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E-Banking: A Revolution In The Banking Sector Virtual Banks

Proceedings of IRF International Conference, 5 th & 6 th February 2014, Pune India. ISBN: 978-93-82702-56-6

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E-BANKING: A REVOLUTION IN THE BANKING SECTOR VIRTUALBANKS

1 ADITYA METHAILA, 2 POOJA WALIA, 3 SACHIN CHAUDHARY, 4 RAHUL TEWATIA

1 Netaji Subhash Institute of Technology (NSIT), Delhi2,3Lingayas University, Faridabad

4 Noida Institute of Engineering and Technology (NIET), Greater Noida

Abstract The advent of Internet has initiated an electronic revolution in the global banking sector. The dynamic andflexible nature of this communication channel as well as its ubiquitous reach has helped in leveraging a variety of bankingactivities. Online banking (or Internet banking or E-banking) allows customers of a financial institution to conduct financialtransactions on a secured website operated by the institution, which can be a retail bank, virtual bank, credit union or

building society. Huge volume of research has been done and is still going on different issues of E-banking. The research hashelped the customers, the bankers, and other dependent institutions in understanding various aspects of E-banking. Internet

banking customers can access many different services online, which makes physical banks open even after office hours. Inmeans of offline banking is becoming to be online banking while physical banks are not opened (out of office hours), socustomers do not need to go to the banks or call them any more unless there is an issue that cannot be handled online.Through this paper, we intend to study the various services rendered by the banks in India and the necessity of certainservices to be incorporated which are presently not availed by all the banks functioning in India. We have created a replicaof the internet banking system using ASP .Net and SQL Server and hence have analysed the complete functionality of aninternet bank.

Keywords Internet, Internet banking, Banks, Customers, Services.

I. INTRODUCTION

If one has to point out one major reason forfacilitating armchair banking, it's the use of theinternet. With the internet now popular among all agegroups, online banking has become a necessity. It has

a major role to play in capital market transactions too.This is a solution that enhances business to consumerinteractions over the Internet. People are increasinglyusing net banking for a wide variety of purposes, as itis very convenient.

Internet banking system and method in which a personal computer is connected by a network service provider directly to a host computer system of a banksuch that customer service requests can be processedautomatically without need for intervention bycustomer service representatives. The system iscapable of distinguishing between those customerservice requests which are capable of automatedfulfillment and those requests which require handling

by a customer service representative. The system isintegrated with the host computer system of the bankso that the remote banking customer can access otherautomated services of the bank. The method of theinvention includes the steps of inputting a customer

banking request from among a menu of bankingrequests at a remote personnel computer; transmittingthe banking requests to a host computer over anetwork; receiving the request at the host computer;identifying the type of customer banking requestreceived; automatic logging of the service request,comparing the received request to a stored table ofrequest types, each of the request types having anattribute to indicate whether the request type is

capable of being fulfilled by a customer servicerepresentative or by an automated system; and,depending upon the attribute, directing the requesteither to a queue for handling by a customer servicerepresentative or to a queue for processing by anautomated system.

To access online banking, the customer would goto the financial institution's website, and enter theonline banking facility using the customer numberand password. To access a financial institution'sonline banking facility, a customer having personalInternet access must register with the institution forthe service, and set up some password (under variousnames) for customer verification. The password foronline banking is normally not the same as for[telephone banking]. Financial institutions nowroutinely allocate customers numbers (also undervarious names), whether or not customers intend toaccess their online banking facility. Customersnumbers are normally not the same as accountnumbers, because number of accounts can be linkedto the one customer number. The customer will linkto the customer number any of those accounts whichthe customer controls, which may be cheque, savings,loan, credit card and other accounts. Customernumbers will also not be the same as any debit orcredit card issued by the financial institution to thecustomer.

The Internet finally have given the connected public the opportunity to buy, sell, collect, andexchange information easily, securely, and quickly.

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II. FEATURES OF A VIRTUAL BANK

The electronic banking or e-banking covers bothtelephone and computer banking. In other words it issaid that it is updated on-line, real time. The systemis updated immediately after every transactionautomatically. Its features include electronic fundstransfer for retail purchases, automatic teller machines(ATMs), and automatic payroll deposits and bill

payments. Some banks offer home banking, wherebya person with a personal computer can maketransactions, either via a direct connection or byaccessing a Web site. E- banking means any user witha personal computer and a browser can get connectedto his banks website to perform any of the abovementioned virtual functions.

E-banking, is at times also known as electronic fundtransfer (EFT), which uses computer and electronictechnology in place of checks and other papertransactions. EFTs are initiated through devices likecards or codes that let you, or those you authorize,access your account. Many financial institutions useATM or debit cards and Personal Identification

Numbers (PINs) for this purpose.India has two main electronic funds

settlement systems for one to one transactions:the Real Time Gross Settlement (RTGS) and the

National Electronic Funds Transfer (NEFT) systems.Transactions which are bulk and repetitive in natureare routed through electronic clearing service (ECS).Local ECS scheme is provided in 81 centres and theRegional ECS scheme at 9 centres across India whilethe National ECS scheme is operated at Mumbai.RTGS: These are funds transfer systems wheretransfer of money or securities takes place fromone bank to another on a "real time" and on "gross"

basis. Settlement in "real time" means paymenttransaction is not subjected to any waiting period.The transactions are settled as soon as they are

processed. "Gross settlement" means the transactionis settled on one to one basis without bunching or

netting with any other transaction. Once processed, payments are final and irrevocable. NEFT: It is a nation-wide payment systemfacilitating one-to-one funds transfer. Under thisScheme, individuals, firms and corporates canelectronically transfer funds from any bank branch to

any individual, firm or corporate having an accountwith any other bank branch in the country participating in the Scheme.

These schemes are yet to be adopted by all the banksin India, which would cater for a smooth andadvanced banking system.

III. PROS AND CONS

Benefits of internet banking are as follows:-i. Banks are offering more than banking

services; they are offering services on the bank website such as tax services, asallowing customers to fill out the taxapplication online, calculating the taxes

ii. People can bank from any place that hasInternet, so it is not limited to a time or a

place as it was with physical banking.iii. Internet banking allows customers to be

alerted via email and phone of every updateand change that occurs in their account,which differentiates it from physical bankingwhere customers have to go to the bank tocheck for updates.

iv. Internet banking may be more cost effectivefor banks, which can then lower the fees for

the customersv. Transactions are executed and confirmedquickly.

E-banking is disadvantageous in the following ways:-i. A traditional bank can host meetings and

call in experts to solve a specific issue. Inaddition, international transactions may bemore difficult (or impossible) with somedirect banks.

ii. Accounts may be subject to phishing , hackerattacks, malware and other unauthorizedactivity.

iii. Some virtual banks may not offer all the

comprehensive financial services, such asinsurance and brokerage accounts, thattraditional banks offer.

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iv. An interrupted online session, a mistakemade by either the user or the banks caneffect both.

IV. SOFTWARE

The internet banking system has been canvassed byus using ASP .NET framework and SQL Server 2008R2 database which are used as per the use casediagrams. 1. ASP .Net : It is a server-side Web applicationframework designed for Web a development to

produce dynamic Web pages. It was developed by Microsoft to allow programmers to builddynamic web sites, web applications and webservices.

i. Editor- Visual Studioii. Extension- .aspx

iii. Webserver Controls, html controls

iv. Inbuilt server- Filesystem DevelopmentServer

v. IIS Expressvi. Compiler based language

vii. C# is used to execute code on server sideThe Microsoft .NET Framework is a softwareframework that can be installed on computers runningMicrosoft Windows operating systems. It includes alarge library of coded solutions to common

programming problems and a virtual machine thatmanages the execution of programs writtenspecifically for the framework. The .NET Frameworkis a key Microsoft offering and is intended to be used

by most new applications created for the Windows platform.

ASP.NET is built on the Common LanguageRuntime(CLR), allowing programmers to writeASP.NET code using any supported .NET language.

Common Language Runtime (CLR) : It isthe virtual machine componentof Microsoft's .NET framework and isresponsible for managing the execution of .NET

programs. In a process known as just-in-timecompilation, the compiled code is convertedinto machine instructions that, in turn, areexecuted by the computer's CPU. The CLR

provides additional services including memorymanagement, type safety and exceptionhandling. All programs written for the .NETframework, regardless of programminglanguage, are executed by the CLR. It providesexception handling, garbage collection andthread management. CLR is common to allversions of the .NET framework.

The Framework Class Library (FCL) : It isa standard library and one of two core components ofMicrosoft .NET Framework. The FCL is a collectionof reusable classes, interfaces and value types.The Base Class Library is a part of FCL and providesthe most fundamental functionality, which includesclasses in namespaces System, System.CodeDom,System.Collections,System.Diagnostics,System.Globalization, System.IO, System.Resources andSystem.Text.

Figure ASP .NET Architecture

2. Microsoft SQL Server: It is a relational database

management system used to store and retrieve data asrequested by other software applications likeworkstations, the Internet, or other media such asPersonal Digital Assistants (PDAs).Following are the features of SQL Server 2008Management Studio.

Supports most administrative tasks for SQLServer.

A single, integrated environment for SQLServer Database Engine management andauthoring.

New management dialogs for managingobjects in the SQL Server Database Engine,Analysis Services, Reporting Services,

Notification Services, and SQL Server

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Compact, that allows you to execute youractions immediately, send them to a CodeEditor, or script them for later execution.

Exporting and importing SQL ServerManagement Studio server registration fromone Management Studio environment to

another. A new activity monitor with filtering andautomatic refresh.

Integrated Database Mail interfaces. Microsoft IntelliSense support for query

editing. SSMS 2008 has a feature to run a query on

different servers from one query editorwindow.

The asynchronous population of objects,with the ability to filter objects based ontheir metadata.

Figure Microsoft SQL Architecture

3. Use Case Diagram: It is a representation of auser's interaction with the system and depicting thespecifications of a use case. A use case diagram can

portray the different types of users of a system andthe various ways that they interact with the system.This type of diagram is typically used in conjunctionwith the textual use case and will often beaccompanied by other types of diagrams as well.

V. IMPLEMENTATION AND RESULTS

Use of computers and telecommunications to enable banking transactions to be done by telephone orcomputer rather than through human interaction.

Electronic banking has vastly reduced the physicaltransfer of paper money and coinage from one placeto another or even from one person to another.People have switched to e-banking from the ho-hum

bank procedures. The following data shows thegrowth in the usage of mobile banking in India.

Certain key issues on E-banking:-i. The present system of authentication does

not address the security aspect completelyii. Data protection and the need for a legal and

regulatory framework.iii. There is a dual requirement to protect

customers privacy and protection againstfraud.

iv. Stringent regulatory and operational securitymeasures.

CONCLUSION

Without any doubt, the international scope of E- banking provides new growth perspectives andInternet business is a catalyst for new technologiesand new business proccesses. With rapid advances intelecommunication systems and digital technology,E-banking has become a strategic weapon for banksto remain profitable. It has been transformed beyondwhat anyone could have foreseen 25 years ago.

The rise of internet banks has increased thecompetition for your banking business. With bothonline and brick-and-mortar banks offer unique

benefits and drawbacks, it may not be wise to do your banking exclusively with either option. While it's not possible for everyone, the best play may be to splityour banking between both in-store and onlineservices and enjoy the conveniences and savings ofinternet banks while maintaining the customer serviceand personal relationships a physical branch can

provide.E-banking is redefining business relationships

and the most successful banks will be those that cantruly strengthen their relationship with theircustomers. Since, opportunities foregone areopportunities lost, the banks have to rise ahead oftime so as not to lag behind in the e-banking era.

FUTURE PROSPECTS

Globally, the financial sector is metamorphosingunder the impact of competitive, regulatory and

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technological forces. The banking sector is currentlyin a transition phase with re-alignment, mergers andentry of new players from different industry is

becoming common. Many countries including are de-regulating their banking sector and government

policies no longer form an entry barrier to banks

competitors.Every day more and more people are turning tothe Technology for their personal banking. It is asafe, convenient way to shop for financial services,maintain bank accounts and conduct business 24hours a day.Further amendmends in E-banking can be done:-

i. Reduction in branch banking.ii. Gradual evolution of virtual banking.

iii. People will want to process moretransactions on the internet.

iv. Geography will not be an inhibitor anymore.

v. The future of banking would be in terms ofintegration.

REFERENCES

[1] X. Xu, Mark, Wikes, Siobhan, & H. Shah, Mahmood(2006). E-Banking Application and Issues In Abbey

National PLC. E-Technologies, Retrieved 01-01-2009.[2] Obaid, Magda (2007). E-BANKING. Amman, Dar Safa

to post.[3] Virtual Banking: An Empirical Study. Pergamon, 63-74,

Retrieved 01-01-2009.[4] Wang, Y.; Wang, Y; Lin, H. and Tang, T. (2003),

Determinants of users acceptance of Internet Banking an[5] Empirical study, International Journal of Service

Industry Management, 14(5),pp-501-519.[6] Zikmund, W.G., (2000). Business Research Methods, (6th

ed.). United States of America: Harcourt CollegePublishers.

[7] Bidgoli, H. (2004). The Internet encyclopedia. Hoboken, N.J.: John Wiley & Sons.

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