Learn basics of Electronic Banking System

Science has made the world more dynamic and progressive. It has brought changes in economy, politics, culture, society and the individuals. In the finance and banking sector, this variation is 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.

 The concept of E-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 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 form 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 E-banking:

The objectives of Electronic banking have to be discussed from 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 the number of workers.
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 transactions.
3.    Security of account.

The system of E-Banking contains the following four components:

•    Banking system software:

Which is settled up in the computer for providing the clients with different type o f transaction facilities?

•    Communication network:

Both dial-up telephone and radio link are being used as communication network.

•    Delivery channel:

Banksy, Euroclear, SWIFT etc. are being used in corporate banking, small business banking and even in individual and family banking.

•    Switching system:

Switching system is being used for transferring banking transaction in their right place through computer.

Kinds of E-Banking:

Primarily, E-banking is of two kinds:

1)    Retail electronic banking

•    ATM
•    Debit card
•    Credit card
•    Point of sale
•    Cheque transactions
•    Home banking
•    Retail Automated Clearing House (ACH)

2)    Wholesale electronic banking

•    Cash management
•    Wire transfer
•    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 toay. In spite of the guarantee of security. Clients always remain anxious if anybody brings 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 unemployment especially in developing countries.
Thirdly, conservativeness of the clients as well as their inability to use electronic device are the important barriers in the way of E-banking.


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