Meaning of Internet Banking
Internet banking is the
system that provides the facility to the customer to conduct the financial and
non-financial transactions from his net banking account. The user can transfer
Funds from his account to other accounts of the same bank/different bank using
a website or an online application. The customer uses a resource and a medium
to conduct financial transactions. The resource that a customer uses might be
an electronic device like a computer, a laptop, or a mobile phone. The internet
is the medium that makes the technology possible.
The facility of Internet
banking is provided through banks and the customer must be an account
holder with any bank to get the facility available for him/her.
Any user with a personal
computer and browser can connect to his bank website and perform any virtual
banking function.
Features of Internet banking:
- It has removed the traditional geographical barriers, it can reach out to customers of various countries. However, this has raised a lot of problems of legal jurisdiction.
- It has added a new dimension of risk which were earlier associated with banking transactions.
- A new form of competition has emerged due to the upcoming of internet banking system.
- Security of banking transaction have been the concern of both bankers & supervisors. Therefore, there is a need to provide better faciloities so as to secure internet banking.
Advantage of Internet Banking
- High rates on deposits.
- 24 hours access to website is available.
- Facilities such as payment of any bill is free of cost.
- It’s comparatively simple & quick.
- Availability of innovative products.
- Customer service quality is good comparatively.
Product & Services
The various types of
product and services which are available through internet banking are:
- Bill Payment
- Fund Transfer
- Shopping
- Investment
- Recharging
Risk Involved
Even through internet
banking is safe but there are certain risks involved which are as follows:
- Operation Risk: Such as negligence, fraud, hacking, etc.
- Security Risk: Such as any unauthorized access to bank system and data
- Legal Risk: When a crime is committed through internet banking by a criminal sitting in one country which affects a person in another country the problem of legal jurisdiction arises.
- Reputational Risk: All banks have to maintain a certain reputation in the market. Whenever any fraud is committed, it affects the market reputation of bank also.
- Money Laundering Risk: It is a process of transforming the proceeds of crime into ostensibly legitimate money or other assets.
Internet Banking Frauds
The various frauds which
can be committed through internet banking are as follows:
- Phishing: - It is an attempt by which the criminal tries to acquire any sensitive information such as username or password of the victims for malicious reasons. The criminal generally hides himself behind a trustworthy entity in a electronic communication.
- Spoofing: - In this, the criminal tries to conceal his IP address with a forged IP address. The purpose of this is to conceal the identity of the sender or the computer system
- Vishing: - It is an attempt to scan the user into surrounding private information that will be used for identity theft. The scammer usually pretends to be a legitimate business, and fools the victim into thinking he or she will profit.
- Schimming: - It is an illegal practice of taking money from cash receipts for personal use. It is a form of tax evasion.
- Money Muel: - They are people who serve as intermediaries for criminals and criminal organisation. They can be innocent too. They might just be helping the criminal unknowingly. Their work is to transfer fraudulently gained money to fraudsters.
- Data Diddling:- It means changing of the data before or during entry into the system. There are some other types hurdles which occurs during internet banking, such as:
Unauthorized access to
computer system & network.
- Email bombing
- Salami attacks
- Denial of service
- Virus
Precautions to be taken
- One must not enter his or her ID or Password or any sensitive information on the website without ensuring that the website is authentic. You must check the URL of your bank’s website.
- One must not use the links which are embedded in any e-mail to get to any web page.
- It is not policy of any bank to ask for the password of the customer hence, one must not under any circumstance disclose his or her password to even the officials of the bank.
- It is advised that you should not save your IP as well as your PIN in Internet Explorer Browser.
- Check your account and transaction history regularly.
- Update your computer with latest anti-virus and spyware regularly.
- Avoid using cyber cafe’s for Internet Banking.
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