Don't open an account, if it isn't an e-bank

Banking has come a long way from the time of ledger cards and other manual filing systems. Most banks today have Electronic systems to handle their daily voluminous tasks of information retrieval, storage and processing. Irrespective of whether they are automated or not, banks by their nature are continually involved in all forms of information management on a continuous basis. 

The Computer is of course an established tool for achieving a competitive edge and optimal resource allocation. 

The most obvious banking application of Computers is customer service. Computerized banks respond immediately to requests from customers for Statement of Accounts, Balance and Account activity enquiries. With Signature and Image verification systems, the time taken to offer typical cashier services like receiving and paying out of cash, is minimized. 

With advent of Automatic Teller Machines (ATM), banks are able to serve customers outside the banking hall.

Furthermore, computers help banks to reduce the cost of doing business. 
Although, the effectiveness of the Information Technology deployment in banks is another matter, the fact remains that IT usage is now a reality. This is to be expected in view of the huge amount of information being handled by banks on a daily basis. On the customer's side, cash is withdrawn or deposited, cheques are deposited or cleared, statement of accounts are produced, etc. At the same time, banks need up-to-date information on accounts, credit facilities, interest, deposits, charges, income, profitability indices and other financial control information.

How effective is IT deployed by banks? IT investment by banks include IT infrastructure such as Hardware, Software, Networking (local, Wide Area and the Internet). For E-banking to be effective these areas must be well managed. Banking software can be described as the heart and soul of a bank's IT infrastructure. 

But having a good banking software may be of little value if your hardware is inadequate to meet your needs. Likewise in today's E-banking, Networking cannot be ignored. 
Banking today is much more than routine storage and retrieval of information. Computers give banks the ability to quickly respond to market trends, changes in the business environment or new directives from regulatory bodies such as the Central Bank and Ministry of Finance. In a highly competitive banking industry speed is a clear-cut advantage.

E-banking refers to the effective deployment of IT by banks. But hold on, the fact that a bank uses computers is not enough to qualify it as an E-Bank. How is Information Technology is used by the bank to drive the business of banking - for immediate and future goals? It is a fact that today a good number of banks cannot use their IT infrastructure to adequately deal with their immediate information requirements. Do such banks qualify to be called E-banks?

E-banking is about using the infrastructure of the digital age to create opportunities -both local and global. E-banking enables the dramatic lowering of transaction costs, and the creation of new types of banking opportunities that address the barriers of time and distance. Banking opportunities are local, global and immediate in E-banking. 

The benefits of Electronic banking compasses a broad range of functions and include: 
Electronic mail (email) improves communication between individuals and the bank, within the bank, with the bank and external parties and between banks.
The availability of online information provides bankers and customers with a powerful vehicle for research.

Banks can provide information and services online, which customers can pay for, and receive.
Banking processes are made more efficient and cost effective by integrating other aspects of banking operations such as treasury management and financial control.
If a banking function does not require physical interaction, it may derive the benefits of electronic banking.

Where should the Real E-bank be? First of all the bank must fully understand and appreciate the fact that the banking industry now exists in a global village. It must therefore strive to provide local and global banking services using the infrastructure of the Global village. 

Most current E-banking applications use the Internet. The advantages of online banking are in providing convenience and flexibility for customers. Let's take a look at some. 

Online banking allows customers to get current account balances at any time. Customers don't need to wonder whether a check has cleared or a deposit has been posted. At the click of a button, customers can easily check the status of their current, savings, and money-market accounts. 
Through online banking, banks can provide immediate account enquiries/statements online for customers. Customers don't have to wait till month end for historical, snail-mail statements. 

Online banking gives the ability to pay bills electronically. Electronic payments can be credited the same day or the next. Customers can also download account transactions online. It should be easy to import the transactions directly into typical PC programs at home or office. 

The transfer of money between accounts is another powerful application of online banking. 
Online banking provides flexibility, by allowing the customer to access his finances from any part of the globe. 

Most of the applications mentioned involve the use of the internet. This is to be expected: the Internet is the infrastructure for the current age. But hold it! E-banking is more than just Internet banking. 

In the still-evolving e-climate, in the E-conomy, it involves using the Net to exploit new opportunities by transforming products and markets, and business processes. 

E-banking also means developing new relationships with customers, regulatory authorities, suppliers, and banking partners with digital age tools. 
For example, it requires an understanding that customer/bank relationships will be more personalized, resulting in novel modes of transaction processing and service delivery. 

Today, banking executives and managers who still view e-banking as a passing craze risk being left behind. E-banking is essentially about banks using new age methods and tools to expand into new banking markets and grow. 

Creating a corporate online presence for your bank should be more than just building a web site; it should be about building a web business for your bank. To do this effectively, the people in charge, i.e. the CEOs, not just the IT Directors and managers, must have a deep knowledge of what E-banking culture demands. Banks can only apply IT effectively if management appreciation exists. Unfortunately, many managers who claim to appreciate IT cannot use IT. Can you give what you don't have?

IT today, E-business, E-commerce is not about routine information management or automation. It is about using these unique tools to create opportunities, create new markets, new processes and growth - the creation of e-wealth.

This will entail creative ideas and solutions, not simply the transplanting of block-and-mortar concepts onto the Internet. The E-Bank must monitor the environment - local and global, with the aim of understanding and mastering its environment. For E-banks, this involves collaboration (local and international) on payments systems, cashless transactions, digital cash and other electronic based projects.

It can be seen that the other immense potentials can only be realized if bank management and staff, not just the systems staff, are sufficiently literate and aware. Presently, the banking industry still has a lot to do in terms of training staff. The speed of change, together with the need for proper orientation for the e-world makes training even more of a necessity.

For E-banking to be effective, an area that must be addressed is security. For any IT based service, the convenience associated with E-banking increases the need for security. 

In E-banking, the core security areas must be addressed: Confidentiality, Integrity and Availability. A key concern is that of privacy. You cannot expect to do business on the net without addressing the privacy concerns of people you do business with. Do you have a privacy policy? No customer wants to click away to a negative balance. Security in online banking is typically provided through the use of a user ID and password. These and other security measures must be installed and must be effective to prevent not only the breach of privacy, but other security concerns like the alteration of data, IT fraud, etc.

But it is in ensuring system availability that banks still have a lot of work to do. When you are an E-bank, your banking services are totally dependent on IT. Of what use are powerful and functional programs, which are lacking in recovery procedures in an environment where telecommunications services are still at best epileptic. Fault tolerance and robustness of the IT setup in a bank must never be underestimated. Contingency plans should be put in place to handle this persistent problem of availability. 

As an E-Bank offering worldwide services, the fault-tolerance of its IT infrastructure cannot be compromised. Availability planning must address power supply, telecommunications, Internet service, quality of technical support, backup facilities, robustness of IT setup (Hardware, banking software, Networking).

In conclusion, to be a true E-bank, each bank must identify its own unique targets, focus and style. Banks need to realize that E-banking is more than simply banking on the Internet. E-banking is more than having a web site. E-banking is about building a web business for your bank.
 

Jide Awe

Jide Awe is the Founder of Jidaw.com (http://www.jidaw.com) 

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