E-Banking

Modern lifestyles and heightened competition in the business world mean that a bank’s clients no longer want to be restricted to standard banking hours or practices. Whether they are private individuals or financial representatives of corporations, people are demanding more options for banking. In response to this demand, banks are recognizing technology as a key differentiating factor in the competitive financial marketplace. Recent advances in technology and security have opened the doors to innovative and convenient banking. As has often been said, the Internet Age is all about customer empowerment.

You can use the same equipment that you're using to read this article to streamline your banking and monthly bills, by switching to E-Banking. E-Banking, or online banking is now offered by hundreds of banks, credit unions, and savings associations. Your current bank may offer online access through the Web, or using software that they provide.

Once your online account is established, you'll be able to check balances in your accounts, transfer funds between accounts, enter payments to be made from your account (instead of writing paper checks), file loan applications and pay bills electronically through bill-paying systems. And your computer will remember who you write checks to, so the next time you pay a bill to that same company, you'll just have to enter the amount and point-and-click to confirm it -- and the bill will be paid!

E-Banking allows you to perform most of your routine banking tasks from the comfort of your home, office or location of your choice 24 hours a day with Internet access. However, I do believe that the Internet, because of its low cost, global reach and versatility raises the stakes for the banks - both in terms of the opportunities it presents as well as the risks. The advantages of E-Banking, and Internet-banking in particular, are quite clear - the ability, for example, to disseminate information widely and instantaneously at low cost but there are also strategic threats. The cheapness and global reach of the Internet opens up the threat of increased competition from new entrants who will no longer need a branch network to operate effectively in any given market. This competition can be launched across national frontiers.

Operational risk, including security risk, is of course one of the more frequently mentioned risks in connection with electronic banking. Security is not a new risk. We are all familiar with the various security issues that banks are facing on a day-to-day basis, e.g., robberies, thefts at ATM machines and frauds. However, banking transactions over the Internet do pose new issues. A major concern about the Internet is its open nature. In relation to banking on the Internet, this translates into increased risk of unauthorized access to, and alteration of, information.

To conclude, I think that E-Banking is the way forward for the banking industry. There is no doubt that technology is now the single biggest strategic issue in banking. E-Banking does bring new challenges and perhaps additional risks for banks, consumers and regulators. But it also brings new opportunities to improve the efficiency of the payment system and the quality of banking service. In particular, bankers like other businessmen are, or should be, urgently reviewing the opportunities provided by the Internet. Although it is tempting to dismiss much of what is said about the Internet as media hype, I do believe that it is true to say that we are living in the "Age of the Internet", and businesses that do not adapt to the opportunities and challenges which this presents, will have a limited future.