking if he/she has a Telephone Identification Number (TIN)
OR
downloading an e-Age Banking form. The completed form can be submitted at the nearest branch.
The IPIN (password) will be mailed to the customer’s correspondence address.
NetBanking form for Individuals
NetBanking form for Corporates
If the customer does not have an HDFC Bank Account he/she can download* the relevant Account Opening Form print it, fill in the details along with his/her signature and drop it off the nearest HDFCBank branch. This form includes the NetBanking registration form.
Account Opening Form for Individuals
Account Opening Form for Companies
* The customer will need Adobe Acrobat Reader to read the Account Opening and NetBanking Application forms. If the customer does not have Adobe Acrobat Reader, download it. After the customer have downloaded and installed Adobe Acrobat Reader, the customer will need to restart his/her browser.
INTERNET BANKING SERVICES PROVIDED BY HDFC BANK INCLUDES THE FOLLOWING SERVICES:
1. ATM FACILITY
ATM in India for 24 Hour Banking
Now, the customer’s money is accessible to him/her 24 hours a day, 7 days a week, 365 days a year from any of the bank’s over 1054 ATM across India.
2. BILL PAYMENT
BillPay - Bill Payments Service
Now, the customer can have the luxury of paying his/her telephone, electricity and mobile phone bills at your convenience. Through the Internet, ATMs, his/her mobile phone and telephone. LIC insurance premiums can also be paid through this facility. The customer can also Renew your VSNL Internet Account and even Register for a New VSNL Internet Account using BillPay, a comprehensive bill payments solution. The customer can check the bill amount before he/she makes any payments ensuring that he/she always pays the right amount. BillPay has made all your bill payments easy. It gets even better if the customer is a resident of Hyderabad or Secunderabad and registered for the bank’s NetBanking service. Thanks to the bank’s tie-up with eseva, a unique integrated service launched by the government of Andhra Pradesh, the customer can now pay his/her electricity bills, water bills and municipal taxes (telephones to be introduced shortly) through the Internet using the Direct Debit option. The most important aspect of this service is that the payments made are updated in the database of the utility companies on an online and real-time basis.
3 DEBIT CARD
EasyShop Gold Debit Card
HDFC Bank proudly presents the EasyShop Gold Debit Card. The EasyShop Gold Debit Card is the first Gold Debit Card in India. Not only does it replace the customer’s ATM card, it also revolutionises the way he/she spends through a Debit Card and The customer also gets the benefits that as a Gold Debit Card Customer.
• Cash back*
For every Rs. 100 that the customer will spend, he/she will receive Re. 1 as cash back. This cash back is valid on all purchases made through the card, at all times of the year!!!
• Zero surcharge at Petrol Pumps*
The customer can now use his/her Debit Card at the Petrol Pumps. As a Gold Card holder, no surcharge would be levied on the customer at the petrol pumps.
• Special Offers at Premium Outlets, Hotels and Restaurants*
The bank has arranged for special offers for its customers, the details of which are available in the Merchant Booklet.
• Insurance covers*
The following are included in the insurance covers
o Death Cover by Air / Road - Sum assured Rs. 5,00,000
o Fire & Burglary for the items purchased under Debit Card (upto 6 months) - Sum assured Rs. 50,000
Loss of Baggage Insurance - Sum assured Rs. 20,000
4. INTERNATIONAL DEBIT CARD
Easyshop International Debit Card
Easyshop International Debit Card lets the customer shop and do much more than he/she could do with his/her ATM Card. It replaces cash, so when one goes shopping, the customer no longer need to carry cash with him/her. This card can be used in India and abroad at merchant locations such as shops and restaurants and to withdraw cash from a widespread network of ATMs. The value of the payment made or cash withdrawn is instantly debited from his/her account. What's more, while all purchases and cash withdrawals of the customer are in the currency of the country he/she is in, his/her account is debited in Rupees!
HDFC Bank offers the following Debit Card programmes in India:
1. Visa in association with Visa International
2. Maestro in association with MasterCard International
5. ONLINE SHOPPING
NetSafe, is a unique online payment solution that offers the customer’s complete security while shopping on the Internet. With NetSafe, they can now shop online without revealing their HDFC Bank Credit Card number. They can now use their HDFC Bank Debit Card also for online purchases.
The customers will have to follow a simple 3-step process to register for NetSafe using either his/her HDFC Bank Visa Credit or Debit Card. Once registered, the customer will have to choose the amount and account he/she wish to debit and create as many NetSafe cards as he/she wants. And after the transaction or a max of 48 hours, the card will cease to exist. All this comes FREE with the customer’s HDFC Bank Credit / Debit Card.
*
Step1:OnetimeRegistration
NetSafe requires a one-time registration. After accepting the Terms and Conditions, the customer will need to key in his/her Debit / Credit card number , his/her ATM PIN and the date of expiry of your card.He/She can then generate his/her own Login Id and Password after adding his/her personal details. The Registration process is complete and the customer can Login to NetSafe !
Step2:YourfirstNetSafecard
The customer will have to create a NetSafe card drawing funds from his/her existing HDFC Bank Debit or Credit card accounts . All the customer needs to do is specify the account to be debited and the required value( limit ) of his/her NetSafe card.
Step3:ShoppingwithNetSafe
The customer can use his/her NetSafe card to make purchases online in 2 ways
• He should copy the NetSafe Card Number as the Card Number required in the payment screen of his/her shopping site.
• The customer should download the Plug-In during the Registration process.
6. DIRECT PAY FACILITY
HDFC Bank's Direct Pay facility is an e-Age Banking Channel where the purchases are debited directly to the customer’s account and credited to the account of the establishment (or the website where the purchases were made). If the customer is an account holder with HDFC Bank, all he/she will have to do is to register for the NetBanking facility to use this option.
However, shopping is not the only option that the customer has. If the customer is a resident of Hyderabad or Secunderabad, it gets even better. Thanks to the bank's tie-up with Eseva, a unique integrated service launched by the government of Andhra Pradesh, you can now pay your electricity, water bills and municipal taxes (telephones to be introduced shortly) using the Direct Pay option. The most important aspect of this service is that the payments made are updated in the database of the utility companies on an online and real-time basis.
What's more, both the Direct Pay and NetBanking facilities are available FREE of cost.
HDFC Bank offers the highest level of security available today - 128-bit SSL (Secure Socket Layer) encryption. The customer’s NetBanking details (Customer ID and password) are kept confidential and cannot be viewed by the merchant.
7. INSTA-ALERT
HDFC Bank has made its customers life easier than ever before. Because with the bank’s new InstaAlert service the customer can get regular updates on you’re his/her bank account via SMS or e-mail.
I
- 1 Credit in account greater than Rs. 5,000/ Rs.10, 000/ Rs. 20,000/Rs. 50,000
- 2 Account Balance below Rs. 5,000/ Rs.10, 000/ Rs. 20,000/Rs. 50,000
- 3 Weekly account balance
- 4 Salary Credits*
- 5 Utility bill payment due Alert**
*The customer needs to have a Corporate Salary account with HDFC Bank
** To avail this alert the customer needs to be registered for the Bill Pay service. Also, this is applicable only to the presentment/biller companies.
8. REFILL OF PREPAID CARD THROUGH SMS
HDFC Bank introduces refill of prepaid card through SMS
All the customer need to have is an HDFC Bank Account and be a prepaid customer.
Pre-paid Refill through SMS
Pre-paid Refill through ATM
Pre-paid Refill through SMS :
The customer needs to be registered for this service.But for once the bank has taken the pain of filling up a form away.The customer can now just have to walk across to an HDFC Bank ATM and do the following.
1. Select 'Prepaid Refill/Bill Pay'option
2. Select 'SMS refill registration'
3. Enter your 10 digit mobile number and confirm
Within seconds the customer will receive an SMS confirming his/her registration, giving the customer a code number and also the syntax of the message that the customer needs to send for getting a refill done. The number to which the message needs to be sent will also be a part of this message that the customer receives.
So now a refill is just an SMS away.
How much does it cost ? *
This service is absolutely free from HDFC Bank! The customer will only have to pay the regular SMS charge for the customer’s SMS request.
Where can I access this service ?
Operator Name Circle
Airtel Mumbai
Orange Mumbai
Prepaid refill through ATM :
It's actually very easy to refill your prepaid card. The customer just needs to walk into an ATM.
1. Select 'Prepaid Refill/Bill Pay'
2. Then select Pre-paid Refill
3. Enter the 10 digit mobile number and confirm
4. Fill the amount you want your card to be re-filled for
Within seconds the customer will get an SMS confirming the refill for the asked amount!
How much does it cost ?
This service is absolutely free from HDFC Bank! The customer will only have to go to the ATM and use his/her card. It's a service that has been introduced for the first time in India, just to make the customer’s world easier.
Where can I access this service ?
Operator Name Circle
Airtel
Andhra Pradesh, Chennai, Delhi, Gujarat, Haryana, Himachal Pradesh, Karnataka, Kerala, Kolkata, Madhya Pradesh, Maharashtra, Mumbai, Punjab, Tamil Nadu, Uttar Pradesh (West)
Hutch Andhra Pradesh, Chennai, Delhi, Gujarat, Haryana, Karnataka, Kolkata, Punjab, Rajasthan, Uttar Pradesh
Idea Andhra Pradesh, Delhi, Gujarat, Haryana, Kerala, Madhya Pradesh, Maharashtra, Uttar Pradesh (West)
Orange Mumbai
9. ONEVIEW OF ONE’S ACCOUNTS IN 6 BANKS
OneView. For the first time in India, this convenient service brings together the customer’s online bank accounts (including those of family members), in one place, in total security.
Now, OneView puts it all on one screen for its customer, so that tracking and managing his/her online accounts becomes quicker and easier than ever before. It gives its customer a complete picture of his/her finances across multiple accounts.
If the customer has one or more accounts with HDFC Bank, Citibank, ICICI Bank, HSBC India, Standard Chartered Bank and/or Global Trust Bank then OneView is just right for him/her. Best of all, it's absolutely free!
Simply register for Internet banking with these banks and use OneView to get a single window acess to :
1. Current/Savings account balances
2. Current/Savings account transaction history
3. Fixed deposit summary
4. Saving/Fixed deposit summary
5. Citibank Credit Card
6. Citibank Credit Card transaction history
7. Hdfcbank Demat Profile
8. Hdfcbank Demat Holdings
9. Hdfcbank Demat Status
It will provide the comprehensive information the customer needs at one place. So get the convenience of OneView now and get into 6 banks.
CHAPTER-4
PROMISES OF
E-BANKING
PROMISES OF INTERNET BANKING
As the potential that the internet held to transform different aspects of our lives manifested itself, it was forecast that its impact on financial services such as stock-broking and banking would be especially profound. Banking transactions could be conducted entirely in a virtual context with no physical exchange necessary. Also transactions are to a large extent standard with little, apart from price, difference between banks. For both these reasons banking was especially well suited to use the Internet. It promised to create a perfectly competitive electronic marketplace for banking products- with perfect information about products ;larger number of buyers and sellers; and reduced transaction costs.*
1. No physical change
Historically, as the means of payment substituted gold by paper currency and paper currency by plastic and finally plastic by direct debits, the information intensity kept increasing. In the case of buying physical goods online, a large portion of the value to the customer is derived only after the goods are physically delivered. The internet brings supplemental value by aiding the search process, making comparisons efficient and automating order placement and billing. On the other hand, in determining which bank to place a deposit with, not only can the search be done online but the actual product delivery (deposit booking) can also be affected online. Since there is high information intensity and no physical exchange, the internet as a delivery channel is responsible for delivering a large portion of the value for a customer. More importantly, the end-to-end process can be completed entirely online.
2. Reduced transaction costs
Additionally various studies showed that as a delivery or distribution channel, the Internet could bring substantial cost advantages for banks. Consultants Booz-Allen & Hamilton estimated that whereas the cost of a customer walking into the branch and using a teller is USD 1.01 , the cost of conducting the same transaction on the internet is a tenth of that and is close to USD 0.10.This was also considerably lower than the cost of conducting the transaction over the telephone(USD 0.52) or having a customer visit an ATM (USD 0.27). Significantly, transaction costs over the internet are also lower than the cost of a customer accessing the bank over a dedicated telephone line using a modem.
The Booz-Allen study was quoted in many commentaries that described the impact of the Internet on banking, included one by the United States Department of Commerce. There was a similar study on the costs of delivering banking services across different channels conducted by the IBM Consultancy Group. Although the absolute costs that they estimated for each channel were different from Booz-Allen , the message was the same- banking transactions on the Internet would cost banks a fraction of what a physical branch would.
3. Double-edged Sword
Reduced delivery costs and the absence of physical exchange is indicative of why the Internet held so much promise to turn banking upside down. In theory, physical branches were not required and the transaction costs over the Internet were much lower. It was almost obvious that from a bank’s perspective this was the way to go. However, the promise of the Internet was a double-edged sword.
While it held the opportunity to lower costs and do away with costly branches and staff, it also posed the threat of compressing profit margins by making it easier and more efficient for customers to search and get comparative information on the offerings of various providers. Another threat that loomed in the distance was that this new electronic marketplace for banking products would directly link the savers in the economy with the borrowers and ultimately diminish the role of intermediaries like banks.
3. Perfect Information
One of the things that the Internet does extremely well is make perfect information available to all market participants by bringing about efficiencies in the search process. For buyers of banking services, there are sites that aggregate information on product offerings from different providers at a single location. By merely making information available to customers about multiple providers, these sites perform the function of dismantling the oligopoly of a few providers and bringing about a structure tending towards perfect competition. A good example of this would be E-loan, an online aggregator of loans. It allows potential borrowers to search and compare the offerings of thousands of providers. Obviously, this is something that a borrower cannot efficiently accomplish by walking around branches, researching product catalogues or calling.
Eliminating the agent’s commission effects a further reduction in mortgage cost. As a further value addition to the client (and to the obvious detriment of the bank’s profitability), E-loan monitors the mortgage over its life and continually alerts the borrower to cheaper refinance options.
Perfect information would be available to the banks as well. The Internet makes it
less likely that, for example, an individual could hide a bad credit history from prospective providers and beat the system by switching providers frequently. To that extent this superior information-set would enable banks to move away from portfolio-pricing, where good credits subsidise the bad ones, to a pricing structure that is based on the customer’s credit history.
4. Reduced role for intermediaries
One of the most successful companies on the Internet is eBay. It offers visitors the ability to participate in online auctions hawking everything from a used car to a perfume bottle collection. More than 60 million auctions have been completed to eBay on an average basis set a new record of 1.782 million. For the first quarter of 2000, eBay generated net revenues of USD 85.8 million, a 100 % increase over the earlier year.
The likely reason for eBay’s success is that it offers visitors an electronic marketplace that is tending towards perfect competition. This is achieved by two economic functions that eBay is providing. The first is
aggregation of buyers and sellers and facilitating a search function. The second is bringing about efficiency in determining price that is enabled by the online auction mechanism which makes pricing transparent and also makes it dynamic since it is now driven by market conditions of ‘demand and supply’.
An eBay online auction model applied to banking services could have a potentially devastating effect on banks. On the corporate baking side, the Internet could replace expensive teams of bankers whose job is to link the companies in need of capital with the providers of capital (and, in the process slice-off banking fees). By creating competition among the providers of capital, the Internet could help companies raise money at much finer spreads. Investment banks using the Internet such as WR Hambrecht have pioneered the use of online auctions to determine prices for initial public offerings (IPOs).
Hambrecht’s trademarked OpenIPO is based on a Dutch auction system designed by Noble Prize winner economist Vickrey and allows individual and institutional investors to bid online for shares of an IPO. Participation is not based on who you know-qualified investor can open an account and place a bid. The auction treats all bids equally, whether from qualified individual investors or from a large institutional investor. The allocation is based on what the bidder is willing to pay rather than on the preferential treatment. This creates a market driven by supply and demand rather than influence or artificial demand.
INTERNET ENABLED BANKING MODEL
The new banking business model coalesces around the ‘6 Cs’ which are summarized below.*
The 6 Cs
Traditional Model
Internet Enabled
Cross-sell
Product Driven
Relationship value driven
Connectivity
Stand-alone
Connected
Channels
Few
Multiple
Consolidation
Low
High-across products and banks
Competition
Within Industry
Outside Industry
Convenience
Short time window
24*7*365
1. Cross-sell
Traditionally, banks have organized themselves along product/relationship lines. The product teams are responsible for the revenues on the portfolios of products managed by them-across the customers of the bank. They also manage brand equity and track market share. The relationship teams are responsible for the revenues on the set of customers managed by them – across the products offered by the bank.
Managing a bank on a product profitability basis is fine when there are few providers and competition is limited. When product competition intensifies, it becomes important to view ‘relationship profitability’. This means that some products might be loss-leaders that enable the bank an entry into the customer relationship and cross-sell other, often more profitable, products. Foe example, a bank provides fine pricing on trade services to get the customer’s foreign exchange business.
In the emerging business model, individual product profitability will become less important and a cross-sell strategy will drive marketing efforts. One of the drivers of this change will be eroding profit-margins at a product level. As the margins get compressed, cross-sell of various products will become essential to achieve a viable level of profitability at a customer relationship management (CRM) tools will become important in identifying cross-sell opportunities and tracking their conversion.
2. Connectivity
In comparison with the stand-alone high street branch of the traditional business model, the emerging business model will have a high degree of connectivity across its branches and products. In part, this will be driven by the market, with customers seeking to seamlessly access their account across locations. It will also be driven by the need to monitor the customer buying behavior and include all possible data points so that cross-sell opportunities are identified.
Connectivity in the emerging business model will also imply electronic linkages between the bank and its customers, especially on the corporate side. Already, many bank-processing platforms on the corporate side. Already, many bank-processing platforms integrate electronically with customer back end systems such as an enterprise resource planning(ERP) software. Data on accounts payable, foe example may be electronically accessed by the bank to process payments (in a straight through manner) to the customer’s suppliers.
Developments in the Internet, especially expansions of coverage and increase in bandwidth have made connectivity logistically possible and economically feasible.
3. Channels
Not so ling ago, customers had to conduct a banking transaction by physically going across to a branch within a limited time window. More recently, new channels such as telebanking and ATM have also been offered by banks and have become popular with customers. There will be a multitude of channels in the internet enabled banking model through which a customer can reach a bank. Not only will access increasingly be online via a PC, it will quickly become wireless via mobile phone or personal digital assistant.
The context of the physical branch will also change. From the imposing banking halls on main high streets, branches will increasingly be a counter at a supermarket. In the United Kingdom, Tesco and Sainsbury already have banking kiosks within their supermarkets that carry their brand names. In the United States, the Canadian Imperial Bank of Commerce is setting up banking services in the 1400 odd outlets of the safeway supermarket chain. The emphasis of the model is thus changing from symbolising
Stability to a more functional and convenience driven one. It is also possible that the physical branch may not be a bank at all. Online banks such as Juniper allow their customers to drop deposits off at any of the 3400 United States outlets of Mail Boxes Etc, a San Diego based private postal outlet.
4. Consolidation
Traditionally, a customer who purchased more than one product from a bank probably had to interface with two different departments. It is also likely that these departments had no idea of what other banks’ products and services the customer avails of. Consolidation (or aggregation) of accounts for a customer across products within the same bank is taking place.
The primary driver of this consolidation is customer convenience and at a mere click, a customer can view all her account statements. However, the signs for bank profitability are ominous. Consolidation means that information to a customer is now readily available. It follows that it is unlikely that a customer would be paying interest on a credit balance while having idle money in a checking account.
Taking consolidation a step further is aggregation of accounts across banks. This means that a customer can view her savings accounts, credit cards and mortgage all in one place even though the providers of those products may be different. In such a scenario, the ownership of the customer will shift from the banks providing the products to the banks aggregating them because of the latter’s control over the customer’s access to information.
5. Competition
In the last decade, there has been a surfeit of deregulation of banking activity across the world, the most prominent being the Gramm-Leach-Bliley Act in the United States. Banks have seen lowering of the barriers to enter the banking sector or expand within it. Competition has not only come in the form of new entrants setting up shop-incumbent banks have seen erosion of their monopoly over customers by non-traditional competitors from other parts of the financial services industry such as mutual funds who have out-competed them for surpluses.
There is more competition to come and the Internet enabled bank will see threats from new competitors that come from outside the financial services industry. In the United Kingdom, the Post Office made a foray into banking by launching its ‘Universal Bank’. As technology and telecommunications increase their weightage as critical success factors, players in these areas will look for a slice of the action. Many a banker’s nightmare is the threat of a software powerhouse such as Microsoft integrating forward and providing a banking service. There are already a plethora of alliances and strategic partnerships between the telecom players and banks to jointly offer customers a mobile banking proposition. This is driven in part by the need of the telecom companies to recoup some of their own capital investments by providing new services as their traditional voice and data services suffer declining margins.
6. Comfort
It follows from the multiplicity of channels and the underlying technologies the Internet enabled banking model will have far higher customer convenience. The model envisages basing the service offerings around the convenience paradigm. Access the bank anytime (on 24*7*365 basis); anywhere (from across the globe) and anyhow (through whichever preferred channel).
The Internet is likely to make the term ‘bank holiday’ redundant. Its capabilities will make possible ‘around the year and around the clock’ access to the bank. Importantly, it will do so at a cost that will not inhibit delivery. In the bricks and mortar world, an anytime service offering came at additional cost for the bank because of the utility and overtime expenses of a teller or call centre respondent. And ‘anywhere’ meant opening branches to service customers that may not have been profitable at the margin. The Internet does change everything.
CHAPTER-5
IMPACT OF INTERNET ON DELIVERY OF BANKING PRODUCTS
IMPACT OF INTERNET ON DELIVERY OF BANKING PRODUCTS:*
1. Credit cards:Nextcard
2. Consumer Loan Origination-loan
3. Corporate Treasury:FXall
1. Credit cards:Nextcard
Winning a customer in a heartbeat - Launched in 1998 in United States, NextCard exemplifies the potential of the internet to force a paradigm shift in the distribution of financial products. Existing processes for approval (or declines) of credit cards take up to three weeks time. NextCard announced its arrival rather dramatically by granting approvals (or declines) for its online credit card applications in less than 30 seconds. Approved customers could even start shopping online the same day and need not wait for the physical card to arrive. By the second quarter of 2001, NextCard crossed the one-million milestone and established itself as one of the leaders in the online credit card market.
At the heart of the NextCard instant approval process is a proprietary engine, RapidResults , which integrates logic and data from the major credit bureaux, national fraud databases and NextCard’s own databases. When a prospective customer provides brief details online- name, address, income and social security number- NextCard’s approval engine checks the cudstomer’s record in these databases and creates two credit scores. One is the industry-recognized score developed by Fair, Isaac & Company (FICO) and another is an internally developed score. The application is approved or rejected by the computer almost instantaneously based on the set decision criteria.
Market Segment of One
The internet has allowed NextCard to customize its card offering to each customer as if they were a segment on their own. Importantly, it has afforded this without adversely impacting the cost base. NextCard’s computers search from among an array of thousands of options and provide the customer with combinations that best suit her credit profile and requirements. For example ,a customer who is willing to transfer a higher balance may be enticed to do so by being offered a better rate.
This automated methodology of providing alternate credit card pricing terms based on balance transfers from other credit cards in real time over the Internet is now patented. Significantly, the algorithm is able to sniff out those applicants who are prone to moving their balances at the prospect of a better ‘teaser rate’ elsewhere. The average NextCard customer keeps a balance in excess of USD 1700 on their card which is higher than industry average of about USD 1500.
Customization implies that each NextCard customer has differential pricing that is based on her individual risk profile and profitability dimensions such as balances held. This is opposed to a traditionally used portfolio approach to credit card pricing that involves some customers being subsidized by others. In a portfolio, profitable customers such as those who keep high balances on their cards routinely subsidise those unprofitable customers who pay-off their outstanding balances in time.
The impact of this differential pricing is quite profound. It allows the issuer to broaden the catchment area of potential customers. This is especially for the so-called ‘sub-prime’ segment which is usually considered to be high-risk in terms of their credit-worthiness. Using a portfolio approach, these ‘sub-prime’ customers would have fallen through the credit sieve. Under an information-led customized approach, these customers have the opportunity to get credit cards and the issuer is rewarded for the higher risk by a higher interest rate.
Furthermore, continuous mining of the card spend data allows the issuer to pick up any early warning signals.
Differential pricing also improves the quality of the credit in the portfolio of the customers. It does this by avoiding the problems of what economists term ‘adverse selection’, whereby a lowering of the portfolio interest rate makes the card attractive for customers who would otherwise be unable to afford the terms. Moving away from the portfolio approach allows the issuer to adopt an aggressive approach to interest rates to expand market-share by signing-up customers who are desirable while simultaneously ensuring that the lower quality credits continue to be priced in accordance with the higher credit risk they pose.
e-service
NextCard uses the Internet to provide superior service that is also customized for each customer such as putting a picture of the customer’s kids as wallpaper for the card. This creates affinity and, as a JP Morgan analyst noted, this makes it less likely that the customer will cut up her card and send it back.
Customers can also set automated e-mail alerts that send them an e-mail when, for example, a specific merchant posts a transaction into a account. Each customer gets a concierge, an online shopping ‘bot’, which remembers passwords, fills up forms and searches the web for the best prices. Yet another innovation is the active credit card statement which provides exclusive merchant offers to cardholders. These offers can be availed by a simple click on the site.
2. Customer Loan Origination: E-loan
Empowering the customer
E-loan is online lender that burst onto the scene in 1997 with a promise of offering the customers the best loans at the lowest cost. Founded by Chris Larsen and Janina Pawlowski who met while working at a mortgage brokerage in Palo Alto, California, their vision was to transform the inefficient mortgage industry and create an information resource that would put up the customer in charge of the process of securing a loan.
This was an Internet venture that took shape more by accident than by design. Larsen and Powlowski who had computer backgrounds and had written software that compared different mortgage products for their clients, founded the Palo Alto Funding Group in 1992. The infant E-loan went to the Internet as www.pafg.com as a part of a pilot project on e-commerce funded by a Silicon valley consortium. When 12 applications were received in less than a week, the founders realized that they were on to something.
Trends in online mortgage
In the United States, it is estimated that in year 2000, about 1% of the total mortgages were originated online. Predictions by TowerGroup and Forrester Research vary, but broadly, online mortgages are expected to reach 10% of the total mortgage value over the next few years.
Trends in searching and applying for a mortgage online are fuelled by growth in use of the Internet in the process of buying or selling a home. Consultants, Gomez Advisors conducted a survey of about 4000 real-estate agents and 17000 adult Internet users. More than two-thirds of the respondents believe that the Internet will alter the way homes are bought and sold; that it will make the process quicker and there will also be likely declines in the standard 6% commission rate currently payable to agents. Using the Internet to search and apply for a mortgage is a natural extension of searching foe homes online.
E-loan has sold mortgages for a dollar value in excess of a billion dollars each in the years 1998-2000. In 2001, it experienced rapid growth and sold as many mortgages as the cumulative value of mortgages sold in the previous three years. It is to be noted that the actual value of loans sold by E-loan is higher, given the auto loans that it also sells. This was a product line that got a kick-start when E-loan acquired carfinance.com from Bank of America.
Putting the Customer in Charge-Enabling Search
E-loan enables customers to perform an automated search for the most suitable loan from over 50000 products provided by more than 70 lending sources. It matches the customer’s risk profile, debt objectives, repayment capacity and other borrowing criteria with the products available and offers the most competitively priced loans. The customer can apply for the loan online and also track the status online. Through this process, traditional intermediaries in the loan process such as the mortgage broker or commissioned loan agent are eliminated.
The most revolutionary part of the E-loan offering, however, is the proactive management of the loan for the customer. Computers continually scout around for better refinance opportunities and alert the customer as they arise over the entire lifetime of the loan. By alerting the customer about the potentials savings from refinancing an existing mortgage and making it easier for the transaction to close, E-loan is threatening to erode the profitability of incumbent loan providers.
The Internet Powered value proposition
E-loan is leveraging the power of the Internet for lowering the costs of search. These costs are defined as those borne by customers who include the time and effort involved in searching for a new supplier.
It also creates a situation of more perfect information between providers of the loan and the customer and drives the interest rate and other terms down to competitive levels. Over the life of the loan, the Internet enabled processing engines proactively manage the loan and alert the customer regarding cheaper finance options. There are also savings in the E-loan business model owing to a reduction of transaction costs by eliminating paper during the application process. Without the Internet, it is unlikely that such a service could be offered without substantial cost.
3. Corporate Treasury: FXall*
Even though global foreign exchange markets are the largest and the most liquid, tracing on the market by corporate customers has remained untouched by technology. According to the Bank for International Settlements (BIS), the average daily turnover on foreign exchange markets was estimated to be USD 1200 billion in April 2001. This trading volume is almost six times higher than the combined global debt and equity markets. Of the total turnover, four-fifths, is comprised of interbank transactions between banks and their customers.
In this day and age, customers trading currencies do so by calling their bank and asking for the rates. Banks quote with a spread that is determined by the size of the transaction and the overall corporate banking relationship. Price discovery takes place, in the most primitive way, only if the customer calls multiple banks and compares rates. This is especially cumbersome when the market is volatile and moves before a trade is consummated. If there is agreement on the price, a deal is closed and, this leads to a complicated, manual and paper-based chain of events that constitute the trade settlement process. This lack of automation has resulted in the market being inefficient, opaque and costly.
In an attempt to improve this situation, the year 2001 saw the launch of two competing electronic trading systems for foreign exchange, Fxall and Atriax. Consortia of leading banks sponsored both these systems. FXall has been supported by a group of 14 banks such as Bank of America, Credit Suisse First Boston, Goldman Sachs, and Morgan Stanley Dean Witter. On the other hand, Citigroup, Deutsche Bank, JP MOrganChase and Reuters backed Atriax.However, in may 2002 , Atriax ceased operations after in conclusive merger talks with Fxall and Citigroup , Deutsche Bank and JP MorganChase moved their liquidity commitments to FXall.
Greater transparency, finer spreads
The Electronic trading systems such as FXall allow a customer to complete the price discovery , trade and settlement online and automate the FX lifecycle. Customers log on and are offered quotes from either a single bank or multiple banks and these quotes can be either one or two-way. The customer can maintain rules that enable the automatic identification of the best competing price. These rules include highest bid/lowest offer; tightest bid/offer spread; fastest quote; favorite bank.
These systems allow for straight through processing (STP).While they allow the customer to input deals manually or by importing a spreadsheet they are designed to seamlessly integrate with the customer processing system. Also they provide economic research, market news and currency forecasts, and post-MIS.
A natural consequence of the greater transparency that characterizes electronic trading is:
• A narrowing of the bid/ask spread.
• Customers are able to estimate better the liquidity available in the market.
• Transactions are not only cheaper as paper is eliminated and STP is enabled but they are also less error prone.
Adoption Rates
In the backdrop of these multiple benefits to customers, it is perhaps not surprising that the share of electronic trading of foreign exchange by bank customers is expected to sharply increase. From levels of about 5%in 2001, the share of electronic trading of foreign exchange by value is expected to increase to about 35% by 2004. Technology consultancy, TowerGroup, has a far more optimistic projection of more than 75%.
MOBILE BANKING :
Mobile operators may place their bets on financial content and, in doing so, enable the adoption of mobile banking. The mobile devices are eminently suited for the most basic banking transactions such as viewing the account balance ,ordering cheque books and accessing ( a limited number of )past transactions. These are services that customers may or may not pay for. However, a mobile device can support even more complex transactions such as share trading , bill payment and can be used to effect other payments. These are services that customers are not only willing to pay for explicitly, but they also create opportunities for implicit revenue generation, such as earnings on float.
Indicative of the suitability of the mobile device for banking is report by Durlacher, which cites that 90% of banks in Europe were offering some form of mobile banking in as early as 1999. Surveys by Nokia and IDC reveal that banking is the foremost mobile application which is demanded by users of mobile phones and other wireless devices. Banks find that offering mobile services is a good way to improve the positioning of their offering as encompassing ‘cutting edge technology’. Unlike PC based Internet banking, rudimentary mobile banking services can be operationalised within a short time frame and with small outlays. Apart from providing another channel, the mobile phone offers the prospect of value added services if combined with positioning technologies. Furthermore, the mobile payments proposition promises to vastly improve banks’ service delivery in the micropayments area by reducing the need for handling physical cash.
A combination of all these factors has led to great optimism about the penetration of mobile banking. The estimates of mobile banking users vary of wireless financial services by 2004, which is double the number they predict in 2003. Meridien Research, on the other hand, estimates that there will be only 40 million users by 2003.
Significantly, most of the growth in customer adoption is predicted to be in the Asia-Pacific region. In some countries such as Japan, the relatively advanced network is driving growth. In others, fixed line telephone penetration has been abysmal and mobile telephony is the only viable option. The US, in particular, is not seeing such growth because the country is a patchwork of three different mobile protocols –GSM, TDMA and CDMA. The lack of interoperability across territories is an inherent disadvantage for a mobile customer since it undermines the core mobility proposition itself. In contrast, most of the Asia-Pacific region as well as Europe is on a GSM network. Another factor discouraging penetration in the US is that the mobile customer receiving the call pays for the call, whereas almost everywhere else the ‘calling party pays.
Phone Banking in the Internet Age
Product Information
Mobile devices can provide users with a wide variety of information from the public domain which can range from foreign exchange rates to the list of ATM’s in a city. Customers can also get information that is not in the public domain and which is specific to them. An example would be the ability to access their last five transactions. The customer can pull out this product information on demand- by accessing the website of the bank. It can also be pushed out to the customer in the form of customised alerts. A customer can get an SMS alert when the dollar/euro breaches a certain level or when an item of an unusually high value is debited to the account.
There are a few new banking applications that the ubiquity of the mobile-device and location-based services combine to provide. One of these involves helping customers go beyond finding an ATM- the network uses location-based technologies to indicate to the customer the nearest ATM. Another application adds to security-it sends the customer an SMS message alerting him or her of a transaction on the credit card or money withdrawn using the ATM card.
Transaction Initiation
The size of the mobile device makes it amenable to conduct most banking transactions. These include transferring funds between accounts, issuing instructions to book a certificate of deposit for a specific tenor or to order a cheque book. One of the applications that have been widely believed to be the ‘killer application’ for PC based Internet banking as well as mobile banking is bill presentation and payment. MeritaNordbanken (one of the entities that merged to form Nordea) has offered this to customers as early as 1992 and more recently, the UK building society Woolwich also announced an application. Over a mobile, a composite bill cannot be presented and only a summary is sent to the user.
Since the device is ubiquitous, a mobile can also be used to validate transactions. For example, large credit card payments could be validated electronically by the customer by inputting a secret pin number. Or, a call could be made to the customer on the mobile reconfirming that they are in the process of buying a large ticket item using their credit card.
However, within banking, the application that holds the largest potential is payments. Initially, it is expected that these will be of small value or micropayments but over a period of time, all payments could be made using the mobile device. There are multiple reasons to expect that the initial application will be focused on micropayments . Firstly, this is an area that is not currently addressed by the present card forms and hence will face least resistance as it entails no substitution. Smart cards that function as stand-alone stored value e-wallets have had a limited penetration, that too, only within closed communities such as a university campus. Currently micropayments are settled by exchanging physical currency. This is something that banks would be more than happy to substitute given the costs of handling, storage and issuance (not considering that some of the current infrastructure for mobile payments is not fail proof and, therefore, makes its unsuitable for large value payments).
Cash, card or mobile?
In order to complete a payment transaction, there are four steps that need to be fulfilled.
• The transaction needs to nr initiated with the customer account number, the merchant account number and the amount.
• It needs to be routed to a payment server that will affect the entries.
• If the payments are for amounts that are not insignificant then the payment amount needs to be validated by the customer.
• Also, the merchant needs to receive a confirmation that he has been/will be credited so that the goods can be released.
Banks want to play too:
Dual slot/chip systems
Payment solutions that involve an active partnership between the mobile operator and a bank include those that involve a dual slot phone. In this case, the customer selects an item to be purchased on the website of the merchant. The merchant then sends an authorization request the customer with the product’s price. The customer inserts his or her plastic card into the second slot of the mobile phone and enters a transaction PIN number to authorize the payment. In effect, the mobile phone becomes a POS terminal. Advantages of this system are the incremental security since, in addition to the SIM of the phone, there is a payment card that is required. However, the second slot and card reader in the mobile phone makes it heavier and more expensive –and limits widespread adoption.
The Iti Achat system that is in operation in France is based on this mobile payment model. It is the outcome of alliance between Mastercard , Oberthur smart cards , France Telecom , Europay and Motorola (which provides the dual slot Motorola StarTac hanset). The debit/credit card used is called the CB or cartes bancaires. A variation of this system is for the amount to be debited to a wallet with value stored on a smart card (prepaid).
It is crucial to understand that the real motivation behind the slot phones is not security but rather considerations of banks and credit card companies to retain their dominance over payment systems. An embellishment to the system is the development of phones with dual chips (as opposed to the dual slots). This involves a chip card issued by bank that is in addition to the GSM card issued by the mobile operator. The bank issued card acts as the plastic debit/credit card that provides the security without the incremental weight of a dual slot phone and the added step of inserting and taking the payment the card out of the slot. The chip insures that the payment transaction is independent of the operator. Having the payment card ‘always in’ also enables loyalty programs to be administered and interactive shopping such as pay per view.
Nokia, Nordea and Visa have come together to provide customers an Electronic Mobile Payment Services (EMPS) based on dual chip technology. A limited number of specially designed Nokia phones were issued to customers in Helsinki in late 2001.During the pilot, payments could be made online at a designated Internet grocery store and in the real world, at a movie theatre.
Banks get revenues from payments explicitly from fees and commissions and implicitly from the floats. According to the Boston Consultancy Group (BCG), a payments revenue pie currently worth USD 300 billion is at stake. They estimate that because mobile payments will be cheaper for both merchants and consumers as compared to conventional payments effected by cheque or card, the pie could shrink overall. For banks, the bad news is compounded because mobile operators could gobble up a slice as large as 20% of the (smaller) revenue pie from the banks.
Partner or perish*
It is imperative that the mobile operators increase revenue by providing content such as banking applications. On their part, the banks would strive to protect their payments revenues from attack by outsiders. With both banks and mobile operators focusing on mobile banking, is a showdown in the offing? Perhaps not – if the slew of alliances seen recently is considered – it is likely that more cooperation will be seen between them.
Country Bank Mobile Operator
Finland Leonia/various Sonera
Germany Deutshe Mannesmann
Direkt Anlage T-Mobil
Hypo Vereinsbank Viag Interkom
LBBW MobilCom
Italy Banca Intesa Omnitel
Banco di Roma/Fineco Telecom Italia
Japan Sakura Bank NTT DoCoMo
Norway Den Norske Bank Telenor
Spain BBVA Telefonica Moviles
Sweden Swed Bank Telenor
England Llod’s BT-Cellnet
Natwest Orange
MOBILE OPERATORS AND BANKS: JOINING HANDS
This cooperation emerges from the strategies of both banks and mobile operators to ‘buy’ rather than ‘build’. From the banks’ perspective, an alliance allows them to continue to provide the core value proposition in the payments process. As noted, mobile operators have a relationship with the customer and could relegate banks to performing peripheral functions of becoming a final clearing and settlement bank.
For a variety of reasons, banks are unlikely to consider getting control of mobile telecom assets themselves. Efforts to mandate bank-friendly industry standards such as the EPMS based on dual chip technology are dependent on customer adoption and cannot be entirely relied upon to ensure that disintermediation does not take place. For example, the Danish operator Mobilix has already piloted a system in partnership with a card-processing firm that provides customers with a mobile wallet. Since customers receive a new SIM card that stores a confidential PIN code, neither is a dual slot necessary nor is a dual chip phone.
For the mobile operators, an alliance strategy works better than the other option of building a bank from scratch or acquiring one. Post the 3G licensing, the capital outlays are just not available to mobile operators for acquisitions. Building a bank from requires investments and domain expertise-again, the operators have neither. Alliances are a good way to provide customers with a banking service without significant outlays of capital.
In summary – the till is not ringing, it is beeping
There are significant factors that are driving the increased penetration of mobile banking, both on demand and supply side. The penetration of mobile devices is experiencing exponential growth. Under pressure to arrest declines in voice revenues, mobile operators are adding value added services, primary among which are banking applications.
The mobile device takes the concept of anywhere banking to the next level and presents a whole host of new product opportunities for banks to make available to their customers. Much like a double-edged sword, mobile banking also presents a threat to those banks that ignore it. Payments for small value purchases are one such area where the available value can be competed away by nimble-footed groups of mobile telecom companies and banks acting in unison. Various mobile payment solutions are currently being piloted. It is just a matter of time before the clinker of coins is replaced by the beep of a mobile device.
CHAPTER-6
FOLLOWING TRIOKA OF PRODUCTS USE THE INTERNET
FOLLOWING TRIOKA OF PRODUCTS USE THE INTERNET TO MOVE BEYOND THE PURE EFFICIENCY GAINS AND WHICH PORTEND A PARADIGM SHIFT IN THE WAY BANKING IS DONE:*
1. ACCOUNT AGGREGATION: Hailed as the “most significant financial innovation in 2000”, account aggregation is a relatively recent product that has been enabled by the internet. The product involves aggregating information from a customer’s different financial accounts maintained with multiple providers and presenting them to the customer on a single website. The customer can access the information seamlessly by using a single username and password.
Most customers have relationships with more than one bank and use more than one banking product. For example, in the United States, a Banking Industry Technology Secretariat (BITS) estimate says that households in the US use an average of 3.6 financial institutions. Account aggregation allows these customers to better manage their money without the bother of collating information from different websites. Aggregation can also involve non-financial products such as frequent flyer miles and e-mail.
The initial customer interest in account aggregation is very high. In the United States, the first customers were signed up in 2000 and these have risen to about 5million in 2001.Citibank, which was one of the first large institutions to offer aggregation, saw almost 2000 customers sign-up daily for its service branded myciti.com. In the UK, the number of customers has touched a million and it is reported that the aggregation launch has generated at least half of new-to-bank customers.
There are varying estimates about how many customers are predicted to embrace aggregation but all of the studies indicate explosive growth. Datamonitor for example, forecasts that within the US and Europe, aggregation users could touch 30million each by 2005. These numbers represent almost 65% of e-banking users in the US and 40% of the users in Europe.
ENABLED BY THE INTERNET
In, personal finance managers (PFM) such as Quicken and Microsoft Money have allowed customers to aggregate their financial data from multiple sources onto their PC. However, this is a little cumbersome- the data has to be entered into the PFM since only a few financial institutions enable data downloads. The high rates of adoption are premised on Internet enabled aggregation on a website. This can be at the website of the customer’s financial institution, at the website of an independent aggregator such as Yodlee or at the customer’s point of access to the Internet such as America Online (AOL) or Yahoo.
How Aggregation Takes Place
Screen Scrapping: Screen scrapping involves the use of software robots or ‘bots’ that go into the financial institution’s website, masquerading as the customer, and extract static financial data. The customer’s username and password are stored with the aggregator and usually the financial institution cannot tell whether it is the actual customer or the ‘bot’ which has visited the site. The data so obtained is then translated by the aggregator into a standard format and stored in a central server for presentation to the customer.
The scraping begins by mapping the HTML of the website but data layouts and formats can change and so the website being aggregated needs to be constantly monitored for any changes. The technology is unsuitable for applications where the data is time-sensitive, since it works on a batch-basis and mostly scrapes once a day.
Though the technology is admittedly clumsy, it works. Embellishments to the technology have come in the form of more ‘intelligent’ scraping where the ‘bots’ are configured , using object-based parsing, to specifically find the financial information they need.
Direct Feeds
Direct Feeds involve the active participation and consent of the financial institution in the aggregation process. This is also the reason why some observers refer to the technology as ‘permissive aggregation’. Based on a customer’s standing instruction, the financial institution provides a direct datafeed to the aggregator using a normal communication protocol. This may be converted into a standard format by the aggregator using simple conversion routines and displayed on its website. The data can be provided on real time basis.
Most financial institutions wherewithal to provide these feeds since existing channels such as ATM network or electronic inputs use similar inputs. Direct feed is an obviously more robust process for collating data and affords greater security and integrity. While a real time feed is possible in technological terms, the costs may outweigh the customer benefits. Though both screen scraping and direct feeds are important in their own right, there was widespread opposition by financial institutions to the nascent screen scraping aggregation service. Screen scraping helped to jumpstart the industry by obviating the need for the buy-in of the financial institution. It is still possibly the more efficient way to look at aggregating simple things like account balances especially as the adoption of a standard such as OFX becomes more widespread.
Direct feeds are costly to negotiate, set up and operationalise but obviously provide data that is rich in content and can be trusted. They can be used to move aggregation beyond the level of a commodity and enable value added applications such as advisory services.
BUILD VALUE ADDED SERVICES
Aggregation on its own is a commodity service. Customers want information relating to all their accounts in one place, but importantly, once they have the information, they want to be able to act on it. To be able to attract customers, and keep them coming back, aggregators must jump to the next level of functionality.
One of the obvious features that the aggregation services should look at next is the transfer of funds between accounts. If a customer ahs money in a savings account and an outstanding credit card balance or loans, then it is important that the aggregator allows the transfer between these two accounts. The ability to initiate payments would also help settle credit card utility bills that have been aggregated at the site.
Once a customer’s banking, brokerage and insurance products are aggregated at one place, one of the obvious value additions for an aggregator is financial advisory services. The access to customer information in terms of its breadth and depth would be unique and would enable the delivery of advice that is more closely aligned with the customer’s risk-return preferences and financial priorities. It is important to note that for the high level applications such as wealth management, the underlying technology must change to direct feeds as opposed to screen scraping. The latter will fall short of the task when required to get security prices, which may be an important input into the wealth management process.
2. ELECTRONIC BILL PRESENTATION AND PAYMENT (EBPP)
Electronic bill presentation and payment (EBPP) involves the delivery of bills (or invoices) over the Internet and also affords consumers the opportunity to review and pay these items electronically. By eliminating paper and the delays associated with physical bills and payments, EBPP delivers value in terms of reduces time and lower costs.
EBPP has been described as the ‘killer application’ for banks, which promises to redefine value propositions and transform the competitive landscape by a radical and creative combination of technology, product and service. According to Forrester Research, there will be 21 million households using EBPP by 2005 and paying about 13% of all their bills by using their product. These estimates are broadly similar to those provided by Jupiter Communications (25 million households) and TowerGroup (9% of bills paid) for the same time frame.
ENABLED BY THE INTERNET
The electronic exchange of invoices has existed for a while between trading partners operating within a closed loop network. This involved electronic data interchange (EDI) and participants had to sign up for expensive, proprietary software. There were also recurring costs of network linkage and usage.
The Internet affords an EBPP solution that is easy to implement and comes at a low cost. Even a minor examination of the dynamics of EBPP, reveals that there are substantial benefits that accrue to the billers and the payers. It is therefore not surprising that there is so much optimism about EBPP . TowerGroup , for example, estimates that some banks are expected to spend up to a quarter of their IT budgets on electronic billing between 2001 and 2005. Meridien Research also predicts an increase in expenditure on EBPP solutions along broadly the same time frame.
VALUE PROPOSITION
EBPP delivers its value from reductions in cost and time in the billing process. For billers, EBPP reduces bill presentation expense by avoiding the need for printing and mailing of physical bills. Eliminating mailing delays and allowing an almost instantaneous presentation reduces cycle time. EBPP also fosters better customer service by removing ambiguities on the dispatch or receipt of bills. For payers, EBPP affords the ability to review bills and make payments on 24*7*365 basis from the convenience of their personal Internet device. Savings accrue because mail float on the payment leg can be avoided as also the costs of cheques, postage and envelopes. It is also possible to wait till the very last day to initiate an electronic payment and be confident that it is not late. Finally, for both billers and payers EBPP offers simplification of record retention and retrieval.
As an illustration, households in the US pay an estimated 20 billion bills each year. Of these, 15billion are fixed amount payments representing flows like mortgage and loan repayments and 5 billion are variable such as credit card bills. Assuming that the time spent by the consumer (payer) to review and process the payment of the electronic bill is the same as that for a physical bill, and also ignoring maul float, consumers save USD 5 billion on stamps alone. Gartner Group has estimated that 20% of bills are currently paid electronically and taking this estimate is into account, the potential savings are a healthy USD 4 billion.
By the same logic, billers not only save the costly of posting but also save the printing costs. The estimates for the cost of printing and distributing a bill vary between USD 0.85 to 1.5. Both of these costs imply, on an average, savings of another USD 15 billion for billers. A study by McKinsey estimated the benefits to billers to be even higher, at about USD 2, for an average bill size of USD 100 with more than 60% of the savings coming from elimination of paper processing and postage.
3. PERSON-TO-PERSON (P2P) PAYMENTS
It has the elements of the proverbial Silicon Valley start-up in a garage. Russian Max Levchin , an expert in security applications for palmtops, and American Peter Thiel who is a nationally ranked chess grand master, fund manager and author first met at a Stanford lecture and set up a company , PayPal , which launched an e-mail payment service in the summer of 1999. There is also a third player, Elon Musk , who left South Africa to avoid a compulsory stint in the military . Musk sold his first start-up called Zip2 to Compaq for USD 307 million and the forayed into financial services and set up X.Com intending it to be a financial supermarket. In March 2000, X.Com and PayPal , the two biggest players in the person-to-person (P2P) payments space merged.
The average age of the three players is just about 30, and with the exception of a summer internship that Musk had, none of them have any experience with a bank. Yet, the e-mail based payment service that they have created has been huge adoption for P2P small value payments. In late 2001, PayPal had a customer base of more than twelve million and was transferring more than USD 3.5 billion for its customers in a year. According to its website, PayPal constitutes over 10% of the Internet traffic in the financial services category, more than Citibank, wells Fargo and Bank of America combined. Not own P2P services in an attempt to build their own “consumer payment engines of the Internet”.
THE CHEQUES IS IN THE E-MAIL
P2P payments are strikingly simple in how they work. If you use PayPal , which is the first mover and is currently almost synonymous with P2P payments , all need to know is the e-mail address of the person to whom you want to send money. You have the choice of paying by credit-card, existing bank account or PayPal account (which recently started paying interest on balances). The recipient will be notified by e-mail(You’ve Got Cash!) that someone has sent them money and has the option of asking PayPal to send them a physical cheque, directly credit their bank account or their PayPal account.
BENEFITS OF P2P PAYMENTS
This is a key reason why P2P payments have had a healthy adoption rate –simplicity of the proposition and delivery method. P2P payments can be made between people as long as they use e-mail. No plastic needs to be issued, no point of sale machine needs to be swiped and neither does any expensive software need to be installed. The power of this proposition cannot be underestimated since e-mail is the most used application on the Internet with an exponential rate of growth.
In order to establish the identity of its first time user, PayPal deposits a random amount between 1and 99 cents into the user’s checking account. It then asks the user to verify the amount deposited. In so doing, it piggy-backs on the established and sophisticated controls that a customer is subject to before opening a checking account in the real world. Since a payment system is as good as the number of people using it, PayPAl employed the viral marketing technique is to get network economies. It paid new users a sign on bonus of USD 5 and also every time they brought a referral. As an analyst observed, much like Western Union, the wire transfer specialists, PayPal pulls users to sign up because they have money waiting for them rather than pushing people to do so.
The services make money in two ways:
• One is to charge a fee for the actual transfer itself. Citigroup’s c2it, for example, started at a flat USD 2% transfer but now charges a percentage of the money sent. PayPal does not charge if the money transferred is less than USD 300 per year and beyond that only a small amount. It has also a charge for merchants, at 1.9% of the transaction value, which is lower than the corresponding charges for mainstream credit card companies.
• The second source of revenue is the float on the payment. As noted, the sender gets debited for the money upfront and float is earned on the money since the recipient does not get the money straightaway. In the case of PayPal revenues were about USD 30 million for the quarter ended September 30, 2001.
CHAPTER-7
COMPARISON OF VARIOUS
E-BANKING SERVICES
COMPARISON OF VARIOUS INTERNET BANKING SERVICES PROVIDED BY ICICI BANK, SBI BANK AND HDFC BANK :
1. BILL PAYMENT
ICICI BANK
ICICI Bank has tied up with more than 60 organizations across the country to facilitate payment of bills for Utility Companies (Electricity and Telephone) Bills, ICICI Bank credit card, Mobile Phone and Insurance Premium bills.
For the customers ease the bank has enabled the billers in following two modes:
• Presentment Type Billers: For these billers, the bill amount and due date will be presented to the customers online on http://www.icicibank.com/ and a reminder will be sent to them on Email.
• Payment Type Billers: For these billers the customers can register and pay any amount immediately
SBI BANK
SBI e-PAY - It provides a simple and convenient service for receiving and paying of bills online
OnlinePay: By using SBI e-PAY the customers can 'see and pay' their various bills online, directly from their SBI Account. The customers can pay telephone, electricity, insurance, credit card and other bills - from the comfort of their house or office, 24 hours a day, 365 days a year! They will have to just logon to http://www.onlinesbi.com/ to 'see and pay' their bills. They will also get an electronic acknowledgment for every bill paid by them using e-PAY.
AutoPay: The customers can also set up AutoPay instructions with an upper limit to ensure that their bills are paid automatically whenever they are due. The upper limit ensures that only bills within the specified limit are paid automatically, thereby providing the customers complete control over these payments.
HDFC BANK
HDFC Bank provides the luxury of paying its customer’s telephone, electricity and mobile phone bills at their convenience. Through the Internet, ATMs, your mobile phone and telephone. LIC insurance premiums can also be paid through this facility.
It is better for the residents of Hyderabad or Secunderabad and registered for Hdfc NetBanking service. Thanks to the bank’s tie-up with eseva, a unique integrated service launched by the government of Andhra Pradesh, now these residents can pay their electricity bills, water bills and municipal taxes (telephones to be introduced shortly) through the Internet using the Direct Debit option. The most important aspect of this service is that the payments made are updated in the database of the utility companies on an online and real-time basis.
2. ONLINE SHOPPING
ICICI BANK
ICICI Bank has tied up with more than 75 organizations to facilitate online shopping for all its Internet Banking Customers. They can now choose their products online and pay conveniently through ICICI Bank Internet Banking Service.
ICICI Bank has teamed up with four partners to buy various products/ services online.
• ICICI Bank has brought Insurance products to one’s door-step. Now one can buy Insurance products from ICICI Lombard General Insurance and pay through ICICI Bank’s Internet Banking.
• ICICI Bank has teamed up with AIR DECCAN SIMPLIFY so one can now Book his/her Air Tickets online and pay through Internet Banking.
• ICICI Bank has teamed up with INDIAN RAILWAYS so now one can book his railway tickets using ICICI Bank Internet Banking. IRCTC will deliver ticket to delivery address mentioned by the person on whose name the tickets are booked.
• ICICI Bank has teamed up with RELIANCE INFOCOMM and now one can pay his/her Reliance Infocom bills through Internet Banking.
SBI BANK
It does not provide online shopping service.
HDFC BANK
HDFC Bank proudly presents the EasyShop Gold Debit Card. The EasyShop Gold Debit Card is the first Gold Debit Card in India. Not only does it replaces the customer’s ATM card, it also revolutionises the way the customers spend through a Debit Card.
Easyshop International Debit Card : This card can be used in India and abroad at merchant locations such as shops and restaurants and to withdraw cash from a widespread network of ATMs. The value of the payment made or cash withdrawn is instantly debited from customer’s account. While all the purchases and cash withdrawals are in the currency of the country in which the customer is in, the customer’s account is debited in Rupees!
NetSafe, is a unique online payment solution that offers the customers complete security while shopping on the Internet. With NetSafe, the customers can now shop online without revealing their HDFC Bank Credit Card number. They can now use their HDFC Bank Debit Card also for online purchases.
Follow a simple 3-step process to register for NetSafe using either your HDFC Bank Visa Credit or Debit Card. Once registered, the customers can choose the amount and account they wish to debit and create as many NetSafe cards as they want. And after the transaction or a max of 48 hours, the card will cease to exist. All this comes FREE with HDFC Bank Credit / Debit Card.
3. TICKET BOOKING
ICICI BANK
With ICICI Bank one need not visit Train/ Air ticket booking reservation centers any more. One can now buy your tickets online and pay using ICICI Bank’s Internet Banking Facility. ICICI Bank has tied up with IRCTC (for Railway Ticket Booking) and Air Deccan (for Air Ticket booking).
SBI BANK
SBI bank also provides online railway booking and for this one has to log on to www.irctc.co.in and register their on this site and further one has to follow the procedure as given in SBI’s site.
HDFC BANK
It does not provide online booking of tickets.
4. INSURANCE SERVICE
ICICI BANK
ICICI BANK NOW offers its customers the most comprehensive suite of General Insurance products from ICICI Lombard, to cater to their insurance needs and that too online.
It offers the following products:
• 10K TAX SAVER HEALTH INSURANCE
• FAMILY FLOATER HEALTH INSURANCE
• OVERSEAS TRAVEL INSURANCE
• STUDENT TRAVEL INSURANCE
• 4 WHEELER INSURANCE
• 2 WHEELER INSURANCE
• HOME INSURANCE
SBI BANK
It does not provide online INSURANCE SERVICE to its customers.
HDFC BANK
It does not provide online INSURANCE SERVICE to its customers.
5. ONLINE SHARE TRADING
ICICI BANK
It offers online share trading service to its customers through ICICI direct.com.
SBI BANK
It does not provide ONLINE SHARE TRADING services to its customers.
HDFC BANK
HDFC BANK does not provide ONLINE SHARE TRADING services to its customers but it provides advice on direct equity through research reports based on fundamental and technical parameters across individual stocks / model portfolio / customized client portfolios.
Research recommendations are generated by bank’s Equity Research team and cover different risk parameters and time horizons.
6. SMS ALERTS
ICICI BANK
ICICI Bank offers Mobile Banking facility to all its Bank, Credit Card and Demat customers. ICICI Bank Mobile Banking enables its customers to bank while being on the move.
ICICI Bank Mobile Banking can be divided into two broad categories
• Requests
• Alerts
Mobile Banking Requests:
ICICI Bank Mobile requests provides its customers with the following requests:
a)Bank Requests
b) Credit Card Requests
c) Demat Requests
Mobile Banking Alerts:
ICICI Bank Mobile alerts provides its customers with the following alerts:
a) Bank Alerts
b) Credit Card Alerts
b) Demat Alerts
Charges:
All ICICI Bank Mobile Banking services are currently FREE. For charges on sending SMS Requests to ICICI Bank, the customers will have to check with their mobile phone Service Provider. All updates of the fees would be put up on the bank’s site page for the customer’s reference. ICICI Bank reserves the right to change the charges for this facility.
SBI BANK
In a significant step towards enabling anytime-anywhere banking, OnlineSBI.com now enables its customers to receive alerts on their mobile phone. The customers can ask to be alerted when the balance on their account goes above or below a particular amount; or when a transaction of greater than a specified amount hits their account; or when an interest is applied on their account.
HDFC BANK
HDFC Bank presents Mobile Banking service. Now one can access his/her bank account and conduct a host of banking transactions and inquiries through the bank’s Mobile Banking service. One can check his/her balance, stop a cheque payment, or even pay your utility bills. This bank’s Mobile Banking service gives account information and real-time transaction capabilities from the mobile phones at a true "anywhere, anytime, anyhow" convenience.
All this through SMS or WAP or R World ( for Reliance India Mobile customers). SMS Banking brings the customer’s bank accounts to his/her fingertips. It works using Short Messaging Service (SMS) technology. With SMS one can perform a wide range of query-based transactions from his/her mobile phone, without even making a call.
7. ATM SERVICE
ICICI BANK
ICICI Bank's 24 Hour ATM network is one of the largest and most widespread ATM Network in India. ICICI Bank’s ATMs are located in commercial areas, residential localities, major petrol pumps, airports, near railway stations and other places which are conveniently accessible to the customers.
ICICI Bank ATMs features user-friendly graphic screens with easy to follow instructions. The bank has introduced ATMs which interact with customers in their local language for increased convenience.
SBI BANK
State Bank offers its customers the convenience of over 5067 ATMs in India. This means that one can transact free of cost at the ATMs of State Bank Group (This includes the ATMs of State Bank of India as well as the Associate Banks – namely, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, State Bank of Mysore, State Bank of Patiala, State Bank of Saurashtra, and State Bank of Travancore), using the State Bank Cash Plus card.
State Bank Cash Plus Domestic Card: It offers its customers the latest in banning convenience viz. State Bank Cash Plus card. With this card, there is no need to carry cash in one’s wallet and one need not fear overspending on his/her credit card. One can now withdraw cash and make purchases anytime he/she wishes to. One can get a FREE ATM-cum-Debit card with which one can transact for FREE at any of the 5067 ATMs of State Bank Group within our country.
HDFC BANK
HDFC bank provides ATM services 24 hours a day, 7 days a week, 365 days a year from any of their over 1054 ATM across India.
8. ONEVIEW SERVICE
ICICI BANK
It does not provide oneview service to its customers.
SBI BANK
It does not provide oneview service to its customers.
HDFC BANK
For the first time in India, this convenient service brings together one’s online bank accounts (including those of family members), in one place, in total security. OneView puts it all on one screen for the customer , so that tracking and managing His/her online accounts becomes quicker and easier than ever before. It gives the customer a complete picture of his/her finances across multiple accounts.
If the customer has one or more accounts with HDFC Bank, Citibank, ICICI Bank, HSBC India, Standard Chartered Bank and/or Global Trust Bank then OneView is just right for him, it's absolutely free!
9. PREPAID REFILL OF SIM CARD
ICICI BANK
It does not provide this service to its customers.
SBI BANK
It does not provide this service to its customers.
HDFC BANK
Pre-paid Refill through SMS :
A customer needs to be registered for this service. Now one will just have to walk across to an HDFC Bank ATM and do the following.
1. Select 'Prepaid Refill/Bill Pay’ option
2. Select 'SMS refill registration'
3. Enter his/her 10 digit mobile number and confirm
Within seconds he/she will receive an SMS confirming his/her registration, giving his/her a code number and also the syntax of the message that he/she needs to send for getting a refill done. The number to which the message needs to be sent will also be a part of this message that he/she receives. So now a refill is just an SMS away.
How much does it cost ?
This service is absolutely free from HDFC Bank! One will only have to pay the regular SMS charge for his/her SMS request.
Where can one access this service ?
Operator Name Circle
Airtel Mumbai
Orange Mumbai
10. MUTUAL FUND SERVICE
ICICI BANK
One can invest in mutual funds through ICICIdirect.com.
SBI BANK
It provides this service through SBI Mutual Fund (a partner for life).It offers both open-ended as well as closed-ended schemes.
HDFC BANK
It does not provide investing in mutual funds through its website.
11. ONLINE DEMAT SERVICES
ICICI BANK
ICICI Bank Demat Services boasts of an ever-growing customer base of over 7 lacs account holders. In their continuous endeavor to offer best of the class services
to their customers they offer the following features:
• Online access to his/her demat account. The customers can check their holdings, transactions, details of bills and status of requests and much more.
• Digitally signed transaction statement by e-mail.
• Corporate benefit tracking.
• e-Instruction facility - facility to transfer securities 24 hours a day, 7 days a week through Internet & Interactive Voice Response (IVR) at a lower cost.
• Dedicated specially trained customer care executives at the bank’s call centre, to handle all queries of the customer’s
SBI BANK
It does not provide ONLINE DEMAT SERVICES to its customers.
HDFC BANK
HDFC Bank provides its customers with online access to his/her Demat Account, so that they can check their holdings using the NetBanking facility. Now the customer can convert his/her securities to electronic format with the HDFC Bank Demat Account.
CONCLUSION:
From this comparison of online internet banking services provided by ICICI BANK, STATE BANK OF INDIA (SBI) and HDFC BANK, I have drawn a conclusion that as compared to ICICI BANK and HDFC BANK, SBI provides less online internet banking services.
When I compared the online internet banking services provided by ICICI BANK and HDFC BANK, I came to the conclusion that these banks provided online internet banking services almost at the same level.
Therefore, the GENERALISED CONCLUSION drawn by me is that the private banks provide more online internet banking services than the public sector banks, so the public sector banks should also start providing more online internet banking services and should expand these services to most of its branches, this will enable them to expand their customer base and to face the competition in a better way.
CHAPTER - 8
ANALYSIS OF THE DATA COLLECTED
ANALYSIS OF THE DATA COLLECTED THROUGH THE QUESTIONNAIRE
I have analyzed the data collected through the questionnaire and have classified the data into tables.
TABLE-I
NO. OF USERS WHO HAVE AVAILED THE ATM FACILITY OF ANY BANK
AVAILED THE FACILITY
NO.OF USERS
YES
90%
NO
10%
TABLE-II
The users have used the ATM facility of the following banks:
NAME OF THE BANK
NO. OF USERS IN PERCENTAGE
HDFC BANK
25
STATE BANK OF PATIALA
25
ICICI BANK
10
BANK OF PUNJAB
15
STATE BANK OF INDIA
15
NOT USED THE FACILITY OF ATM
OF ANY BANK
10
TABLE-III
THE SATISFACTION LEVEL EXPERIENCED BY THE ATM USERS
LEVEL OF SATISFACTION
NO. OF USERS IN PERCENTAGE
HIGHLY SATISFIED
20
SATISFIED
70
INDIFFERENT
0
DISSATISFIED
0
HIGHLY DISSATISFIED
0
USERS NOT AVAILING THE FACILITY
10
TABLE-IV
Following number of times in a week the users have used the ATM:
NUMBER OF TIMES NUMBER OF USERS IN PERCENTAGE
1
60
2
20
3
5
5
5
USERS NOT AVAILING THE FACILITY OF ATM
10
TABLE-V
Preference of the users of ATM card of the benefits of ATM:
BENEFITS OF ATM
NUMBER OF USERS IN PERCENTAGE
It is time-saving
20
It is beneficial when cash is needed
Urgently
60
It is convenient
20
TABLE-VI
WHETHER THE USERS OF ATM CARD HAVE FACED ANY PROBLEM WHILE USING THE ATM CARD:
YES
40% (No. of users)
NO
60% (No. of users)
PROBLEMS FACED BY THE USERS:
NATURE OF PROBLEM
NO. OF USERS IN PERCENTAGE
The card got withheld in the machine
25
ATM was not working
63
Instructions to use the ATM were not clear and received no help from employees of the bank
12
TABLE-VII
Other Internet Banking Services availed by the respondents:
NATURE OF SERVICE
NO. OF USERS IN PERCENTAGE
Credit card
15
Transferring one’s money from one city to any other branch in a city
5
Opening Fixed Deposit account via
The Internet
10
Inquire about the balance in one’s saving, Current and FD account
0
Tax deducted at source on one’s FD account for current financial year
0
Giving instructions over the internet for stopping payments on cheques
0
Request for a cheque book via the internet
5
View all transactions on an account for a specified period and get a copy via e-mail
0
None of the above
65
TABLE-VIII
Whether the respondents ever had any grievance against the bank providing Internet Banking Services to it:
YES
5% (NO. OF USERS)
NO
95% (NO. OF USERS)
TABLE-IX
Level of satisfaction experienced by the respondents of the grievance handling procedure of the bank:
LEVEL OF SATISFACTION
NO. OF USERS IN PERCENTAGE
Highly Satisfied
0
Satisfied
100
Indifferent
0
Dissatisfied
0
Highly Dissatisfied
0
TABLE-X
Respondent’s opinion of the weaknesses of Internet Banking Services:
NATURE OF WEAKNESS
NO. OF USERS IN PERCENTAGE
There is only one way communication
44
The security is not flawless
30
Lack of first hand experience gained by a person by visiting a bank is not there
26
TABLE-XI
Respondent’s view of the security of the Internet Banking Services:
It is secure
45% (No. of respondents)
It is not secure
55% (No. of respondents)
It is secure because
The security systems are reliable
89% ( No. OF RESPONDENTS)
There are firewalls which strengthens the security system
11% ( No. OF RESPONDENTS)
It is not secure because there is always a risk from the hackers who may hack the password of one’s account and may manhandle one’s account or transfer money from one’s account to their own account-------- THIS OPINION IS SUPPORTED BY 100% OF THE RESPONDENTS WHO ARE OF THE OPINION THAT THE INTERNET BANKING IS NOT SECURE.
TABLE-XII
Opinion of the respondent’s on whether all public sector banks should start providing Internet Banking Services to survive in the market:
ANSWER OF THE RESPONDENTS
NO. OF USERS IN PERCENTAGE
YES
75
NO
25
RESPONDENT’S REASON FOR SAYING YES IN THE ABOVE TABLE:
RESPONDENT’S REASONS
NO. OF USERS IN PERCENTAGE
Internet Banking is time-saving
20
To face the competition
50
Internet Banking is convenient and hassle-free
20
Customer preference and increasing number of people using the internet
10
FINDINGS EXTRACTED OUT OF THE INFORMATION COLLECTED THROUGH A QUESTIONNAIRE
1. Most of the respondents used ATM facility (90% of them availed this facility.)
2. Respondents were using the ATM facility of private banks more than the public sector banks.
3. Most of the respondents were satisfied by the ATM facility being used by them.
4. Most of the respondents used ATM facility once in a week.
5. Most of the respondents feel that the benefit of the ATM card is that it comes handy when cash is needed urgently.
7.60% of the respondents faced using the ATM faced no problem in using the ATM while 40% of the respondents faced a problem while using the ATM.
8.e major problem faced by the respondents while availing ATM card facility was that the ATM was not working and the second common problem was that the card got withheld in the machine.
9. Most of the respondents used very less Internet Banking facilities other than the ATM. Out of the other facilities, credit card was the most commonly used service and the second service used was opening a Fixed Deposit account via the internet.
10.95% of the respondents didn’t have any grievance against the bank providing them the internet services and the 5% respondents which had a grievance against bank providing them the internet banking services were satisfied with the grievance handling procedure of the bank.
11. Most of the respondents felt that the weakness of internet banking is that it is a one way communication and the second most commonly held weakness was that it is not secure.
12. 55% of the respondents felt that Internet Banking is not secure and the reason behind this is that hackers may hack the password of one’s account and this may result in huge losses to the user of Internet Banking.
13. Most of the respondents felt that the public sector banks should start providing the Internet Banking services in order to face the competition from the private banks and also because Internet Banking is time-saving and hassle-free.
SUMMARY AND CONCLUSION
E-commerce is rapidly expanding its wings across the globe and India is no exception to this phenomenon. Now, several banks have put their electronic banking facilities on the Internet and are providing many facilities like adopting ECS and EDI for knowing account-status , funds transfer between accounts , Billing payments, Web-shopping, Railway and air-ticket booking, etc to their customers at the click of a button. But since Web is a public space open to all , THESE INTENET BASED SERVICES ALSO RAISE NEW THREATS FOR THE BANKS. Financial institutions like banks and merchant websites like Rediff , Amazon , payment sites like PayPal etc,. by virtue of the value of information , their customers share with them are becoming the most lucrative target for the attackers. Attackers are formulating newer strategies for attack and one such attack is Phishing.
The use of ‘Ph’ in the word instead of ‘f’ has come from the word “Phreaks” who were involved in “Phreaking” which was a type of attack on telephone system in 1970’s. Later in the 1990’s the term was used for the hackers who used these techniques for stealing passwords and user-id’s for ISP’s. It is believed that the term became popular after its use in the famous hacker newletter “alt.2600” in January 1996.*
Phishing is based on impersonating, which has been one of the most popular types of trickery used by people and the instances of which are available in plenty, even in our mythology. Phishing can be considered as an e-avatar of tricking by impersonating. Like all identity based attacks , Phishing also takes the help of impersonating and social engineering to divulge confidential information like account details;passwords;PINs etc. from the users , for various nefarious activities.
Most common Phishing attacks are HTML based and are use e-mail as the medium to propagate. Such attacks are easy to perpetrate and enjoy a good success rate. Phishing is “The act of sending e-mail to a user falsely claiming to be an established legitimate enterprise in an attempt to scam the user into surrendering private information that will be used for identity theft.” It is also called carding or brand spoofing.
According to recent studies by Gartner , 57milllion US Internet users have identified the receipt of e-mail as linked to Phishing scams , and about 11million US adult Internet users have clicked in the link in a Phishing email and out of these around 1.78 million are thought to have succumbed to the convincing attacks , which made them divulge their personal information.
ANATOMY OF THE ATTACK
Phishing attacks are a combination of technical loophole exploits and social engineering, which trigger a series of actions by the user or victim and make him furnish his confidential details to the attacker. One fine day the user gets a mail from his bank that his account has been compromised or his password has leaked or a compulsory security update needs to be done etc. The content ca vary depending on the skill of the fraudster in the field of social engineering. The mail will contain company logos, watermarks, a familiar language and almost everything just perfect so that a naïve user could think of a possibility that this is not a genuine mail. Here the attacker adopts two kinds of strategies.
2. Either the user will be prompted to click an embedded URL in the email, in order to make any entries.
3. The user is prompted to fill a HTML form and submit.
THREATS TO THE BANKS DUE TO PHISHING
The first and foremost threat is loss of customer faith in technology. Such attacks could make customers shun e-banking and reverts towards tradition brick and mortar banking. So, the banks will not be able to leverage the benefits from huge investments they have made for adopting technology. This threat thus spans the whole industry rather than any particular bank. Many a times banks have compensation policies for such cases where customer credit cards are used fraudulently using any of the techniques. If such attacks increase beyond a proportion the banks will lose control over the provisioning done for compensatory expenses. The bank may face lawsuits filed by customers under various legislatures like Privacy under IT Act 2000. There can be significant wastage of productive resources in handling such attacks and their consequences in the form of lawsuits etc. Another very important threat to banks is Reputation Threat. This is a threat which no bank can afford in today’s competitive scenario. The ultimate threat is loss of business, profits, profitability and loss of customers.
PREVENTING BEING PHISHED
In order to device methods and doing research in the identity frauds a cross-industry organization called “Anti-Phishing Working Group” (APWG) has been formed recently .
• Strong website client authentication.
• Mail server authentication.
• Digitally signing e-mails.
These strategies though, if implemented will help solving this problem to a great extent but there are practical difficulties in implementing them (many web-based mail clients e.g. Hotmail, Yahoo! Mail etc. so not support S/MIME ; most users do not have smart cards or tokens ). We can safely assume that these will not be possible in the Indian Scenario in the immediate future. Thus a more prudent approach at present should be one based on education and awareness.
STEPS TO BE TAKEN BY BANKS
• EDUCATION AND AWARENESS
The banks need to generate awareness among its employees and customers about the attack. Banks need to educate their customers as well as customer facing employees about Phishing, types of attacks, countermeasures etc. Information can be given on the website of the bank regarding handling e-mails that appear to come from legitimate sources.
Further in order to give the customer a real idea of how the attack actually occur the bank can give a demo on its site. The customer will click a given URL and he will go through the steps similar to those in an actual attack. In this way by simulating the attack customers can be better educated.
• PROTECTING PRIVACY
The banks should ensure that customer contact information like e-mail addresses should never fall in wrong hands since this betrays the customer trust and is against the basic protocols of banking.
• MONITORING
Banks can develop some intelligent fraud detection tools to trace fraudulent behaviors by noticing the activities done by an attacker once he gets access to other’s personal information. This can be integrated with the existing fraud detection and money laundering systems.
• LOGIN REPORTS
On logging in his account on the website the customer should be provided his last three login times/dates including the exact duration. Also the bank may send monthly login information to the customers.
• OTHER APPROACHES
Banks can become a member to organizations like APWG, in order to get latest updates about the modus operandi of the attack and countermeasures. Also it can hire the services of third party vendors, like a web server monitoring company. These companies examine contents and looks of websites, which look similar to the organization’s site. Another approach can be, to have a PassMark security, which is a new initiative by a Silicon Valley, based company. It works in reverse manner to passwords in the sense that instead of user having confidential information in order to prove his identity, the institution shares an image uniquely with each user. These personalized images can be embedded in outgoing e-mails and on their website logon pages to provide a higher level of assurance to the customer that the e-mail or website is authentic and not a rogue. Customers should ensure the correct PassMark before entering their personal information on Web pages.
• FRAUD RESPONSE
Banks should formulate strategies for responding to such frauds when they occur, so as to minimize the losses. The customer should be educated to immediately inform the bank, in such a case. The bank can then immediately freeze that account and try to catch the fraudster. These response actions should be well understood and documented.
So, Internet Banking is the need of the hour and private banks are already providing efficient Internet Banking Services to their customers. Although Public sector banks are also providing Internet Banking Services but the number of their branches facilitating such services are less as compared to private banks. So, the Public sector banks should concentrate more on providing Internet Banking services. By taking the above measures Internet Banking will become more secure and will help the banks to become more competitive and profitable.
BIBLIOGRAPHY
Library Sources
1. Internet Banking-The Second Wave: By Sanjeev Singhal,Tata Mcgraw Hill Publication , 2003
2. Management Trends (A Journal of Department of Business Management)
Article- Internet Banking by Kavita Kshatriya Sep 2004
3. Indian Banking 2005 , The ICFAI University Press Publication
4. The Journal of Internet Banking and Commerce ( Published by Array Development of Ottawa )
5. International Journal of Business Performance Management 2002 (Published by InderScience publishers)
6. The Small Business Guide to Internet Banking by – Ray Hurst
7. Internet Banking Shopping for the Older Generation by ---- Greg Chapman
8. Internet Banking :Strategies, Tools and Best Practices – by Mona Brewer
(Published by Sheshunoff and Co.)
10. Banking and Finance on the Internet (Internet Management Series ) by Mary J. Cronin
(Published by John Wiley and Sons )
11. Successful Web Portals in Retail Banking by--- Daniel Singer, Douglas Ross, Albert Avery
(Published by --- Wiley)
Internet Sources
www.sbi.com
www.hdfcbank.com
www.icicibank.com
www.firstib.com
www.nationalcity.com
www.netbanker.com
Annexure
FORMS OF SBI OF VARIOUS INTERNET BANKING SERVICES
STATE BANK OF INDIA
INTERNET BANKING
" OnlineSBI "
Registration Form
(for Corporations / firms)
To
The Branch Manager
State Bank of India
________________
We wish to register our firm / company / corporation for availing of the Bank's Internet Banking Service ~ "OnlineSBI". *
Our firm / company / corporation has already been registered for availing of the Bank's Internet Banking Service ~ "OnlineSBI". * (*Strike off whichever is inapplicable)
We request you to register the below named official / employee as an authorised USER on behalf of the firm / company / corporation* for accessing its account(s). We confirm having read and understood the document containing the "Terms of Service" governing the SBI's Internet Banking Service and we accept them.
Name of firm / company / corporation :
Name of the Official / employee being authorised :
(Any official / employee of the firm / company / corporation may be nominated to use the OnlineSBI Service for Enquiry purposes only)
Designation & Official Address of the Official : e-mail Address
____________________ _________________
____________________________________
____________________________________ Tel. No._________________
Pin : _____________
Account Numbers : (Please mention 11 / 13 digit A/c No. as mentioned in your Statement of Account)
For Firm / Company / Corporation,
Date : _________________________ ________________________
(Signature of Official being Authorised) (Authorised Signatory / Signatories)
For office use
SIGNATURE(S) OF AUTHORISED SIGNATORY(IES) OF FIRM/COMPANY/CORPORATION VERIFIED
OFFICER
FOR OFFICE USE
Application Serial Number :
PARTICULARS DATE SIGNATURE OF AUTHORISED OFFICIAL
The account numbers and the account name quoted in the registration form tallied with branch records.
Rights of the Signatory(ies) on the registration form for authorizing access to the accounts of the firm / company / corporation verified and found to be correct & in order.
Notes:
(a) The Account Numbers and Name of Firm should appear in the same manner and form, as it is stored in Bankmaster.
(b) Name of the authorised official must be entered as appearing in the registration form.
(c) Authorised Signatory means those person(s) who are authorised to conduct operations on the account. A separate resolution for using OnlineSBI services is not necessary.
Authorised Official/user means any official/employee of the corporate/ firm who is authorised to use OnlineSBI services by the Authorised Signatories.
Recommended for providing/ rejecting Internet Access Internet Access permitted/rejected
DATE : OFFICER DATE BRANCH MANAGER/
MANAGER OF DIVISION
Reason(s) for rejecting the INB Service (if any)
DATE SIGNATURE OF OFFICIAL
Reason(s) advised to the Applicant
INB Service approved and INB Customer Flag set to "Y" in the Bankmaster *
User Details Uploaded
* This is necessary only at the time of registration of the First Authorised User and not for the subsequent authorised users of the firm/Company/Corporation.
CINB – C3
STATE BANK OF INDIA
FOR OFFICE USE
Application Serial number:
CORPORATE INTERNET BANKING (VYAPAR)
" OnlineSBI "
Registration of Local Admin
To
The Branch Manager
State Bank of India
________________
We have been registered for accessing "OnlineSBI".
The Corporate ID allotted to us is
We request you to register the executive named herein as a Local Admin for the accounts listed below.
Name of company:
Name of the Local Admin:
Address for despatch of User-ID/Password
Line 1
Line 2
City
District
State
Pin code.
Designation: ……………………
Department:…………………….
e-mail address :…………………
Tel. No…………………………..
List of Account Numbers :
Please mention the 11 or13 digit A/c number as mentioned in your Statement of Account. Use additional sheets if necessary. It will suffice if one account number per Customer-ID is mentioned. See note below for further information on Customer-IDs.
* “Company” used here includes a Corporate, (Signature of Local Admin)
Firm, Institution, Association, Local Body or any such Signature of Local Admin attested
Entity operating accounts in the Bank. For
Date : ________________________
(Authorised Signatory / Signatories)
_
Note on the account numbering system followed by the SBI:
a. The Account number assigned by SBI to a Company’s bank account has 11 to 13 digits. Digits 6 to 11 (both inclusive) form the customer ID.
b. Accounts opened in future bearing these customer-IDs will automatically get assigned to this Local Admin.
For Branch Use
Application Serial Number :
Requirement Yes/ No SIGNATURE OF OFFICIAL
The Account Name tallies with Branch Record
Signature of authorised signatories on Registration Form verified and found correct
Corporate ID quoted in the application form verified with web interface and confirm that the ID is valid for the Corporate
Recommended for Providing Access to OnlineSBI..
Internet Access Permitted
Local Admin’s details uploaded
Notes:
(d) Name of Corporate should appear in the same style and form, as it is stored in Bankmaster.
(e) Name of the Local Admin must be entered in the web interface strictly as it appears in the Registration Form.
(f) Authorised Signatory means those person(s) who are authorised by a Board Resolution/ Mandate to operate on the account.
(g) A Board resolution/ Mandate for using OnlineSBI services has already been obtained while registering Corporate ID and hence a Board Resolution for this application is not necessary.
(h) While uploading data it would be sufficient if one account per customer ID is uploaded.
If rejected, then please enter reasons for rejection on the application form.
Form C5
Format of Board Resolution to be submitted by the Company alongwith the Corporate Internet Banking Registration Form
Resolved that:
The Company do avail the ‘Corporate Internet Banking Service’ over Internet Channel with State Bank of India (SBI) at their various Branches and the Company accepts such “Terms of Service” for Corporate Internet Banking laid down by SBI from time to time for the purpose.
Resolved further that each of the officials as empowered by the Company to operate the Company’s accounts with SBI either singly or jointly as the case may be, is hereby authorized to apply for and avail of the ‘Corporate Internet Banking’ facility offered by SBI and do all they have been authorized, electronically, using their user name and password.
Accepted
Signature
Authorised Signatory of the Company
Place Date
CINB – C1
STATE BANK OF INDIA
CORPORATE INTERNET BANKING (VISTAR)
" OnlineSBI "
Registration Form
To
The Branch Manager
State Bank of India
________________
OnlineSBI : Corporate Internet Banking
We wish to register for the Bank's Corporate Internet Banking Service ~ "OnlineSBI".
We confirm having read and understood the document containing the "Terms of Service" governing the SBI's Internet Banking Service. A copy of the document is enclosed duly authenticated by the authorised signatories in token of having accepted the terms of the service contained therein.
The Board Resolution for the purpose is enclosed.
Name of Company:
Address of the Registered office:
____________________________________
____________________________________
____________________________________ Tel. No._________________
Pin Code: _____________
For use only when registration of Regulator is not contemplated immediately.
We request the Bank to set up the following parameters for our company. We are aware that we can change these when a Regulator is appointed:
1. Upper Limit for issue of DD/TT Rs………………
(Default Value – Rs.0.00)
2. Upper Limit on request for third party transfer Rs……………… (Default Value – Rs.0.00)
4. Whether Audit User feature is required Yes/No
(Default Value – No)
If Yes,
a. Upper Limit for Un-audited E-Cheques ………………..
b. Threshold value (amount) of E-Cheques for Audit Rs…………….
For
Date : ________________________
(Authorised Signatory / Signatories)
Should be a senior corporate level person authorised by the Board to operate on Company’s account.
This Registration Form need be submitted only ONCE to the SBI Branch where the Company’s principal account is maintained.
For Branch Use
Application Serial Number :
Requirement Yes / No SIGNATURE OF OFFICIAL
The Account Name tallies with Bankmaster Record
Signature on Registration Form Verified
Recommended for Providing Internet Access
Corporate Details Uploaded
Corporate ID Generated
Corporate ID Advised
Notes:
(i) Name of Company should appear in the same style and form as it appears in Bankmaster records.
(j) A separate Board resolution for using OnlineSBI services as per the format enclosed to Terms of Service and a copy of CINB- C4 recording acceptance of Terms of Service must have been received, scrutinized and attached to Account Opening Form.
Corporate-ID No
If application is rejected, then please enter reasons for rejection on the application form
CINB – C2
STATE BANK OF INDIA
FOR OFFICE USE
Application Serial number:
CORPORATE INTERNET BANKING
(VISTAR)
" OnlineSBI "
Registration of Regulator
To
The Branch Manager
State Bank of India
________________
OnlineSBI: Corporate Internet Banking
We have registered for accessing "OnlineSBI".
The Corporate-ID allotted to us is
We request you to register the executive named herein as the Regulator.
Name of the Corporate:
Name of the Executive:
Designation : e-mail address :
Employee Number: Tel. No.
Address for Despatch of User-ID/Password
Line 1
Line 2
City
District
State
Pin code.
(Signature of Regulator)
Signature of Regulator attested.
For
(Authorised Signatory / Signatories)
Date:
For Branch Use
Application Serial Number :
Requirement Yes / No SIGNATURE OF OFFICIAL
Signature on Registration Form Verified
Corporate-ID quoted in the application Form verified on web Interface and confirm that the ID is valid for the applicant corporate.
Recommended for Providing Access to Internet Banking.
Internet Access Permitted
Regulators’ details uploaded
Notes:
(k) Name of Corporate should appear in the same style and form, as it is stored in Bankmaster.
(l) Name of the INB Regulator must be entered on the web interface as appearing in this Registration Form.
(m) Authorised Signatory means those person(s) who are authorised by a Board Resolution to operate on the account. The regulator himself can sign this form if he is an authorised signatory.
If rejected, then please enter reasons for rejection on the application form.
CINB – C3
STATE BANK OF INDIA
CORPORATE INTERNET BANKING
(VISTAR)
" OnlineSBI "
Registration of Local Admin
To
The Branch Manager
State Bank of India
________________
We have been registered for accessing "OnlineSBI".
The Corporate ID allotted to us is
We request you to register the executive named herein as a Local Admin for the accounts listed below.
Name of company:
Name of the Local Admin:
Address for despatch of User-ID/Password
Line 1
Line 2
City
District
State
Pin code.
Designation: ……………………
Department:…………………….
e-mail address :…………………
Tel. No…………………………..
List of Account Numbers :
Please mention the 11 or13 digit A/c number as mentioned in your Statement of Account. Use additional sheets if necessary. It will suffice if one account number per Customer-ID is mentioned. See note below for further information on Customer-IDs.
(Signature of Local Admin)
Signature of Local Admin attested
For
Date : ________________________
(Authorised Signatory / Signatories)
_________________________________________________________________________
Note on the account numbering system followed by the SBI:
c. The Account number assigned by SBI to a Corporate’s bank account has 11 to 13 digits. Digits 6 to 11 (both inclusive) form the customer ID.
d. Customer ID is the only basis for assigning accounts to a Local Admin.
e. Accounts opened in future bearing the same customer-ID will automatically get assigned to this Local Admin.
For Branch Use
Application Serial Number :
Requirement Yes/ No SIGNATURE OF OFFICIAL
The Account Name tallies with Branch Record
Signature of authorised signatories on Registration Form verified and found correct
Corporate ID quoted in the application form verified with web interface and confirm that the ID is valid for the Corporate
Recommended for Providing Access to OnlineSBI..
Internet Access Permitted
Local Admin’s details uploaded
Notes:
Name of Corporate should appear in the same style and form, as it is stored in Bankmaster. (o) Name of the Local Admin must be entered in the web interface strictly as it appears in the Registration Form.
(p) Authorised Signatory means those person(s) who are authorised by a Board Resolution to operate on the account.
(q) A Board resolution for using OnlineSBI services has already been obtained while registering Corporate ID and hence a Board Resolution for this application is not necessary.
(r) While uploading data it would be sufficient if one account per customer ID is uploaded.
If rejected, then please enter reasons for rejection on the application form.
Form C5
Format of Board Resolution to be submitted by the Company alongwith the Corporate Internet Banking Registration Form
Resolved that:
The Company do avail the ‘Corporate Internet Banking Service’ over Internet Channel with State Bank of India (SBI) at their various Branches and the Company accepts such “Terms of Service” for Corporate Internet Banking laid down by SBI from time to time for the purpose.
Resolved further that each of the officials as empowered by the Company to operate the Company’s accounts with SBI either singly or jointly as the case may be, is hereby authorized to apply for and avail of the ‘Corporate Internet Banking’ facility offered by SBI and do all they have been authorized, electronically, using their user name and password.
Accepted
Signature
Authorised Signatory of the Company
Place Date
QUESTIONNAIRE
CONSUMER PERCEPTION ABOUT INTERNET BANKING
1. Name:
2. Age :
3.Occupation: : ______________________________________________________
4. Do you avail the ATM facility of any bank :
Yes No
( If yes, then proceed to Q:5 otherwise move to Q:10)
5. You are using the ATM facility of which bank ?
6. What is the satisfaction level experienced by you with the ATM facility being used by you ?
Highly Satisfied
Satisfied
Indifferent
Dissatisfied
Highly Dissatisfied
7. How many times in a week do you use your ATM card?
8. Rank in order of preference the benefits of ATM card in your opinion :
It is time-saving
It is beneficial when cash is needed urgently
It is convenient
9. Have you ever faced any problem while using your ATM card
Yes No
If yes , the select any of the following problems which you have faced
The card got withheld in the machine
ATM was not working
While using it for the first time , you faced a problem while understanding the instructions and there was no employee of the bank to help you
10. Which of the following Internet Banking Services are you availing?
Credit card
Tranferring one’s money from one city to any other branch in a city
Open Fixed Deposit (FD) account via the internet
Inquire about balance in one’s saving , current and FD account and also on
the tax Deducted at source on one’s FD account for the current and financial year
Giving instructions over the internet for stopping payment on cheques
Request for a cheque book via the internet
View all transactions on an account for a specified period and get a copy via e-mail
None of the above
11. Did you ever had any grievances against the bank providing you Internet Banking service regarding
the Internet Banking service provided by it?
Yes No
( If yes then answer the next question , If no then move on to Q:13)
12. What was the level of satisfaction experienced by you of the grievance handling procedure of the Bank?
Highly Satisfied
Satisfied
Indifferent
Dissatisfied
Highly Dissatisfied
13. What is in your opinion the weakness of Internet Banking?
There is only one way communication
The security is not flawless
Lack of first-hand experience gained by a person visiting a bank is not there
14. Do you think Internet Banking is secure?
Yes No
Give a reason for your anwer
15. Do you think that all public sector banks in India should start providing Internet Banking Services to
Survive in the market?
Yes No
If Yes, why?
