1. Online Banking and Investing

2. Presentation Outline Online Banking-introduction. Two approaches in Online Banking. Online Banking Regulations. Advantages and Disadvantages of Online Banking. Types of Online Banks. Online Loans ECN- Electronic Communication Networks Online Trading. Financial Aggregators. Wireless Banking. Security Measures.

3. By Online Banking you can Manage your accounts online. Transfer money between accounts. Pay your bill online and keep convenient record of all payments. Review your processed checks online. Apply for loans online. Trade stocks or mutual funds. Track your recent account activity Online Banking

4. Two Approaches of Online Banking 1.Dial-in Approach: Requires users to have a separate finance software, so that they can do all the process offline and connect to the bank just for transactions. 2.Internet Approach: Users directly log on to their bank website and complete all their work online.

5. Online Banking Regulations The only federal regulations governing online banking are covered by the Electronic Funds Transfer Act of 1978. The Fair Credit Reporting Act prevents institutions from selling or sharing credit-worthiness information about customers with affiliated companies.

6. Advantages of Online Banking Online Banking is much cheaper for the bank. A survey says that Online Banking costs only 10% of branch services. Normally internet banks offer better rates than traditional banking. Pay bills online there by saving postal services. Consolidated Bill Presentment services alert you when the bills are due. The services are available seven days a week, 24 hours a day.

7. Advantages Cont… Free Stock Trading – Offered by American Express Online. Direct transfer of bank statements to the customers financial management software such as MS Money. Free interactive help for the customers investment decisions.

8. Concerns.. Security concerns, like hackers accessing your bank accounts. Need an account with an Internet Service Provider (ISP). Switching banks can be more cumbersome online than in person. Online banks generally do not have their own ATMs. Must have basic computer skills and Internet knowledge.

9. Concerns Consumer AttitudeTotalUSJapanItalyUK Security/privacy concerns over transactions79%85%72%68%78% Find online financial transactions more convenient45%42%35%41%32% Net has changed attitude to financial transactions34%29%15%26%18% But Almost One-Quarter Will Bank Online Conduct/expect to conduct financial transactions24%20% 8% 4%17% Check/expect to check credit card balance17%15% 2% 13%

10. Types Online banking services are provided by two types of banks 1. Hybrid banks : - Has both online and offline presence. -Wells Fargo, Citibank, Bank of AmericaWells FargoCitibankBank of America 2. Internet only banks : - Banks that have only online presence. -NetBank, nBank, CompuBankNetBanknBank

11. Hybrid Banks Traditional brick and mortar banks turned to click and mortar banks. These banks offer banking and other financial services online. Has an edge over Internet only banks with large ATM network presence. Generally they charge for online bill payment. Hybrid Online Banking demo

12. Internet only Banks Has only online presence. Provides lending, investing, checking services. Offers lower fees and higher interest rates. Accepts deposits by mail. Provides free online Bill payment. Insured by FDIC. Internet Only Banking demo

13. Cost comparisons A banking transaction involving a teller averages $1.07. A telephone transaction costs 54¢. A transaction made through an ATM costs 27¢. Banking with a PC software program costs 1.5¢. An Internet-based transaction only costs one cent. Source: www.msmoney.comwww.msmoney.com

14. Cost Comparisons-(Bankrate.com)Bankrate.com

15. Online Loans Loan approval in a few minutes Provides a means of comparing and applying loans from multiple vendors. Customers can keep track of their loan processing. E-LOAN is an online loan service.E-LOAN PrimeStreet, LiveCapital also offers online financing. Online Mortgage service is provided by Dietech, LoopNet and MortgageRamp.

16. Home Financing online

17. Online Credit Market

18. Electronic Communication Networks(ECN) ECN-Electronic networks that facilitate electronic trading by listing securities(stocks,bonds) order sizes and prices. Transactions are faster. Offers before and after hours trading. Brokers are avoided. ECN’s benefit from decimalization. Instinet, Island, REDIBook and Archipelago are some of the ECN’s.InstinetIslandREDIBook

19. Online Trading Two types of Online Trading services exist 1.Full-service brokerage -Online Trading service with the advice of a broker. -Merill Lynch, Salomon Smith BarneyMerill LynchSalomon Smith Barney provide Full-service brokerage trading. -Has Hybrid brokerages as well as Internet Only brokerages.

20. Online Trading 2. Discount brokerage trading -Investors should make their own investment decisions without the advice of brokers. -E*TRADE offers Discount brokerage Trading. Online Trading companies charge for every purchase or sale of the securities. Investors can take the assistance of financial information services provided by Money.com. Online brokerage survey

21. Dollar based investing Investors can purchase stock based on dollar amount they choose to invest and not on the traditional multiples of stock price. Investors have the option of monthly investments or one-time investment.. ShareBuilder offers Dollar based investment services.ShareBuilder

22. Day Trading The purchase and sale (or the short sale and cover) of the same security on the same day ( also called daylight trade). Making short term trades to profit off of market inefficiencies (e.g a news affecting market). CareerDayTrader.com, DayTradingOnline.com, OnlineTrading.com are some of the companies providing Day Trading services.CareerDayTrader.com

23. Online Bond Trading Investors can watch the bond auction in real time and bid. Allows transaction of Treasury,Municipal,Zero coupons and Corporate bonds. Tradebonds.com,bondonline.com,munidirect.com offer online bond trading.Tradebonds.combondonline.com

24. Online Bond trading

25. Merging Financial Services Services merging online banking and brokerage. Prudential.com offers insurance,banking,brokerage,real-estate and financial planning services.Prudential.com

26. Financial Aggregation Services Users can keep all their financial information in one account. User should register with an aggregator and provide all his accounts username and passwords. Financial aggregator visits those sites using the users username and password and collects all the information and stores (Screen scrapping). Yodlee, Vertical One, ebalance, GainsKeeper and ezlogin offers these financial aggregation services.Yodlee Celent communication predicts that,by 2003 the number of aggregation users will reach 7 million.

27. Aggregation

28. Financial Aggregators Advantages All The information in one site. Up-to-date information. Data from multiple providers.

29. Financial Aggregators Disadvantages Password/Account Disclosure. Concentration of personal data. Not all Financial providers support aggregators. Risk of Cross-selling information.

31. Wireless Banking Wireless banking is gaining popularity. With a phone number and a special PIN number a customer has access to his account balance from his cellular device. Allows user to pay bills,transfer funds between accounts and check accounts from anywhere. Netbank,tdbank offers wireless banking. Security is an important issue in Wireless Banking. Newsbytes reports that wireless banking users will number over 7 million in the US by 2005.

32. Wireless Banking

34. Wireless Statistics

35. Wireless Trading Provides real time market information to traders. According to Celent communications,by 2004 150 million people will use PDAs to make trades, get stock quotes and view their bank accounts. Trade.com, Ameritrade, suretrade,dljdirect offers wireless Trading services.

36. Online Financial Planning People can learn about better rates on loans and bank accounts or read about retirement programs online. 401Kafe.com offers information regarding 401(K) plans. ihatefinancialplanning.com provides information on all financial planning topics.

37. Security features Security is a primary concern in internet banking SSL (Secure Sockets Layer) protocol is used to ensure data security between customer’s browser and web server. SSL provides data encryption,data integrity and server authentication. 128 bit data encryption. Customer database is protected by double firewalls.

38. Security features

39. Wireless Banking Security

40. Simple Safety Measures Change Your password periodically. Review your bank accounts frequently. Try to use low limit credit card for internet transactions.

41. Statistics

42. U.S Online Bankers

43. Comparison

44. Future In 2001, 20 percent of U.S. households performed banking transactions online, up from 15 percent the year before. Thirty-nine of the top hundred US banks currently provide fully functional Internet banking, a total more than double that of 2001. Newsbytes reports that wireless banking users will number over 7 million in the US by 2005. By 2006, according to estimates by Jupiter Media Metrix, half of all banking households will bank online.

45. Future..

46. References e-Business and e-Commerce for Managers,Deitel&Deitel. http://www.bai.org/bankingstrategies/2000-july-aug/index.html http://onlinebrokerage.about.com/library/weekly/Aa040100.htm http://www-106.ibm.com/developerworks/library/wi- banking/?dwzone=wirelesshttp://www-106.ibm.com/developerworks/library/wi- banking/?dwzone=wireless http://www.bai.org/bankingstrategies/2002-mar- apr/aggregation/index.htmlhttp://www.bai.org/bankingstrategies/2002-mar- apr/aggregation/index.html http://nua.ie.com/surveys http://www.onlinebankingreport.com/resources/sr7.html

47. Thank You