E-Banking Operations Term Paper

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new era of information technology brought about a new speed in business and operations and a new meaning of everything from obtaining and passing on information to evaluating one's options in the field and to taking responsible decisions based on the information received. Corroborated with the global business environment which characterizes the end of the 20th century and the 21st century, and with the necessity to be able to act and react to factors occurring geographically in different places, technology became a must. In terms of speed, availability, operational ease or time saving, e-banking has become one of the most revelatory experiences in the way information technology was applied. We will further investigate the separate benefits and advantages that e-banking brought, both for the customers and for the banks where the service is available.

Customers

Any enumeration of the advantages and benefits of e-banking should perhaps first start with a definition of the concept, which will highlight some of the essential profiles of e-banking. As such, e-banking refers to "a service ( ... ) that allows you to conduct banking transactions over the Internet, using a personal computer, mobile telephone pr handheld computer, such as a personal digital assistant"

. These transactions generally range from simple bill payments, to B2B transactions and to money transfers between accounts

Conducting transactions using the Internet means, first of all, speed in dealing with the banking transactions one needs to perform. Generally, a transaction don at the bank, whether it may be a payment or receiving funds, comprises approvals, signing papers, waiting for the desk officer to process the information, etc. All these cumbersome tasks mean that a transaction will take everything from 10 to 30 minutes to be completed, depending on its difficulty and levels of approvals it needs to pass through before being completed.

E-banking resumes to using the online Web application that the bank provides on its website and simply detailing the operation one desires to make. The financial statements (which otherwise need to be printed at the bank) are usually sent by email to the user. The entire operation can take at most 5 minutes.

The speed of transactions brings about the benefit of saving time. Because transactions are processed and completed so fast, the user definitely saves a significant amount of time, especially if he performs these operations repeatedly over a certain period of time. The speed of transaction needs however to be corroborated with the advantage deriving from not having to queue at the bank and wait in line before getting to complete your transaction. The orders are automatically processed and, as such, any possible overlapping occurring is avoided

For any customer, e-banking is associated with not having to leave the house or the office in order to process a transaction. If we consider that for any businessman, time is money, e-banking appears to have its most important advantages in terms of speed and time saving.

Another advantage of e-banking we should be mentioning is related to availability. Any bank has a certain schedule, usually lasting no more than 9 or 10 hours. E-banking means an access to one's account 24 hours a day, 7 days a week

. For example, if time hasn't allowed the customer to access his account and perform an operation during the day, he can easily so thus at home, in the evening, after he has returned from work.

Accessibility is also closely related to Internet access and the possibility to check your account, execute transactions and make payments anywhere an Internet connection is available. If we consider the fact that the 21st century technology allows Internet access from mobile phones or PDAs, we may conclude that e-banking allows one to perform banking operations from his home, car, hotel, etc.

Another advantage of electronic banking is the fact that secure electronic transactions can be performed

. People may argue that the Internet is not the place to be dealing with money, to be operating one's funds freely over the World Wide Web. Partially true, the statement refers only to unsecured transactions. The electronic signature and electronic transactions are more secure, because the banks that practice the system have sophisticated applications that practically make hacking quite difficult. Firewalls and the personal identification number (PIN) allow for the e-banking process to be, in many occasions, more secure than the traditional one.

The fact that the customer has a permanent and "constant overview on the account balance and list of transactions"

allows for a better cash and financial management.

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In the traditional bricks-and-mortar bank, financial management implied going to the bank, getting a financial status on your funds and applying the measures you saw fit. With electronic banking, cash management is much easier to perform on the desktop application provided.

One advantage that e-banking provides and should not be neglected is related to costs. As many banks mention on their websites, "online banks' fees are often lower, and the interest you earn is higher than that of most other banks"

. Indeed, most of the banks that offer the e-banking facility have higher interest rates on deposit than traditional banks, in order to stimulate demand for this type of transactions. Additionally, some of the banks offer the clients the opportunity of choosing only one type of banking (traditional vs. electronic), at even higher interest rates.

The fees are generally lower in the case of interaccount transactions, but the real cost advantage comes from the fact that the customer is saving on all the postage costs associated with having to act on a payment in the traditional manner.

In order to resume some of the advantages from a customer point-of-view, we should mention the fact that these are generally related to comfort, cost, time saving, security, accessibility and better possibilities for cash and financial management of one's account. As one of the sites consulted mentioned, "about the only thing you can't do is get cash directly from your computer"

. In anything else, you can use electronic banking with confidence.

Banks

There are quite a few advantages for the banks as well and many of them strongly encourage the use of electronic banking (as I have previously noted, some of them offer higher interest rates for customers choosing to use only the e-banking system).

The first advantage for the banks we should note is the fact that with e-banking there will be less or even no queues in the bank, given the fact that all transactions can be handled through e-banking and that cash remissions are operated at the ATMs. Only operations such as credits and credit evaluations may be performed at the bricks-and-mortar banks. No queuing is equivalent to a higher level of comfort for the desk operators and a higher level of efficiency on their part.

Closely related to the benefit I have mentioned in the previous paragraph, e-banking reduces "pressure on the bank personnel"

. We are all familiar with the usual tense atmosphere that may occur when the bank personnel is not processing quickly enough the customers' demands. E-banking helps remove at least part of this disadvantage.

E-banking allows the banks to perform a better human resource management. Traditional banks employ a set of people that deal simply with the over-the-desk operations, payments, transactions, etc. E-banking takes over much of this cumbersome works, permitting thus for the respective workers to be assigned other tasks within the banks.

This definitely leads to cost reductions within the bank. The cost of stationery (for payments, financial status, etc.) and the cost related to extra salaries (if the bank decides to give up on some of the extra bank employees) make up part of the overall fixed administrative costs and lowering them will decrease banks' expenses.

Additionally, traditional banks operate large amounts of cash in the vaults, increasing costs related to maintaining a high level of security within the location, paying trained specialists to guard the money, etc. E-banking is means that everything is done electronically and that there is absolutely "no need to have huge amounts of cash in the vaults"

The banks can also increase their number of customers by using e-banking. Indeed, we should acknowledge the fact that the bank personnel can only operate and serve a certain number of customers in a day. Practically, with e-banking, this number is limitless, with a significant impact on the overall revenues.

If we consider all of the advantages for the banks deriving from e-banking, we may note, as the main consequence, a significant increase of the overall profitability of a bank practicing this system. The increase in profitability is determined, on one side by the lower administrative costs and, on the other hand, by the higher revenues, determined by a larger amount of customers using the banks' services.

As we can see from the list of advantages described previously, many of the benefits deriving from the use of e-banking are common for both the banks and the customers. I am referring.....

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