Evolution of e-banking


E-banking is the use of electronic methods to deliver traditional banking services such as taking deposits, making loans and clearing payments using any kind of E-channels, The effect of E-banking is to augment and facilitate existing bank activities and payment mechanisms, Primarily by making many transactions cheaper, faster, more secure and more convenient. This definition implies that e-banking has been taking place in various forms for decades, telephone banking for example, which enables account holders to conduct several kinds of transactions has been used since the advent of touch-tone dialing and similarly the automatic teller machines(commonly called the ATMs or bankomats) are a form of retail e-banking in use since the mid-1970s and in nearly universal use since late 1980s.


there have been significant development in the e-banking sector in the past years. According to delving (1995). until the early 1970s functional demarcation was predominant with many regulatory restrictions imposed. One main consequence of this was limited competition both domestically and internationally. as a result there was heavy reliance on traditional branch based delivery of financial services and little pressure for change. This change gradually with deregulation of the industry during the 1980s and 1990s. whilst during the this time, The increasingly important role of information and communication technologies brought stiffer competition and pressure for a faster pace of change.

The internet is relatively the new channel for delivering banking services. the early form of online banking services requiring a PC, modem and software provided by financial services vendors were first introduced in the early 1980s, however it failed to gain widespread acceptance and most initiatives of this kind were discontinued, with a rapid growth of other electronic services since mid 1990s, banks renewed their interest in electronic modes of delivery using the internet. The bursting of the internet bubble in early 2001 caused speculation that the opportunities for internet services firms had vanished. the dot.com companies and internet players struggled for survival that time but e-commerce recovered from that shock quickly and most of the branches including e-banking have been steadily and in some cased dramatically growing in most part of the world. One survey conducted by techweb found e-banking to be the fastest growing commercial activity on the internet. The banks have discovered the benefits of e-banking and have become keener to it


E-banking relies heavily on information and communication technology(ICT) to 24hrs availability, Low error rates and quicker delivery of financial services, When considering e-banking, bank websites usually come to mind first but e-banking requires much more than just a good website, It needs back end applications such as account systems, support applications such as customer relationship management(CRM) systems, communication technologies to link e-banking to the payment systems and middleware to integrate all those often different type of systems.

The two major technologies that influences E-banking are Internet and Mobile technology. The Internet is a massive global network of interconnected packet-switched computer networks, The most existing E-banking development are occurring on the portion of the internet known as World Wide Web, the internet eliminates obstacles created by geography, time zones and locations, this really help the financial sector to market their product and offer services globally. Internet is less functional in E-banking without the use of tangible appliances like PCs, ATMs and mobile phones.

Some banks are making significant investments in mobile systems to deliver business activities so as to increase efficiency and reduce cost, to improve operational effectiveness and customer services to maintain a competitive hedge.


Traditional banking business assumes that we have to have customers desk at the bank's building and that we have the office hours from 8:00AM to 7:00PM. On the other hand, our customers have their jobs during the day, and they have family activities after the job. As you can see, there is obvious collision between customers' demand and financial institutions capabilities. E-banking is transforming banking business into E-business through utilizing various e-channels such as:


WAP based mobile network

Automated telephone

ATM Networks

SMS and Fax Messaging

Multipurpose E-banking Kiosk

Web TV and others

These e-Channels enables financial transactions from anywhere and they allow non-stop working time that the customers require and they want to be able to use these services anytime, anywhere, we can see that in E-banking business we now have a perfect match between the customers' requests and the financial institutions capabilities.

Banks are deemed to be the early users of technology and the main drivers of technological revolution. The first applications of the computer age were the use of mainframes, and later minicomputers, to process data such as customer accounts, bank inventories, and personal records and accounting packages and ultimately evolved into spreadsheets, the use of technology was a support tool for banking operations, helping staff to do their work faster, more conveniently and with less human errors.

The Idea of direct customer services was clear but first ATM(Automated teller machine) came into commercial use in 1968.ATMs were the first visible face of electronic banking. From being mere currency dispensers they have nowevolved into multifunctional devices enabling customer to conduct a whole range of transactions from account management, fund transfer, to bill payments. It took 16 years for the first 100,000 ATMs to be operational, whereas the next 100,000 were in place in a mere four years. The day of smart ATMs that use biometrics to recognize customers and cross sell financial products with a fair knowledge of the investment and purchasing of customers is not far off.

The next step in providing direct customer service came with the extended use of credit and debit cards in merchants' shops through EPOS(electronic point of sale) technology. Electronic fund transfers were another application where technology was used extensively, mainly to cut down the cost of transaction and to speed up payments. This led to the development of specialized products like corporate cash management systems.

The proliferation of internet gave a real boost to electronic banking and moved banking services from back-end application to customer centric-centric front ends. The open networked environment provided instant global access to information, products and services,, so now the customers could bank from the comfort of their homes. It is estimated that as at march 2007 about 16.9% of world's population are internet users. Globally the number of broadband subscribers by the end of 2006 was estimated to be about 281million and it is expected to cross 400 million this year, underlining the potential. the development in the internet technology had led to the development of new products such as aggregation services, bill presentation and payment, and personalized financial portals.

The advances in telecommunication technology have helped the development of a new facet of electronic banking; namely, mobile banking. Wireless is estimated to be growing at more than three times the rate of landlines globally. with the number of connections estimated at 2.6 billion at the end of 2006, and expected to cross 4 billion by this year, mobile banking is set to become a major delivery channel.

Another evolution of e-banking eliminates the need to deposit Cheques into bank account personally by customers according to Net quality, with the development of the banking kiosk which can perform the duty of a bank worker by accepting cheque deposit, On depositing a cheque at the kiosk, it issues an immediate receipt, with a scanned image of the cheque, with every detail listed. The cheque is endorsed at the back, while the transaction details are generated for the bank's MIS(management information systems), kiosk can also perform personal enquiries by allowing you to check your account balance, print a mini statement and make cheque book requests, connects to the internet and carry out transactions through e-banking, view details of your account and make transactions online. they has the customer tool support with the provision for a web cam in the kiosk that allows a personalized experience where a Help Desk Agent can be reached via Video conferencing, to answer any of your service related queries. The data that is generated from the kiosk transactions are further used for MIS reports and database creation. This leads to minimizing back-end operations of the bank


As Electronic Banking is a technology that has a lot of financial capabilities, it is also open to some risks and problems, The use of Electronic Banking has brings about some issues in different areas: government, businesses, banks, individuals and technology.


Because the Internet allows services to be provided from anywhere in the world, there is a danger that banks will try to avoid regulation and supervision, Banks can potentially expand the geographical scope of their services faster through electronic banking than through traditional banks, however, they might not be fully versed in a jurisdiction's local laws and regulations before they begin to offer services there



Banking has traditionally been built on the branch-banking model with two basic competitive advantages; namely, a brand name and customer relationships. The speed of change and advancement in information technology have brought changes to the way banking has been done for centuries and will continue to influence future banking trends.

The nature of distribution channels has changed dramatically. today the competition in the banking sector is determining the success of a bank by ability to deliver innovative products and services in a technologically advanced way that meets the changing needs of the customer. some of the perceptible changes are as follows.

Changing customer profile

previously customers change banks only in extreme circumstances. Now they can do so at the click of a mouse. A comparism by customers of the products and services offered by the different banks is facilitated by the easy availability of information on the internet.

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