How do Internet banking services affect the banking industry?
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What is Net Banking?

Net Banking is also known as online banking, e-banking or Internet Banking. It is a facility provided by banks and financial institutions which allows customers to use banking services via Internet facilities.


There are different services like online money transfer, account opening, bill payment, and tracking account activity, which is made available to the customer with the help of online banking services through banks.


Internet banking services also allow banks to advertise their products and services in a manner to reach millions of customers.


However, to get all net banking facilities, an individual will require access to the internet facilities. Internet banking is also accessed via smart mobile phones which have data cards 2G, 3G, 4G, and 5G.


History of Internet  Banking:-


The first internet banking application started in the U.S.A. in 1996. Eminent banks such as Citibank and Wells Fargo started to provide these services to their customers in 2001.


On the other hand, in Singapore, DPS bank started internet banking services in 1997. Mr. Alfred Zipf, 82 is the executive of Bank of America and is considered the father of online banking. ICICI Bank in 1998 introduced internet banking to its customers. 

How do Internet banking services affect the banking industry?
Google-pay-Phonepe-Internet banking services in India

Types of Internet Banking:-


  • National Electronic Fund Transfer(NEFT)


  • Real-time Gross Settlements (RTGS)


  • Electronic Cleaning System (ECS)


  • Immediate Payment Services (IMPS)



How Internet Technologies affect the banking Industry:-


The Internet has emerged as an important medium for the delivery of banking products and services. The customer can view the account statement, transfer the funds, purchase the drafts, and make an investment in mutual funds, insurance etc, just punching on a few keys.


The smart card (Debit card) & (Credit card) with a microprocessor chip have added new dimensions to the scenario.


The Internet banking system is the new wave of the future. It provides enormous benefits to customers in terms of ease and cost of transactions.


Differences between E-wallet & Net Banking:-


E-Wallet: – A mobile wallet or E-wallet is a virtual digital wallet where you can save your funds to be used without the need for swiping any debit or credit. It is one of the fastest modes of transaction.


This does not require any minimum amount to be deposited in the E-wallet. Wallets can be used to purchase anything from groceries and vegetables to flight tickets. E-wallet can be downloaded on your smartphone through your app’s store.


Examples of e-wallet are Pay tm, Google Pay, Amazon Pay, Airtel Money, and Jio Money are all E-wallet.


Net Banking: – Most online payments are made via the online banking option. Nowadays, net banking is a very easy process to transfer the money from one person to another. Most banks created their own apps. The app can be downloaded to your mobile phone and used at any time, anywhere.


Net banking facilities and Internet fund transfer services such as IMPS, NEFT, and RTGS are done through Net Banking.

How do Internet banking services affect the banking industry?
SBI-Net-Banking Services in India

Trends in Internet Banking Services:-

The Internet Banking system is widely spread in Austria, Korea, Singapore, Spain, and Switzerland, where more than 75% of banks offer such services to customers.


The Internet banking system is very popular in India. Nowadays people are hesitate to visiting bank give their valuable time, they prefer net banking systems. Nearly 32% of people use the services of online payment mostly.


The second most used service is Fund Transfer accounting for about 26%. The third most expensive service is ATM banking, accounting for 22% in India.


ICICIBankis one of the the best banks in terms of Net Banking through which you can transfer your funds anytime, pay bills, insurance and many other services.

Top Ten advantages of the Internet Banking Services:-

1. Easy to operate the account:-Online banking is very easy and simple to understand for many users. Even an illiterate person can also use this online banking through mobile devices.

 2. Convenience of Making Payments:-Internet Banking is quite easy to operate, to carry out the transactions like transfer of funds, Bills payments, Insurance premium payments etc. This system no longer allow the customer to stand in queues for bill payments and safely receive bill payments.


3. Round Clock availability:-Another advantage of online transactions is that it is available round the clock, throughout the year. You don’t have to schedule a time when you carry out banking activities. At any time any weekend also one can use the internet facilities as per their requirements.


4. Time Savings & Efficient:-E-Banking is not only fast but also very efficient to complete transactions in very few minutes. Transfer of funds, account opening, and bill payments are also done very quickly so that it can save a lot of valuable time for the customer.

How do Internet banking services affect the banking industry?

5. Customers can track their account activity at any time:-Another important benefit provided by net banking is that it allows you to track your account activity all the time. Any unauthorized transactions or discrepancies can be immediately tracked and reported to the bank immediately. Internet banking keeps your money safe.


6. Investments in Mutual Funds:-Online banking is the easiest way to start your SIP mutual funds investment. This process is hassle-free, error-free, paper-free & very less time-consuming. Moreover, you have the control to change, stop or start the investment at any time at any place.


7. Travel Booking:- With online banking, you can book your flight, cab and hotel booking in just a few minutes. As and when necessary to book your schedule for travels, you can easily book your reservation through internet banking systems. The popularity of online banking is growing day by day.


8. Placing orders for Bank products:- Internet banking also allows you to place orders for bank products. Checkbook, bank debit cards or credit cards you can order through internet banking.


9. Add-on Services:- You can enjoy a wide variety of add-on services, including buying or selling mutual funds. Buy insurance policies to apply for various types of loans. You can easily adopt an auto payment system to pay your bills on time without any fine.


10. Account History:-Online banking allows you to access your account history and transactions from anywhere at any time.


You can easyly you’re your account history within fractions of seconds as and when required by you. It also enables you to find out about any unauthorized transactions more quickly.

How do Internet banking services affect the banking industry?
HDFC BANK Internet banking services in India

Top Six Disadvantages of Internet banking Services:-

1.No cashless deposit options:-There is no provision for cash deposits in internet bank systems. You must visit the nearest branch or cash deposit machine to deposit physical cash money.


2. Internet Requirement:-Your access to Internet banking services can be hindered in the absence of a stable internet connection. It is also affected when the bank server is down due to internet connectivity.


3. Internet Fraud:- You could be a victim of Internet fraud if you do not comply with the security measures prescribed by the bank, such as not setting a strong password, sharing passwords or not logging out from your internet banking account.


4. Operational Risk:-The reliance on new technology to provide services makes security and systems availability the central operational risk of electronic banking.


Internet banking security you will get inside the bank or outside the bank  systems.For that purpose the Bank authority  should take  proper care  for  confidential the baking data  as top most secure place.


 Managing heightened operational risk needs to become an integral part of banks’ overall management risk.


5. Reputational risk to the Bank:-Breaches of security and disruptions to the system availability can damage a bank’s reputation.


Though the bank operates in electronic channels, there is greater risk of problems, for which the loss of confidence of customer will rise against the banking systems or procedures.  


The problem could potentially affect other providers of electronic banking services.


6. Data hacked by the Hackers:-Internet banking is completely insecure as there are many problems related to the websites and data can be hacked by hackers. It can lead to financial losses for the users. The financial information also is stolen which also creates financial losses.

How do Internet banking services affect the banking industry?


 1. Question: – Which bank in India is top in Internet banking facilities:-


1. Answer: – ICICI Bank, HDFC Bank, Kotak Mahendra Bank, Axis Bank, and State Bank of India are the five top Internet banking facilities in INDIA.


2. Question:-Is Internet banking safe or not?


2. Answer:- Yes Online banking is safe with proper precaution. The following sections detail safety steps for online banking and ways for information.


3. Question:-Will banking systems obsolete in the future?


3. Answer: – Reports find that branch-based banking may become obsolete within five years. A report published by Temenos has found that 65% of global banking executives believe branch-based banking will be “dead”.


4. Question:-Is the banking Industry growing in India?


4. Answer:-During FY (16-17) deposits grew at CAGR of 12.38% and reached US$2.06trillionby FY (2020-2021). Bank deposits stood at Rs.165.74 trillion (US$2.11 trillion) as of May 2022.


5. Question:-Which country has the best banking system in the World:-


5. Answer:-Singapore, Norway, Hong Kong, Newsland, Canada, Australia & Finland are the best banking systems in the world.

6. Question:-How do I know the customer ID?

6. Answer:- The customer ID is mentioned  in the welcome letter  and cheque book. It is also mentioned in the first page of the passbook.

7. Question:-Is Google paying for Internet banking?

7. Answer:- Google has tied up with 38 banks, so far  letting users  pay on Google  Play  via online banking.


Conclusion:-Internet banking can provide several benefits for customers and new business opportunities for banks. The Internet is changing the way businesses work all over the world.


It is changing the way banks work. Now under Internet banking services you save your time. do your banking work without leaving the office and transfer the bill payment at the proper time without fine or delay. You can also do more financial transactions sitting at home.


Globally, digitally banking users are expected to cross the 3.6billion mark by 2024. The future of the world is going Digital together  with Internet Banking services for betterment of our banking  customers.


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I am Ajay Kumar Patra. ( & MBA-Finance) with 27years of Accounts & Taxation Experience in Large Manufacturing Units in India. In 2021 I started my own tax consultancy firm called “Ajay Tax consultant”. I started my Digital marketing on my website "".I have already published more than 100 Blogs on Business, Finance, startups, Digital marketing & Tours & Travel for my viewers.