The Indian Internet Banking Journey

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About Internet Banking Globally, the banking business has always been in the forefront of harnessing technology to improve its services and efficiency. Banks have been quick to adopt rapidly evolving electronic and telecommunication technologies to deliver an extensive line of value added products and services to their customers. By the early 1990s, direct dial-up connections, personal computers, tele banking and automated teller machines (ATMs) became common in most developed nations. Internet banking evolved in the mid-1990s when Internet and the World Wide Web began to catch on. Soon, many major banks in the US and Europe began to use the Internet to provide banking services. Internet banking is a web-based service that enables the bank's authorized customers to access their account information. It allows the customers to log on to the bank's website with the help of a bank-issued identification and a personal identification number (PIN). The banking system verifies the user and provides access to the requested services. The range of products and services offered by each bank on the Internet differs widely in their content.

Most banks offer Internet banking as a value-added service. Internet banking has also led to the emergence of new banks, which operate only through the Internet and do not exist physically. Such banks are called 'Virtual' banks or 'Internet only' banks.

The products and services offered by the banks on the Internet can be divided into three types:

Information Kiosks: It includes providing information regarding various products and services offered by the bank to its customers and others in general. The bank’s site receives and answers queries of customers through e-mails

Basic Internet Banking: It includes enabling customers to open new accounts, check account balance and pay utility bills

E-commerce Banking: Banks function as electronic market places (e-market place) enabling customers to use their accounts for money transfers, bills payment, purchase and sale of securities and online real time purchases and payments

In a typical Internet banking transaction, customers' requests for online banking information are passed on from Web server to the bank's Internet banking server through the WWW interface. These requests pass through a firewall² before they reach the Internet banking server. Due to the use of SSL technology,³ only authenticated requests reach the Internet banking server. The customer information database is stored on a bank's server, which is protected by the use of various security tools in addition to the firewall technology. The WWW interface is the only media of communication with the Internet banking server and Internet banking server is the only media of communication with the customer database, thus ensuring the safety of operation and customer data. When the customer requests reach the Internet banking server it passes the requests to the bank server hoarding customer database. The database provides the required information to the Internet banking server, which is in turn passed on to the web server, through the firewall, from where the customer is able to access it.

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2] A system designed to prevent unauthorized access to or from a private network. Firewalls can be implemented in both hardware and software, or a combination of both. Firewalls are frequently used to prevent unauthorized Internet users from accessing private networks connected to the Internet, especially intranets. All messages that enter or leave the Intranet pass through the firewall, which examines each message and blocks those that do not meet the specified security criteria.
3] Data security between the customer's web server and the bank’s web server is handled through a security protocol called Secure Sockets Layer (SSL). SSL provides data encryption, data integrity and server authentication for an Internet connection.

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