Contents |
Name: Donnabel Guillermo
Course: Bachelor of Journalism/Law
Year: Second
Topic
Internet Banking - A look at the development of both consumer and institutional acceptance, and the ongoing security issues that accompany it. Furthermore, an insight into its impact on bank institutions, and a guide to building a successful internet bank.
Donnabel Guillermo 11:03, 12 Aug 2005 (EST)
1. Lafky, J.M. (1997) "Banking on the Internet," The Lane Report vol.13, iss.4, pg. 34.
This article looks at what is Internet banking during a time when this technological advancement was not as widespread and recognized as in today’s virtual community. It defines Internet banking as a means of using the Internet to perform banking transactions such as deposits, transfer of funds, investing, and bill payment.
Jean Marie Lafky differentiates this to online banking, which is more informational in nature as opposed to interactive.
The article also comments on the reluctance towards the Internet because of security issues, and why loyalty is important in regards to the demographics of Internet banking users. During the publication of this article, current users of Internet banking were young, educated and more affluent than the general population.
Donnabel Guillermo 18:34, 12 Aug 2005 (EST)
2. Jean, S. (1999) "Net banking: Not your father's bank," City Business vol.17, iss.12, pg. SS13.
The author of this article, Sheryl Jean, predicts that Internet banking will deliver the next big wave of commercial growth on the Internet. However, the article explains that it still has a long way to go.
Jean comments that while the number of financial institutions offering Internet banking has tripled in this article’s publication year, Internet banking has not reached more than 10% of transactions at any US bank. The article states that according to a study it is estimated that by 2003 18.5 million households will participate in Internet banking transactions.
This article also provides a commentary on the conservative approach taken by Minnesota banks in the US, and the effect of Internet banking on smaller banks. Also, it gives a brief insight into the possible services banks will provide on the Internet in the future.
Donnabel Guillermo 18:34, 12 Aug 2005 (EST)
3. Humphreys, K. (2000) “Internet Banking: Leveling the Playing Field for Community Banks through Internet Banking�?, in J. Keyes (ed.) Internet Management, Florida: Auerbach Publications, pp.175-183. ISBN 0849399874
This book provides reasons as to why banks should consider Internet banking. The author, Kim Humphreys, comments that Internet banking is the future for banks who want to attract new customers without increasing operation costs because the revolution is being driven by the consumer.
Some of the reasons Humphreys looks at are:
The author illustrates the success story of an American bank, First National Bank & Trust of Pipestone, as a support to her statements.
The chapter also discusses strategies on how banks can recover profits from Internet banking in a short period. Furthermore, it outlines ten must-ask questions for Internet banks in evaluating their services.
Donnabel Guillermo 18:58, 12 Aug 2005 (EST)
1. Li, S. and Worthington, A. (2004) “The Relationship between the Adoption of Internet Banking and Electronic Connectivity: An International Comparison,�? discussion papers in economics, finance and international competitiveness, Queensland University of Technology, Brisbane.
As the title suggests, this paper discusses the relationship between the adoption rate of Internet banking and electronic connectivity at an international level. The authors, Stephen Li and Andrew Worthington, highlight the countless studies related to Internet banking, although there has been little study on the specific issue concerned. They write the paper to fill this empirical gap.
The discussion is concerned primarily with two research questions;
The paper is based on a study which sampled 27 developed and developing economies. In this study Li and Worthington develop a multivariate regression model to predict the adoption rate. Logically, the results conclude that the international rate of adoption of Internet banking is influenced largely by the increasing number of people owning a personal computer. The authors state their results will affect the global banking industry in areas such as business marketing.
Donnabel Guillermo 18:50, 12 Aug 2005 (EST)
2. Cobbs, C. (2005) “Online banking gains popularity with Gen Xers, older Baby Boomers,�? Knight Ridder Tribune Business News, pg. 1.
This article examines the results of a 2004 survey by the Pew Internet and American Life Project. It yields from the survey the notion that Internet banking is one of the fastest-growing online activities, especially among Gen Xers and older Baby Boomers. The author, Chris Cobbs, describes the sharp rise in the number of Internet bank users in the US, and also identifies the driving force behind it.
Cobbs highlighted a 47% increase since 2002, with about one quarter of all adults (53 million) now fans of Internet banking.
Donnabel Guillermo 18:39, 12 Aug 2005 (EST)
3. Orenstein, B.W. (2005) “Banks branch out despite increased Web use,�? Eastern Pennsylvania Business Journal vol.16, iss.7, pg. 1.
This article examines why the future of banking is not dependant on the Internet, but rather a complement of all delivery channels including traditional brick and mortar banks and telephone banking. Beth Orenstein states that financial institutions must allow customers to bank in their preferred manner to be successful.
The author employs quotes from David Lobach, Vice Chairman and Chief Executive Officer of Embassy Bank to explain the reason for increased commercial bank branches. She quotes David Lobach, “People will research their symptoms online to see what might be wrong, but then they’ll go to their doctor for treatment. Likewise, people might research loan rates or deposit accounts online, and then walk into the bank and discuss what they want and the best way to achieve it with their banker�?.
The article is based on a study by the Pew Internet and American Life Project, which also found that broadband users with higher incomes embraced Internet banking more openly.
Donnabel Guillermo 18:39, 12 Aug 2005 (EST)
1. Federal Deposit Insurance Corporation (2005) “Safe Internet Banking,�? retrieved August 8, 2005, from http://www.fdic.gov/bank/individual/online/safe.html
This webpage offers information and tips on how to conduct safe banking over the Internet, for example how to keep personal information private and secure, and verify that an Internet bank is legitimate. The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the US federal government. It preserves and promotes conviction in the U.S. financial system by insuring deposits in banks.
Donnabel Guillermo 18:45, 12 Aug 2005 (EST)
2. Silverstein, M. (2005) “Banks Strive to Make Online Transaction Safe from Fraud & Identity Theft,�? New Jersey Business vol.51, iss.5, pg. 48.
This article describes the security procedures which banks are introducing to ensure secure transactions for customers. The author, Michael Silverstein, describes the difference in security measures between Internet banks with smaller firms and those with a customer-base of large corporations.
Silverstein outlines the security procedure of a small firm US Internet bank, Touch Point Services. They include change of password every 90 days, request of signatures, and an explanation on their website on how customers can protect themselves.
The article makes a comparison to a big firm US Internet bank, Sovereign Bank. Some of the security measures employed by Sovereign Bank include empowering only certain people to conduct specific procedures, the requirement of two people to complete a sensitive transaction such as wiring money, and the three-factor authorization.
The author explains that a rise in service also means a rise in security measures for banks that have a customer-base ranging from retail to government.
The article also highlights that in the virtual world insecurity will always be an issue. However, Silverstein provides a balance by stating that a study showed Internet losses is still in fact remarkably less than traditional lost.
Donnabel Guillermo 18:45, 12 Aug 2005 (EST)
3. Washington, D. (2004) “Commentary: Stay away from the phish,�? Daily Record and the Kansas City Daily News-Press, pg. 1.
In this article, Doug Washington looks at ‘phishing’, an Internet identity-theft scam. The article explains the concept of phishing and how it was developed in the mid 1990’s by criminals to conduct spamming.
Phishing involves the distribution of emails which appear to be from a trustworthy company. The emails alarm recipients into believing they are required to go to a fake webpage where they unknowingly relinquish personal information.
Finally, the article illustrates a recent phishing case before the Federal Trade Commission (FTC) involving a 17-year-old male.
Donnabel Guillermo 18:45, 12 Aug 2005 (EST)
4. Lekakis, G. (2005, Jul. 19) “Banks lose millions in Net fraud�? The Courier Mail, retrieved August 8, 2005, from http://www.thecouriermail.news.com.au/common/story_page/0,5936,15973564%255E3122,00.html
This newspaper article provides an indication of the million-dollar identity fraud industry related to Internet banking in Australia. The author, George Lekakis, writes the article based on a confidential document, which states that the potential financial impact of identity fraud could reach $6.1 million this year and $8.3 million in 2008. The story reveals that the National Australia Bank is losing about $1 million per month due to Internet fraud.
Donnabel Guillermo 18:45, 12 Aug 2005 (EST)
1. Simpson, J. (2000) The Impact of the Internet in Banking: Observations and Evidence from Developed and Emerging Markets, Perth: Curtin University of Technology. ISBN 1740670027
This paper investigates the impact of the Internet in banking. Simpson examines three issues with the purpose of testing the proposition that lower risks, higher revenues and lower costs are accredited to Internet banking. The three issues are whether Internet banking will result in:
Before John Simpson considers his study, the paper firstly identifies the benefits of Internet banking and the arguments against it.
The study is based on a sample of banks from a developed and emerging market. After employing algebraic equations and data derived from seventeen banks in the US and forty banks in developing markets over a five year period, Simpson concluded that the results supported his initial proposition.
Donnabel Guillermo 18:50, 12 Aug 2005 (EST)
2. Claessens, S., Glaessner, T, and Klingebiel, D. (2002) Electronic Finance: A New Approach to Financial Sector Development?, Washington D.C.: The World Bank. ISBN 0821351044
This discussion paper reviews the recent developments in electronic finance, and analyses its effects on consumers and more importantly financial service providers. Although this paper is concerned with e-finance in general, internet banking, which is a component of e-finance, has perhaps played the biggest part in reshaping the nature of financial services.
The authors of this paper firstly look at the reason for the spread of e-finance services globally, and also predict the future growth of Internet banking. Furthermore, they outline the consequent changes to financial sectors and their customers, including services at a lower cost but greater revenue.
The paper then examines its effect on the government and the policy changes that are required to respond to the development of electronic finance.
Donnabel Guillermo 18:39, 12 Aug 2005 (EST)
1. Hsu, C. and Pant, S. (2000) Innovative Planning For Electronic Commerce and Enterprises: A Reference Model, Massachusetts: Kluwer Academic Publishers. ISBN 0792384377
Chapter 7 of this book provides an exploratory plan for aspiring e-commerce enterprises on how to create a successful Internet bank based in Asia. Cheng Hsu and Somendra Pant base the plan on a reference model developed by a banker of an Asian bank who wished to remain anonymous. The banker developed a planning methodology, from strategic goal setting to analysis and design of an Internet bank. However, the scope of this chapter is limited only to some of the mundane activities of a bank.
The book identifies two steps to planning. They are the goal setting stage and the changes required of traditional processes in meeting the Internet banking goals.
Hsu and Pant outline some common Internet banking goals, which are categorised according to the type of business, for example, individual banking and international banking. These goals in turn yield an analysis of the design process.
Of particular interest to this chapter is the second stage of the methodology which looks at certain processes that are affected when building a Web-based bank. These include Savings Account Management Process, Savings Account Transaction Management Process and Loan Management Process. This section identifies the issues that need to be addressed, for example design, technical and security issues. Furthermore, it details how to avoid such problems and even goes insofar as developing possible scenarios that may arise and thus require different processes and design.
Donnabel Guillermo 18:50, 12 Aug 2005 (EST)
