E Banking

                                       E Banking:

                             Internet banking (or E-banking) means any user with a personal computer and a browser can get connected to his bank -s website to perform any of the virtual banking functions. In internet banking system the bank has a centralized database that is web-enabled. All the services that the bank has permitted on the internet are displayed in menu. Any service can be selected and further interaction is dictated by the nature of service. The traditional branch model of bank is now giving place to an alternative delivery channels with ATM network. Once the branch offices of bank are interconnected through terrestrial or satellite links, there would be no physical identity for any branch. It would a borderless entity permitting anytime, anywhere and anyhow banking.  

                          The network which connects the various locations and gives connectivity to the central office within the organization is called intranet. These networks are limited to organizations for which they are set up. SWIFT is a live example of intranet application.

                           This is all about the introduction of banking management system we make a database which control the worth of banking management system. Our database Provides different kind of banking system such as.....

•  Account Opening
•  Online Banking
•  E-baking
•  ATM-Card
•  Demand Draft
•  Pay Order
•  Cash Withdrawal
•  Cash Deposit

   

Mobile Banking

                                   Mobile Banking:

                        Mobile banking (also known as M-Banking, embanking, SMS Banking etc.) is a term used for performing balance checks, account transactions, payments etc. via a mobile device such as a mobile phone. Mobile banking today (2007) is most often performed via SMS or the Mobile Internet but can also use special programs called clients downloaded to the mobile device.

                         A mobile banking conceptual model: In one academic model, mobile banking is defined as: "Mobile Banking refers to provision and ailment of banking- and financial services with the help of mobile telecommunication devices. The scope of offered services may include facilities to conduct bank and stock market transactions, to administer accounts and to access customized information."

          According to this model Mobile Banking can be said to consist of three inter-related concepts:

• Mobile Accounting
• Mobile Brokerage
• Mobile Financial Information Services

                        Most services in the categories designated Accounting and Brokerage are transaction-based. The non-transaction-based services of an informational nature are however essential for conducting transactions - for instance, balance inquiries might be needed before committing a money remittance. The accounting and brokerage services are therefore offered invariably in combination with information services. Information services, on the other hand, may be offered as an independent module.

Banking Day

                        Banking Day:

                                    For exchange contracts it is the day on which the two contracting parties exchange the currencies which are being bought or sold.. For a spot transaction it is two business banking days forward in the country of the bank providing quotations which determine the spot value date. The only exception to this general rule is the spot day in the quoting centre coinciding with a banking holiday in the country(ies) of the foreign currency(ies). The value date then moves forward a day. The enquirer is the party who must make sure that his spot day coincides with the one applied by the respondent. The forward months maturity must fall on the corresponding date in the relevant calendar month. If the one month date falls on a non-banking day in one of the centers then the operative date would be the next business day that is common. The adjustment of the maturity for a particular month does not affect the other maturities that will continue to fall on the original corresponding date if they meet the open day requirement. If the last spot date falls on the last business day of a month, the forward dates will match this date by also falling due on the last business day. Also referred to as Maturity Date.

Investmet Banking

                              Investment Banking:

                                    Investment banking is a field of banking that aids companies in acquiring funds. In addition to the acquisition of new funds, investment banking also offers advice for a wide range of transactions a company might engage in.

                                    Traditionally, banks either engaged in commercial banking or investment banking. In commercial banking, the institution collects deposits from clients and gives direct loans to businesses and individuals. In the United States, it was illegal for a bank to have both commercial and investment banking until 1999, when the Gramm-Leach-Bliley Act legalized it.

                                    Through investment banking, an institution generates funds in two different ways. They may draw on public funds through the capital market by selling stock in their company, and they may also seek out venture capital or private equity in exchange for a stake in their company.

                                    An investment banking firm also does a large amount of consulting. Investment bankers give companies advice on mergers and acquisitions, for example. They also track the market in order to give advice on when to make public offerings and how best to manage the business' public assets. Some of the consultative activities investment banking firms engage in overlap with those of a private brokerage, as they will often give buy-and-sell advice to the companies they represent.

                                    The line between investment banking and other forms of banking has blurred in recent years, as deregulation allows banking institutions to take on more and more sectors. With the advent of mega-banks which operate at a number of levels, many of the services often associated with investment banking are being made available to clients who would otherwise be too small to make their business profitable.

                                    Careers in investment banking are lucrative and one of the most sought after positions in the money-market world. A career in investment banking involves extensive traveling, grueling hours and an often cut-throat lifestyle. While highly competitive and time intensive, investment banking also offers an exciting lifestyle with huge financial incentives that are a draw to many people

                                    An investment bank is a financial institution that raises capital, trades in securities and manages corporate mergers and acquisitions. Investment banks profit from companies and governments by raising money through issuing and selling securities in the capital markets (both equity, bond) and insuring bonds (selling credit default swaps), as well as providing advice on transactions such as mergers and acquisitions. To perform these services in the United States, an adviser must be a licensed broker-dealer, and is subject to SEC (FINRA) regulation.

                                    Trading securities for cash or securities (i.e., facilitating transactions, market-making), or the promotion of securities (i.e., underwriting, research, etc.) was referred to as the "sell side".

                                    Dealing with the pension funds, mutual funds, hedge funds, and the investing public who consumed the products and services of the sell-side in order to maximize their return on investment constitutes the "buy side". Many firms have buy and sell side components.

           Functions of Investment Banking:

            Investment banks have multilateral functions to perform. Some of the most important functions of investment banking can be jot down as follows:

• Investment banking help public and private corporations in issuing securities in the primary market, guarantee by standby underwriting or best efforts selling and foreign exchange management. Other services include acting as intermediaries in trading for clients.
• Investment banking provides financial advice to investors and serves them by assisting in purchasing securities, managing financial assets and trading securities.
• Investment banking differs from commercial banking in the sense that they don't accept deposits and grant retail loans. However the dividing lines between the two fraternal twins have become flimsy with loans and securities becoming almost substitutable ways of raising funds.
• Small firms providing services of investment banking are called boutiques. These mainly specialize in bond trading, advising for mergers and acquisitions, providing technical analysis or program trading.

Electronic Banking

                                     Electronic Banking:

                                                For many consumers, electronic banking means 24-hour access to cash through an automated teller machine (ATM) or Direct Deposit of paychecks into checking or savings accounts. But electronic banking now involves many different types of transactions.

                                                Electronic banking, also known as electronic fund transfer (EFT), uses computer and electronic technology as a substitute for checks and other paper transactions. EFTs are initiated through devices like cards or codes that let you, or those you authorize, access your account. Many financial institutions use ATM or debit cards and Personal Identification Numbers (PINs) for this purpose. Some use other forms of debit cards such as those that require, at the most, your
signature or a scan. The federal Electronic Fund Transfer Act (EFT Act) covers some electronic consumer transactions.

          Electronic Fund Transfers: EFT offers several services that consumers may find practical: 

•  To withdraw cash, make deposits, or transfer funds between accounts, you generally insert an ATM card and enter your PIN. Some financial institutions and ATM owners charge a fee, particularly to consumers who don’t have accounts with them or on transactions at remote locations. Generally, ATMs must tell you they charge a fee and its amount on or at the terminal screen before you complete the transaction. Check the rules of your institution and ATMs you use to find out when or whether a fee is charged.
• You also may pre-authorize direct withdrawals so that recurring bills, such as insurance premiums, mortgages, and utility bills, are paid automatically. Be cautious before you pre-authorize direct withdrawals to pay sellers or companies with whom you are unfamiliar; funds from your bank account could be withdrawn fraudulently. 
• Personal Computer Banking lets you handle many banking transactions via your personal computer. For instance, you may use your computer to view your account balance, request transfers between accounts, and pay bills electronically.
• Debit Card Purchase Transactions let you make purchases with a debit card, which also may be your ATM card. This could occur at a store or business, on the Internet or online, or by phone. The process is similar to using a credit card, with some important exceptions. While the process is fast and easy, a debit card purchase transfers money — fairly quickly — from your bank account to the company’s account.  
• Electronic Check Conversion converts a paper check into an electronic payment in a store or when a company receives your check in the mail. In a store, when you give your check to a cashier, the check is run through an electronic system that captures your banking information and the amount of the check. You’re asked to sign a receipt and you get a copy for your records. When your check has been handed back to you, it should be voided or marked by the merchant so that it can’t be used again. 

                                     Be especially careful in Internet and telephone transactions that may involve use of your bank account information, rather than a check. A legitimate merchant that lets you use your bank account information to make a purchase or pay on an account should post information about the process on their website or explain the process over the telephone. The merchant also should ask for your permission to electronically debit your bank account for the item you’re purchasing or paying on. However, because Internet and telephone electronic debits don’t occur face-to-face, you should be cautious with whom you reveal your bank account information. Don’t give this information to sellers with whom you have no prior experience or with whom you have not initiated the call, or to companies that seem reluctant to provide information or discuss the process with you.

                                    Not all electronic fund transfers are covered by the EFT Act. For example, some financial institutions and merchants issue cards with cash value stored electronically on the card itself. Examples include prepaid telephone cards, mass transit passes, and some gift cards. These “stored-value” cards, as well as transactions using them, may not be covered by the EFT Act. This means you may not be covered for the loss or misuse of the card. Ask your financial institution or merchant about any protections offered for these cards.

                                    Disclosures: To understand your legal rights and responsibilities regarding your EFTs, read the documents you receive from the financial institution that issued your “access device.” That is, a card, code or other means of accessing your account to initiate electronic fund transfers. Although the means varies by institution, it often involves a card and/or a PIN. No one should know your PIN except you and select employees of the financial institution. You also should read the documents you receive for your bank account, which may contain more information about EFTs.

            Before you contract for EFT services or make your first electronic transfer, the institution must tell you the following information in a form you can keep.

• A summary of your liability for unauthorized transfers.
• The telephone number and address of the person to be notified if you think an unauthorized transfer has been or may be made, a statement of the institution’s “business days” (which is, generally, the days the institution is open to the public for normal business), and the number of days you have to report suspected unauthorized transfers.
• The type of transfers you can make, fees for transfers, and any limits on the frequency and dollar amount of transfers.
• A summary of your right to receive documentation of transfers, to stop payment on a pre-authorized transfer, and the procedures to follow to stop payment.
• A notice describing the procedures you must follow to report an error on a receipt for an EFT or your periodic statement, to request more information about a transfer listed on your statement, and how long you have to make your report.
• A summary of the institution’s liability to you if it fails to make or stop certain transactions.
• Circumstances under which the institution will disclose information to third parties concerning your account.
• A notice that you may be charged a fee by ATMs where you don’t have an account.

                                    In addition to these disclosures, you will receive two other types of information for most transactions: terminal receipts and periodic statements. Separate rules apply to passbook accounts from which pre-authorized transfers are drawn. The best source of information about those rules is your contract with the financial institution for that account. You’re entitled to a terminal receipt each time you initiate an electronic transfer, whether you use an ATM or make a point-of-sale electronic transfer. The receipt must show the amount and date of the transfer, and its type, such as “from savings to checking.” When you make a point-of-sale transfer, you’ll probably get your terminal receipt from the salesperson.

                                    You won’t get a terminal receipt for regularly occurring electronic payments that you’ve pre-authorized, like insurance premiums, mortgages, or utility bills. Instead, these transfers will appear on your periodic statement. If the pre-authorized payments vary, however, you should receive a notice of the amount that will be debited at least 10 days before the debit takes place.

                                    You’re also entitled to a periodic statement for each statement cycle in which an electronic transfer is made. The statement must show the amount of any transfer, the date it was credited or debited to your account, the type of transfer and type of account(s) to or from which funds were transferred, and the address and telephone number for inquiries. You’re entitled to a quarterly statement whether or not electronic transfers were made.

                                    Keep and compare your EFT receipts with your periodic statements the same way you compare your credit card receipts with your monthly credit card statement. This will help you make the best use of your rights under federal law to dispute errors and avoid liability for unauthorized transfers.

Types Of Banking

                          Types of Banking:

Online Banking:

                                   Online banking (or Internet banking) allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society. Features: Online banking solutions have many features and capabilities in common, but traditionally also have some that are application specific.

The common features fall broadly into several categories: 

=> Transactional (e.g., performing a financial transaction such as an account to account transfer, paying a bill, wire transfer... and applications... apply for a loan, new account, etc.): 

·         Electronic bill presentment and payment - EBPP

·         Funds transfer between a customer's own checking and savings accounts, or to another customer's account

·         Investment purchase or sale

·         Loan applications and transactions, such as repayments

=> Non-transactional (e.g., online statements, check links, cobrowsing, chat)

=> Financial Institution Administration - features allowing the financial institution to manage the online experience of their end users  

=> ASP/Hosting Administration - features allowing the hosting company to administer the solution across financial institutions: 

·         Support of multiple users having varying levels of authority

·         Transaction approval process

·         Wire transfer

            Features commonly unique to Internet banking include:

                          Personal financial management support e.g. importing data into personal accounting software. Some online banking platforms support account aggregation to allow the customers to monitor all of their accounts in one place whether they are with their main bank or with other institutions... 

                               Security e.g. Protection through single password authentication, as is the case in most secure Internet shopping sites, is not considered secure enough for personal online banking applications in some countries. Basically there exist two different security methods for online banking the PIN/TAN system where the PIN represents a password, used for the login and TANs representing one-time passwords to authenticate transactions. TANs can be distributed in different ways; the most popular one is to send a list of TANs to the online banking user by postal letter. The most secure way of using TANs is to generate them by need using a security token. These token generated TANs depend on the time and a unique secret, stored in the security token (this is called two-factor authentication or 2FA). Usually online banking with PIN/TAN is done via a web browser using SSL secured connections, so that there is no additional encryption needed.

                               Signature based online banking where all transactions are signed and encrypted digitally. The Keys for the signature generation and encryption can be stored on smartcards or any memory medium, depending on the concrete implementation.

                              Attacks e.g. Most of the attacks on online banking used today are based on deceiving the user to steal login data and valid TANs. Two well-known examples for those attacks are phishing and pharming. Cross-site scripting and key logger/Trojan horses can also be used to steal login information.

                            A method to attack signature based online banking methods is to manipulate the used software in a way, that correct transactions are shown on the screen and faked transactions are signed in the background.

                              A recent FDIC Technology Incident Report, compiled from suspicious activity reports banks file quarterly, lists 536 cases of computer intrusion, with an average loss per incident of $30,000. That adds up to a nearly $16-million loss in the second quarter of 2007. Computer intrusions increased by 150 percent between the first quarter of 2007 and the second. In 80 percent of the cases, the source of the intrusion is unknown but it occurred during online banking, the report states.

                          Countermeasures e.g. there exist several countermeasures which try to avoid attacks. Digital certificates are used against phishing and pharming, the use of class-3 card readers is a measure to avoid manipulation of transactions by the software in signature based online banking variants. To protect their systems against Trojan horses, users should use virus scanners and be careful with downloaded software or e-mail attachments.

                                In 2001 the FFIEC issued guidance for multifactor authentication (MFA) and then required to be in place by the end of 2006.

ELECTRONIC BANKING 

INVESTMENT BANKING 
   
                           These two are explained in others posts 

                        History of Banking

Banking activities were sufficiently important in Babylonia in the second millennium B.C. that written standards of practice were considered necessary. These standards were part of the Code of Hammurabi? The earliest known formal laws obviously, these primitive banking transactions were very different in many ways to their modern-day counterparts.   Deposits were not of money but of cattle, grain or other crops and eventually precious metals.   Nevertheless, some of the basic concepts underlying toady’s banking system were present in these ancient arrangements, however.  A wide range of deposits was accepted, loans were made, and borrowers paid interest to lenders.

Similar banking type arrangements could also be found in ancient Egypt.   These arrangements stemmed from the requirement that grain harvests be stored in centralized state warehouses.   Depositors could use written orders for the withdrawal of a certain quantity of grain as a means of payment.   This system worked so well that it continued to exist even after private banks dealing in coinage and precious metals were established.

                               We can trace modern-day banking to practices in the Medieval Italian cities of Florence, Venice and Genoa.   The Italian bankers made loans to princes, to finance wars and their lavish lifestyles, and to merchants engaged in international trade.   In fact, these early banks tended to be set up by trading families as a part of their more general business activities.   The Bardi and Peruzzi families were dominant in Florence in the 14th century and established branches in other parts of Europe to facilitate their trading activities.   Both these banks extended substantial loans to Edward III of England to finance the 100 years’ war against France.  But Edward defaulted, and the banks failed.

  Perhaps the most famous of the medieval Italian banks was the Medici bank, set up by Giovanni Medici in 1397.   The Medici had a long history as money changers, but it was Giovanni who moved the business from a green-covered table in the market place into the hall of a palace he had built for himself.   He expanded the scope of the business and established branches of the bank as far north as London.   While the Medici bank extended the usual loans to merchants and royals, it also enjoyed the distinction of being the main banker for the Pope.   Papal business earned higher profits for the bank than any of its other activities and was the main driving force behind the establishment of branches in other Italian cities and across Europe.

  Much of the international business of the medieval banks was carried out through the use of bills of exchange.   At the simplest level, this involved a creditor providing local currency to the debtor in return for a bill stating that a certain amount of another currency was payable at a future date often at the next big international fair.  Because of the prohibition on directly charging interest, the connection between banking and trade was essential.  The bankers would take deposits in one city, make a loan to someone transporting goods to another city, and then take repayment at the destination.  The repayment was usually in a different currency, so it could easily incorporate what is essentially an interest payment, circumventing the church prohibitions.  An example shows how it worked. A Florentine bank would lend 1000 florins in Florence requiring repayment of 40,000 pence in three months in the banks London office. In London, the bank would then loan out the 40,000 pence to be repaid in Florence at a rate of 36 pence per florin in three months.  In six months, the bank makes 11.1 percent? That’s an annual rate of 23.4 percent. It is also interesting to note that a double-entry bookkeeping system was used by these medieval bankers and that payments could be executed purely by book transfer.

   

   During the 17th and 18th centuries the Dutch and British improved upon Italian banking techniques.  A key development often credited to the London goldsmiths around this time was the adoption of fractional reserve banking.   By the middle of the 17th century, the civil war had resulted in the demise of the goldsmith’s traditional business of making objects of gold and silver.   Forced to find a way to make a living, and have the means to safely store precious metal, they turned to accepting deposits of precious metals for safekeeping. The goldsmith would then issue a receipt for the deposit.  At first, these receipts circulated as form of money.  But eventually, the goldsmiths realized that, since not all of the depositors would demand their gold and silver simultaneously, they could issue more receipts than they had metal in their vault.

  Banks became an integral part of the US economy from the beginning of the Republic. Five years after the Declaration of Independence, the first chartered bank was established in Philadelphia in 1781, and by 1794, there were seventeen more.   At first, bank charters could only be obtained through an act of legislation. But, in 1838, New York adopted the Free Banking Act, which allowed anyone to engage in banking business as long as they met certain legal specifications.   As free banking quickly spread to other states, problems associated with the system soon became apparent.   For example, banks incorporated under these state laws had the right to issue their own bank notes.   This led to a multiplicity of notes? Many of which proved to be worthless in the (all too common) event of a bank failure.