| With the increasing popularity of
the Internet among the public as a whole, Internet banking
had to become a focus for most bankers. The concept
of allowing a bank's customer to communicate with the
bank via the Internet is an attractive one. On the part
of the bank, all that it requires is a relatively minor
investment in the hardware and software necessary to
offer the service and give customers 24-hour accessibility.
From the customer, Internet banking simply requires
that he or she have access to the Internet, something
that is increasingly a commonplace. From the customers'
perspective, Internet banking is also attractive since
many of the transactions they traditionally would perform
at the bank office can now be executed from the comfort
of their home or office, at whatever hour is most convenient.
All that being the case, why is it that "Internet
banking" has not become as successful or as widespread
as originally anticipated?
There are a number of answers to this question. The
first and most important is fear, on the part of the
bankers and customers alike, about the security of
the Internet. Other explanations relate to cultural
and even practical reasons, that is, in order to obtain
cash or to make a deposit the customer will always
have to go to a physical location, be it a regular
bank branch, or at least to an ATM. Some people feel
more comfortable when they go to the branch and perform
their transactions on a personal basis with their
banker and walk out with a receipt or some other documentation
as proof of their transaction. This explains why Internet
banks that do not have brick-and-mortar locations
will unlikely ever replace the traditional bank.
What has occurred is that banks have realized that
offering services via the Internet is critical if
they are to survive in the competitive environment
that characterizes the industry today. They must have
an Internet channel for those customers who demand
it and the product offering must have enough functionality
to satisfy their requirements. It must be secure and
it must convey to the customers the same image that
has characterized the bank's reputation and image.
One of the first characteristics this product offering
must have is online access to the customer's accounts.
Some of the offerings in the marketplace today work
with the closing balances from the previous nights
closing and will not update them until the day's closing.
This is not acceptable for most customers who want
to see their balances affected as they perform whatever
transaction they process through this channel.
From a functionality point of view, there is still
debate among bankers as to how many Internet-related
banking services they should offer. Some bankers decide
they only want to allow queries on balances, which
imply a low and acceptable degree of exposure from
a security point of view. Other bankers think that
they should offer the full spectrum of services to
try and supplant the bank's branch in order to minimize
traffic in the branches and reduce the bank's operational
expenses. The truth appears to be somewhere in the
middle. A typical Internet banking product will offer
queries on account balances, payment of loans, payment
of credit cards, in some countries the payment of
services (utilities), opening of new products, capability
of initiating transfers, stop-payment orders on checks,
and other services such as request of new checkbooks,
calculators, and the naming or renaming of their accounts
and the capability to send an e-mail to the bank.
Some even allow the opening of new accounts, for example
to open a certificate of deposit from funds coming
from a savings or checking account. The capability
to download an account statement to a personal computer
into a spreadsheet application is also quite common.
Insofar as security is concerned, every financial
institution that engages in Internet services must
take the necessary steps to protect themselves against
fraud-related losses and to insure that confidential
information is not distributed to unauthorized users.
Some of the security risks confronted in the Internet
include so-called "sniffer programs" that
can collect unprotected data such as credit card numbers
and passwords traveling the Internet, problems of
data integrity, authentication of users, non-repudiation,
which requires the creation of proof of origin to
protect the sender of transactions and the protection
of other bank systems once the internal network is
linked to the Internet. As the problems of Internet
security have increased, so have the protection measures
available to defend against its perils. Some of the
latest techniques and procedures available include:
user IDs and passwords, which to be effective they
must be properly controlled, data encryption (Secure
Socket Layer (SSL) and Secure HyperText Transfer Protocol
(S-HTTP) are standard technologies in this area),
certificate authorities and digital certificates to
address the issues of authentication, virtual private
networks, which permit the use of public telecommunication
infrastructure while maintaining privacy through the
use of tunneling protocols and security procedures).
Other security techniques might include routers and
firewalls, which are effective measures to be taken
to prevent unauthorized user access and stopping unwanted
activities on the internal network, and virus protection
software to protect servers and work stations. In
addition, physical security of the network, including
controlled access to the components of the network
are important measures to be taken. Finally, redundancy
and disaster recovery procedures are essential in
insuring the continued operability of the network
once established.
As with all new banking service offering Internet
banking will continue to mature and will become more
widespread as pervasive computing becomes a reality.
New problems will arise and new solutions will be
found. What is irreversible is the continued access
by Bank Customers to their accounts at the bank using
the Internet.
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