The Indian Internet Banking Journey

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This sort of architecture, known as the 'three-tiered architecture' (comprising of a web server, Internet banking server and customer database protected by firewalls) creates a controlled environment, which allows quick incorporation of Internet security technologies. A security analyzer constantly monitors login attempts and recognizes failures that could indicate a possible unauthorized attempt to log into an account. When such trends are observed, steps are automatically taken to prevent that account from being used. The most significant benefit of Internet banking is the ready accessibility of bank accounts at all times. The inconvenience of visiting and waiting at the banks is also eliminated. This result in, enhanced customer satisfaction, reduced customer attrition and increased customer base. Internet banking considerably reduces transaction costs for the banks. According to a study conducted by consultants Booz-Allen & Hamilton, the cost of an average transaction on the Internet is as low as 13 cents, compared to $ 1.07 through the branch, 54 cents through the telephone and 27 cents through the ATM. The study also stated that Internet banking helped banks reduce the branch load and attract future customers.

In India, the cost of one banking transaction through the Internet amounted to 10 paise to the bank, as compared to Re.1 through a branch, 45 paise through an ATM, 35 paise through phone banking and 20 paise through debit cards. The low transaction costs and the promising picture painted by analysts induced many banks in India to introduce Internet banking services during the late 1990s. However, only few of them succeeded in moving beyond the launch of the website. ICICI's Internet banking service 'Infinity' became the most recognized and popular service in the country, providing a wide range of products and services.

ICICI - Internet Banking Initiatives

ICICI bank was incorporated as a commercial banking company, by the Industrial Credit and Investment Corporation of India (ICICI)⁴, 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-SAT⁵ 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.

ICICI was always regarded as one of the best private banks to foster advanced technologies in the banking sector. As part of its technology drive, in 1997, ICICI launched 'Infinity,' the first Indian Internet banking service. The service was launched to reduce transaction cost and offer convenient banking to customers. This meant enabling the customers to access their bank account and make transactions at any time. ICICI realized that to make Infinity a success, it would have to invest heavily in sound Internet banking e-commerce technology. During 1995-99, ICICI invested Rs 50 million in online banking technology solutions.

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4] ICICI is a leading financial services company, established by the Government of India, in 1955, to promote industrial development in the country.
5] 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.

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