Electronic Banks

 

1. Introduction

This and more definitions about electronic banking and its history will be discussed in the following pages.”

Electronic banking is a product that has become increasingly popular in the global market. Also referred to as online banking, the system provided by many different banks and financial institutions is largely designed to make things such as banking more convenient and hassle-free for clients. Fintech proposes and offers alternative solutions for various financial services, making transactions more efficient. Fintech can be used in this particular case by providing customized features and styles as well as local support.

1.1 Definition “What is electronic banking”?

Electronic banking refers to the process of performing banking activities over the internet. This can be done through two methods. It can be done by using a web page interface and by using a modem. Electronic banking is different from traditional banking because it allows account holders to make different types of transactions, such as changing account balances, transfers between accounts, bill payments, and setting up standing orders using the facilities available on the internet. Also, most electronic banking services allow account holders to carry out transactions round the clock during any day of the year, and thus it is not necessary to visit the bank’s physical location. On the other hand, traditional banking is provider-oriented, which means that banks take the decisions concerning who the customer is and what services they want the customers to use. In traditional banking, the customer will see to apply for those services that the bank delivers face to face because necessary papers such as identity and paychecks have to be seen by the bank staff. But in electronic banking, customers have more power over the kind of services that they choose to use because all the services are online, and therefore the customer decides what is best for them. Nowadays, most of the banks have introduced newer technologies for electronic banking. There are smart cards and credit cards that are based on electronic fund transfer technology, and customers are able to use these cards at different points of sale on the internet. Also, there are credit and debit cards embedded with smart chips. Banks now have automated teller machines which customers can use to access all the services mentioned above. Modern banks are now offering banking through digital television. Customers can access the internet on television screens.

1.2 Evolution

In the 1950s, the credit card was introduced, but it was not until the 1980s that electronic banking became popular. Automatic Teller Machines (ATM) were then used, and nowadays it is possible to check our accounts, move funds, and pay bills using a computer or mobile telephone. Some banks do not even have a traditional “bricks and mortar” presence. This type of bank is known as a “direct bank” or a “virtual bank,” and it offers only online banking services. Electronic banking includes the internet over personal computers (PCs) and the increasingly prevalent use of the mobile phone and the use of Television (TV) as discussed in more detail later. Banks must become more technological to face competition from other institutions and from the international network of communication and data exchange that is now available. It is also a response to the demands of modern lifestyle, where electronic communication and access to information are essential to the economy and the community.

2. Benefits of Electronic Banking

Since electronic banking operates on a 24/7 basis, a client is not restricted by the hours of operation at any physical bank, thus the worries of getting to the bank on time are eliminated. Payment of bills instantly instead of the conventional way of spending time and money writing checks and money orders. In writing a check, it takes at least two days for the receiver to be able to access the funds, although the client will be deducted with the respective amount from the account on the same day. However, with funds transfer and online payment of bills, can be made in real time. With an internet connection, bill payment can be made from anywhere around the globe without one having to leave the place of his/her convenience. Online banks provide the facility to customers to check their account status and activity on a regular basis, either through their mobile devices or personal computer by just logging onto the bank’s website. This frequent monitoring can help the customers in numerous ways, for example tracking malicious activities and interception of personal information. Scheduling of bills in advance makes sure that the client’s bills are settled on time and hence worries of late payments and attracting penalties are eliminated. As a confirmation whether the bill has been settled, the client receives the confirmation number of the completed transaction. All electronic banking transactions can be monitored in detail and the records are available at all times in the bank. In cases of disputed payments or fraud, the records serve as evidence for seeking redress. Delays in withdrawal and deposit of money on physical bank trading have been solved by electronic banking. From any ATM point, customers can be able to withdraw money, check their account balances, request for mini statements as well as depend on various other services that depend on the type of the ATM card. By the use of ATM, the worries of going to the bank, queuing and explaining to the cashier and possible scrutinizing whether the client possesses an account with the bank are alleviated. Also, quite often, ATM points are much closer to most clients compared to the parent physical banks. This means that cash is available at places of convenience.

2.1 Convenience

Customers with remote access to the internet can access their bank accounts 24 hours per day, seven days a week. People now no longer need to take time off from their jobs to come to the bank 9 am to 3 pm from Monday to Friday. They can pay virtually all of their bills electronically through the internet or an automatic withdrawal system. Consequently, you do not have to spend money on checks or postage. Also, you can get paid through direct deposit; thus there is no need to visit your bank to make a deposit every pay day. You can also transfer money between your checking and savings accounts that are linked together at any time through the internet. Many electronic banking systems will track your activities and some can create personal financial statements. This type of record keeping makes it much easier to balance your checking account, because you have a record of all of your activities. It also makes it easier to track your monthly expenses and prepare your income taxes. You can also monitor your account 24 hours a day 7 days a week, and be notified at your home email address whenever a transaction occurs in your account. Take note that banking regulators as well as academics are concerned that convenience and human error may make security risks more common for computer based electronic banking. Also if computer banking is not introduced and managed properly, the convenience of computer banking can actually be an inconvenience. For example, instead of the current system of paper checks processed and delivered periodically during the day, most electronic fund transfer such as automated teller machine (ATM) transactions and point of sale (POS) transactions results in instantaneous charges to the customer’s account through a computer based system. This would shift most of the work of processing these transactions from the banks to the customer as a result of the checks and the balances which the customer would have to maintain on a minute to minute basis. Banks would no longer have to manage the flow of paper transactions throughout the working day, but the convenience of such a system is a matter of great debate.

2.2 Accessibility

When speaking about accessibility, it’s important to recognize that electronic banking caters for everyone. For instance, individuals with disabilities may find electronic banking to be much more convenient and simpler than traditional branch-based transactions. This is because banks provide machines with extra-large keypads and embossed instructions on key functions for those with visual impairments. It’s clear that anyone who has access to the internet, with any level of ability, is able to use such services to transfer money, obtain information on their accounts, pay bills, and obtain statements. The same is true of internet-only accounts – they’re also making it easier for individuals to look after their finances. This helps to reduce the reliance upon either the telephone (often requiring human intervention or advice) or face-to-face meetings with bank staff, something that may take a lot of time to resolve and may also lead to stress, fatigue, or misunderstanding for those with certain disabilities. By providing an easy and simple transaction method, electronic banking services do truly cater for the diverse needs of our population today. And electronic banking also tends to overcome geographic barriers as it’s possible to access the internet from almost anywhere in the world today, including through the use of mobile phones, and given that financial markets now operate over a global time zone, this can be particularly effective for those needing to manage money in different countries or different currencies. Creative use of language and image on the internet can also make banking services more user-friendly. For example, the use of British Sign Language video clips on websites to assist those with limited literacy will help open up the possibilities of internet banking to even more people.

2.3 Time-saving

Electronic banking can also save you time. You can pay your bills quickly and easily using your computer or mobile phone – many payments will take only a day to clear. Mobile banking is also very quick – you can check your balance in seconds. Joining a bank’s online banking service can take a little time, but once you have a user name and password, managing your money over the internet is very straightforward. However, make sure that you keep your personal details secure and that you log off after every banking session. Banks or building societies may also recommend that you use specific security software. This can be updated regularly and will help to protect you against the risk of online fraud. With so many banking and money transfer services available, it is important to choose the best ones to suit your needs. Topping up your credit, applying for a loan and sending money to friends and family can all be done online. This is especially useful if you have a busy lifestyle and do not have the time to visit a bank or post a cheque. Online-only banking is becoming more popular, but there are still instances when you might need to visit a bank. For example, to provide identification documents when opening an account. Security is a key concern for many people considering using online banking. However, taking a few simple precautions and understanding the common risks can greatly reduce the chances of falling victim to fraud. For example, make sure that a secure operating system is installed on your computer or mobile device. Keep your device up to date with the latest software, as security updates are regularly provided by manufacturers and software providers. A good anti-virus and anti-malware package will help to protect your devices against online threats and you should also ensure that your internet connection is secure. This could include using a personal firewall and a wireless network so that a stable and private connection is maintained. Try not to use public networks when you access online banking, as this increases the risk of others being able to intercept and capture your data. By following this advice, it is possible to enhance the security of online banking and limit the potential for vulnerabilities which could result in unauthorized access.

3. Types of Electronic Banking Services

On the other hand, the Short Message Service types of mobile banking are mainly for low-value transactions such as obtaining the checking account balance and transaction history. It can be conducted using any kind of mobile phone, even without the internet facility. The customer has to activate the mobile phone for SMS banking after receiving the registration confirmation and notification from the bank. By sending a specific short command to the bank’s service provider, the customer can request the information they want. The service provider will then forward back the relevant information to the customer’s mobile phone. It is easy, simple, and no complex technology is involved in SMS mobile banking. However, it saves considerable amounts of time compared to visiting an ATM or going to a computer in the office or at home for internet banking.

Mobile banking, also known as m-banking or SMS banking, can be considered as the latest addition to the electronic banking and financial services offerings. Through mobile banking, a person can check his bank account, debit card, and credit card, and also make a payment, transfer money, and view transaction history from anywhere at any time via a mobile phone. There are two measures of mobile banking; it can be either through Short Message Service (SMS) or using Mobile Internet browsers and also known as Wireless Application Protocol (WAP). The customer needs to get themselves registered with the bank for mobile banking, and a Personal Identification Number (PIN) has to be obtained to activate the bank account. They have to download the security application provided by the bank, and each time before using mobile banking, they have to switch on the application and key in the PIN. The applications on the mobile phone have a secure connection to the internet banking servers, so the customer’s data and information are highly protected against fraudulent activities, which also apply to the Wireless Application Protocol (WAP) mobile banking.

Furthermore, banks that conduct business solely through the internet can offer better rates and terms for both consumers and businesses. Because online banks do not have any physical branches or distribution networks, they are able to pass on some of the savings realized on operational costs to the consumers in the form of better rates. Internet banks also offer other benefits such as higher interest rates, more convenience, and better payment options. For example, most internet banks offer free online bill payment services. These services can save consumers’ time, money, and the hassle of writing and sending checks in the mail.

3.1 Online Banking

Online banking is the latest development in the banking services. The bank provides the software for the computers and/or the connection to the application of the bank through the internet. After subscribing to the online banking service, the customer will have the user identification and the password. When signing in, the customer will just need to insert their user identification in the space provided. The customer will be able to do the following: check their account balance, go through the last 5 transactions of the account, print a statement for a certain period, and add the request of changing the daily transaction limits. Through online banking, it is feasible for the customer to transfer money from their account to other accounts of their own or other accounts to other people. Also, money can be sent to a beneficiary abroad where the mode of receiving the money is telegraphic transfer. In addition to the benefits, online banking is not confined to a specific location. This means that customers do not have to worry about racing to the bank in the course of their lunch hour or leaving undone a significant task that requires to be accomplished during working hours. Many customers may have reservations, but the fact that the bank has software and the internet service – if compared to the knowledge with smartphones and the apps – needed is not so much, online banking is reasonably accessible to a wider base of customers. There is a certain level of satisfaction that is linked to online banking. After paying the bills and/or transferring the money, the customer may get an electronic confirmation. In most cases, the service is viable, continual, and 24/7. However, the official working hours normally relate to the serving of the transactions team. On this section of electronic banking, the drafters included the types of transfers of the possible funds which are relevant to online banking.

3.2 Mobile Banking

However, it is important to realize that both mobile and online banking services can be suspended at any time if necessary. For instance, banks sometimes need to run maintenance checks and maintenance services may affect the availability of mobile banking. Also, banks reserve rights to suspend services if unauthorized use of accounts is suspected or there is a security breach. Such possibilities are stated to customers in the terms and conditions of the use of mobile banking. Customers need to agree to certain privacy and security measures when they sign up for any kind of electronic banking services. It is the responsibility of customers to ensure that their ways of accessing the services are secure so that the data shared between the bank and customers are kept private and safe.

When using mobile banking services through a website, different banks may provide different transaction and service capabilities but generally, customers can still use similar functions as those in computer-based online banking. For example, through mobile banking in a browser, customers can make payments and transfer money to existing or new payees in the similar way they do it with online banking and they can also check their available balance.

On the other hand, the use of a web browser means that customers do not have to worry about the brand or operating system of their phones because they can simply access the service via the internet using browsers such as Google Chrome in all different types of smart devices. However, customers have to ensure that the internet on their devices is safe and secure when using mobile banking as they are exposed to the risks of data interception and compromise. Customers also should make sure that they always access mobile banking through secure and safe websites using their own internet.

With mobile banking, there is no need to wait in line at the bank for services or even try to catch a branch before it closes for the day. In addition to the services customers can get with online banking, mobile banking has an added advantage of features such as push notifications. While in many instances computer-based online banking is free, using mobile services may attract some charges depending on the transaction. For example, banks may charge for any text messages sent to a customer’s phone when providing services like balance checks through customers’ mobiles. Also, customers should take note that there may be costs arising from the service provided by the telecommunications service provider.

A mobile banking application is a type of application specifically dedicated for use on small handheld devices such as smartphones and tablets. With a mobile application, customers have to download and install it onto their devices and they need to first sign up for online banking. Customers can check their account balances, account history, pay bills, and can even transfer money with the use of mobile banking. It is a very convenient way for patrons to be able to access their accounts on the go.

Mobile banking provides mobility and convenience. With the prevalence of smartphones, mobile banking has become the most common type of electronic banking. When offering mobile banking services, banks provide two main modes of access. Customers either access their mobile banking through mobile applications or web browsers.

3.3 ATM Banking

ATM banking is also one of the popular electronic banking services, where banking services are offered 24×7. The full form of ATM is Automated Teller Machine. We use a plastic card which looks like a credit card. This card is inserted in a slot provided in the ATM and on the screen (monitor) of the ATM and with the help of the keyboard placed just below the monitor, we can access our bank account by entering the secret code which has been provided by the bank for the same. We can withdraw money, do fund transfers, check our account balance and many more by using this card. This is very convenient and easy to access electronic banking service. The use of ATM has speeded up the process and reduced the service time related to the traditional banking methods. ATMs are not only located outside the bank branches, but also in shopping centers, service stations, rail and airports and many other strategic places, so that people can access their money at any time in the day and at any place, almost in every corner of the city. Also according to the recent technologies, these ATMs can be used as an online banking service provider as they are connected to our bank servers and we can do transaction or check our account balance as if we use the online banking service. We can use our ATM cards at various ATMs of different banks, if those banks have made special arrangements for providing ATM services. These are known as shared ATM services. It is very simple to withdraw cash from these ATMs. Place the ATM card into the slot, enter the ATM PIN and follow the on-screen instruction for withdrawing cash. ATM may operate on a standalone or linked basis. Standalone means the money is not debited from the customer’s account immediately. The information about the transaction is stored on the card and cash account status is updated at the end of the day’s business. However, in linked operation, the appropriate account balance in the bank’s computer is altered immediately and cash is paid. So the customer’s account will automatically be debited at the time of withdrawal. Nowadays, most of the ATMs are run on a linked basis.

4. Security Measures in Electronic Banking

Before the start of the information, page number is written. After the page number, an introduction to electronic banking is given. A definition or some sort of description is mentioned to introduce electronic banks. It is a mode of electronically transferring money from one person to another. A main heading is given for the descriptive information about the security in this bank. A sketch or graphical presentation should be given. Some descriptive information in the form of a small paragraph should be mentioned. Terms and conditions of the information chart are given. Some sort of bulleted points are given about the security in this bank. Some important points in bold and italics are mentioned, such as “Do not share or reveal your personal information like user ID, PIN, and password to anyone.” Another point is written that if you receive any unknown pages in email, then don’t open the attached file and viruses installed in the system. The next important topic is given. A descriptive note with the center line shown. A paragraph emphasizing the usefulness of this bank in such a busy life. Another diagram is sketched in a very effective way about how to transfer that can also be given. On the sketch, an envelope tank and in between a computer system and on that many different small steps are provided that can cause good information. These days, one of such systems is electronic banking. This is one of the best ways of money transfer from one person to another person. Through this system, we can transfer money at any time and anywhere. This is user-friendly and usable at home, office, and any type of workplace. The best thing about this system is that no paperwork or document is required. All transactions are carried out by the electronic card and PIN. The passage finishes with the bottom line given. This is a complete set of security information in that. All components and descriptive information are completed by this stage.

4.1 Encryption

This is a technique used to scramble plaintext information so that it can only be read by someone who has the right encryption key to unscramble it. The system is as follows. First, a hash code is created using the plaintext. This hash code is then encrypted by a sender’s private key, producing what is known as a digital signature. The plaintext is also encrypted, but this time by employing the public key of the intended receiver of the message. The digital signature and the encrypted plaintext are then sent to the recipient. When the recipient receives the message, he uses his private key to decrypt the digital signature. This produces a hash code. The sender’s public key, which is available to anyone who wants to send a digital signature securely back to the sender, is used to decrypt the digital signature. If the two decryption processes match up – that is, if the resulting hash code is the same as the hash code created from the received plaintext – then the recipient can be assured that the digital signature is genuine and the plaintext has not been tampered with. He can then use the sender’s public key to decrypt the actual message.

4.2 Two-Factor Authentication

Two-factor authentication, also known as two-step verification, is a security method in which a user is required to provide two authentication factors to authenticate. It provides a higher level of assurance that you are the real owner of the account and better secures resources. Two-factor authentication is a good way to add an extra layer of security to prevent someone else from accessing your account – even if they steal your password. The first factor is a password; this is something that the user knows. The second authentication factor is usually a security token: this is something that the user has. The security token is used to generate another value to represent a code. This code changes after a certain time period, often 60 seconds. Some common forms of security token include a key that the user inserts into a reader, a card that the user holds against a reader, or a smartphone app. An alternative method of two-factor authentication uses SMS or email; in this setup, after a user successfully provides their password, a message is sent to their mobile phone or email account with the second authentication code. They then provide this second code to complete the authentication process. However, this is generally considered to be less secure as there are a number of attacks that can intercept and read the SMS or email message. When using two-factor authentication, it is essential that the two factors use different channels of communication – for example, a password (something you know) and a security token (something you have). If they both rely on the same channel, it is possible that an attacker could intercept both the password and the second code as they are transmitted and authenticate as if they were the user. By using different channels, the security of two-factor authentication is greatly increased – just as it is when encryption and SSL are used to increase the security of passwords. Well-known third party companies often provide two-factor authentication systems as a service. This means that, rather than having to develop their own security measures, companies can integrate the third party’s system into their own system and allow the third party to handle the authentication of user’s accounts. This removes the need for the company to securely store large amounts of personal data and removes the responsibility of ensuring that the security measures remain up to date. There are a number of such services available with different levels of functionality, customization, and cost.

4.3 Fraud Detection Systems

The banks and financial institutions use these systems to detect unauthorized access and fraudulent transactions. Over the years, with the advancement of technology, fraud in electronic banking has become more sophisticated. As a result, using a single method of fraud detection is no longer effective. Multiple methods and systems are required. The first commonly used fraud detection system is an “expert system.” This is a computer system that is designed to emulate the decision-making ability of a human expert. An expert system can be used to restrict the number of times a customer can attempt to enter their PIN. If the system detects that the PIN has been entered incorrectly more than three times by the customer, their card may be retained by the machine. The second method is a “neural network.” A neural network is a computer system designed to work in a similar fashion to the human brain. It can learn from the data it processes in order to detect patterns and trends. For example, neural networks are used as a method of analyzing the spending habits of customers. The system can detect unusual spending by looking for patterns that do not match the usual spending characteristics of the customer. Finally, we have biometrics; a technology that involves using a person’s unique physical characteristics for identification and authentication. When it comes to electronic banking and fraud detection, biometric features such as fingerprints or retinal eye patterns can be used as a method of ensuring that the customer is who they say they are. By linking a person’s bank details to their personal biometric data, it makes it much more difficult for fraudsters to gain unauthorized access. These fraud detection systems are becoming an essential requirement to safeguard customers from fraud in electronic banking and continue to help detect and prevent fraudulent activity.

5. Challenges in Electronic Banking

In this section, I have tried to come up with some challenges in electronic banking. The fact that all the transactions and processes are done online makes it easier for cybercriminals to access and manipulate the system. So making sure that the system is safe and secure for online banking has been a major challenge. With advanced technology, cyber criminals are also working tirelessly to ensure that they beat all the cybersecurity measures put in place to safeguard electronic banking. Hacking, phishing, malware attacks, and Denial of Service (DoS) are the most common types of cyber-attacks and they pose a serious threat to electronic banking. The error in telecommunication and networking infrastructure is also a major challenge to electronic banking. Most of the transactions and processes run on real-time mode. However, from time to time, the system may fail to deliver due to technical hitches here and there. For example, connection errors, system downtime and slow responses are some of the technical issues which cut across electronic banking and they are likely to affect the normal operation of the system. Whether banking platform is a traditional bank or a FinTech company, customer trust and acceptance has always been a herculean task. There is a fear of job losses in traditional banks with the incorporation of the digital banking system. This kind of perception makes it even difficult for old customers to adopt electronic banking and also for the banking staff to accept and adapt to the new technologies. On the same note, without trust, security and flow of transactions may be compromised. Customers will feel insecure and will therefore avoid things to do with electronic banking. On the other hand, a firm cannot do away with the traditional way of doing things for the fear of losing its clientele during the trying moments of system failures.

5.1 Cybersecurity Threats

The section “5.1 Cybersecurity Threats” includes both intention-based attacks, such as phishing, hacking, and denial of service, and attacks that occur as a result of poor system implementation, such as viruses and malware. It also highlights the scale and business impact of electronic banking fraud. For instance, in 2017, the UK Finance UK Card Payments report stated that while brick and mortar fraud shrank by 8%, card not present fraud shot up by 34%. This phenomenon, where electronic banking fraud increases while traditional fraud decreases, is a commonality among industry reports and is a massive trend in the digital/electronic banking and cybercrime world. At the moment, the most popular and rising type of fraud for financial services is the aforementioned Remote Purchase fraud. This is when items are bought with a person’s credit/debit card details online without the physical card being used, and the cardholder not aware. The related cybersecurity threat has come to light after the recent TSB fraud incident involving their customers’ accounts, where it is likely that this type of fraud is involved. With this kind of fraud being prevalent in the current market, this rising trend in terms of the fraud type adds to the constant technological and security changes which make the process of fraud management even more complex and variable. Also, the experiences from the section “Wire Transfer” continue to emphasize the importance of a strong security program and operating environment to successfully protect email compromise as the main fraud and future cybersecurity threats. This experience touches upon the Remote Purchase fraud, again raising the point about the mounting security threat towards card not present transactions. The fraud prevention solutions mentioned here, such as User Authentication and Unilateral Protocols, serve as updates on how they can help to mitigate such cybersecurity threats and fraud from occurring in Wire Transfer.

5.2 Technical Issues

Electronic banking is vulnerable to technical issues just as any other computer-reliant activity. Despite the ongoing maintenance efforts of the banking sector, technical problems are still witnessed. These technicalities concern the internet connectivity and the backend system infrastructure on which the e-banking system relies. Sometimes, the banks’ websites which support e-banking services are over-congested, leading to a failure. As the e-banking system is still new to the banking industry, there are no harmonized standards. Banks and other financial institutions use disparate network and security technologies. Interoperability among all the systems globally is still a technological conundrum. On top of that, research shows that the software design on the backend is still wanting. For instance, according to “Bank Systems & Technology” Magazine, full transaction details are not carried by accounts aggregation software. These are third party software which presents in a single interface, financial information from different accounts held from different banks. The use of aggregation technique and technology, where information is automatically retrieved in e-banking from servers and presented to the users seamlessly, becomes an issue when a user is not sure whether the presented information is comprehensive. Moreover, some banks are yet to implement security steps that can be taken. For instance, if a user wants to transfer some money to a “whitelist” account, which is a trusted account previously provided in writing to the bank, only minimal details like the date of birth of the transfer recipient can be requested. This service, which is aimed at reducing the effects of phishing, has not been wholly embraced. On the side of the navigation, some banks’ websites have yet to achieve standards that can make e-banking more user friendly. For instance, some websites really designed to be used with a mouse, making it difficult for visually impaired to use the keyboard or other assistive technology when attempting to access information at any instance on the site. However new and significant a technological advancement the e-banking system may be, it is still susceptible to service failure. As I had discussed, the nature, predictability and unobtrusiveness of the cyber-attack on the e-banking system makes it another challenge. Its 24 hour service availability is a target to realization while the scope of the e-banking system as a potential medium to commit cybercrimes represents a threat. Further, its impersonal and mass nature allows a cyber-criminal to cause widespread financial losses using relatively small number of well-versed criminals. This is a challenge which concerns directly to the clients of the e-banking system and their trust on the service quality and reliability. These challenges put emphasis on the need to secure the online financial systems and to build trust by showing the e-banking system’s resilience to such cyber-attacks. Enhancing security and resilience to electronic banking will encourage further uptake and increasing the client’s trust and confidence of its reliability and integrity.

5.3 Customer Trust and Adoption

When referring to internet banking, every market needs to examine the factors that can affect their rate of adoption. As mentioned earlier, the trust that customers have in the security of the system is one of the key drivers of adoption. By contrast, lack of awareness among consumers is one of the main obstacles in China. Ads focus on creating consumer awareness about internet banking, a process that will also help to increase customers’ trust in the new system. Trust is considered such an important factor to adoption that it has a direct relationship with the adoption rate. This has been found in many markets. No researchers have developed a model specifically based on trust in internet banking adoption. However, customer adoption can also be affected by the existing alternatives, contrary to the potential benefits of internet banking. For example, in Slovenia, though there are other bottlenecks, such as the limited use of computers and lack of technological knowledge in society as a whole, a higher need for reform in the traditional banking sector is considered. Some banks are urging the Slovenian government to develop an online payment gateway for such as a Find Growns. This can significantly increase the rate of service adoption as the customer can be guaranteed safe and easy payment methods. Customer trust has been identified as a key determinant of internet banking acceptance, especially in the initial stages of system introduction.

6. Future Trends in Electronic Banking

It is interesting to know that electronic banking will continue to be greatly improved by the integration of artificial intelligence (AI) in the near future. That of course means that the existing AI systems will have to be boosted in terms of both their cognitive and learning capabilities. This will be crucial in enabling AI to perform more advanced functions that are increasingly required in digital banking. In addition, improvements in the burgeoning blockchain technology will also shape the future of electronic banking. As most of the world is moving forward to embrace all digital and decentralized systems – databases, transactions, and information are carried out. Blockchain technology, if optimized, can help in ensuring that electronic banking is secure and convenient as it should be. In 2-3 years to come, we might start experiencing a much secure means of authenticating digital transactions if the researches and trials on biometrics succeed. The days of secure pins and eTANs are expected to be replaced by the more reliable and highly effective biometric authentication solutions (e.g. iris, fingerprints, palm vein patterns, facial recognition, and finger vein geometry). For instance, the main German industries that focus on digital technology and security have come together to form a biometrics initiative to demystify the efforts and resources that are placed in digitizing citizens’ IDs, electronic passports, and registering mobile, internet, and other digital applications using biometric traits.

6.1 Artificial Intelligence Integration

Without AI, a lot of the automation within the banking sector wouldn’t be possible. AI helps to install a more intuitive way of interacting with clients. Today, most banks offer a virtual assistant, a chatbot, and voice-enabled services. These services use AI to understand and respond to inputs from clients, learning over time to provide more relevant and accurate responses. An example includes RBS’s virtual assistant Cora. User inputs and experiences are constantly recorded, analyzed, and optimized. Every chat session improves the service’s understanding of user inputs. By 2021, RBS had reported that Cora had typically been used over 300,000 times a month by clients and had helped answer over 60% of customer queries, showcasing the potential of AI bot integration within the banking industry. By pulling on ‘big data’, a prime logic behind AI, and amalgamating this with client usage patterns and what type of results in areas of the service are accessed and when, services can be continuously designed and redesigned to suit client needs, promoting an ever-evolving customer experience. Ergo, AI enables the exploitation of ‘big data’ to make the client experience as optimal as possible. Moreover, AI simulates human thinking, allowing complex and multifaceted issues to be solved by a machine, reducing both the risk of errors and the time spent in the problem being resolved. And with the implementation of automation, AI can therefore enable most of the routine and repetitive work to be managed, while simultaneously enhancing the decision support for employees. Already in many industries that manage information for a multitude of clients, such as banking and finance, workers are actively starting to use the term “cobot” – the notion of a collaborative robot that works alongside them, with the potential of freeing up time from routine tasks to be able to focus on the more cognitively demanding activities because of AI assistance.

6.2 Blockchain Technology

Blockchain is a public ledger which forms the main technological innovation of Bitcoin. A group of transactions in a block are verified by individuals in the network called miners who get an award in exchange for their time and the power it takes to verify a transaction. Once the transactions are verified, the next block is formed and the miner gets a new puzzle. As this sequence of forming the block chain containing all the transactions in an economy is a complex process, a very large amount of computational power is required and it is certainly not an energy efficient process. Nor is it a particularly fast process. However, there are businesses now looking to integrate blockchain technology into their structure in a way that will benefit the customer; the most common idea being to improve and streamline the payment process. As with most things, these payments are moving online, and businesses are forever looking for quicker, cheaper and more efficient ways in which to take customer payments. Work is now being done on integrating blockchain into the financial ecosystem. By verifying direct transactions between parts or agents with smart contracts stored on the blockchain, the amount of checking and confirming that needs to be done should require less time and resources as all the information is stored in one location and time.

6.3 Biometric Authentication

Another latest technology used for biometric authentication in banking is retina recognition. Divya and Gavas investigated the implementation of an iris recognition for ATM terminal. The system was modified to operate in the banking environment. The iris scan reveals a high level of unique points that are then used in the generation of iris codes. These codes are used to search the database of clients. When a matching record is found, the details from that database are returned back to the access control to act as the input parameter in the logic of allowing access to the facility. Their findings illustrate that the implementation of iris recognition could potentially lead to a highly secure method of ascertaining the identity of an individual for the purposes of banking security.

Some other banks have already integrated biometrics in their online and mobile banking applications. Niger Insurance in Nigeria is the first and currently the only bank using biometrics in its internet banking services. Its fingerprint-based biometric systems allow for convenient and secure authentication of the bank’s customers. Fingerprint and palm vein patterns have been employed by some biometric systems in some countries around the world. For example, Westpac bank in Canada uses the technology where fingerprints are scanned and measured, and the unique points are mapped and qualify as minutiae. These minutiae are then stored as a biometric template, which is encrypted and stored as a digital file. When customers go to access their accounts, their fingerprints are scanned, and the software uses the stored template of the fingerprint to detect and create a digitized image of the live scan. Once it proves a positive match with the stored biometric template, the customer is granted access to their account.