Nowadays obvious example. Banks nowadays operate in a highly

Nowadays Information Technology has become an
important asset for easy access in this instant world. The information
technology (IT), is referred to computers and equipments, which has helped in
rapid growth of service sector in the recent years. As the banking industry,
where through the introduction of various IT related products in internet
banking, electronic payments, security investments, and information exchanges
made an easy access for customer to do transactions is the most obvious example.
Banks nowadays operate in a highly globalized, liberalized, privatized and a
competitive environment. E-banking is a term which involves the use of
electronic channels through telephone, mobile phones, internet etc. for
delivering of banking services and products .The use of IT has lead to
emergence of  an entirely new and
unexplored platform for the banking business. It is increasingly playing a
significant role in improving the  
banking services. Indian banking industry has seen a lot of new
developments and new changes that are taking place in the information
technology. The term “Banking Technology” refers to the use of complex
information and communication technologies together with computer and other
electronic equipments to enable banks to provide better services to its
customers in a secure, reliable and affordable manner and sustain competitive
advantage in the banking industries. So it is an opportunity to look the
evolution of banking in today’s world. It’s benefits and challenges and how it
is better than traditional banking.

E-Banking primarily involves the use of internet
as Internet is primarily a wide network of individual computers and these
computer networks connected to and communicate with each other using the same
communication protocol – TCP/IP (Transmission Control Protocol / Internet
Protocol). When two or more computers are connected a network is created;
called ‘inter-network’ or Internet. The Internet, as commonly termed, is the
largest example of such an effective facility. Internet is most often described
as ‘Information Superhighway’, a source to reach potential destinations. The
destination can be any of the connected networks and host computers.

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As most of the economies are generally cash
driven; meaning that money related transactions are made through the exchange
of bank notes and coins for goods and services. However, recent trends are now
providing a way to a modern and sophisticated payment system where the
transactions related to currency and notes are converted to that data which can
be easily transferred. There is now a faster and effective delivery of
information from the customer and service provider, thus differentiating between
modern Internet electronic banking systems from the previously traditional
banking operations. This development has lead to e–banking posing a serious
threat to the traditional branch banking operations, despite the fact that
electronic commerce is still developing and is rapidly changing day by day in
today’s world. As world is changing rapidly and there is a stiff competition between
public, private and foreign sector banks in India. They have realized the
importance of how to achieve high levels of customer satisfaction for providing
quality service of world class level. Banks operating in these public, private
and foreign sector banks are consequently putting a lot of pressure due to
increase in competition.



In very simple words, e-banking can be termed as a
combination of various banking products and services through electronic modes
of channels.  Electronic banking has
become popular around for some time in the form of automatic teller machines
(ATMs) and telephone transactions. E-banking has
broken the barriers of Traditional and branch banking.

E-banking provides various vast opportunities,
yet there are three banks which have an E-banking strategy in place. According
to a study given by RBI, less than 15 percent of banks with transactional
websites will realize profits which are directed to those sites. For customers,
the internet offers a unique and faster access, which is more convenient and
available around the clock irrespective of the customer’s location. Every bank
has a different E-banking strategy. But whether they select an offensive or a
defensive way, they must constantly re-evaluate and re-design their strategy.

Some of the distinctive features of e-banking

It has been successful in removing the
traditional geographical barriers as the customers of different countries /
legal jurisdiction can be reached out easily.

A new dimension for different kinds of risks
traditionally which are associated with banking, changing some of them and
putting new risk control challenges in the frame.

The Security issues for banking
transactions,validity of electronic contract, customer’s privacy, etc., which
have been immensely concerned for both bankers and supervisors as they have
assumed different dimensions given that Internet is based  public domain, not subject to control by any
single authority or group of users,

It tends to pose strategic threats of losing of
business to those banks who do not respond in time, to this new technology, or
being as efficient and cost effective delivery mechanism of banking services.

As In early 2001, approximately 60 percent of
E-businesses which are in the UK was concentrated in the financial services
sector, and with the, the share of the financial services will further
increase. Around one fifth of Swedish bank customers are banking online, while
in the US, according to UNCTAD, online banking is growing at an annual rate of
60 percent and the number of online accounts has approximately reached 15
million by 2006. Banks have established an Internet presence with various
objectives. As Internet as a distribution channel is used by most of them.  Financial services, with the use of the
Internet, both combined can be offered in an equivalent quantity with lower
costs to more potential customers. From each corner of the world at any time of
day or night the transactions can be facilitated.