Impact of e-commerce on the banking sector with reference to ICICI, Citibank & SBI

SYNOPSIS:

Over the last ten years, the way of buying and selling of goods and services has been changed by the Internet. E-commerce is transforming the shopping experience of Indian customers. The introduction of electronic data interchange spreads into producers, retail traders, stock market operations and travel reservations et cetera, which resulted in a higher growth of the economy. The term "E-commerce" means doing online business with the help of computer, fax, telephone. In 1972, the term was firstly used by IBM. The first transaction was carried out between the European Union and the USA. In 1995, the introduction of internet marked the beginning of E-commerce in our Country.

E- COMMERCE IN BANKING:

E-banking (internet banking) is an E-commerce application which allows the customers to perform any of the virtual banking functions, financial functions online, in a protected and secure manner.

It involves using the Internet for delivery of banking products and services. E-banking functions include BFSI (Banking, Finance, Securities and Insurance). Banking concerns about providing the customers virtual banking functions, whereas financial functions include stock broking, payment gateways, mutual funds etc.

TYPES OF E-BANKING:

• Bill payment service
• Fund transfers
• Credit card customers
• Investment through internet banking
• Shopping
• Automated Teller Machines
• Credit/Debit/Smart cards
• Electronic Funds Transfer (EFT System)
• Mobile/Internet banking

MERITS OF E-COMMERCE IN BANKING SECTOR:

1. Time saving- Online banking undoubtedly, saves time by allowing direct transactions from office, home et cetera

2. Convenience- The biggest advantage that online banking brings to the table is its convenience. We can pay phone and other bills via online banking without rushing to the utility companies’ bill collection outlets.

3. 24*7 Services- Online banking transactions can be performed at any time and from anywhere.

4. Eco-friendly process- Online banking is an eco-friendly process as it does not consume volumes of paper like conventional banking modes and hence helps protect the environment.

CHALLENGES IN E-COMMERCE AT THE BANKING SECTOR:

1. Need for standardization of hardware, operating systems, system software and application software to facilitate inter connectivity of systems across branches.
2. Need for high level of security.
3. Communication and Networking- use of networks which would facilitate simplest data bases and distributed processing.
4. Technology plan with periodical up gradation.

COMPARISON BETWEEN SBI, ICICI AND CITIBANK:

Bank-wise Electronic Banking Operation by the Respondents

Services SBI ICICI Citibank Total

Banking from Home 13 10 16 39
Transfers after Bank Hours 10 15 07 32
To Reconcile Accounts 03 05 04 12
To View Recent Transactions 01 01 05 07
All the above 03 05 38 46

Total 30 36 70 136

THE STATE BANK OF INDIA:

• State bank supports unified and secure infrastructure, access to banking services for almost all the accounts in over 11,000 branches across India.

• The State Bank of India is one of the few banks which provides some special features in its online portal which are:

a. SBI E-tax
b. E-ticketing

ICICI BANK:

In the ICICI Bank, in the year 2000, 94%of the transactions happened at the branches and just 2% over the net, but in fiscal 2006, transactions at the branch were down to 22% of the total while the Net Banking transaction rose up to 18%.

CITIBANK:

Of many banks, Citi Bank offers different types of online services which are Internet Banking, Citi Mobile, Tablet Banking, and Citi We Chat Banking.

CONCLUSION:

The E-banking in India will have its own advantages to both the banks and the customers. As India is the second largest populous country and the 3/4th population lives in rural areas and there is a proper need to divert the efforts to the entire areas, the city as well as the villages. The use of Information Technology will not only reduce the costs of operation but also would be effective, easy to maintain, speedier and highly competitive. The banks cannot remain unapproachable from this perception of E-Banking, and they should bring appropriate changes to meet the necessities and challenges of E-Banking.

By: Navin Kumar Jaggi & Mansimran Singh Syal