Digital Oman explores the Internet's exciting role in transforming the banking sector and bringing many of its customers closer through electronic means. Internet banking specifically involves consumers using the Internet to access their bank account and to undertake banking transactions from their home or office without requiring a trip to the bank. Internet banking does not require proprietary software or access to a private network. Anyone with Internet access can participate and interchange data with other software applications anywhere in the world.
Online banking has two technology models; namely, open and closed. In an open system, content changes can occur easily because of the use of standard technology and components. The Web is an open system that is easy to customize to a bank's changing needs. On the other hand a closed system is one in which the changes are difficult since every thing is proprietary.
Internet banking can range from a simple bank website to a sophisticated transactional website. Again banks in the real world can have Internet as a channel for banking in addition to their existing channels as an added service to their customers. There are even online banks that exist only on the Internet without any branches in the physical world.
We have seen earlier that Security First Network Bank (www.sfnb.com) in the United States is the first bank to provide electronic banking services to Internet users with a fully functional website in the mid of October 1995. The bank allured more of customers to go online by even offering 6 per cent interest on its checking accounts. They simply hoped to steer customers away from their brick-and-mortar channel of branch-banking.
Internet banking does not require proprietary software or access to a private network. Anyone with Internet access can participate and interchange data with other software applications anywhere in the world. On the threshold of the new millennium, Internet banking appears as a response both to the technical drawbacks of the previous home banking systems and to the growing demands of the consumers.
Some literatures mention Wells Fargo (www.wellsfargo.com) to be the first in the world to begin offering customers access to their accounts over the Internet. But this happening in May 1995 is not sufficient as the bank offered only services like account viewing through website and not any transactions. However, the first Internet-only bank to make real profit and prove it to be a viable and successful e-commerce model is the Net.B@ank (www.netbank.com) of the US. The major drivers for banks to go online are to keep up with the other banks that are going online; and also to reduce cost of supporting their branch operations with staff.
According to Booz, Allen & Hamilton, a consulting form, it costs a bank about $1 to deliver a manual transaction at a branch. The same transaction using an ATM would cost 25 cents while using the Internet it can go as incredibly low as 1 cent.
So when the citizen of the digital economy get tech-savvy, Internet may become the most predominant and profitable electronic channel for banks and other financial institutions. Let us consider some of the banking services available through the Internet in this column next week. (The author is a senior faculty member of Majan University College. She may be contacted at sendsengita@gmail.com)
By Sangeetha Sridhar
© Oman Daily Observer 2005
