Internet Banking

Online banking, also known as internet banking or web banking, is an electronic payment system that enables customers of a bank or other financial institution to conduct a range of financial transactions through the financial institution’s website. The online banking system will typically connect to or be part of the core banking system operated by a bank and is in contrast to branch banking which was the traditional way customers accessed banking services.

Some banks operate as a “direct bank” (or “virtual bank”), where they rely completely on internet banking.

Internet banking software provides personal and corporate banking services offering features such as viewing account balances, obtaining statements, checking recent transactions, transferring money between accounts, and making payments.

Internet banking is the system that provides the facility to the customer to conduct the financial and non-financial transactions from his net banking account. The user can transfer funds from his account to other accounts of the same bank/different bank using a website or an online application. The customer uses a resource and a medium to conduct financial transactions. The resource that a customer uses might be an electronic device like a computer, a laptop, or a mobile phone. The internet is the medium that makes the technology possible.

Features of Internet Banking

The customer using this facility can conduct transactional and non-transactional tasks including:

• The customer can view account statements.
• The customer can check the history of the transactions for a given period by the concerned bank.
• Bank, statements, various types of forms, applications can be downloaded.
• The customer can transfer funds, pay any kind of bill, recharge mobiles, DTH connections, etc.
• The customer can buy and sell on e-commerce platforms.
• The customer can invest and conduct trade.
• The customer can book transport, travel packages, and medical packages.
• The list of benefits a user can enjoy using internet banking is too lengthy, to sum up.

Advantages of Internet Banking

• The customers get permanent access to his/her bank anytime and anywhere.
• Transactions are safe and highly secure.
• Immediate funds transfer helps the user in time of urgent need.
• It saves valuable time of the users.

Security of Internet Banking

The financial information of a customer is important. This is the reason a customer trusts financial institutions. The financial institutions keep it on a high priority that the security of customers’ accounts shouldn’t face a breach. The financial institutions are using two types of security methods to make internet banking safe and secure:

Use of PIN/TANs: Under this system, a PIN is used to login and TANs are used to conduct transactions. TANs are one time passwords. TAN is sent to the customer via SMS on registered mobile number that corresponds with the login user id. It is valid for a short time frame.

Internet banking is conducted using web browsers with SSL enabled websites, so encryption is not an important issue. It also uses signature verification as a base. Under this method, the transactions done by the customer are signed and encrypted digitally. The smart cards or any other memory storable medium can be used to store keys for signature generation and encryption.

E-Banking

The facility of e-banking provided by the banks to their customers uses the internet as a medium. The services under this facility include funds transfer, payment of bills, opening bank accounts online, and much more.

There are mainly two methods to deliver e-banking to the customers:

• Banks with physical presence offering electronic transaction
• Virtual banks offering transaction services

Most of the banks have a physical presence and offer banking facility online. But, there are some banks that don’t have any physical presence anywhere. They are virtual banks.

Features of e-Banking

1. ATMs

ATM is shot form of Automated Teller Machines. These machines are actually electronic terminals which provide the customers to bank anytime. The ATM machines take inputs from the ATM that the banks provide to its customers. To make use of ATM, the user must have a password. Banks charge a nominal fee from the customers on every transaction made after crossing the specified limit of free transactions, if the transaction is done from any other bank’s ATM machine.

2. Deposit and Withdraws (Direct)

This service under e-banking offers the customer a facility to approve paycheques regularly to the account. The customer can give the bank an authority to deduct funds from his/her account to pay bills, instalments of any kind, insurance payments, and many more.

3. Pay by Phone Systems

This service allows the customer to contact his/her bank to request them for any bill payment or to transfer funds to some other account.

4. Point-of-Sale Transfer Terminals

This service allows customers to pay for purchase through a debit/credit card instantly.

Forms of e-Banking

• Internet Banking: The customer uses electronic devices like computer or mobile to conduct transactions using the internet.
• ATM machines: The customers can withdraw cash, deposit cash, transfer funds using ATMs.
• E-cheque: The customer can transfer money using PayPal or other e-service providers.