Electronic banking, also known as e-banking, virtual banking and online banking, is a service that allows customers to access their bank information, conduct financial transactions, make deposits, withdrawals and pay bills through the Internet without having to physically visit their bank. It provides the convenience of accessing banking facilities from the comfort of their home or office.
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The concept of electronic banking systems began when the first automated teller machines (ATMs) were installed in the 1970s. ATM machines allowed deposits to be made from remote locations—a convenience for customers who otherwise would have had to withdraw cash personally from their bank. According to D. K. Murthy and K. R. Venugopal in the book “Indian Financial System,” the advantages offered by ATM machines quickly spilt over to encompass other areas of bank services, computerising manual systems for greater efficiency and time savings. The concept behind ATM machines gave rise to smart cards, intranet and Internet banking, EFT (electronic funds transfer) and POS (point of sale) systems, phone banking and other electronic services.
Electronic banking facilities can be accessed by existing bank customers and new customers alike. Existing customers are typically required to forward their request and inquiries to their personal relationship manager or bank support staff. To access electronic banking features in the United States, new customers are required to provide their Social Security number. A customer is issued a personal identification number (PIN) and access details once his Internet account is verified.
Features and Services Provided
Electronic banking services and solutions fall into a few broad categories, including transactional services, non-transactional services, administrative services and wire transfers. Transactional services include EBPP (electronic bill presentment and payment), transfer of funds between different user accounts, investment sale or purchase, loan transactions and applications. Non-transactional services provided by electronic banking systems include webchat with online bankers, viewing online statements and accessing bank information services online. Administrative services are also provided online, including interest rate calculation, depreciation, adjustment of fees and others.
Electronic banking systems offer a multitude of advantages over traditional, physical banks. They provide a convenient, reliable and safe method of online transactions, allowing customers to access their financial records from anywhere in the world at any time. Electronic banking saves time, costs and allows information to be processed quicker than at standard brick-and-mortar banks.
While electronic banking systems ensure the provision of the highest levels of security by installing high-end firewalls and encryption software, breaches do occur. Hackers and malicious software can break into even the toughest of online vaults and steal personal information. System failures or technical hitches in servers can cause an electronic banking network to go offline temporarily, which can prove a nuisance, especially if a bill or payment is to be made or cash transferred urgently.
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