E Banking is the use of electronic channels to communicate and transact business with both domestic and international customers, through the use of internet and World Wide Web.
Internet banking (or E-banking) means any user with a personal computer and a browser can get connected to his bank -s website to perform any of the virtual banking functions.
E banking is providing the same banking services such as payment, inquiry, information processing but with internet. It can be offered in two ways. First an existing bank with physical offices can also establish an online website and offer e banking services. Secondly, e-banks can only exist only on Internet, thus allowing users to work with”Virtual Bank”.
NEED FOR E-BANKING
- It is a flexible service provided by banks where customer can work according to their needs.
- It removes the geographical barrier, thus customer can access from anywhere and at anytime. It provides 24 hour-7 days services.
- It increases bank efficiency and competitiveness and lower the operating cost.
- It provides higher transaction speed.
The Website related to E-banking can be of two types:
· Information Website: It gives general information about the financial institute and its products or services to the customer.
· Transactional Website:
Ø Simple Transactional Website: It allows customer to submit their instructions, applications for different services, queries on their account balances etc but do not permit any fund based transactions on their accounts.
Ø Fully Transactional Website: It allows the customers to operate on their accounts for transfer of funds, payment of different bills, subscribing to other products of the banks and to transact purchase and sales security.
E-BANKING SUPPORT SERVICES
E-BANKING SUPPORT SERVICES
· Account Aggregation
· Eletronic Authentication
· Website Hosting
· Payments for e-commerce
· Wireless banking activities
· Transactional/Operational Risks
· Credit Risk
· Liquidity/Interest Rate Risk
· Reputation Risk
· Compliance/ Legal Risk
· Strategic Risk
It arises because of inaccurate processing of transactions, non-enforceability of contracts, compromises in data accuracy, data privacy and confidentiality or unauthorized access to banks system and transaction etc. It arises during day to day activity of banking transaction.
It is the risk that counter party will not settle an obligation i.e. pay their debt for full value, either when due or any time thereafter.
Liquidity/Interest Rate Risk
It arises out of a banks inability to meet the required obligation when they become due without incurring unacceptable losses, even though the bank may ultimately be able to meet its obligations.
It is the risk of getting significant negative public opinion, which may result in a critical loss of lending or customer.
Compliance/ Legal Risk
It arises from violation of or non conformation with laws, rules, regulations or prescribed practices or when the legal rights and obligations of parties to a transaction are not well established.
It is the risk associated with the financial institution’s future business plans and strategies.
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