Internet has become a very important tool for many organizations. In today's highly competitive world, to cater to
the needs of the customers more effectively, banks
are using the latest technology. Internet can be a great asset
to banks as well as customers. It helps banks to
enhance their services, reduce transaction costs, increase
the level of customer satisfaction, etc. In the same way, customers
can carry out their transactions with ease on a 24x7 basis.
Banking and financial institutions, being service
industries, must provide best services in order to attract new customers
and retain the existing ones. Internet banking is the delivery of
products and services using the Internet as the primary
channel. When a customer opts for Internet banking, he need
not travel all the way to the bank to carry out his transactions,
i.e., banking is not confined to a particular bank's branch.
Internet allows him to make his transactions from anywhere and at
any time. Initially, customers could carry out only the basic
transactions, like checking their account balance.
But now, they can even make other transactions, such
as opening of accounts, requesting for cheque book, applying
for loans, etc.
Transactions that could be made only after personal
interaction can now be carried out electronically. Though it is a
highly cost-effective delivery channel with many advantages, one
cannot overlook the risks associated with this kind of banking.
Some of the most important risks associated with Internet
banking are: credit risk, interest rate risk, liquidity risk, price risk,
foreign exchange risk, transaction risk, compliance/legal risk,
strategic risk, reputation risk, cross-border risks and information
security risk. |
