The growth of technology has changed the payment system world over during the past two decades. More and more innovations are being introduced in both cash payments systems and non-cash payment systems. With the introduction and implementation of recent technology in banking, electronic devices are making the job of cash payment as well as non-cash payment easy and efficient. For many customers, electronic banking means 24-hour access to cash through an Automated Teller Machine (ATM) or direct deposit of pay cheques into chequeing or saving accounts. But electronic banking now involves many different types of transactions.
The banks’ first use of computer was strictly a back office affair, transferring the accounting and record keeping activities from branch ledger onto centralized or decentralized computer systems. With rapid improvement of electronic technology and availability of higher computer power and faster communication technology, the demand for more efficient banking system has increased. This has resulted in more competition among banks and the introduction of electronic banking. Put in simple words, banking done electronically is Electronic Banking. Delivery of banks’ services to customer at his office or home can be termed as electronic banking.
Banking services are one of the key elements in establishing electronic media as a viable environment in which to carry out commercial activity. In many ways banking is already a virtual concept to most people. The routinely use their bank account to deposit wages and draw down on those wages without ever going into branch. While this presents the banks with a problem in establishing a close relationship with their customers, it presents ideal opportunities for electronic delivery. Indeed, the use of electronic delivery can potentially increase service levels and improve relationships with customers above current levels. The use of interactive electronic links to customers could go some way towards re-establishing links and providing the customers with greater levels of information about both their own financial situation and about the services offered by the bank. However, security in public access networks is vital to ensuring that customers will trust this form of banking.
Electronic banking also known as electronic fund transfer (EFT) uses computer and electronic technology as a substitute for cheques and other paper transactions. EETs are initiated through devices like cards or codes that let you, or those you authorize, access your account. Many financial institutions use ATM or debit cards and personal identification numbers (PINS) for this purpose. Some use other forms of debit cards such as those that require, at the most, your signature or a scan.
Electronic banking payments systems find that EFT offers several services which consumers may find practical. Technological innovations in banking primarily have been manifested in the form of electronic funds transfer systems (EFTS or EFT systems). The basic components of EFTS are:
• Automated Clearing Houses (ACHs)
• Automated Teller Machine (ATM)
• Point-of-sale Terminals
• Internet Banking
These EFT devices are complemented by e-money, specifically the credit, debit, smart and pay cards. ACHs and ATMs have been the success stories of EFTs or electronic banking.
Professor Rafiqul Islam
Faculty of Business & Economics (FBE)