INTRODUCTION

Banks have traditionally been in the forefront of harnessing technology to improve their operations including the Automated Teller Machines, etc. With the popularity of PCs, easy access to Internet and World Wide Web (WWW), Internet is increasingly used by banks as a channel for receiving instructions and delivering their products and services to their products, services and efficiency. They have, over a long time, been using electronic and telecommunication networks for delivering a wide range of value added products and services. The delivery channels include direct dial up connections, private networks, public networks etc and the devices include telephone, Personal Computers including the Automated Teller Machines, etc. This form of banking is generally referred to as Internet Banking. The provision of banking services on a secure website operated by their retail or virtual bank, credit union or building society is referred to as internet banking Here the customers can access the data without time and geographical limitations. Broadly, the levels of banking services offered through INTERNET can be categorized in to three types: The Basic Level Service is the banks websites which disseminate1 information on different products and services offered to customers and members of public in general. It may receive and reply to customers queries through e-mail, In the next level are Simple Transactional Websites which allow customers to submit their instructions, applications for different services, queries on their account balances, etc, but do not permit any fund-based transactions on their accounts, The third level of Internet banking services are offered by Fully Transactional Websites which allow the customers to operate on their accounts for transfer of funds, payment of different bills, subscribing to other products of the bank and to transact purchase and sale of securities, etc. The above forms of Internet banking services are offered by traditional banks, as an additional method of serving the customer or by new banks, who deliver banking services primarily through Internet or other electronic delivery channels as the value added services. Some of these banks are known as virtual banks or Internet only banks and may not have any physical presence in a country despite the offering

IMPORTANCE OF INTERNET BANKING

Our civilization operates on a busy, busy, busy mentality. We are regularly multitasking, and there does not seem like there is ever enough time. Banks naturally have very tough hours for working adults to fit into their schedule. With internet banking, you can do your banking several day of the week at several hour of the day. The enormous thing is that you can relocate funds from account to account, check in on your balances, and perhaps the greatest benefit is that you know how to pay your charges online! You can have your charges sent electronically so that you are not just saving paper, but you are also saving on postage. As an alternative of buying a stamp to send in your check, you be able to just transfer money directly into your account. Internet banking also offers you slightly more protection . You be able to keep an extremely watchful eye on the debits and credits that hit your account instantly. By maintaining an eye on it, you can see if there are any suspicious charges almost directly so you can defend your finances and personal information. The evolution of electronic banking started from the use of automatic teller machines (ATM) and has passed through telephone banking, direct bill payment, electronic fund transfer and the revolutionary online banking . The future of electronic banking according to some is the acceptance of WAP enabled banking and interactive-TV banking . But it has been forecasted that among all the categories, online banking is the future of electronic financial transactions. The rise in the e-commerce and the use of internet in its facilitation along with the enhanced online security of transactions and sensitive information has been the core reasons for the penetration of online banking in everyday life . The fundamental shift towards the involvement of the customer in the financial service provision with the help of technology especially internet has helped in reduce costs of financial institutions as well as

helped client to use the service at anytime and from virtually anywhere with access to an internet connection. According to theorists customer evaluation of the electronic services is influenced by attributions of success and failure in inter personal service situations. The use of electronic banking has removed the banking personnel that facilitate the transactions and has placed additional responsibilities on the customers to transact with the service. Although the use of E-banking is provided for the benefit of the customers but these changes require increased work or involvement on the part of customers.

CONTEXT History of internet banking

Internet banking can be defined as a facility provided by banking and financial institutions, that enable the user to execute bank related transactions through Internet. The world is changing at a staggering rate and technology is considered to be the key driver for these changes around us. An analysis of technology and its uses show that it has permeated in almost every aspect of our life. There are many activities are handled electronically due the acceptance of information technology at home as well as at workplace. Internet can be seen as a truly global phenomenon that has made time and distance irrelevant to many transactions. The transformation from the traditional banking towards internet banking has been a leap' change. During 1980s there were certain developments such as: Rapid development of internet TCP/IP system E-commerce In May 1995 Wells Fargo-the first bank in the world to offer customer access to their accounts over the internet. ICICI bank was the first to initiate the internet banking revolution in india during 1997 under the brand name Infinity.

FEATURES OF INTERNET BANKING

Transactional (e.g., performing a financial transaction such as an account to account transfer, paying a bill, wire transfer, apply for a loan, new account, etc.) Payments to third parties, including bill payments and telegraphic/wire transfers Funds transfers between a customer's own transactional account and savings accounts Investment purchase or sale Loan applications and transactions, such as repayments of enrollments Non-transactional (e.g., online statements, cheque links, cobrowsing, chat) Viewing recent transactions Downloading bank statements, for example in PDF format Viewing images of paid cheques Financial Institution Administration Management of multiple users having varying levels of authority Transaction approval process

UNIQUE FEATURE personal financial management support, such as 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. Different services provided under internet banking are:Online bill payment Shopping Ticket booking Prepaid mobile recharge Market watch Personal home page Investment services Online applications Personal update

Types of Internet Banking

The advent of the World Wide Web in the mid-1990s brought information to our fingertips. Using the Internet, we can shop, pay bills, hear weather reports, play interactive games and keep abreast of breaking news. In recent years, both Internet-based and traditional brick-and-mortar banks have set up shop online, allowing their patrons to send, receive and monitor money in their accounts. There are types of internet banking such as:Informational Internet Banking- This fundamental level of banking does not allow patrons to view or maintain accounts, nor does it allow for communication between the financial institution and customers. Informational Internet banking simply means the bank provides basic information about its products and services, much like a brochure. This is meant for marketing purposes only, and there is no connection to the bank's main computer systems. Communicative Online Banking- Communicative online banking allows for some communication between the patron and bank. However, this is typically limited to fundamental interactions such as account inquiries, new account updates, loan or mortgage applications, contact information updates and balances. Communicative online banking may connect with the bank's main computer systems. Transactional Internet Banking-The most popular online banking type, transactional Internet banking offers all of the benefits of a traditional brick-and-mortar institution. This includes full control over your accounts---deposits, withdrawals, transfers, updates and online payments. Increased security measures now make Internet banking safe, secure and convenient, especially in the case of mobile online banking.

Process of internet banking

Opening the banks website Selecting the option which provides Internet Banking Enter the user-Id and Password/PIN Perform the requisite transactions Logout

TECHNOLOGIES RELATED TO INTERNET BANKING

The technologies are:

Telephone banking Mobile banking IVR ATM EFT AFT

TELEPHONE BANKING
When banking and financial services are delivered to the customer of a bank through the medium of telephone is called as telephone. It uses AVR(automated voice response) In this technology a customer uses the tone-phone to send digitized data messages to the system in order to activate a particular service. the system contains software to recognize the tone/word.

MOBILE BANKING

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It refers to the banking activity that are carried out on mobile phone. Current Mobile Banking Applications: SMS Banking WAP Banking STK (Sim Toolkit) Banking Interactive Voice Response (IVR) is a software application that accepts a combination of voice telephone input and touch-tone keypad selection and provides appropriate responses in the form of voice IVR has come into our life at the beginnings of 90s. First step in Telephone Banking Peak transaction volume in salary payment days for balance inquiry Integrated with ATM system

IVR

ATM(AUTOMATED TELLER MACHINE)

On most modern ATMs, the customer is identified by inserting a plastic ATM card with a magnetic

stripe or a plastic smart card with a chip, that contains a unique card number and some security information such as an expiration date or CVVC (CVV). Authentication is provided by the customer entering a personal identification number (PIN). Using an ATM, customers can access their bank accounts in order to make cash withdrawals, credit card cash advances, and check their account balances as well as purchase prepaid cellphone credit.

ELECTRONIC FUND TRANSFER

Electronic Funds Transfer (EFT) is a system of transferring money from one bank account directly to another without any paper money changing hands. One of the most widely-used EFT programs is Direct Deposit, in which payroll is deposited straight into an employee's bank account. EFT is safe, secure, efficient, and less expensive than paper check payments and collections.

AUTOMATED FUND TRANSFER

The automatic funds transfer is a financial transaction that ensures funds are sent and received on schedule without the need for human intervention.

SECURITY MEASURES
There exist two different security methods for online banking. 1. 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, a. 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. b. Another way to provide TANs to an online banking user, is to send the TAN of the current bank transaction to the user's (GSM) mobile phone via SMS. The SMS text usually quotes the transaction amount and details, the TAN is only valid for a short period of time. Especially in Germany and Austria, many banks have adapted this "SMS TAN" service as it is considered as very secure. 2. 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.

COUNTER MEASURES
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

ARCHITECTURE

In the internet architecture there is a WEB SERVER. To the web server the BANK SERVER is connected. Banks access the customer database and then get connected to the web server for the transactions. The web server is connected to the internet. Firewalls are used for the protection.

MAIN CONCERNS IN INTERNET BANKING In a survey conducted by the Online Banking Association, member institutions rated security as the most important issue of online banking. There is a dual requirement to protect customers' privacy and protect against fraud. Banking Securely: Online Banking via the World Wide Web provides an overview of Internet commerce and how one company handles secure banking for its financial institution clients and their customers. Some basic information on the transmission of confidential data is presented in Security and Encryption on the Web. PC Magazine Online also offers a primer: How Encryption Works. A multi-layered security architecture comprising firewalls, filtering routers, encryption and digital certification ensures that your account information is protected from unauthorised access: Firewalls and filtering routers ensure that only the legitimate Internet users are allowed to access the system. Encryption techniques used by the bank (including the sophisticated public key encryption) would ensure that privacy of data flowing between the browser and the Infinity system is protected. Digital certification procedures provide the assurance that the data you receive is from the Infinity system.

ADVANTAGES OF INTERNET BANKING

1.BENEFITS FOR BANKS Large customer coverage Lower cast of operation International promotion of products and services Increasing customer satisfaction and providing personalized relationship with customers. 2. BENEFITS FOR SMALL TO MEDIUM BUSINESS to run its operations more effectively lower cost than traditional financial management mechanisms. 3. BENEFITS FOR CUSTOMERS Convenience-24 hrs a day and 7 days a week Cost- reducing transfer fees Speed- faster circulation of assets Competitiveness-fostering competition in financial market. Communication- communicate easily Environmental-abolishing the uses of paper

DISADVANTAGES OF INTERNET BANKING

Internet banking services provide a number of benefits to consumers. Despite the growing popularity of internet banking, it cannot be denied that some people still remain hesitant doing transactions online especially where money is concerned. Some of the disadvantages are :1. Impersonal.- Doing transactions on the internet can be very impersonal. In other words, you only do business with the use of a computer. No individual to receive and check your money or correct some wrong information that you might have written on a certain form. And so for people comfortable dealing with real people who provide personalized services and using paper and money, internet banking is not ideal. 2. Lack of trust- Many people still don't trust the internet. For the new users who have performed financial transactions for only a few times, they may still have this doubt whether or not they did the right thing such as clicked the right button and so on. They can only be comfortable once they print the transaction receipt and the transaction appeared on the bank statement. 3. Difficult for first timers- For a first time user, navigating through a website of an internet bank may be hard and may take some time. Opening an account could also take time as some sites ask for numerous personal details including a photo identification which can inconvenience the potential customer. Because of this complexity, they may be discouraged to use this internet banking service. Tutorials and live customer support may be provided, though, to help the client in his or her needed tasks so it's best to take the time to know the virtual environment. 4. Security fraud.- Many people shy away from internet banking because of the security threat. They can't help but worry about this aspect what with news on fraudulent bank transactions that pop up every now and then. However, this should not be a problem as banks that provide internet banking services prioritize security above anything else. Since they value their customers, they always use the most advanced security technology in protecting their websites. 5. Bank site changes- Most banks upgrade their online programs on a periodic basis sometimes adding new features and products. When this happens, the bank may ask customers to re-enter account information which can be a cause of worry. 6. Accessibility- If the Internet goes down in your area or the area of the banking office, you will be unable to access your accounts. This includes being unable to withdraw money from ATMs or to use your debit card.

TIPS TO AVOID INTERNET BANKING FRAUDS

The various ways to avoid interbanking frauds are:Phishing A person's personal details are obtained by fraudsters posing as bankers, who float a site similar to that of the person's bank. They are asked to provide all personal information about themselves and their account to the bank on the pretext of database upgradation. The number and password are then used to carry out transactions on their behalf without their knowledge. 2. Hacking Here, personal data is stolen through hacking. The fraudster needs to be an adept cyber criminal who can steal information stored or transacted in any computer. Sometimes, a spyware is installed in computer to gain access to all files. 3. Securing your account Here are some simple tips to prevent you from falling into the trap of cyber criminals. Remember, a simple ignorance or oversight can make a huge dent in your hard-earned savings. Avoid online banking on unsecured wifi systems and operate only from PCs at home. Never reveal password to anyone. Do not even write it on a piece of paper on diary. Just memorise it. It should be alphanemeric and change it frequently. Never reply to queries from bank online about account or personal details. The personal information should not be kept in a public computer or in emails. 4. Check sites Url Always check the URL of your bank's web site. Fraudsters can lure you to enter your user ID and password at a fake website that resembles your bank. If you see anything other than the bank's genuine URL, it has to
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be fake. Never enter your user ID or password or such sensitive information without ascertaining that you are on the right website. Always type the Web address of your bank into the browser address space. Never click on the link in the email. 5. Full-proof password Change your online banking password at regular intervals. Also, avoid easy-to-guess passwords, like first names, birthdays, kid's or spouse's name and telephone numbers. Try to have an alpha-numeric password, one that combines alphabets and numbers. If you have several bank accounts, never use the same online banking password for all. Never select the option on browser that stores or retains user name and password. As it can easily be cracked by cyber criminals. Also, never paste your password, always type it in. This little amount of `finger exercise' will go a long way in safety. 6. Always check 'last logged' Most banks have a 'last logged in' panel on their websites. If your bank has it, check the panel whenever you log in. If you notice irregularities (like you are logging in after two days, but the panel says you logged in that morning!), report the matter immediately to your bank and change your password right away. Always log out when you exit the online banking portal. Close the browser to ensure that your secure session is terminated. Never exit simply by closing the browser. 7. Keep your system up to date Regularly check for security updates for your computer operating system. Most security updates are aimed at reducing risks to your computer, these may be data-related or otherwise. Make sure that your operating system and browser have the latest security patches installed. And, always install these only from trusted websites. Install a personal firewall to prevent hackers from gaining unauthorised access to your computer, especially if you connect to the Internet through a cable or a DSL modem. 8. Public access can be injurious Don't leave the PC unattended after keying in information while transacting on the website. Avoid accessing your bank online at cyber cafes or on a share or public computer. Also, avoid locations that offer online connections through wireless networks (Wi-Fi), where privacy and security are minimal. 9. Public PCs Also, using Net banking services at cyber cafes leaves one vulnerable to data thieves. Another modus operandi adopted by cheats these days is stealing data from public computers or shared PCs. The fraud here takes advantage of unsecured cyber cafes. A police office says, "Sometimes, the cafe owners are hand-inglove with the thugs."

CONCLUSION
More and more banks are coming to realize that internet is a part of banks' alternative delivery channel strategies activities concentrated in the business-to-consumer segment, focused on retaining clients In Internet banking, security is a primary concern. Security concerns have been addressed from every angle within the architecture of the Internet banking application Internet banking is now being widely accepted because of the following reasons:It accelerates the process of creating new markets It Reduces operational costs and workforce Checking with no monthly fee, free bill payment and rebates on ATM surcharges It facilitates faster, easier and more reliable service to clients It helps in the development of Corporate image Exceptional rates on Savings, CDs, and IRAs Credit cards with low rates Easy online applications for all accounts, including personal loans and mortgages 24 hour account access

Quality customer service with personal attention

The potential of E-banking is huge. With the increase in connectivity, the number of users will explode, The strategy for banks is to provide value-added services to products to customers utilizing the Internet extensively. Web based banking service or E-Banking, the latest generation of banking transactions, has opened up new window of opportunity to the banks and existing financial institutions. Since its evolution in 90th decade, it is having unprecedented growth.