Dear payanku,
Brett Watson defines an electronic banking system (EBS) as "A PC-based
desktop tool specifically designed to provide users with an electronic
interface to the banking system." (source: Watson, Brett 1998. "Cash
Management via Electronic Banking - Part One" KPMG • 28 Jul 1998 •
Originally published in The 1998 Year in Review a publication of The
Finance and Treasury Association, can be found online in the GT News
site <http://www.gtnews.com/articles_se/0655.html>). That includes
involve online account queries, bill payments and money transfers
among the banks themselves.
Electronic banking systems exist on the business as well as on the
individual user's level. In both cases, the system has several
important advantages - in saving people's time and efforts, and in
easing the banking actions for the clients.
The types of the systems also vary, according to the client's/end
user's needs, and according to the bank's needs. However, to a large
extent they are still dependent upon the level of security they are
able to maintain.
Proprietary electronic banking "offer multiple functions including the
ability to obtain timely electronic bank account information;
domestic, international and inter-company payments and trade
transactions" (Watson, ibid.).
There are numerous benefits of the usage of electronic banking system
for businesses and corporations. Watson (ibid.) claims that
"Electronic banking can add significant value to the day-to-day cash
management process by enabling access to timely electronic accounting
information; enhancing the timeliness of your payments and receipts
and reducing the cost of payment and receipt processing" (source:
Watson, ibid.). This might reduce the costs of cash management and
efficient the organisation.
Watson adds, that "Integration of these systems to the general ledger
is the key to realising the full range of benefits. Integration can
allow you to remove re-keying and to undertake bank reconciliations.
Access to the direct entry system is also provided as a module of
these systems. Direct entry is the lowest cost form of payment and
receipt processing with $0.50 or lower being the usual cost per item"
(source: Watson, ibid.).
Another element is that, a business can outsource cheque production to
the bank, therefore reducing payments. Watson explains, that the
business can "provide an electronic file to the bank which produces a
cheque and remittance and mails that to the recipient. This can also
provide significant savings for those organisations which print a
large number of cheques" (ibid.).
Another advantage is the speed of information, regarding banking
transactions. "Many banks are now providing same-day information as
well as value, and this information can be used to electronically
update your receivable systems" (Watson, ibid.).
There are also some problems with the systems. Most importantly is the
security issue, which prevents some actions from being performed on
the systems or at least changes the policies related to them, like in
issues of credit and treasury transactions.
Banking are related on trust, and if the system is not 100% safe for
transactions, this is a major setback and might pervert clients from
using the system.
This requires several cryptographic techniques, which are in a
constant "tension" with the hackers - trying to hack the system:
Symmetric Encryption is being used in combination with public-key one,
and with other types of encryption. Symmetric Encryption is defined as
"A type of encryption where the same key is used to encrypt and
decrypt the message. This differs from asymmetric (or public-key)
encryption, which uses one key to encrypt a message and another to
decrypt the message", Webopedia, "symmetric encryption"
<http://www.pcwebopaedia.com/symmetric_encryption.htm>).
When regarding to individuals, who are not business, this might reduce
the level of assistance they are receiving from the bank - and harm
their economic interests - while they are weaken (see Elric of Imrryr,
1999. "Banking - Brave New World to lock out poor customers" Post to
the misc.consumers newsgroup in 1999/01/24,
<http://groups.google.com/groups?selm=MPG.11155701d846ca27989885%40nntp.we.mediaone.net&oe=UTF-8&output=gplain>).
Further Reading
===============
Jones, George and Hill, Contemporary Management, 2nd ed. (New York:
Irwin/McGraw-Hill, 2000) pp. 70-72
Donal O'Mahony, Michael Peirce, Hitesh Tewari _Electronic Payment
Systems_ Artech House 1997
<http://www.amazon.com/exec/obidos/tg/detail/-/0890069255/ltc-political/103-1618531-1147846>
Chia Chun Wu, "Interim Project Report - Online Electronic Banking
Systems" University of Bristol
<http://www.cs.bris.ac.uk/~cwu/interim.pdf>
Yi-Jen Yang, "The Security of Electronic Banking"
http://csrc.nist.gov/nissc/1997/proceedings/041.pdf>
"Authentication in an Electronic Banking Environment August 8, 2001",
<http://www.ffiec.gov/pdf/pr080801.pdf or
http://www.fdic.gov/news/news/financial/2001/fil0169a.html>
My search strategy might also help: included the term "electronic
banking system" with several different other terms, such as
"definition" "advantages", etc.
I think that answered your question. However, if you need any further
clarifications on the answer, please let me know. |
