Online banking can be defined as an electronic solution that gives you direct assess to your financial transactions through the internet allowing you to do your banking anytime and wherever you are. It enables the customers to conduct financial transactions on a secure website operated by the retail or virtual bank, credit union or building society.
Today most large banks offer some kind of online banking, commonly known as pc banking, electronic or internet banking. The financial institution that do offer online banking are sometimes referred to as "brick to click", both to distinguish them brick and mortar banks that are yet to offer online banking as well as from online or "virtual" banks that have no physical branches or tellers.
Through traditional banks, online banking enables customers to perform all routine transactions such as transfers, balance inquires, bill payment etc. online banking have many common capabilities and features which falls into different categories:
- There are those that are transactional in nature, for instance forming a financial transaction such as an account transfer, applying for a loan or a new account etc. They also include services such as electronic bill presentment and payment; funds transfer between a customer's and savings account or to another customer's account, investment purchase or sale and loan applications and transactions such as repayment.
- There are those that are non-transactional, for example online statements, check links, co-browsing and bank statements.
- Transaction approval process.
- Support multiple users with varying levels of authority.
- Wire transfers.
- Financial institutions.
For years financial institutions have used powerful computer networks to automate millions of daily transactions. Today, often the only paper record is the customer's receipt at the point of sale. Now that customers are connected to the internet through personal computers, banks envision economic advantages by adopting the same internal electronic processes to home use.
Banks view online banking as a powerful 'value added' tool to attract new customers while helping to cut off costly paper handling and telephone interactions in an increasingly competitive banking environment.
Online banking services were introduced around 1981 and became popular in the late 1980's.it referred to the use of terminal, keyboard and monitor to access the banking system using a phone line. Instructions were sent to the bank through the use of numeric keypad through the phone line and this process was referred to as home banking.
How the system works
Online banking works almost the same as traditional banking but with greater rewards.
Your deposits, interest and balance are calculated and stored electronically.
More money is being saved in the savings since there are higher rates being offered, because of the absence of overhead of maintaining physical branches.
Transactions are processed electronically just like when your employer directly deposits your paycheck as when you swipe your debit card at a store. Transfers are fast and free and there is no need to change your banks. You can link electronically to any current checking or savings account.
In order to be able to use online banking, one has to have the following security measures and hardware capabilities in place:
- 128-bit ssl technology: this is a secure socket layer (ssl) to encrypt your personal information being sent over the internet. It is the highest standard available and makes it virtually impossible for someone else to access your information.
- Sytstem monitoring: these are intrusion defection devices installed throughout the site to provide real time alerts about system changes or attacks. They are monitored on a continual basis to help ensure account protection.
- Personal firewalls: a firewall is a filter used to determine whether information is allowed to travel from one network to another. Banks can use multiple layers of firewalls to help prevent hackers from getting into your computer system, anti-virus software to prevent virus from infecting your computer and anti-spy ware software to prevent spy ware from collecting your sensitive data.
- Password or personal identity numbers (PIN's) should be used when accessing an account online. It should be unique to you and you should change it regularly and keep it a secret.
The concept requires the following hard wares:
- Pentium lll processor or higher
- dial up 56k modem or leased line
- 128mb RAM recommended
- 5mb free hard drive space
- windows 98 or above
- CD ROM
- internet explorer 5.5
Benefits of online banking
For someone who goes online with internet banking, the convenience factor rates high:
- Customers no longer have to wait for bank statement to arrive in the mail to check accounts balance. One can check the balance everyday by logging onto their account. In addition one can catch discrepancies in the account right away and deal with them immediately. The most interesting part is that this can be done anywhere as long as one has access to the internet.
- Ubiquity: if a money problem arises while you are out of the country, you can log on instantly to your online bank and take care of business.
- It is cost effective- many customers can be dealt with at once. There is no need of having too many clerks and cashiers. The administrative work gets reduced drastically with internet banking. Expenditure on paper slips, forms and even bank stationery goes down thus raising the profit margin of the bank by a large number.
- Online banking has helped eliminate the need for writing checks since bills are paid online, affixing postage and posting the payment in the mail is eliminated. Once the amount is entered and the payee is checked off, the funds are automatically deducted from the payer's choice of account.
- Online banking is fast, effective and efficient, i.e. through the internet transactions are typically performed and executed at a faster rate than ATMs, there are performed there and there which is known as real time. It also gives one the ability to handle several bank accounts from one site.
- Eliminates paper waste which is what environmentalists are advocating for.
Online banking has expanded its roots because most commercial banks are now using the concept and Swaziland has not been left behind in the implementation of the concept. For the purpose of this paper we have attached FNB.
First National Bank-a division of First Rand Bank Limited is an authorized financial service provider. It started way back around 1874 in America. FNB then branched out to other countries and was introduced in Swaziland in1995, with its main branches Mbabane and Manzini. Other branches in Matsapa and Bigbend were later opened. Today, FNB has many branches and agencies in Nhlangano, Bhunya, Pigg's peak and Siteki.
FNB employees as well as customers relies more on manual work and there was a lot of paperwork involved. For instance, customers had to queue all day long and in order to process their transactions and employees had to do a lot of paperwork before a transaction is fully processed. As a result online banking came into existence and was implemented in FNB in April 2004.
According to FNB online banking is highly secure, internet based, electronic product which is designed with the needs of your business in mind.
Features of online banking solutions
- Online access: for one to go online with internet banking, one has to have access to a computer that is connected to the internet.
- Post-dated transactions: these are future date payment paid in advance. For examples, most trucks are post dated so that by the time they arrive at their destination, they find that payments have already been done.
- Payments to FNB account are real time immediate.
- Payments to non- FNB account reflect within three days.
FNB'S uses the following security features:
- Utilizes 128- bit encryption; Encryption is the process of scrambling private information to prevent unauthorized access. You can also display a small icon in your screen that looks like a key or o lock whenever you conduct your transactions online.
- Digital certificates: these are users certificates in the system
- Dual authorization: for instance a wife and a husband
- Audit trails.
- User profile: you can add users to the system and define level of access. You can also decide payment or transfer limits.
- Site profile: it enables the ability to change default settings, you can also set up dual or multiple authorizations.
- Account permissions: allow users no limit\limited\full access to accounts.
- Folder permissions: it allows user to maintain folder recipient. It also allows users to authorize folder recipients.
While there is a fee for online banking, the cost are minimal, not having to spend the whole of Saturday morning standing in a crowded bank line is justification enough for most since 'time is money'. Other fees are as follows:
Subscription fee: E94 per month
Signing up: E450 (flat fee)
Financial transactions: E10 (maximum)
Non-financial transaction: E3.80 (maximum)
There are no charges for training
FNB also offers the following products:
Automatic teller machines (ATM's):
These are computerized devices that allow banking and other financial transactions to be performed without the assistance of bank tellers. They can be used for:
- Depositing money into an account
- Withdrawing money
- Checking account balances
Debit or credit card
Debit cards are used for paying bills, buying clothes and other accessories. These are plastic cards which have a magnetic line, at the bank when you swipe it to the speed point it reflects your personal details.
This is an efficient and secure card acceptance solution, which enables merchants' to accept locally and internationally issued credit and debit cards and takes 24- 48 hours to process a transaction. The customer will swipe the debit\credit card through your speed point in lieu of payment. The customers account will debit and the merchant will be credit.
Of course, there are drawbacks associated with online banking but looking at the benefits mentioned above one can argue that they far outweighs the risks that the convenience is a perk worth the costs.
- Technical difficulties: sometimes online banking website goes down. When this happens, there is no back up branch that you can go to and the phone lines will be clogged. However you can protect yourself by always keeping a local branch or a credit union account with some emergency cash so that you won't be penniless while technicians fix the problem.
- If you have to deposit cash or cheques you still have to spend time at the ATM.
- Online sites can also take a while to start up.
- Missing personal service- no smiling teller. Instead, all paperwork is up to you .you print copies of important transactions.
- It requires you to have an account with an internet service provider.
- Switching banks can be cumbersome online than in person.
- Companies that have implemented online banking, FNB in particular, works hand in hand with SPTC and MTN in order to be successful. SPTC offers internet services such as the instant in contact massages. So if SPTC encounters problems with its internet, then customers are directly affected. Likewise, MTN being a monopoly in the country prohibits the smooth running of online banking. For instance, some transactions require two signatures in order for them to be successful. If one authorized customer performs transactions, the other authorized person should receive a SMS informing him\her of the transaction so that he can put his signature. If there is no net work this transaction will be delayed, no matter how emergent it is, until the problem is fixed.
- Another problem is that Swaziland is still a developing country and most of its citizens are computer illiterate thus it may take a while for them to know how to use their banking sites.
- Hackers- these are people who are always looking for personal passwords to access one's personal data. If they access your account they can steal all the in it, for instance recently the issue of hackers hit the US hardly as someone published personal passwords online and many funds were stolen. Although no case of hacking have been reported in Swaziland, it should be a cause of concern because Swazi's are very careless they give their PIN's to their spouses, friends, and relatives that can make it easier for hackers to access their funds.
- Another major drawback is that most Swazi's still believe in the manual way of doing things when it comes to money. They still prefer queuing in the line to do their transactions than doing them online without any physical proof the services that online banking offers are not fully utilized. The issue is that of trust. They usually wonder if transactions were successful.
- From Clint bailey, manager at Matsapha branch.
- From Mpumalanga Dlamini, IT manager at FNB Matsapha branch.
- FNB brochures