Concept of E-Banking

Historically, banks have adopted several new electronic and telecommunication technologies to deliver an extensive line of value added products and services to their customers. By the early 1990s, direct dial up connections, personal computers, telebanking and automated teller machines (ATMs) became common in most developed nations. E banking evolved in the mid 1990s when the Internet started gaining popularity.

E banking or Internet banking is a web based service that enables the bank's authorized customers to access their account information. It allows the customers to log on to the bank's website with the help of a bank issued personal identification numbers (PINs). The banking system verifies the user and provides access to the requested services. The range and content of the products and services offered by each bank on the Internet differ widely. Most banks offer Internet banking as a value added service. Internet banking has also led to the emergence of new banks, which operate only through the Internet and do not exist physically. Such banks are called 'Virtual' banks or 'Internet only' banks.

The products and services offered by the banks on the Internet can be divided into three types:

Information Kiosks: These provide information regarding various products and services offered by the bank, to its customers and others in general. The bank's site receives and answers customers' queries through e mail.

Basic Internet Banking: This type of service enables customers to open new accounts, check account balances and pay utility bills.

E Ccommerce Banking: Here, banks function as electronic marketplaces (emarketplaces) enabling customers to use their accounts for money transfers, bills payment, purchase and sale of securities, and online real time purchases and payments.

In a typical Internet banking transaction, customers' requests for online banking information are passed on from the Web server to the bank's Internet banking server through the WWW interface. These requests pass through a firewall, before they reach the Internet banking server. Due to the use of SSL technology,2 only authenticated requests reach the Internet banking server.

A system designed to prevent unauthorized access to Or from a private network. Firewalls can be implemented in both hardware and software, or in a combination of both. Firewalls are used to prevent unauthorized Internet users from accessing private networks connected to the Internet, especially intranets. All messages that enter or leave the Intranet pass through the firewall, which examines each message and blocks those that do not meet the specified security criteria.

2 Data security between the customer's web server and the bank's web server is handled through a security protocol called Secure Sockets Layer (SSL). SSL provides data encryption, data integrity and server authentication for an Internet connection.

The customer information database is stored on a bank's server, which is protected by the use of various security tools in addition to the firewall technology. The WWW interface is the only means of communication with the Internet banking server, and the Internet banking server is the only means of communication with the customer database; this ensures the safety of operations and customer data. When customer requests reach the Internet banking server, it passes the requests to the bank server which holds the customer database. The database provides the required information to the Internet banking server which is, in turn, passed on to the web server, through the firewall, from where the customer is able to access it.

This sort of architecture, known as the 'three tiered architecture' (comprising of a web server, Internet banking server and customer database protected by firewalls), creates a controlled environment, which allows the quick incorporation of Internet security technologies. A security analyzer constantly monitors login attempts and recognizes failures that could indicate a possible unauthorized attempt to log into an account. When such trends are observed, steps are automatically taken to prevent that account from being used.

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