Characteristics Of Electronic Banking

2.4.1 IDENTIFICATION AND ANALYSIS OF EBANKING RISKS Electronic banking possess distinctive characteristics that may increase a financial institution or banks’ overall risk framework and the level of risks related to the traditional financial services, particularly strategic, operational, legal, and reputation risks. There are unique internet or electronic banking characteristics which are inspected below. i. Explosion of threats and vulnerabilities with internetExcessive data explosion results from technological innovation and with it comes with risks such as hacking and crimes, a combat that most financial institutions are fighting with. Phishing attacks of online banking accounts or replication of ATM cards are common incidences. The cumulative

Every time one uses a new website to transact, they input their details. Sharing important personal and financial information is not to be taken lightly, yet it is becoming a generally accepted practice - and the more people that know who you are, the more likely someone who shouldn't will get hold of that information. iv. Amplified visibility of the internetIncreased visibility by financial institutions through electronic banking can reach an audience of millions and more likely people within that banking set up will utilise it for necessary products or services. A successful online visibility initiative will assist in gaining competitive advantage as well as attract new customers. v. Shifting customer expectationsFinancial Institutions that offer internet or electronic banking seem to be setting a new benchmark for customer experiences. Technology has played a key role in driving a renewed focus on the customer by giving them greater power, voice and control, as well as accumulating the choices available to them through the elimination of many of the barriers to market entry traditionally faced by non-enterprise

c. Advanced transactional websites allow customers to execute financial transactions for example transferring funds from one account to the other, including to third parties and bill payments. Since there is no face-to-face conclusion of transactions and they are authenticated by directives or instructions over non-personal means, the risk profile on this platform is the highest and it needs careful and well planned monitoring as it can result in a total bank collapse if not given due attention. 2.4.1.2 Benefits of electronic banking Electronic payment platform is likely to impact importantly in the expansion of electronic business; retail electronic banking services and products, which comprise of electronic money and it provides substantial innovative prospects for banks. Electronic banking allows banks to expand their markets for ordinary deposit-taking and credit allowance undertakings, to propose new products and services or reinforce their economic position in offering existing payment services. Moreover, electronic banking reduces operating costs for banks but there are always consequences for that in the form of amplified exposure to risks which needs sufficient attention to avoid banks