Features and functions of Online
BankingWe can broadly
categorized common features provided by the online banking in below - *
Transactional (e.g., performing a financial transaction such as an
account to account transfer, paying a bill, wire transfer... and
applications... apply for a loan, new account, etc.)
* Electronic bill presentment and
payment - EBPP
* Funds transfer between a customer's
own checking and savings accounts, or to another customer's account
* Investment purchase or sale
* Loan applications and transactions,
such as repayments
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* Non-transactional (e.g., online
statements, check links, cobrowsing, chat)
* Bank statements
* Financial Institution Administration
* Support of multiple users having
varying levels of authority
* Transaction approval process
* Wire transfer
* Personal financial management
support, such as importing data into personal accounting software.
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Security issue in Online Banking
Protection through single password
authentication, as is the case in most secure Internet shopping sites,
is not considered secure enough for personal online banking applications
in some countries. Basically there exist two different security methods
for online banking.
1. The PIN/TAN system
In here the PIN represents a password,
used for the login and TANs representing one-time passwords to
authenticate transactions. TANs can be distributed in different ways,
the most popular one is to send a list of TANs to the online banking
user by postal letter. The most secure way of using TANs is to generate
them by need using a security token. These token generated TANs depend
on the time and a unique secret, stored in the security token (this is
called two-factor authentication or 2FA). Usually online banking with
PIN/TAN is done via a web browser using SSL secured connections, so that
there is no additional encryption needed.
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2. Signature based online banking
In this method all transactions are
signed and encrypted digitally. The Keys for the signature generation
and encryption can be stored on smart cards or any memory medium,
depending on the concrete implementation.
History of Online Banking
The term online became popular in the
late '80s and referred to the use of a terminal, keyboard and monitor to
access the banking system using a phone line. Online services started in
New York in 1981 when four of the city's major banks offered home
banking services using the videotex system.
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The UK's first home online banking
services was set up by the Nottingham Building Society (NBS) in 1983.
The system used was based on the UK's Prestel system and used a
computer, such as the BBC Micro, or keyboard (Tandata Td1400) connected
to the telephone system and television set. The system (known as 'Homelink')
allowed on-line viewing of statements, bank transfers and bill payments.
Stanford Federal Credit Union was the
first financial institution to offer online internet banking services to
all of its members in Oct, 1994.
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