E-Banking / objectives, advantages and disadvantages of Electronic Banking.
The provision of banking services through electronic channels and the customer can access the data without any time and geographical limitation.
The term “electronic banking” or ” e-banking” covers both computer and telephone banking. In other words it is said that it is updated on time, real time. The system is updated immediately after every transaction automatically.
The concept of Electronic Banking The Concept of Electronic Banking. Science has made the world more dynamic and progressive. It has brought changes in economy, politics, culture, society and the people themselves. In the finance and banking sector, this change is more tremendous. Because, the use of computer in banking ensured the mathematical accuracy and promptness. It has made banking transactions more speedy, easy and comfortable. Today, the client need not to carry a cheque book or cash money rather it is enough for him just to carry a plastic card. But the spread of electronic banking in our country is very limited. The Concept of Electronic Banking – Generally speaking, electronic banking systems are electronic systems where the transactions and relationship between the bank and clients grow through electronic devices instead of paper documents. In other words, E-banking means that kind of banking in which the bank uses electronic or satellite based computerized devices for ensuring promptness and accuracy in banking transactions.
Basic components of E-Banking
The system of E-Banking contains the following four components:
1. Banking system software: Which is settled up in the computer for providing the clients with different type of transaction facilities.
2. Communication network: Both dial-up telephone and radio link are being used as communication network.
3. Delivery channel: Banksy, Euroclear, SWIFT etc. are being used in corporate banking, small business banking and even in individual and family banking.
4. switching system: Switching system is being used for transferring banking transactions in their right place through computer.
Types of E-banking
1. Informational Internet Banking:- This fundamental level of banking does not allow patrons to view or maintain accounts, nor does it allow for communication between the financial institution and customers. Informational Internet banking simply means internet banking simply means the bank provides basic information about its products and services, much like a brochure. This is meant for marketing purposes only, and there is no connection to the Bank’s main computer systems.
2. Communicative online banking – Communicative online banking allows for some communication between the patron and bank. However this typically limited to fundamental interactions such as account inquires, new account updates, Loan or mortage applications, contract information updates and balances. Communicative online banking may connect with the bank’s main computer.
3. Transactional Internet Banking:- The most popular online banking type, Transactional internet Banking offers all of the benefits of traditional brick and mortar institution. This includes full control over your accounts deposits, withdraws, transfers, updates, and online Payments. Increased security measures now make internet banking safe, secure and convenient, especially in the case of mobile banking. Objectives of Electronic Banking from
The objectives of Electronic Banking have to be discussed two perspectives.
A. Objectives from the perspectives of bank:
1.Providing retail services and reducing costs through bank network.
2. Reducing administrative costs through reducing
3. Increasing income through fees.
4. Expanding services.
B. Objectives from the perspectives of clients
1. Acquiring data and information in time.
2. Lessening time and cost in transactions.
3. Security of account. the number of workers.
Advantages of E-Banking:
1.Very convenient:- Online banking is a totally easy thing to do. In the comfort of your home or offices.
2. Unlimited service:- The services and various features of your bank are always available seven days a week and 24 hours daily.
3. No time constraint:- Online banking is also stress free because it never closes unlike the traditional banking that has cut-off time.
4. Easy way of payment:- Bill payments can also be handled properly and smartly. Instead of waiting for certain due dates, you can easily pay all your transactions using your computer and in coordination with your bank.
5. Smart:- Online banking is also ubiquitous or simply put smart. This enables you to do troubleshooting regarding any problem that may arise from your business.
6.Higher interest rate:- Another great advantage of online banking is the interest rates which basically range between 5% to 3.40% annually. Unlike the traditional bariking, online banking can eam you a better interest or return of investment both in your savings and checking account.
Disvantages of Internet Banking
1. Understanding the usage of internet banking might be difficult for a beginner at the first go. Though there are some sites which offer a demo on how to use internet banking, but all does not offer this facility. So, a person who is new to internet baking might face some difficulty.
2. You cannot have access to internet banking if you don’t have an internet connection.
3. Security of transactions is a big issue. Your account information might get hacked by unauthorized people over the internet.
4. Password security is a must. After getting your net banking password, do change it and memorize it otherwise your account may be misused by someone who gets to know your password inadvertently.
5. You cannot use internet banking, in case, the bank’s server is down.
6. Another issue is that sometimes it becomes difficult to note whether your transaction was successful or not.
