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E-banking – Today’s need

Jul 5, 2000

After e-commerce (B2B and B2C) and e-trading the next revolution is expected to be in e-banking. Online banking is expected to become more transparent and fully secured in time to come. The Internet offers a potential attractive way to serve customers without the heavy costs associated with the traditional brick and mortar business model (banking at the branch). The incentives of e-banking are either the need to meet competitive challenges and customers demand or the need to cut down costs.

As per the international report on banking the banking transactions on a brick and mortar banking costs around $ 1.1. While through ATM it costs around $ 0.27 and just 1% of over the counter banking in case of Internet banking. This itself indicates the huge hidden potential of the e-banking.

However on the security front, Internet banking has distinct security needs as well as number of core operational requirements. On the other hand in the bricks and mortar world the business is supported by a trust model which has remained largely unchanged for thousands of years. Recently the cyber laws have also been passed by the government envisaging the security for Internet transactions. Banks are using encryption technology, firewall and passwords for security on the net transactions. Many private sector banks have taken a lead in providing e-banking services. Public sector banks on the other hand are sharply moving ahead to remain in line with private sector banks by adopting the latest technology. The leader will be the one, which can provide qualitative services in the minimum time period.

The five main advantages of Internet banking are

  • Internet banking removes the need for physical presence in the new territories since a web site has a global presence.
  • The biggest advantage for the banks is they will be able to grow organically without investing in new branches.
  • The banks will be able to market their new products and services through Internet, reducing the promotional costs. Marketing costs can be concentrated on creating an effective web site that can attract potential customers.
  • Also due to standardised technology, the time to market new products and services will be dramatically reduced.
  • Corporate banking will get a major boost since thousands of transactions can be conducted daily and multiple updates can be provided. Individual can work easily from different locations.

So the conclusion is those banks which have already started e-banking will have to continuously update their services to retain the potential customers since any customer is just a click away from a competitor elsewhere. And those which, have not yet started are ignoring the potential customers by remaining away from the latest technology.

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