Online banking, the ability to conduct banking transactions on the Web, is revolutionizing the way that consumers bank. Behind this transformation is information technology. With its use, banks have been able to scale and secure transactions, provide the same and often more functionality than brick-and-mortar banks and evolve from mass marketing to one-to-one marketing.
Consumer Readiness
The popularity of online banking is soaring with more than fifty million adults banking online in the United States as of November, 2004, an increase of forty-seven percent during the past two years (Sullivan, 2005). It is the fastest-growing Internet activity. Home broadband connections are credited with driving consumer adoption. Those with broadband access are about twice as likely to have tried online banking as users with dial-up connections because broadband encourages users to do more activities online. Demographic characteristics of those more likely to have broadband access include consumers between the ages of twenty eight and thirty nine, and more affluent households, reflecting a group inclined to be early adopters of information technology.
Hardware Infrastructure
The client/server or PC local area network common in the first half of the 1990s as an alternative to the centralized architecture of mainframes and mini-computers in the 1970s and 1980s is now being challenged by the needs of online applications (Miranda, 2002). Therefore, many financial institutions that migrated to the PC-based system switched back to mainframes. The need for high-capacity data storage, open source or interoperability of programs and the existence of multiple applications software and mission-critical systems have all played a role in the renewed interest of mainframe computing. Online banking systems usually meet the needs of both consumer and corporate accounts, however business-to-business transactions tend to be the heaviest in volume, adding to the need for industrial strength computing power.
In addition to high-volume transaction scale, hardware devices are emerging to help resolve security issues discussed next in this paper. Some financial services companies are testing a hardware device that provides a unique code every sixty seconds (Shermach, 2005). When the consumers want to check their accounts or initiate transactions, they follow the usual login process but also enter the code appearing on the device at that moment. For now, the cost of the hardware device is limiting adoption. Initially these devices will probably be issued to high-net-worth individuals to access accounts. As the devices gain more acceptance and come down in price, they will be made available to a broader audience.
Security and Fraud
Security is one of the major concerns of online banking and has not been completely addressed. Growth in complaints about electronic funds transfer fraud has doubled since 2002 (Sullivan, 2005). And, phishing e-mails used by hackers to trick consumers into revealing online banking account numbers and passwords is increasing. Single-factor authentication for online banking has flaws that are increasingly being exploited by phishers (Shermach, 2005) .
Already, analysts believe that fraud will cut out one to two percent of growth in online banking in 2004 (Sullivan, 2005). Further, consumers may begin to limit the way they using banking Web sites such as not signing up for online bill payments. A TowerGroup survey of 3,800 households in the United States, reveal that seventeen percent of consumers still cite security concerns as the primary reason they don't utilize online banking (Hoffman, 2003).
Fraud is occurring despite the fact that online banking employs a lot of security features to prevent fraud. Many Web sites have the minimum standard of 128 bit encryption, firewalls, user identification, authentication, authorization, system lockout, automatic timeouts and double passwords (Online banking). Although new security technologies are being introduced all the time, they are never entirely adequate to deal with all the proliferating threats. New security systems and procedures are being evaluated such as biometrics, smart cards and real-time detection devices; continuous auditing of online systems; and careful monitoring of outsourcers and vendors; and ongoing education of consumers (Hoffman, 2003). Banks are removing all links from bank e-mails to keep customers safe and informing consumers that any e-mail that requires a response is not a legitimate communication (Shermach, 2005).
Recently, the first legal action by a customer was initiated against a United Sates bank to recover money stolen by cybercriminals (Katz, 2005). This case is being called a landmark event because it will resolve the question of who is responsible when a customer's computer is hacked into. The incident occurred because of a variant of a virus called coreflood had existed on the victim's computer systems. The bank contends that the bank was not responsible for the loss because no one hacked into...
Full research proposalDoctor of Business Administration25th February 2022Assignment � 1 CoversheetCandidate Family NameKhoramiFirst NameAbdullahCandidate ID NumberDBA-Batch 6 (ID No. 12352)SBA DBA IntakeFeb 2021CourseDBA DissertationAssignment TopicThe effect of Application modernization inbusiness agility in Finical Sector IndustryLecturersDr. Beenu MagoDue Date30 June 2023Plagiarism StatementThis assignment is the original work of the person whose name is given above. I am aware of and understand the School�s policy on plagiarism, as well as the SBS
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