E-Banking: Meaning, Features & Risks Involved In E-Banking

Electronic banking has many names like e-banking, virtual banking, online banking, and internet banking. It is simply the use of electronic and telecommunications networks for delivering various banking products and services. Through e-banking, a customer can access his account and conduct many transactions using his computer or mobile phone.

E-Banking or Electronic Banking is a major innovation in the field of Banking. The Internet has emerged as an important medium for the delivery of banking products and services.

 ▪ Earlier Banking was conducted in a very traditional manner, there were no such innovations.

▪ Information revolution led to the evolution of the internet, which led to the evolution of E-Commerce continued with the evolution of E-Banking. Modern banking is virtual banking and with the help of this technology, customers can conduct banking activities anywhere in the world.

▪ The changes after the economic liberalization and globalization process, initiated in 1991, have

significant impact on the financial institution.

Modes Of E-Banking

Debit Cards:

The invention of Debit cards in 1966, commonly known as ATM cards is the most reliable, secure and essential part of our daily lives. A debit card (also known as a bank card or check card) is a plastic payment card that provides the cardholder with electronic access to their bank account(s). Payments using a debit card are immediately transferred from the cardholder's designated bank account. 

Because you’re using your own money to make purchases you don’t have to pay interest on the things you buy with your debit card. But you must remember to keep track of how much money you have in your account because it is possible to spend more money than you have in your accounts, causing you to overdraw your account.

Credit Cards:

 A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services. The issuer of the card creates a revolving account and grants a line of credit to the consumer from which the user can borrow money for payment to a merchant. 

Credit cards let you borrow from your credit card issuer. You will have a loan balance for any advance you take that you must pay off at a later date. A credit card allows you to purchase things with a lender—like American Express, Visa or

MasterCard—fronting you the money. The lender charges the merchant on each transaction.

Features Of E-Banking

Mobile applications are one of the primary targets for cybercrimes that need to be addressed. The 21st century has been the pillar of innovations and digitalization. With the growth in the demand for such applications, enabling payments anytime from anywhere, a lot of companies, providing mobile app developers are stretching the limits of safety, pushing users towards online threats. Today, with technology being a pillar of every industry, there are multiple ways of winning over this problem which is described below:

1. Add A Multi-Factor Authentication Feature:

 Simply requiring the submission of a single password before granting access to the customer's bank account is a defence system. By adding a multi-factor authentication feature - such as generated one-time passwords or fingerprints an individual can add a layer of defence which cannot easily be deceived.

2. End-To-End Encryption:

Many entities like payment cards, merchants, card brands and issuing banks exchange loads of sensitive data worth billions of dollars take place in a year. Due to this, it has become a hotspot for hackers. End-to-End encryption is a solution to this massive threat as it ensures that data is safe and sound. It conducts security audits and penetration tests which takes security measures the extra mile.

3. Fingerprinting Device:

The Introduction of Fingerprinting devices adds another dimension to banking mobile apps. It obtains various sets of signals such as IP address, location, time of the day, device type, location, screen size, browser etc.

4. Offer Real-Time Text And Email Alerts:

It is safe to assume someone using mobile banking on their smartphone has direct access to their email and/or text messages. By sending a quick, real-time email or text alert to notify a customer of account activity, they could easily prevent fraud. 

For example, some mobile bank applications allow you to be notified if more than one customer- a specified amount of money is spent. This type of notification could easily let someone know if their information has been compromised and be aware of money spent from their account.

5. Power Of Paperless Banking
The advent of IT technology and Mobile apps has had a massive impact on all sectors. Banking is no exception; digitalization has transformed most of its processes. With digitalization, banks can go completely paperless with most of its process including something as basic as opening a bank account and handling all the transactions online. 

Using digital or online platforms assists in increasing efficiency and transparency as all the files are in digital forms and access becomes quick and convenient. To implement all these, the banking institutions would require a mobile app solution provider which can provide them with enterprise mobility solutions.

6.  Utilize Behaviour Analysis
There is specialized software on the market that will monitor and analyze the login location and activity and online account activity of consumers. With the help of this technology, the mobile banking app could flag abnormal behaviour for further investigation. 

Further investigation could be an email or text alert to the customer advising of suspicious activity, or a call from the bank further investigating the suspicious activity.

7.  Safe Digitalized Documentation
Setting up an electronic signature can help in several verticals like e-Commerce, call centres, retail branches, etc. This method helps in bringing a huge portion of documentation on mobile which enables financial organizations to provide customers with various benefits. And most importantly it avoids cases of fraud and thus increases security.

8. Use Secure Access
By using secure connections via technologies like HTTPS, customer account information can be better secured between the browser and the website they are connected to. This technology will further protect customers against data theft and fraudulent logins.

Risks Involved In The Banking Industry:

1. Unencrypted Data:

This is a very basic yet crucial part of good cyber security. All data stored on computers within your financial institution and online should be encrypted. Even if your data is stolen by hackers, it cannot be immediately used by them if it's encrypted - if left unencrypted, hackers can use the data right away, creating serious problems for your financial institution.

2. Malware:

End-user devices - such as computers and cell phones that have been compromised by malware pose a risk to the bank's cyber security each time they connect with your network. Sensitive data passes through this connection and if the end-user device has malware installed on it, without proper security, that malware could attack your bank's networks.

3. Unsecured T Rd Party Services:

Many banks and financial institutions employ third-party services from other vendors to better serve their customers. However, if those third-party vendors don't have good cyber security measures in place, your bank could be the one that suffers. It's important to look into how you can protect yourself from security threats imposed by third parties before you deploy their solutions.

4. Manipulated Data:

Sometimes hackers don't go in to steal data - they simply go in to change it. Unfortunately, this type of attack can be difficult to detect right away and can cause financial institutions to incur millions of dollars in damages, if not more. 

Because the altered data doesn't necessarily look any different than unaltered data on the surface, it can be challenging to identify what has and hasn't been altered if your bank has been attacked in this manner.

5. Spoofing

A newer type of cyber security threat is spoofing - where hackers will find a way to impersonate a banking website's URL with a website that looks and functions the same. When a user enters his or her login information, that information is then stolen by hackers to be used later. 

As a bank or financial institution, you must find ways to mitigate the threats to your cyber security while still being able to provide your customers with convenient, technologically advanced options.

6. Phishing:

A common way for Internet scammers to obtain your personal information is through a method called phishing. Usernames, passwords, banking information and credit card details are phished through email or instant messaging. Phishing works by sending communications, which appear to be from your financial institution, but they're not. 

You're asked, supposedly by your financial institution, to log in to your online banking to verify account information. The fake email instructs you to click on a link that takes you to a non-legitimate version of your online banking site - one that's largely indistinguishable from the legitimate site - and you'll be asked to enter your credentials. . The details obtained will then be used for identity theft. Phishing emails may include:

• Notices that you've won a prize or monetary windfall and are required to pay a fee to claim it ~ Warnings about account closures
• Offers to register for a new service
• Offers for pre-approved credit cards
• Free virus-protection programs

7. Pharming:

Another way for hackers to get their hands on your details is by pharming them. Pharming occurs when hackers use malicious code on your PC, which compromises your computer's host file and redirects you to fake websites. The malware hides the fraudulent URL, cloaking it in the legitimate one that appears in your browser. 

With pharming, the dishonest redirection of URLs happens even when you type the correct URLs directly into your browser, making you think that you're on the correct website when you aren't. Once there, you're asked to enter your online banking credentials or account information, which hackers take and use for criminal activity.

8. E-Transfer Fraud:

If you have email and online banking access, you can send and receive e-Transfers. E-Transfer fraud occurs when someone steals your online banking login credentials and gains unauthorized access to your bank account. 

Once logged in, the individual sends e-Transfers from your bank account to another bank account elsewhere usually using fraudulent sender and recipient email accounts. The email addresses need to be active for as long as it takes for the fraudster to send and receive the funds.

9. Skimming:

Card skimming is the illegal copying and capturing of magnetic stripe and PIN data on credit and debit cards. It also involves the simultaneous withdrawal of funds from multiple ATMs in different locations, sometimes scattered throughout the world. Captured card and PIN details are encoded onto a counterfeit card and used to make fraudulent account withdrawals and transactions. 

Fraudsters can attach false casings or they can attach a camouflaged skimming device onto a card reader entry used with a concealed camera to capture and record PIN entry details.

10. Spyware:

When clicking on pop-up advertisements - ones that "pop up" in a separate browser window - you may be also downloading "spyware". These programs often come bundled with free programs, applications or services you may download from the Internet. 

Spyware software covertly gathers your user information and monitors your Internet activity, usually for advertising purposes. Be cautious about clicking on Internet banners and pop-ups or downloading free programs.