[Securing Internet Banking] Part 2 – Internet banking

This paper defines Internet banking as systems that enable bank customers to access banking products and services over an Internet enabled terminal[1]. Internet banking is also known as online banking, e-banking, web-based banking and electronic banking. While some literature has differentiated banks that operate primarily or mostly over the Internet (Internet banks) from traditional banks that offer Internet banking services as part of its overall set of services, Internet banking services in this paper refers to the services themselves and therefore covers both.

Internet banking is a relatively recent phenomenon and had an uneven growth throughout the world. Different countries and regions had reacted differently to the onset of Internet banking, accordingly to their infrastructure capabilities and their existing banking environment. Before Internet banking was prevalent, home banking using the PC was a service provided by some banks. In PC banking, the bank customer performs his banking transactions using proprietary software that dials into the bank’s private network via a modem. Data is exchanged by the client software on the PC and the server at the bank. In comparison, Internet banking services use web browsers to access the bank’s servers which are on the Internet, a public network.

During the Internet boom years, Wells Fargo became the first bank to offer Internet-based banking services in 1995 and Security First Network Bank started to be the first Internet-only bank in October 1995. Today, most conventional banks of a reasonable size offer some form of Internet banking service.

Typical banking services provided by an Internet banking service provider are:

· Balance enquiry – information on the current account balances

· Funds transfer – transferring money from one account to another, which can possibly include accounts in another bank

· Bill presentment – viewing bank-related billing information (typically credit card)

· Bill payment – paying bills (typically recurrent bills e.g. utilities such as mobile phone or cable)

· Loans/accounts application – initiating the application process for banking products

· Investment activity – investment related banking services such as paying for shares

[1] See US Comptroller of Currency, Administrator of National Banks, Internet Banking – Comptroller’s Handbook (1999), Jaqueline Marcucci, “The Brave New World of Banking on the Internet: The Revolution of Our Banking Practices”, Nova Law Review, (1999), Monetary Authority of Singapore, Internet Banking Technology Risk Management Guidelines (2003) for alternate definitions.

One thought on “[Securing Internet Banking] Part 2 – Internet banking

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