E-Banking (Electronic Banking) has characterstistics which may increase the overall risk profile of an institution. It happens because there are large numbers of threats and vulnerabilities in publicly accessible networks. A bank should prepare an appropriate e-banking strategy which reduces the vulnerabilities and, at the same time, increase the wealth of a bank.
Before providing the e-banking services, banks should take into account the needs of various customer segments and the institution's risk assessment considerations. Some of the factors which are worth considering in formulating an e-banking strategy.
Banks should periodically revaluate their e-banking strategy to ensure that it remains appropriate for overall business strategy. If the e-banking strategy is in accordance with the overall business strategy, it will reflect in the bank's market share, customers' relationship, expenses reduction, new revenue generation etc.
The major reasons for adopting e-banking strategy by banks are lower operating cost, greater geographic diversification, new revenue opportunities etc. The individuals who do the cost-benefit analysis should take into account the risks attached to the e-banking. Without those considerations, a bank can underestimate the requirements with regard to technical expertise and resources to monitor the e-banking activities.
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