The Indian Internet Banking Journey
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The Future Contd...
• The absence of a regulatory framework for Internet banking transactions in India.
• The mindset of the Indian consumer, who prefers personal interactions and is not very comfortable, doing transactions through the Internet.
• Limited awareness about the potential of Internet banking on the part of banks.
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The issue of banks not being ready to realize the full benefits of Internet banking was aptly summed up by a critic, "Much of what is now on display at bank websites is an embarrassment, to put it politely. The average site has information about certain products, e-mail contacts of bank department, perhaps the Chairman's annual general meeting speech as well. A mere information booth. This is definitely not Internet banking." However, banks are working towards addressing these problems. The security issues can be tackled by having the bank's systems technologically equipped to evade operational and security risks. Reputational risks can be prevented by testing of the system before implementation, developing contingency plans (to handle system disruptions, system hackers, security lapses and virus attacks) and creating back-up facilities.
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Legal and cross-border risks can be avoided through proper customer identification devices, information screening techniques, periodic reviews on compliance with various laws, and gaining knowledge of various national laws (applicable) and guide the customers through their cross-border dealings. Apart from ensuring the security of the Internet-based transactions, ICICI is taking steps to overcome the other hurdles. The bank is tying up with computer manufacturers to make PCs available to customers at low prices. The bank also plans to tie-up with Sify to place its ATMs in Sify cybercafes.
In 2000, ICICI opened Internet kiosks (cabins) at its ATMs to enable easy Internet access to its customers for banking. Many other banks are also adopting such practices. Analysts claim that Internet banking holds lots of potential with the emergence of growing Internet awareness among customers, integration of banking services with e-commerce service, the increasing reach of the Internet and the entry of global players in the banking sector. Even the Reserve Bank of India has come out with Internet banking related guidelines (Refer Exhibit II). With ICICI already having decided to make the Internet an integral part of its future business plans and other banks reportedly following suit, Internet banking seems poised to become an important part of the Indian banking sector in the years to come.
Exhibits
Exhibit I: Internet Banking Problems
Exhibit II: The Regulatory Framework
