THE INDIAN INTERNET BANKING JOURNEY <<Previous ICICI - INTERNET BANKING INITIATIVES ICICI bank was incorporated as a commercial banking company, by the Industrial Credit and Investment Corporation of India (ICICI)[1] , in May 1994. The first ICICI branch was started in June 1994 at Chennai. The bank provides an array of domestic and international banking services to enable national and international trade and business, investment and foreign exchange and treasury services. Right from its inception the bank focused more on incorporating advanced technology. The bank operated the largest chain of ATMs in the country, which amounted to more than 450 in 2000. All the bank's branches were fully computerized and networked through V-SAT[2] technology. By 1999, the number of branches increased to 65 and the bank plans to have over 200 branches by the end of 2002. In April 2000, ICICI became the first Indian bank to be listed on the New York Stock Exchange..

'Infinity' was initially targeted at the non-resident Indians (NRIs) to enable them to manage their bank accounts in India through the Internet. According to the bank's sources, Infinity helped to increase the business generated from NRI customers from Rs 300 million in 1997 to Rs 1.4 billion in 1998. The service was also aimed at individuals in the age group of 30 to 50 years working in the corporate sector and proficient in using technology. However, over the next few years, the bank enhanced its services to attract other customers as well. As a result, by early 2000, ICICI had over 110,000 Internet banking customers. In the first half of 2000, ICICI's Internet banking customer base touched 275,000.
 

On account of the growing competition in the Internet banking sector, ICICI focused on enhancing and extending its business-to-business (B2B) and B2C services through tie-ups and acquisitions. The bank entered into a 50-50 joint venture with Satyam Infoway^[4] in December 1999 to offer retail banking products and services on the Internet. R. Ramraj, Managing Director, Satyam Infoway, said, "ICICI bank has many corporate clients and the idea is to develop e-commerce on a B2B platform where payments will be facilitated through ICICI. The alliance is going to give a big fillip to B2B."

Infinity's services included account information, funds transfer, bill payments, online Real-Time e-shopping payments; communication with bank manager, various customized services. The products were targeted at two different customers: individuals and small businesses, and corporates having an annual turnover of over Rs 500 million.

In the first half of 2000, ICICI introduced new Internet banking products for school and college students. Kid-e-bank was introduced to help children between 5-12 years to open an account and check the account balance on the Internet. Bank@campus was a service for students to enable services like ATMs, Smart Card, educational loans etc. It was launched across the country in many campuses.

As part of its B2C programs, ICICI tied up with 10 shopping malls all over India. This allowed customers to shop and pay bills online from their accounts. It also tied up with 24 billing companies across 11 cities, including Bharat Sanchar Nigam Ltd. (BSNL) for bill payment. The bank also offered mutual funds related services to its customers. It also tied up with automobile major Ford, for local delivery of its car 'Ikon' against orders placed on the Internet.

In 2000, ICICI bank acquired the Bank of Madura. Bank of Madura (BoM). BoM was amalgamated with ICICI bank from March 10, 2001, as a part of which, ICICI acquired BoM's customer base of 1.2 million. However, analysts felt the biggest gain was BoM's IT-savvy employees. By 2001, ICICI bank had emerged as one of the leading providers of Internet banking services in India. The bank was reportedly moving towards becoming a full-fledged e-commerce company in a couple of years. Nachiket Mor, Head of ICICI Treasury said, "The Seven-Eleven supermarket chain in Japan has recently applied for a banking license. This is the way world is moving. If supermarkets get into banking, then it is also time for banks to get into the selling of consumer durables."

HURDLES IN INTERNET BANKING

[1] ICICI is a leading financial services company, established by the Government of India, in 1955, to promote industrial development in the country.

[2] Very Small Aperture Terminal (VSAT) refers to an earthbound station used in satellite communications of data, voice and video signals. A VSAT consisted of a transceiver that was placed outdoors in direct line of sight to the satellite and a device that was placed indoors to interface the transceiver with the end user's communications device such as a PC.

[3]BankAway was the first Internet banking solution in India and was installed at four out of the six leading banks in the country offering Internet banking services. It was featured in a study, 'Ranking of International Internet Banking Solutions' by Meridien Research, USA. BankAway was the only solution from Asia Pacific to be featured in the report.

[4]Satyam Infoway or Sify was a Chennai-based subsidiary of Satyam Computer Services. Sify focused on providing Internet solutions like ISP operations, cybercafes and e-commerce consultancy.

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