HUSNIYAH BT. ABD. RAHIM BILIK A2-14 Jabatan Pengurusan Sumber & Pengajian Pengguna

1. 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

2. Chapter 8 Financial Services Development and its Impact on Individual and Organisation

3. 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

4. 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.

5. 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. .

6. 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.

7. 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

8. 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.

9. 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.

10. 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.

11. 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.

12. 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.

13. 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

14. 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.

15. 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.

16. 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 .

17. 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

18. 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

19. 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

20. E-banking Components • Website design & hosting • Firewall configuration & management • Intrusion detection system or IDS (network & host-based) • Network administration • Security management • Internet banking server

21. 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

22. 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

23. 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

24. 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.

25. 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.

26. 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.

27. 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.

28. 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.

29. 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.

30. 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.