Nowadays Information Technology has become animportant asset for easy access in this instant world. The informationtechnology (IT), is referred to computers and equipments, which has helped inrapid growth of service sector in the recent years.
As the banking industry,where through the introduction of various IT related products in internetbanking, electronic payments, security investments, and information exchangesmade an easy access for customer to do transactions is the most obvious example.Banks nowadays operate in a highly globalized, liberalized, privatized and acompetitive environment. E-banking is a term which involves the use ofelectronic channels through telephone, mobile phones, internet etc. fordelivering of banking services and products .The use of IT has lead toemergence of an entirely new andunexplored platform for the banking business. It is increasingly playing asignificant role in improving the banking services. Indian banking industry has seen a lot of newdevelopments and new changes that are taking place in the informationtechnology. The term “Banking Technology” refers to the use of complexinformation and communication technologies together with computer and otherelectronic equipments to enable banks to provide better services to itscustomers in a secure, reliable and affordable manner and sustain competitiveadvantage in the banking industries.
So it is an opportunity to look theevolution of banking in today’s world. It’s benefits and challenges and how itis better than traditional banking. E-Banking primarily involves the use of internetas Internet is primarily a wide network of individual computers and thesecomputer networks connected to and communicate with each other using the samecommunication protocol – TCP/IP (Transmission Control Protocol / InternetProtocol). When two or more computers are connected a network is created;called ‘inter-network’ or Internet. The Internet, as commonly termed, is thelargest example of such an effective facility.
Internet is most often describedas ‘Information Superhighway’, a source to reach potential destinations. Thedestination can be any of the connected networks and host computers.As most of the economies are generally cashdriven; meaning that money related transactions are made through the exchangeof bank notes and coins for goods and services.
However, recent trends are nowproviding a way to a modern and sophisticated payment system where thetransactions related to currency and notes are converted to that data which canbe easily transferred. There is now a faster and effective delivery ofinformation from the customer and service provider, thus differentiating betweenmodern Internet electronic banking systems from the previously traditionalbanking operations. This development has lead to e–banking posing a seriousthreat to the traditional branch banking operations, despite the fact thatelectronic commerce is still developing and is rapidly changing day by day intoday’s world. As world is changing rapidly and there is a stiff competition betweenpublic, private and foreign sector banks in India.
They have realized theimportance of how to achieve high levels of customer satisfaction for providingquality service of world class level. Banks operating in these public, privateand foreign sector banks are consequently putting a lot of pressure due toincrease in competition. E-BANKING In very simple words, e-banking can be termed as acombination of various banking products and services through electronic modesof channels. Electronic banking hasbecome popular around for some time in the form of automatic teller machines(ATMs) and telephone transactions. E-banking hasbroken 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. Accordingto a study given by RBI, less than 15 percent of banks with transactionalwebsites will realize profits which are directed to those sites. For customers,the internet offers a unique and faster access, which is more convenient andavailable around the clock irrespective of the customer’s location.
Every bankhas a different E-banking strategy. But whether they select an offensive or adefensive way, they must constantly re-evaluate and re-design their strategy. Some of the distinctive features of e-bankingare:• It has been successful in removing thetraditional geographical barriers as the customers of different countries /legal jurisdiction can be reached out easily. • A new dimension for different kinds of riskstraditionally which are associated with banking, changing some of them andputting new risk control challenges in the frame.• The Security issues for bankingtransactions,validity of electronic contract, customer’s privacy, etc.
, whichhave been immensely concerned for both bankers and supervisors as they haveassumed different dimensions given that Internet is based public domain, not subject to control by anysingle authority or group of users,• It tends to pose strategic threats of losing ofbusiness to those banks who do not respond in time, to this new technology, orbeing as efficient and cost effective delivery mechanism of banking services.As In early 2001, approximately 60 percent ofE-businesses which are in the UK was concentrated in the financial servicessector, and with the, the share of the financial services will furtherincrease. Around one fifth of Swedish bank customers are banking online, whilein the US, according to UNCTAD, online banking is growing at an annual rate of60 percent and the number of online accounts has approximately reached 15million by 2006. Banks have established an Internet presence with variousobjectives. As Internet as a distribution channel is used by most of them. Financial services, with the use of theInternet, both combined can be offered in an equivalent quantity with lowercosts to more potential customers. From each corner of the world at any time ofday or night the transactions can be facilitated.