Benefits and Challenges in Digital Banking Sector

Integrated Intelligent Research (IIR) International Journal of Business Intelligents
Volume: 05 Issue: 02 December 2016 Page No.126-130
ISSN: 2278-2400
126
Benefits and Challenges in Digital Banking Sector
T.Arunmozhi, Silviya Aloysius
Assistant Professor, Dept of Commerce, K.C.S College of Arts & Science, Chennai
Email id : arulsai@yahoo.com, silviyaloysius9952@gmail.com
Abstract - Electronic Commerce (E-Commerce) is
the place business exchanges follow through media
communications systems, especially with the
assistance of Internet. E-Commerce has been the
rising business procedure in the time of
globalization, with the assistance of E-trade
supervisor can see every one of the undertakings of
business from one work area and can settle on
speedy choices. E-trades most critical effect is on
the segments that are fundamentally transmit data in
(postal administration, correspondences, radio and
TV) and those that produce it (money, diversion,
travel operators or stock brokers).After
globalization, E-business has been progressively
turned into a vital segment of business technique
and a solid impetus for financial advancement. E-
managing an account has gotten to be well known in
light of its accommodation and adaptability,
furthermore exchange related advantages like pace,
productivity, availability, and so on. The best
preferred standpoint of E-trade is that it interfaces
individuals inside a limited capacity to focus time
from any part of the world. Permit individuals to
appreciate, access items, administrations, data and
other individuals which generally would not be so
effectively accessible to them. Banks are the
foundation of each nations economy and help in
expedient exchanges which were unrealistic before
the presentation of E-business. This paper
demonstrates the advantages and difficulties in the
Indian saving money division through E trade.
Key words: E-Commerce, Globalisation, Financial
Advancement.
I. INTRODUCTION
'Electronic trade is sharing business data, keeping up
business connections and leading business
exchanges by method for media communications
systems'. (Vladimir Zwass 2001) E-Commerce is a
standout amongst the most vital aspects of the
Internet to have developed in the late times. E-trade
or electronic trade includes doing business over the
Internet with the help of PCs, which are connected
to each other shaping a system. To be particular
ecommerce would purchase and offering of
merchandise and administrations and exchange of
assets through advanced correspondences.
II. AN OVERVIEW OF INTERNET
USAGE IN INDIA
The state-possessed Videsh Sanchar Nigam Limited
(VSNL) propelled Internet Services in India in
August 1995. For the initial four years, VSNL was
the sole supplier of Internet Services in the Country.
In the principal years, broadband use in India was
growing 20% every month, as per the Internet
Service Providers Association of India (ISPAI).
Because of the advancement in the infiltration of
ICT and particularly, the Broadband Policy declared
in 1995, the expression "broadband" entered the
mass vocabulary and most Internet clients knew
about quicker Internet speeds. In November 1998,
the Government finished VSNL's imposing business
model and permitted provisioning of Internet
Services by Private Operators. The Terms and
Conditions of the ISP's License were bizarrely
liberal with no License Fee and permitted boundless
number of players. ISPs could set their own levies
and even their own International Gateways. As
indicated by Internet and Mobile Association of
India (IAMAI), an exchange affiliation that displays
the online substance and publicizing, e-business and
portable substance and promoting industry, Indian
natives use Internet for various exercises including
email and IM - 98%, work seek - 51%, e-keeping
money - 32%, charge instalment - 18%, stock
exchanging - 15%, and wedding look - 15%.
III. BENEFITS OF E-COMMERCE
E-commerce allows people to carry out businesses
without the barriers of time or distance. One can log
on to the Internet at any point of time, be it day or
night and purchase or sell anything one desires at a
single click of the mouse. The direct cost-of-sale for
an order taken from a web site is lower than through
traditional means (retail, paper based), as there is no

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127
human interaction during the on-line electronic
purchase order process. Also, electronic selling
virtually eliminates processing errors, as well as
being faster and more convenient for the visitor.
Ecommerce is ideal for niche products. Customers
for such products are usually few. But in the vast
market place i.e. the Internet, even niche products
could generate viable volumes.
Another important benefit of Ecommerce is that it is
the cheapest means of doing business. The day-to-
day pressures of the marketplace have played their
part in reducing the opportunities for companies to
invest in improving their competitive position. A
mature market, increased competitions have all
reduced the amount of money available to invest. If
the selling price cannot be increased and the
manufactured cost cannot be decreased then the
difference can be in the way the business is carried
out. Ecommerce has provided the solution by
decimating the costs, which are incurred.
From the buyer's perspective also ecommerce offers
a lot of tangible advantages.
1. Reduction in buyer's sorting out time.
2. Better buyer decisions
3. Less time is spent in resolving invoice and
order discrepancies.
4. Increased opportunities for buying
alternative products.
The strategic benefit of making a business
'ecommerce enabled', is that it helps reduce the
delivery time, labour cost and the cost incurred in
the following areas:-
1. Document preparation
2. Error detection and correction
3. Reconciliation
4. Mail preparation
5. Telephone calling
6. Credit card machines
7. Data entry
8. Overtime
9. Supervision expenses
Operational benefits of e commerce include
reducing both the time and personnel required to
complete business processes, and reducing strain on
other resources. It's because of all these advantages
that one can harness the power of ecommerce and
convert a business to e-business by using powerful
turnkey ecommerce solutions made available by e-
business solution providers.
IV. E-COMMERCE IN BANKING
E-Banking (Internet Banking) is an e-commerce
application which allows the customers to perform
any of the virtual banking functions, financial
functions online in a protected and secure manner. It
involves using the internet for delivery of banking
products and services. E-banking function includes
BFSI (Banking, Finance, Securities and Insurance).
Banking concerns about providing the customers
virtual banking functions, whereas financial
functions include stock broking, payment gateways,
mutual funds etc.
According to a report released by Internet and
Mobile Association of India (IAMAI) on
Ecommerce industry in India, a growth of 47% in
the e-commerce market is expected. This growth
this principally motivated by the continuous
expansion in the online travel industry in India.
Online travel industry adds around 76% to the total
Ecommerce market today. Other than travel
industry, according to IAMAI forecasts, digital
downloads and e-tailing segment that includes
purchases of electronic items, home and kitchen
appliances and personal items such as Apparel and
Jewelry will register a growth by 62% to reach Rs
1,100 crores and Rs 2,700 crores respectively by the
month December 2011. The Digital downloads
segment is expected to grow in Indian Ecommerce
market due to the explosion of mobile devices and
the services available over the Internet. Financial
services which includes online transactions,
insurance and online classifieds such as matrimonial
and jobs are also likely to grow in future. The whole
Ecommerce market stood at Rs 19,688 crores in
2009 and in 2010 it touched Rs 31,598 crores. The
e-commerce industry is expected to reach at Rs
46,520 crores by end of the year, 2011, according to
a statement released by the Internet and mobile
Association of India (IAMAI). Owing to high
development in online marketing, the complete
Ecommerce industry in India is expected to climb in
future. People of India have shown their curiosity
and concern both to make online purchases and are
actively participating in online business. This
ensures the success and bright future of Ecommerce
in India.

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E-Banking includes
 Bill payment service
 Fund transfers
 Querying the account balance
 Credit card customers
 Applying for/claiming Insurance
 Investment through Internet Banking
 Shopping
 Automated Teller Machines,
 Credit Cards
 Debit Cards
 Smart Cards
 Mobile Banking
 Electronic Funds Transfer (EFT) System
 Internet Banking
 Cheques Truncation Payment System
 Telephone Banking
V. ADVANTAGES OF E-BANKING
Efficient: Online managing an account, without a
doubt, spares time by permitting direct exchange
from office, home or any place. The medium
assuages from going by the bank and holding up in a
line and gives a mental and physical alleviation from
the undesirable surges in the bank.
Accommodation: The greatest favorable position
that internet keeping money conveys to the table is
its comfort. We can pay telephone also, power bills
by means of web managing an account without
hurrying to the service organization's bill
accumulation outlets. It helps you maintain a
strategic distance from deferred installments.
24x7 administrations: Online managing an account
exchanges can be performed whenever and from
anyplace.
Eco-accommodating Process: Online keeping
money is an eco-accommodating procedure as it
doesn't devour volumes of paper like routine saving
money modes and thus ensures the earth.
Simple Access: To perform internet keeping money
errands, all you need is a fundamental PC
framework associated with the Web.
Speedier Banking: Online keeping money is a
quicker method for performing managing account
capacities. Whether you purchase merchandise on
the web, pay bills or exchange cash, it completes in
real time and inside minutes.
Taken a toll saving: The procedure is extremely
financially savvy. It frees organizations of the act of
deputing individuals to extraordinarily pay
organization charges, who waste hours making the
rounds of the banks to play out all the company's
managing an account related capacities.
Different Benefits: Online saving money has a few
different advantages. Clients can shop on the web,
purchase tickets, make progressed appointments,
and so on
VI. CHALLENGES IN E-BANKING
The data innovation in itself is not an answer and it
must be viably used. The idea of e-saving money
can't work unless and until have an incorporated
body or establishment, which can figure rules,
manage, and screen viably the working of Internet
managing an account. The most essential necessity
for the effective working of Web managing an
account is the reception of the best security
strategies. This presupposes the presence of a
uniform and the best accessible innovative gadgets
and techniques to secure electronic saving money
exchanges. With the goal computerization should
deal with the developing needs, the suggestions of
the Committee on Technology Upgradation in the
Banking Area (1999) might be considered.
These are:
 Need for institutionalization of equipment,
working frameworks, framework programming,
and application programming to encourage
interconnectivity of frameworks crosswise over
branches
 Need for abnormal amounts of security
 Communication and systems administration -
utilization of systems which would encourage
concentrated databases and conveyed preparing
 Technology arrangement with periodical
upgradation
 Business process re-building
 Address the issue of human relations in an
electronic domain
 Sharing of innovation encounters
 Payment frameworks which use data innovation
instruments.
The Reserve Bank of India has assumed a lead part
in this circle of movement - with the presentation of
check clearing utilizing the MICR (Magnetic Ink
Character recognition) innovation in the late
eighties. The Reserve Bank of India constituted a
"Working Group on Internet Banking" which
concentrated on three noteworthy territories of E-

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Banking. Technology and security issues , Legal
issues , Regulatory and supervisory issues These
territories are chosen in such a way, to the point that
the issues confronted by banks and their clients can
be minimized to the most extreme conceivable
degree. The Group suggested certain rules for the
smooth and appropriate working of Web saving
money. These unified rules would acquire
consistency the determination and selection of
security measures, with unique accentuation on a
uniform method. The security of Internet keeping
money exchanges would not be imperilled if these
security components are embraced. This is on
account of the achievement of Internet saving
money at last depends upon a uniform, secure and
safe mechanical base, with the most progressive
elements. The RBI has acknowledged the
suggestions of the Group, to be executed in a staged
way.
The RBI has issued the accompanying rules through
a Circular for execution by banks in such manner:
(i) Technology and Security Issues: The
innovation and security issues are of prime
significance as the whole base of Web keeping
money lays on it. On the off chance that the
innovation and security norms are deficient, then
Internet managing an account won't give the
sought results and will fall eventually. The RBI
understanding this significant necessity issued
the accompanying rules in such manner:
 Banks ought to assign a system and database
head with plainly characterized parts.
 Banks ought to have a security arrangement
properly endorsed by the Board of Directors.
There ought to be an isolation of obligation of
Security Officer/Group managing solely with
data frameworks security and Information
Technology Division, which really executes
the PC frameworks. Further, Information
Systems Auditor will review the data
frameworks.
 Banks ought to acquaint legitimate access
controls with information, frameworks,
application programming, utilities, media
transmission lines, libraries, framework
programming, and so forth. Sensible access
control methods may incorporate client ids,
passwords, savvy cards on the other hand
other biometric innovations.
 At the base, banks ought to utilize the
intermediary server sort of firewall so that
there is no immediate association between the
Web and the bank's framework.
 Every one of the frameworks supporting dial
up administrations through modem on the
same LAN as the application server ought to
be detached to anticipate interruptions into
the system as this may sidestep the
intermediary server.
 All PC gets to, including messages got, ought
to be logged. Security infringement
(suspected or endeavoured) should be
accounted for and follow up move made
ought to be remembered while confining
future strategy.
 All utilizations of banks ought to have
legitimate record keeping offices for lawful
purposes. It might be important to keep all
got and sent messages both in scrambled and
unscrambled structure.
(ii) Legal Issues: The reception and switch over to
Internet keeping money will likewise raise
certain lawful issues and debate in the future
which must be expected and healing measures
for the same should be embraced. Further, these
issues should likewise be perfect with the current
laws, especially the Information Technology
Act, 2000. The RBI, keeping as a top priority
these variables, has issued the accompanying
rule
 There is a commitment with respect to banks
to build up the way of life as well as to make
enquiries about uprightness and notoriety of
the planned client. Consequently, despite the
fact that solicitation for opening record can be
acknowledged over Internet, records ought to
be opened simply after appropriate
presentation and physical confirmation of the
personality of the client.
 Security method embraced by banks for
confirming clients should be perceived by law
as a substitute for signature. In India, the
Information Technology Act, 2000,
accommodates a specific innovation as a
method for confirming electronic record.
 Under the present administration there is a
commitment on banks to keep up mystery and
classification of clients' accounts. In the
Internet keeping money situation, the danger
of banks not meeting the above commitment
is high because of a few components. In spite
of every single sensible precautionary
measure, banks might be presented to

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improved danger of obligation to clients by
virtue of rupture of mystery, disavowal of
administration and so on., due to
hacking/other mechanical disappointments.
 In Internet keeping money situation there is
next to no extension for the banks to follow
up on prevents installment guidelines from
the clients. Consequently, banks ought to
unmistakably inform to the clients the time
span and the circumstances in which any
stop-installment directions could be
acknowledged.
 The Consumer Protection Act, 1986
characterizes the privileges of customers in
India and is pertinent to saving money
administrations also. At present, the rights
and liabilities of clients benefiting of Internet
managing an account administrations are
being resolved by reciprocal understandings
between the banks and clients
(iii) Regulatory and Supervisory Issues: The
banks working in genuine space are directed and
administered by the RBI on standard premise.
This direction and supervision is required to be
reached out to Internet managing an account
also. Along these lines, the RBI has issued the
accompanying rules in such manner:
 Just such banks which are authorized and
regulated in India and have a physical
nearness in India will be allowed to offer
Internet managing an account items to
occupants of India. Subsequently, both banks
and virtual banks consolidated outside the
nation and having no physical nearness in
India won't, for the present, be allowed to
offer Internet saving money administrations
to Indian occupants.
 The items ought to be confined to record
holders just and ought not be offered in
different purviews.
 The administrations ought to just incorporate
neighbourhood coin items.
 Abroad branches of Indian banks will be
allowed to offer Internet managing account
administrations to their abroad clients subject
to their fantastic, notwithstanding the host
director, the home chief.
VII. CONCLUSION
The E-managing and account in India will have its
own points of interest to both the banks and the
clients. As India second biggest crowded nation and
the ¾ populace lives in provincial zones and there is
an appropriate need to occupy the endeavours the
whole territories city and in addition towns. The
utilization of data innovation won't just lessen the
expenses of operation additionally would be
compelling, simple to keep up, speedier and
exceedingly aggressive. The banks can't stay
unapproachable from this view of E-managing an
account, and they ought to convey suitable changes
to meet the necessities and difficulties of E-banking.
The difficulties postured by the Internet saving
money are for the most part of procedural nature,
which can be effectively counteracted receiving
reasonable mechanical and efforts to establish
safety. The local guidelines of saving money need to
be in congruity with the understood worldwide
norms and sooner rather than later universal dealings
from India would be a reality, which are without
further ado not sufficiently liberal. There can be
undoubtedly about the colossal potential and open
doors offered by advances in innovation. Be that as
it may, there are pre-necessities and arrangements,
which must be made before the full advantages of
the innovation can be gathered.
Reference
[1] E. Turban, J. Lee, D. King and H.M. Chung,
Electronic Commerce: A Managerial
Perspective. Prentice Hall, 1999.
[2] European Central Bank. 1999. The Effects of
Technology on the EU Banking Systems, July.
Farooq Ahmed (2001); Electronic Commerce :
An Indian perspective; International Journal of
Law and Information Technology; Vol.9, No.2,
2001;pp.133-170

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