Introduction to Electronic Banking Management
Project:
Generally electronic bank means people think that is twenty four hours
availability for money access through ATM, withdrawing or transferring
money and saving accounts. The electronic bank service include like
transferring money and checking your accounts and also replacing the paper
transactions. Electronic fund transfer is done through the cards that will
access to your account with the codes. Financial companies use ATM debit
cards for this purpose. There are some consumer transactions that are covered
by the EFT acts.
Electronic banking service:
For the people who want to save the time and money the electronic banking
made it possible for that type of customers. The people withdraw their money
at any time any place without going to bank and waiting for long time. All this
obstacles are overcome by maintaining auto banking the following
transactions can be done in that bank.
Withdrawing the cash
Depositing of money and cheques can be done.
Balance details can be easily getted
You can check mini statements
Money can be transferred from your account
Online Banking Services:
The bank service is made possible through sitting from home and providing
comfort. Mobile banking also came into use via internet. The following
transactions can be made.
Information regarding balance can be known
Payments of the accounts can be made
Money can be transferred internally
Information regarding last five transaction can be known
For mobiles recharge can be done
The limit of drafts can be increased or decreased.
Telephone Banking Services:
The banking can be done through telephone 24-hours seven [Link]
services through telephone are
You can make payments
Money transferring between linked accounts can be done
Information of recent transaction can know via fax
Balance can be checked
Limit of the drafts can be decreased or increased
Mobiles can be recharged
Internet Banking:
By the help of internet banking the work can be done from the home itself via
internet. Some of services provided are
There has facility to get statements
Payments of the accounts can be made
The payment can be made once
The payments can be made in future
Payments has an option to setup repeadtly
The use of checks is avoided.
Download Electronic Banking Management Project Report for MBA
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Online banking is an electronic payment system that enables customers of a financial
institution to conduct financial transactions on a website operated by the institution,
such as a retail bank, virtual bank, credit union or building society. Online banking is
also referred as internet banking, e-banking, virtual bankingand by other terms.
To access a financial institution's online banking facility, a customer with Internet access
would need to register with the institution for the service, and set up a password and
other credentials for customer verification. The credentials for online banking is normally
not the same as for telephone banking. Financial institutions now routinely allocate
customers numbers, whether or not customers have indicated an intention to access
their online banking facility. Customers' numbers are normally not the same as account
numbers, because a number of customer accounts can be linked to the one customer
number. The customer number can be linked to any account that the customer controls,
such as cheque, savings, loan, credit card and other accounts.
To access online banking, a customer visits the financial institution's secure website,
and enters the online banking facility using the customer number and credentials
previously setup. Online banking services usually include viewing and downloading
balances and statements, and may include the ability to initiate payments, transfers and
other transactions, as well as interacting with the bank in other ways.
Contents
[hide]
1 Features
2 History
o 2.1 First online banking services in the United States
o 2.2 Online banking in the U.K.
o 2.3 Banks and the World Wide Web
o 2.4 Interactive banking on the Web
3 Regulations
4 Advantages
5 Security
o 5.1 Attacks
o 5.2 Countermeasures
6 See also
7 References
8 External links
Features[edit]
This section does not cite any references (sources). Please help improve this
section by adding citations to reliable sources. Unsourced material may be
challenged and removed. (April 2013)
Online banking facilities offered by various financial institutions have many features and
capabilities in common, but also have some that are application specific.
The common features fall broadly into several categories:
A bank customer can perform non-transactional tasks
through online banking, including
Viewing account balances
Viewing recent transactions
Downloading bank statements, for example
in PDF format
Viewing images of paid cheques
Ordering cheque books
Download periodic account statements
Downloading applications for M-banking, E-banking etc.
Bank customers can transact banking tasks through online
banking, including
Funds transfers between the customer's linked
accounts
Paying third parties, including bill payments (see,
e.g., BPAY) and third party fund transfers (see,
e.g., FAST)
Investment purchase or sale
Loan applications and transactions, such as
repayments of enrollments
Credit card applications
Register utility billers and make bill payments
Financial institution administration
Management of multiple users having varying levels of
authority
Transaction approval process
Some financial institutions offer unique Internet banking services, for example:
Personal financial management support, such as importing
data into personal accounting software. Some online
banking platforms support account aggregation to allow the
customers to monitor all of their accounts in one place
whether they are with their main bank or with other
institutions.
History[edit]
The precursor for the modern home online banking services were the distance banking
services over electronic media from the early 1980s. The term 'Online' became popular
in the late '80s and referred to the use of a terminal, keyboard and TV (or monitor) to
access the banking system using a phone line. 'Home banking' can also refer to the use
of a numeric keypad to send tones down a phone line with instructions to the bank.
Online services started in New York in 1981 when four of the city's major banks
(Citibank, Chase Manhattan, Chemical and Manufacturers Hanover) offered home
banking services.[1][2][3] using thevideotex system. Because of the commercial failure of
videotex these banking services never became popular except in France where the use
of videotex (Minitel) was subsidised by the telecom provider and the UK, where
the Prestel system was used. For more information about the latter see Online banking
in the U.K..
When the clicks-and-bricks euphoria hit in the late 1990s, many banks began to view
Web-based banking as a strategic imperative. The attraction of banks to online banking
are fairly obvious: diminished transaction costs, easier integration of services,
interactive marketing capabilities, and other benefits that boost customer lists and profit
margins. Additionally, Web banking services allow institutions to bundle more services
into single packages, thereby luring customers and minimizing overhead.
A mergers-and-acquisitions wave swept the financial industries in the mid-and late
1998s, greatly expanding banks' customer bases. Following this, banks looked to the
Web as a way of maintaining their customers and building loyalty. A number of different
factors are causing bankers to shift more of their business to the virtual realm.
While financial institutions took steps to implement e-banking services in the mid-1990s,
many consumers were hesitant to conduct monetary transactions over the web. It took
widespread adoption of electronic commerce, based on trailblazing companies such as
America Online, [Link] and eBay, to make the idea of paying for items online
widespread. By 2000, 80 percent of U.S. banks offered e-banking. Customer use grew
slowly. At Bank of America, for example, it took 10 years to acquire 2 million e-banking
customers. However, a significant cultural change took place after the Y2K scare ended.
In 2001, Bank of America became the first bank to top 3 million online banking
customers, more than 20 percent of its customer base. In comparison, larger national
institutions, such as Citigroup claimed 2.2 million online relationships globally, while J.P.
Morgan Chase estimated it had more than 750,000 online banking customers. Wells
Fargo had 2.5 million online banking customers, including small businesses. Online
customers proved more loyal and profitable than regular customers. In October 2001,
Bank of America customers executed a record 3.1 million electronic bill payments,
totaling more than $1 billion. In 2009, a report by Gartner Group estimated that 47
percent of U.S. adults and 30 percent in the United Kingdom bank online.
Today, many banks are internet only banks. Unlike their predecessors, these internet
only banks do not maintain brick and mortar bank branches. Instead, they typically
differentiate themselves by offering better interest rates and more extensive online
banking features.
First online banking services in the United States[edit]
According to "Banking and Finance on the Internet," edited by Mary J. Cronin, online
banking was first introduced in the early 1980s in New York. Four major banks
Citibank, Chase Manhattan, Chemical and Manufacturers Hanoveroffered home
banking services. Chemical introduced its Pronto services for individuals and small
businesses in 1983. It allowed individual and small-business clients to maintain
electronic checkbook registers, see account balances, and transfer funds between
checking and savings accounts. Pronto failed to attract enough customers to break
even and was abandoned in 1989. Other banks had a similar experience.
Online banking in the U.K.[edit]
Almost simultaneously with the United States, online banking arrived in the United
Kingdom. The UK's first home online banking services known as Homelinkwas set up
by Bank of Scotland for customers of the Nottingham Building Society (NBS) in 1983.
The system used was based on the UK's Prestel viewlink system and used a computer,
such as the BBC Micro, or keyboard (Tandata Td1400) connected to the telephone
system and television set. The system allowed on-line viewing of statements, bank
transfers and bill payments. In order to make bank transfers and bill payments, a written
instruction giving details of the intended recipient had to be sent to the NBS who set the
details up on the Homelink system. Typical recipients were gas, electricity and
telephone companies and accounts with other banks. Details of payments to be made
were input into the NBS system by the account holder via Prestel. A cheque was then
sent by NBS to the payee and an advice giving details of the payment was sent to the
account holder. BACS was later used to transfer the payment directly.
Stanford Federal Credit Union was the first financial institution to offer online internet
banking services to all of its members in October 1994. [4]
Banks and the World Wide Web[edit]
In the 1990s, banks realized that the rising popularity of the World Wide Web gave them
an added opportunity to advertise their services. Initially, they used the Web as another
brochure, without interaction with the customer. Early sites featured pictures of the
bank's officers or buildings, and provided customers with maps of branches and ATM
locations, phone numbers to call for further information and simple listings of products.
Interactive banking on the Web[edit]
Wells Fargo was the first U.S. bank to add account services to its website, in 1995.
Other banks quickly followed suit. That same year Presidential became the first bank in
the United States to open bank accounts over the Internet. According to research by
Online Banking Report, by the end of 1999, less than 0.4% of households in the U.S.
were using online banking. At the beginning of 2004, some 33 million U.S. households
(31% of the market) were using one form or another of online banking. Five years later,
47% of Americans were banking online, according to a survey by Gartner Group.
Meanwhile, in the UK e-banking grew its reach from 63% to 70% of Internet users
between 2011 and 2012.[5]
Regulations[edit]
Since its inception, online banking in the US has been federally governed by the
Electronic Funds Transfer Act of 1978.
Advantages[edit]
There are some advantages on using e-banking both for banks and customers:
Permanent access to the bank
Lower transaction costs / general cost reductions
Access anywhere
Security[edit]
Five security token devices for online banking.
Security of a customer's financial information is very important, without which online
banking could not operate. Similarly the reputational risks to the banks themselves are
important.[5] Financial institutions have set up various security processes to reduce the
risk of unauthorized online access to a customer's records, but there is no consistency
to the various approaches adopted.
The use of a secure website has been almost universally embraced.
Though single password authentication is still in use, it by itself is not considered secure
enough for online banking in some countries. Basically there are two different security
methods in use for online banking:
The PIN/TAN system where the PIN represents a
password, used for the login and TANs representingonetime passwords to authenticate transactions. TANs can be
distributed in different ways, the most popular one is to
send a list of TANs to the online banking user by postal
letter. Another way of using TANs is to generate them by
need using a security token. These token generated TANs
depend on the time and a unique secret, stored in the
security token (two-factor authentication or 2FA).
More advanced TAN generators (chipTAN) also include
the transaction data into the TAN generation process
after displaying it on their own screen to allow the user
to discover man-in-the-middle attacks carried out
by trojans trying to secretly manipulate the transaction
data in the background of the PC.[6]
Another way to provide TANs to an online banking user
is to send the TAN of the current bank transaction to the
user's (GSM) mobile phone via SMS. The SMS text
usually quotes the transaction amount and details, the
TAN is only valid for a short period of time. Especially in
Germany, Austria and the Netherlands many banks
have adopted this "SMS TAN" service.
Usually online banking with PIN/TAN is done via a web
browser using SSL secured connections, so that there is
no additional encryption needed.
Signature based online banking where all
transactions are signed and encrypted digitally.
The Keys for the signature generation and
encryption can be stored on smartcards or any
memory medium, depending on the concrete
implementation (see, e.g., the Spanish ID
card DNI electrnico[7]).
Attacks[edit]
Attacks on online banking used today are based on
deceiving the user to steal login data and valid
TANs. Two well known examples for those attacks
arephishing and pharming. Cross-site
scripting and keylogger/Trojan horses can also be
used to steal login information.
A method to attack signature based online banking
methods is to manipulate the used software in a
way, that correct transactions are shown on the
screen and faked transactions are signed in the
background.
A 2008 U.S. Federal Deposit Insurance
Corporation Technology Incident Report, compiled
from suspicious activity reports banks file quarterly,
lists 536 cases of computer intrusion, with an
average loss per incident of $30,000. That adds up
to a nearly $16-million loss in the second quarter of
2007. Computer intrusions increased by 150
percent between the first quarter of 2007 and the
second. In 80 percent of the cases, the source of
the intrusion is unknown but it occurred during
online banking, the report states.[8]
Another kind of attack is the so-called man-in-thebrowser attack, a variation of the man-in-the-middle
attack where a Trojan horse permits a remote
attacker to secretly modify the destination account
number and also the amount in the web browser.
As a reaction to advanced security processes
allowing the user to cross check the transaction
data on a secure device there are also combined
attacks usingmalware and social engineering to
persuade the user himself to transfer money to the
fraudsters on the ground of false claims (like the
claim the bank would require a "test transfer" or the
claim a company had falsely transferred money to
the user's account and he should "send it back").[9]
[10]
Users should therefore never perform bank
transfers they have not initiated themselves.
Countermeasures[edit]
There exist several countermeasures which try to
avoid attacks. Digital certificates are used against
phishing and pharming, in signature based online
banking variants (HBCI/FinTS) the use of "Secoder"
card readers is a measurement to uncover software
side manipulations of the transaction data. [11] To
protect their systems against Trojan horses, users
should use virus scanners and be careful with
downloaded software or e-mail attachments.
In 2001, the U.S. Federal Financial Institutions
Examination Council issued guidance for multifactor
authentication (MFA) and then required to be in
place by the end of 2006.[12]
In 2012, the European Union Agency for Network
and Information Security advised all banks to
consider the PC systems of their users being
infected bymalware by default and therefore use
security processes where the user can cross check
the transaction data against manipulations like for
example (provided the security of the mobile phone
holds up) SMS TAN where the transaction data is
send along with the TAN number or standalone
smartcard readers with an own screen including the
transaction data into the TAN generation process
while displaying it beforehand to the user
