Money and Banking: E-Banking

By Moyi Harry Ruben

During the past few years the process of computerization and mechanization in the banking system received greater attention. Computerization received its due significance and the banks made significant progress in this regard. Mini computers have been installed in various offices of the bank. The time has come for the banks to gear up in the direction of e-banking. One of the easiest ways to save time and generate more business is through E-Banking (Electronic Banking). Hence, the wider use of electronics in banking working and transactions is called e-banking.

Electronic Commerce (E-Commerce) implies the ability to conduct business electronically, which also apparently covers any form of business including banking. E-banking essentially involves Electronic Fund Transfer (EFT) network technologies of the Information Technology (IT) frame work. This is not, however, a novel idea in the modern banking. Banking is an art, but E-Banking is more of a science than art. E-Banking is knowledge based and mostly scientific in using electronic devices of the computer revolution (E-Revolution).

The bank has introduced current account, cash credit and overdraft modules in most of its branches. Majority of the software packages required for various operations have been developed.

Business Web:

E-business web is ushering in a whole new paradigm, especially in the services industry. With the availability of newer channels of delivery of banking services, banks will have to offer reliable, tested and secure payment process, and techniques for financial transactions on the net to build confidence of the users in this production. Needless to say internet banking or electronic banking facility, will become important and unavoidable for the South Sudan Banks, if they have to strengthen their customer franchise by offering better services and new products. Banks will need to think ahead of forging alliances with internet service providers or portals. In developed countries cyber cash, Digicash and such other new products are already in use for the payment process under E-commerce.

E-banking involves elimination of paper based transactions and radical change in the operations of banking services. It is expected to result in high productivity and efficiency for the bank. E-Banking is forecasted as the future of banking business in the new millennium. E-Banking is operated through internet, extranet and over the internet. E-Banking is a banking on the information superhighways on the frontier of the internet. It is banking without tellers, ques, restricted office hours.

Internet banking.

Internet is the inter- networking of computer networks around the world facilitating communication among all computers connected to these networks. Therefore, data can be conveniently transferred to and from any computer. The need to interact and exchange views on a planet-wide scale has been the reason for the advent of internet. That’s the whole idea behind internet, enabling inter-connectivity around the globe between government agencies, educational institutions, research institutions, companies, individuals, or anybody who has a computer. The World Wide Web (WWW) is an imaginary space of information. On the network one finds computers and on the Web one finds hypertext language (HTL). On the internet the connections are cables between computers and on the Web, the connections are hypertext links. The web exists because of programs which communicate between computers on the internet. The web would not be without the internet.

Banking Service Through Information Technology(IT)

Banks have adopted fastest ways of communicating with the customers by using some of the following methods:

Faster Remittance Services.

Electronic Funds Transfer (EFT) has accelerated the movement of funds across the globe. E-Cash or Cyber-Cash plays predominant role in the world of commerce. Such electronic funds movement amounting to a few trillions of dollars are settled on daily basis at major international financial centres. Society for World Wide Interbank Financial Telecommunication (SWIFT) is a classic example of Electronic Funds transfers among banks with its own standards for messages, which ensures speed, reliable, security and accuracy.

Tele Banking.

It has started attracting the fancy of urban customers for convenience of facility (which takes care of transport bottlenecks, traffic jams, and non-availability of time to visit bank branches). Any branch of a commercial bank, which has computerized operations, can offer this facility with the help of suitable software for this purpose. Digitization of voice has enabled the introduction of this technological marvel. Facilities offered through Telephone banking include a range of services such as balanced inquiries, about collections or specific credits or debits, transfer, request of statements of accounts, or account opening forms. Banks are also offering services such as account opening, ordering for demand draft.

Home Banking.

It is extended version of tele-banking whereby the customer is able to access his branch account from home for available services and a variety of services which is made available through the customer’s personal computer attached to a telephone line and mediums. On line banking facilities including normal transaction can be handled through this arrangement.

Cash Management products (CMP)

Some banks introduce cash management product for corporate operations to improve the quality of their services. Cash management product technology involves pooling up the collection details of cheques deposited by the corporate or companies in up-country centres to a central place and offering credit in their account either on either on the same day or next day. The details of cheques deposited are relayed from up country branch either through dial-up lines or through leased lines or through very small an Aperture Terminal (VSATS terminals). A versatile CMP application software is used at a central place in the bank for consolidating the details of cheques. This arrangement is gaining popularity as it provides the much needed value addition in the range of services offered to corporate customers.

Banking Online Process

The banks are conspicuous by their near absence in cyberspace except for HDFC, ICICI and Citibank Corporations. E-Banking allows access to bank account online from any part of the world. The customer can check balance in the account, obtain statement of account, request for a demand draft, a bankers cheque or cheque book, transfer funds between own accounts and to third party.

Automatic Teller Machine (ATM) is an electromechanical device, which allows the authorized user not only to withdraw cash from the account but also to access a varying range of other services such as balance inquiry, transfer of funds and acceptance of deposits. A Cash Drawing (CD) is also an electro-mechanical device, which allows the authorized user to withdraw banknotes and in some cases also coins. A POS is a terminal at a retail location which is designed to capture and in some cases also transmit, payment information by electronic means. Home banking provides services which a customer or a financial institution could access using a telephone, a T.V set or a terminal as a telecommunication link to the institution’s computer center. Plastic money such as credit cards, debit cards, cheque cards, are being increasingly used in many countries.

Smart Card System of Banking operations

That smart card has an integrated circuit card (ICC) or microprocessor chip, which is an advanced integrated circuit with an on-board Central Processing Unit (CPU), embodied in its plastic body, to store information. Developed with the latest silicon technology, it does not require a battery to run it. The memory chip can be pre-programed with a determined value, decrement value as well as security codes. The complexity of the chip varies according to the application for which it is designed.

Credit Card (processing)

A credit Card is an instrument of payment. By using it, the cardholder can obtain either goods or services from merchant establishments where such arrangements exit. The outstanding amount because of use of the credit card is payable by the cardholder to the bank over a specified period which carries a fixed amount of interest also. Credit card is a source of revolving credit. A number of parties are involved in credit card transaction and there is a contract between the card issuer and the cardholder. Under this agreement the cardholder is allows to make use of the card at specified retail outlets (called establishment out let) to pay for the goods and services. Gold Card is a type of credit card aimed at customers that are more affluent. While co-branded card is that, a bank promotes jointly with another non-financial institution. It is used in the same way as a credit card.

Debit Card (payment process)

A debit Card is also a payment card used to obtain cash, goods and services automatically debiting the payments to the cardholder’s bank account instantly, in which credit balance exists. In a debit card when the holder makes a purchase, the merchant establishment swipes the card on an electronic data capture machine, which debits the bank account of the cardholder. The merchant establishment gets the payment before providing the goods or services. A client need to have a bank account if he wants a debit card, in the debit card the limit of the card holder will be amount of funds in the account.

Switch Card method of payment.

Switch Card is an electronic debit card, which enables the cardholder to make payments at retail outlets. The payments are charged directly to the retailer’s bank account from the cardholder’s account. It is just an extension of the credit card.




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