Nandinirg (2)

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BANKING INNOVATIONS

• NRG
• Dept. of commerce and management

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INTRODUCTION

• Banking innovations made the operations of bank
  simple , easy , faster and systematic.
• In the face of competition , retaining market has
  become all the more difficult . Banker can
  improve upon their business only if bank
  employees specialize in one or more products and
  services.
• Banking Innovation
• Its stands for making something new in banking
  operations by using electronic devices and
  internet.
• Technology made for banking is to strengthen the
  operations by putting the services faster, easy ,
  cheaper and accurate. These are rightly called as
  Electronic banking services.
• Services are provided to different customer with
  the help of data base, electronic devices and
  internet.

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New technology in Banking

• Mobile Banking
• Debit and Credit card
• Internet Banking
• ATM(Automated Teller Machine)
• EFT (Electronic Fund Transfer)
• MICR ( Magnetic Ink Character Recognition)
• DEMAT (De-materialized account)
• RTGS ( Real Time Gross Settlement)

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• E-Banking or Electronic banking means conduct of
  banking operation through electronic means or
  devices such as computers, telephones, mobile
  phones, ATM etc.,.
• 1.Internet Banking
• Internet banking is also called as online banking
  or E-banking or web banking.
• It simply requires a personal computer and
  internet connection.
• The user connects to the banks website through
  internet and log in to the services by using
  valid user-id and password.
•  

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Features

• Non- Transactional tasks
• viewing account balance
• recent transactions
• Downloading bank statement
• Viewing images of paid cheque
• Ordering cheque book
• Downloading periodic account statement
• Downloading applications for M.banking ,
  E-banking etc

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• Transact banking tasks
• Fund transfer between the customers linked
  account.
• Paying third parties , including bill payment.
• Loan application and transactions, such as
  repayments of enrolments.
• Register utility billers and make bill payments
• The process of banking has become much faster
• Transaction approval process
• The process of banking has become much faster.

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• Advantages
• Faster and more convenient transaction
• No longer required to wait in long queues( 24X7
  Service)
• Opening of account simple and easy availability
• Larger customer coverage
• Abolishing the uses of paper and man power in
  transactions
• Cost effective for banker side
• Increase in customer satisfaction
• Fund transfer become faster and convenient
• Promoting banking services and product
  internationally
• Providing a personalized services

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• Disadvantages
• Huge initial start-up cost
• Lack of customer knowledge i.e illiteracy
• Lack of skilled personnel
• Security threat
• Viruses and worms
• Obsolescence of technology
• Technical problems
• Legal issues
• Training and maintenance

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2.Electronic Banking / Electronic fund
transfer(EFT)

• The use of electronic means to transfer funds
  directly from one account to another , rather
  than by cheque or cash.
• Client uses modern communication media-
  telephone, computer, payment card.
• Definition
• the provision of banking service through
  electronic channels and the customer can access
  the data without any time and geographical
  limitation
• Feature
• The ability to execute local and international
  payments directly from the comfort the home or
  office.
• This reduces cash handling and transport costs,
  lower the risk of theft.
• It increases speed and enhances the comfort of
  making payments.

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Advantages

• Faster and more convenient transaction .
• No longer required to want in long queues
• Opening of account simple and easy
• Larger customer coverage
• Promoting banking services and products
  internationally
• Increase the customer satisfaction and providing
  a personalized relationship with customer
• Abolishing the user of paper in transaction
• Cost effective for banker side
• Fund transfer become faster and convenient

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Disadvantages

• Lack of customer knowledge and skill on computers
  and browsing
• Security risk
• 1. Increased number of fraudulent bank websites
• 2. Fake emails purporting to be sent from banks
• 3. Use of Trojan horse programs to capture user
  IDs and password.
• Viruses and worms

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3. Mobile Banking

• Mobile banking means a financial transaction
  conducted by logging on to banks website using a
  cell phone, such as viewing account balances,
  account transactions, payments etc. via a mobile
  device such as a mobile phone.
• Definitions
• Mobile banking is a system that allows customers
  of a financial institution to conduct a number of
  financial transactions through a mobile device
  such as a mobile phone or personal digital
  assistant.

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List of Mobile Banking Services

• Mini statements and checking of account history
• Alerts on account activity
• Monitoring of term deposit
• Access to loan statement
• Access to card statement
• Insurance policy management
• Pension plan management
• Status on cheque, stop payment on cheque
• Ordering cheque books
• Balance checking in the account, recent
  transaction
• Due date of payment

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• PIN provision, change of PIN
• Blocking of cards(lost, stolen)
• Domestic and international fund transfer
• Micro payment handling
• Mobile recharging
• Commercial payments
• Bill payment processing
• Peer to peer payments
• Withdrawal at banking agent
• Deposit at banking agent

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Advantages
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• Advantages
• It can find mobile connectivity in the remotest
  places
• It saves lots of time
• Its simple and user friendly
• Its Cost effective
• It reduces the risk of fraud
• It cuts down on the cost of telebanking and is
  more economical
• Transfer money instantly
• Banking services like- Balance enquiry , Alerts,
  bill payment alerts

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4.ATM Banking

• ATM Banking is a banking operation through a
  machine at a bank branch or other location which
  enables a customer to perform basic banking
  activities (checking ones balance, make deposit,
  withdrawing or transferring funds) even when the
  bank is closed.
• Functions of ATM banking
• Cash transactions- both deposit and withdrawals
• non-cash transactions- Balance enquiry, Mini
  Statement

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• Benefits to customers
• Convenience to transact whenever and wherever
  required
• Variety of services at one point
• Easy availability
• Security transaction due to use of PIN
• Sense of security due to less cash holding
• Availability of good quality currency notes
• Enhanced interest earnings

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• Benefits to bank
• Improve image
• Reduction in staff workload
• Reduction in transaction cost and overhead
• Improve customer satisfaction
• Benefits to others
• Less circulation of cash

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5.MICR technology
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• It is technology used to verify the originality
  of paper document especially Cheque.
• This system facilitates the processing of checks
  and offers excellent security when performing
  financial transaction
• It is also applicable for ticket verification in
  airline companies
• Reasons why magnetic Ink character Recognition is
  deemed important In banking
• Quickly identify the banks that issued, it
  eliminates the need to manually verify.
• Read information accurately
• This technology rapidly processes high volume of
  Cheque per day within a minute.

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6. RTGS-Real Time Gross Settlement

• It is a fund transfer mechanism where transfer of
  money takes place from one bank branch to another
  branch on a real time and on gross basis.
• It is fastest possible money transfer system
  through the banking channel.
• NEFT is also an Electronic fund transfer that
  operates on a (DNS) Deferred Net Settlement basis
  which settles transactions in Predefined batches.
• NEFT settlement takes place 6 times during the
  week days( 9.30am, 10.30am,12 noon,1pm,3pm,4pm )
• 3 times during Saturday( 9.30am, 10.30am, 12noon)
• RTGS transaction- Min amount 2 lakh, no upper
  ceiling
• No min and max fixed for NEFT

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• Time consumed for funds transfer under RTGS
• Beneficiary branches are expected to receive the
  fund as soon as fund are transferred by remitting
  bank. Because it has to credit the beneficiarys
  account within 2 hrs. of receiving the fund
  transfer message.
• Availability of RTGS window to the customers
• This Service window is open on all days except
  for Sunday and national holidays
• RBI will send prior intimation to the
  participating banks about charges
• This service window for customer transaction is
  available from 9am 14.30pm on week days and
  9am-12 noon on Saturday
• For inter bank transactions the service window is
  available from 9 am to 18 pm on week days and 9
  am-14 pm on Saturday

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• Processing charges/Service charges for RTGS
• Rs. 2 lakh to 5 lakh not exceeding Rs. 30 per
  transactionAbove Rs. 5 lakh not exceeding Rs.
  55 per transaction.
• Details required from the remitter to carry out
  remittance under RTGS transaction.
• Amount, Account number, name of beneficiary bank
  and customer, account number,IFSC number
• All the bank branches in India are not RTGS
  enabled. Only few bank branches can extend this
  facility

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7. DE-MATERIALIZED ACCOUNT (DEMAT) SERVICES

• Demat account is like a bank account for holding
  securities just like funds. It is safe and
  convenient for trading for sorting shares in
  electronic form.
• Today, practically 99.9 settlement of shares
  takes place on Demat mode only thus it is
  advisable to have a beneficiary owner account to
  trade at the exchange.

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• BENEFITS OF DEMAT ACCOUNT
• There are a lot of benefits that a trader will
  have while opening a Demat account and they are
  as follows
• In your Demat account your dematerialized shares
  will be held in a secure electronic environment
• Share and securities will be transfer more faster
  and convenient then the physical form
• If u have Demat account then there are no charges
  on stamp duty while your securities are
  transferred
• There has been significant reduction in paper
  work involved while opening a Demat account
• The best thing is that you can even buy or sell a
  single share when you have a Demat account
• In a dematerialized account the risks involving
  physical share like loss of certificate or fire
  accurse

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• IS IT MANDATORY FOR TRADING?
• Yes, Demat account is mandatory for trading in
  Indian share market. The securities and exchanges
  board of India made it compulsory for buying and
  selling of shares.
• Because of SEBI guidelines, all physical
  certificates must be converted into Demat form by
  investor.
• Demat Charges Services
• No opening charges can open free Demat account
  with us
• Maintenance Charges No maintenance charges in
  first year
• Free trading software
• Trade in any number of lots or any order size
  just pay Rs 5 per order.

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• How to open Demat account
• STEP-1
• First visit the depository participant or its
  website with whom you want to proceed the DP
  Account
• The depository participant can be a broker, bank
  or any agent who acts as a link between the
  depository and the investor
• STEP-2
• You need to fill the Demat account procedure
  form. The following documents must be
  compulsorily attached with the DP account
  procedure form.
• Pan card, Identity proof, Residence proof,
  passport size photo with self attestation

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• STEP-3
• You will have to sign an agreement with DP in the
  prescribed standard format, which gives details
  of rights and duties of investor and DP
• You are entitled to receive a copy of the
  agreement and schedule of charges for future
  reference
• STEP-4
• The DP will then open an account and give you the
  Demat account number.
• this is also called beneficial owner
  identification number.
• All your purchase/ investment in securities will
  be credited to this account . If you sell your
  securities, your Demat account will be debited

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• Difference between Bank account and Demat account

BASIS BANK ACCOUNT DEMAT ACCOUNT
Form of holding Funds Securities
Uses for Safe keeping of money Safe keeping of Share
Facilities Transfer of money Transfer of share
Where to open A bank of choice A DP of choice
Minimum balance requirement Maintenance is specified for certain bank account No such requirement
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• 8 DEBIT CARD AND CREDIT CARD
• DEBIT CARD
• A Debit cards are new methods to transact cash
  between a buyer and seller of goods and
  services.
• DEFINITION
• An electronic card issued by a bank which allows
  bank clients access to their account to withdraw
  cash or pay for goods and services.

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• ADVANTAGES OF DEBIT CARD
• 24-hours access to cash
• View account balance mini statements
• Request a Cheque book /account statement
• Transfer funds between accounts
• Refill your prepaid mobile
• Deposit cash or Cheque
• Change your PIN
• VISA money transfer (Daily limit Rs 49,000)

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• TYPES OF DEBIT CARD
• 1. Online Debit Card
• Online debit cards instantaneously deduct the
  amount spent from a card holder's bank account
  immediately. You will be asked to enter your
  Personal Identification Number (PIN) when you pay
  with an online debit card.
• 2 Offline Debit Card
• Offline debit cards debit the amount spent to a
  card holder's bank account. A transaction using
  the offline debit card creates a debit against
  the cardholder's bank account. But unlike with a
  traditional debit card, no PIN is required during
  the transaction - all that is required is the
  user's signature. These cards are generally
  issued by credit card companies in association
  with the bank in which the account is held.

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• What is OFFLINE DEBIT CARD?
• Cards that have a slight delay in the processing
  of the sellers transactions and as such the
  sellers account is only credited with the amount
  after two days. In comparison, funds are
  immediately transferred with the help of online
  debit cards(check cards)
• 3.Eletronic purse card system
• it is a smart card with an embedded microchip. It
  provides multiple uses, especially for types of
  payments.
• 4. Prepaid debit cards
• A prepaid debit card works just as youd expect
  after acquiring a card, you load it with money.
  As you spend, money is deducted from your
  balance. When your balance is depleted, you need
  to reload your prepaid debit card and start the
  process over.

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• CREDIT CARD
• Credit cards are plastic cards with scan able
  magnetic strips issued by a bank or a business,
  which allow the cardholder to purchase goods or
  service on credit.
• DEFINITION
• Credit card, small plastic card containing a
  means of identification, such as a signature or
  picture, that authorizes the person named on it
  to charge good or services to an account for
  which the cardholder is billed periodically.

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• Essentially a credit card allows customer to
• Purchase product /service whenever and wherever
  customer want, without ready cash and paying for
  them at a later date.
• Have the option of paying only a part of the
  total expenses . The balance amount can be
  carried forward with an interest charged
• Withdraw cash through ATMs anywhere and anytime.
• Enjoy a revolving credit limit without any
  charges for a limited period (20-50days)
• Transact money of more than one currency, from
  one country to another.

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• Advantages of credit card
• Purchasing Power Credit Cards enable users to
  make big ticket purchases they might not
  otherwise be able to afford.
• Rewards Many cards offer rewards programs that
  will accrue points, discounts, or other benefits
  like frequent flyer miles.
• Convenience Credit cards reduce the need to
  carry cash. Most retailers accept credit cards
  and they are pretty much required for online
  purchases.
• Trackability The electronic record keeping that
  comes with credit cards make it easy to track
  your spending and identify fraud.
• Use during an emergency There are times when
  money is the simple solution to an emergency. If
  you get hit with an unexpected expense, credit
  cards can be the quick and easy solution you
  need.
• Builds credit history Responsible use of a
  credit card over time builds your credit history,
  qualifying you for better interest rates and
  other financial benefits

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• Disadvantages of credit card
• Overspending Credit cards can make life easier,
  but they can also make overspending easier as
  well. With a credit card, youre spending money
  you dont necessarily have yet. If youre not
  careful, this can quickly lead to unexpected
  debt.
• Interest and fees Using credit is essentially
  borrowing. And youre not borrowing for free.
  Mismanaging a credit card can lead not only to a
  high balance, or maxed-out card, but also to debt
  in the form of interest and fees.
• Fraud Credit cards (and other electronic forms
  of payment) carry unique dangers. Credit cards
  can be stolen, their numbers can be copied, and
  they can be used to steal your money and
  identity.
• Mounting Debt If you carry a balance on your
  credit card from month to month, it can be very
  easy for charges and interest to rack up. Many
  people dont expect credit cards to be gateways
  to extra debt, but if youre not careful, thats
  exactly what happens.

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• Difference between Debit and Credit Card

BASIS
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BASIS