In India, the regulatory body has not yet sanctioned virtual bank, in abroad there are banks like EGG Bank or NET Bank, which only have a virtual presence without any physical branches.
Net Banking has three basic features. They are as follows:
The banks offer only relevant informations about their products and services to the mass.
Few banks provide interaction facility between the banks and its customers.
Banks are coming up with arrangements of utility payments, like telephone bills, electricity bills, etc.
The current statistics show that hardly 10 per cent of Indian customers uses the internet for banking. Among all the facilities provided, the maximum of them uses only for checking balance or requesting for a cheque book. Very few customers uses the advance interactive services provided by the banks.
According to HDFC and ICICI Bank, 17 per cent of ICICI customers use the Internet for banking and 10 per cent of HDFC customers prefer it.
Cost of installation of services
For basic features, the cost for providing such services to the banks come around Rs 40 lakh to Rs 50 lakh. For the third level service or sophisticated services, the investments mount to the tune of Rs 4 crore to Rs 5 crore. These investments is just a fraction if compared to the operations of the bank using physical infrastructure.
Services provided by Net Banking
Queries
Check Balance
See Statement
Inquire about cheque status
Ask for a Statement
Ask for a Cheque Book
Inquire about Fixed Deposit
Inquire about TDS details
See Demat Account
Update profile
Transactions
Stop a Cheque
Pay Bills
Ask for a Demand Draft
Transfer funds between your accounts
Transfer funds to a third party
Request for a new Fixed Deposit
Shop Online
Pay Bank Credit Card Dues
Advantages of Net Banking
It removes the traditional geographical barriers as it could reach out to customers of different countries/legal jurisdiction. This has raised the question of jurisdiction of law/supervisory system to which such transactions should be subjected.
It has added a new dimension to different kinds of risks traditionally associated with banking, heightening some of them and throwing new risk control challenges.
Security of banking transactions, validity of electronic contract, customers' privacy, etc., which have all along been concerns of both bankers and supervisors have assumed different dimensions given that Internet is a public domain, not subject to control by any single authority or group of users.
It poses a strategic risk of loss of business to those banks who do not respond in time to this new technology, being the efficient and cost effective delivery.
