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.
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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.
So, E-banking makes the bank and its clients enable –
- To deposit and withdraw money automatically;
- To transfer money electronically from one bank to another promptly;
- To open L/C electronically, pay bills without going to the bank; and
- To operate internal banking transactions electronically.
Objectives of Electronic Banking –
The objectives of Electronic Banking have to be discussed rrom two perspecnves.
- A. Objectives from the perspectives of bank;
- B. Objectives from the perspectives of clients
However, the objectives of may be presented in diagram also.
From bank From the clients
From the clients
|1.Providing retail services and reducing costs through bank network.
2. Reducing administrative costs through reducing
3. Increasing income through fees.
4. Expanding services.
1. Acquiring data and information in time.
2. Lessening time and cost in transactions.
3. Security of account.the number of workers.
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.
Kinds of E-banking –
Primarily, E-banking is of two kinds –
- Retail electronic banking services.
Wholesale electronic banking.
These two types contain some other system which are shown in the following diagram-
Retail electronic banking
Wholesale electronic banking
Point of sale
Retail Automated Clearing House (ACH)
Corporate Automated Clearing House (ACH)
Problem of E-Banking
There are some problems of E-banking as –
Firstly, Trickery and improper uses are the main issues of E-banking today. In spite of the guarantee of security.clients always remain anxious if anybody bring changes in his account through improper use. However, the use of SET (Secured Electronic Transaction) and cryptographic devices has lessened the fear of insecurity.
Secondly, It is said that the use of computer in banking many intricate the very problem of employment. specially in developing countries.
Thirdly, Conservativeness of the clients as well as their inability to use electronic devices are the imporin: barriers in the way of E-banking.
Fourthly, Limitations of banks in introducing E-banking in another problem in tho application of electronic banking.
In a nutshell –
The Concept of Electronic Banking has transformed the very process of banking from manual to electronic one. It made the banking transactions more easy, speedy and comfortable. However, there are some risks in E-Banking which sometimes make the clients anxious abut the security of his account. So new devices and techniques are being introduced to make it more secured and reliable.