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FEM 3204 : 3 (2+1) Perancangan Kewangan Dalam Pasaran Global Financial Planning in a Global Market. HUSNIYAH BT. ABD. RAHIM BILIK A2-14 Jabatan Pengurusan Sumber & Pengajian Pengguna Fakulti Ekologi Manusia. Chapter 8
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FEM 3204 : 3 (2+1)Perancangan Kewangan Dalam Pasaran GlobalFinancial Planning in a Global Market HUSNIYAH BT. ABD. RAHIM BILIK A2-14 Jabatan Pengurusan Sumber & Pengajian Pengguna Fakulti Ekologi Manusia
Chapter 8 Financial Services Development and its Impact on Individual and Organisation
E-banking Defined • Electronic banking simply known as e-banking or electronic fund transfer (EFT) is the use of computers & telecommunications enabling banking transactions to be carried out by telephone or computer instead of through human interaction • Thus it is an automated delivery of banking products & services directly to customers through electronic, interactive communication channels
Use of E-banking • Used by financial institution customers, individuals or businesses for retail purchases, automatic teller machines (ATMs), automatic payroll deposits and bill payments • Other than that to access accounts, transact business, or obtain information on financial products and services through a public or private network, including the Internet.
E-banking System • Uses computer & electronic technology as a substitute for checks & other paper transactions. • Initiated through devices like cards or codes that enable individuals or authorized personnel to access the account. • Eg. ATM cards or debit cards, Personal Identification Numbers (PINs), account holders’ signature or a scan are used for this purpose. .
Medium of Transaction • Electronic channels involved are personal computer (PC), via landline & mobile phone connections, automated teller machines (ATMs), personal digital assistant (PDA), kiosk, or Touch Tone telephone.
Benefit of E-banking • For services such as home banking, whereby a person can make transactions via personal computer or via a direct connection or by accessing a Web site., transactions could be made anywhere, & any time including at home & not only during the day. • Vastly reduced the physical transfer of paper money & coinage from places to places or from persons to persons
Benefit of E-banking (cont.) • It facilitate retail payments • Consumers could appreciate the 24-hour access to cash through an automated teller machine (ATM) or Direct Deposit of paychecks into checking or savings accounts.
Type of E-banking Services 1. Automated Teller Machines (ATM) or 24-hour Tellers: • Electronic terminals allowed anytime banking transactions. • To withdraw cash, make deposits, or transfer funds between accounts, using an ATM card & PIN number. • Some charge or fee will be required for interbank transactions, from one bank to another bank (eg CIMB to RHB Bank). ATMs will tell that a fee will be charged at the terminal screen before completing the transaction.
Type of E-banking Services 2. Direct Deposit • Authorized individuals with specific deposits, such as paychecks & Social Security checks, to your account on a regular basis. • Individuals can pre-authorize direct withdrawals so that recurring bills, such as insurance premiums, mortgages, & utility bills, are paid automatically.
Type of E-banking Services 3. Pay-by-Phone Systems: • Individual can call the financial institution to instruct on bill payment or to transfer funds between accounts. • A pre -agreement with the institution is needed prior to the transfers.
Type of E-banking Services 4. Personal Computer Banking: • Enables individuals to handle many banking transactions via personal computer. • Eg. viewing the account balance, request transfers between accounts, & pay bills electronically.
Type of E-banking Services 5. Debit Card Purchase Transactions : • Enable ones to purchases with a debit card, which also may be the ATM card. • This could be at a store or business, on the Internet or online, or by phone. • Similar to the process of using a credit card, with some important exceptions., with enough fund in your account
Type of E-banking Services 6. Electronic Check Conversion: • It converts a paper check into an electronic payment in a store or when a company receives the check in the mail. • In a store, the check given to the cashier is run through an electronic system that captures the individuals banking information & the amount of the check. • One has to sign a receipt & have a copy of it.
Type of E-banking Services 6. Electronic Check Conversion (cont.): • The check is handed back to the individual with certain mark on it by the merchant so that it can’t be reused. • The merchant electronically sends information from the check (but not the check itself) to the financial institution & the funds are transferred into the merchant’s account.
Type of E-banking Services • In cases where a check is mailed to a merchant , they may electronically send information from the check through the system, & funds are transferred into their account. • For a mailed check, an advance notice should be send by the merchant. The notice might be included in the monthly statement or under its terms & conditions. • It should also state if the merchant will electronically collect a fee, in cases of insufficient funds .
Choice of E-banking System Financial institutions may choose their e-banking system configuration based on four factors: • Strategic objectives for e-banking • Scope, scale, & complexity of equipment, systems, & activities • Technology expertise • Security & internal control requirements
E-banking Support System Financial institutions may outsource in supporting their e-banking services through the following hosts: • Another financial institution • Internet service provider • Internet banking software vendor or processor • Core banking vendor or processor
E-banking Support System Financial institutions may outsource in supporting their e-banking services through the following hosts (cont.): • Managed security service provider • Bill payment provider • Credit bureau • Credit scoring company
E-banking Components • Website design & hosting • Firewall configuration & management • Intrusion detection system or IDS (network & host-based) • Network administration • Security management • Internet banking server
E-banking Components (cont.) • E-commerce applications (e.g., bill payment, lending, brokerage) • Internal network servers • Core processing system • Programming support • Automated decision support systems
E-banking Marketing & its Effect on financial management of individual • In the late 1990s, the concept of electronic banking was heavily promoted • Even in the first wave of the application of the Internet, banks were advised to change from the traditional transactions to the one supported by electronic, electronic money was introduced
E-banking Marketing & its effect on financial management of individual (cont.) • Singapore may be the first place to operate using mostly electronic money by 2008. • The bank Nordea in Scandinavia has a significant proportion of customers who bank electronically
E-banking Marketing & its effect on financial management of individual (cont.) • In promote heavily this technology, customers did not really want this technology. • Instead, many require a friendly & efficient service. • A research was conducted for this Market Assessment report by BMRB Access in April 2004.
E-banking Marketing & its effect on financial management of individual (cont.) • Although a significant proportion of the 977 respondents claimed to use their bank electronically, however very few of them showed any enthusiasm for electronic banking services. • This indicates that people are not very interested in automated telephone services, nor in being advised on their financial affairs by their bank.
E-banking Marketing & its effect on financial management of individual (cont.) • In addition, they are even less interested in using electronic purses/ cashpoint for all their financial affairs, • They are not at all interested in interactive television banking or downloading cash to their mobile telephones.
E-banking Marketing & its effect on financial management of individual (cont.) • In fact, a considerable proportion of the respondents believed electronic banks to be insecure & would not trust them to handle their affairs. • Even though many of these respondents were elderly & in the lower social grades, it would be unwise to disregard their opinions.
E-banking Marketing & its effect on financial management of individual (cont.) • In Scandinavia, Nordea bank does not face such problems & has a large, international clientele of remote customers of the wide range of services. • In Singapore, the introduction of electronic smart cards has been pioneered by the road charging system & there is a consensus (85%) in favour of these cards.
E-banking Marketing & its effect on financial management of individual (cont.) • In the UK, consumers are more cautious bank branches are critical to a multichannel distribution system. • Cashpoints are being upgraded, although providers are gaining benefits from this. • In addition, plastic cards are being used increasingly for both payments & borrowing. • Debit cards are more popular than credit cards, leads to a long-term decline in margins on card operations.
E-banking Marketing and its effect on financial management of individual • Banks need to show that they have mastered electronic banking technology, can offer full security & that they can provide a service that meets customer's needs. • When this happens, customers in the world will be ready to accept the technology that is already accepted in such countries, eg. Singapore, Hong Kong & South Korea.