“Icl CH aS ER E-payment Systems anking at ICICI Bank The banking industry in India is facing unprecedented competition from non-traditional banking institutions, which now offer banking and financial services over the Internet. ‘The deregulation of the banking industry coupled with the emergence of new technologies, are enabling new competitors to enter the financial services market quickly and efficiently. Internet banking (or E-banking) means any user with a personal computer and a browser can get connected to his bank-s website to perform any of the virtual banking functions. In internet banking system the bank has a centralized database that is web- enabled. All the services that the bank has permitted on the internet are displayed in menu. Any service can be selected and further interaction is dictated by the nature of sevice. The traditional branch model of bank is now giving place to an alternative delivery channels with ATM network. Once the branch offices of bank are interconnected through terrestrial or satellite links, there would be no physical identity for any branch. It would a borderless entity permitting anytime, anywhere and anyhow banking. The Internet banking is changing the banking industry and is having the major effects on banking relationships. Internet banking involves use of Internet for delivery of banking products & services. It falls into four main categories, from Level 1— Minimum functionality sites that offer only access to deposit account data—to Level 4 sites—highly sophisticated offerings enabling integrated sales of additional products and access to other financial services— such as investment and insurance. In other Words a successful Internet banking solution offers * Excepti tes on Savings, CDs, and IRAs ° Gouna ae monthly fee, free bill payment and rebates on ATM surcharges * Credit cards with low rates * Easy online applications for all ac * 24-hour account access i * Quality customer service with personal attention 251 ccounts, including personal loans and mortgagesE-commerce: An Indian Perspective is ia’ d-largest bank with total assets of rcicl Bank is India er. 2007 and profit after tax of Rs 31,5 246.55 (US$ 79 Oot ey network of about 950 branches and 3,300 qj, 2007. Tre oa countries. ICICI Bank offers a wide range of banking . Eee in ices to corporate and retail customers through a Vatie Financia Piancuak its specialized subsidiaries and affiliates in the areas i cone ee id non-life insurance, venture capital and asset managense% Ys bar kine iee subsidiaries in several other countries. - ne corey Bank was originally promoted in 1994 by ICICI Limited, an Indian g institution, and was its wholly-owned subsidiary. ICICI’S shareholding nt ey institution, ha public offering of shares in India in fiscal . Banh ’ ed to 46% throug! c vin | a rooderng in the form of ADRs listed on the NYSE in fiscal 2000, Icey "6, a eq k of Madura Limited in an all-stock amalgamation in fsck an k's isition of Ban in an_ > ‘ ac ek sacs uae market sales by ICICI to institutional investors in fiscal 299; es oop 3002. ICICI was formed in 1955 at the initiative of the World Bank, the Govs of India and representatives of Indian industry. The principal objective was tg Create a development financial institution for providing medium-term and long-term broj financing to Indian businesses. In the 1990s, ICICI transformed its business from 3 development financial institution offering only project finance to a diversified financia} services group offering a wide variety of products and services, both directly an through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI becons the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. Banking without borders has become an established concept as customers become increasingly sophisticated and international in their outlook. Banks across the globe have swiftly embraced this change by offering electronic banking across multiple channels. However, in this transition from branch banking to multi-channel banking, the key fact that has been overlooked is, customer convenience. As banks have adopted technology for electronic banking, the limitation of technology, to integrate with existing systems of the banks to provide a unified relationship view of the customers, has been a challenge. Further, the lack of flexibility in systems built on obsolete technology has pushed banks to move with the times and offer varied products to meet the changing needs of today’s customers.What banks need today is, a new generation vee ee soiree built on open architecture with robust security feats nship banking functionality. The solution should not only he pOUay’s business requirements but also be scalable and flexible enough to met © changing demands of the retail customer, Automated Teller Machine (ATM) oo fs designed to perform the most eee ; with its special features. The plastic card is replacing cheque, Pe attendance of tI : There are debt ea one banking hours restrictions and paper based verification” f S used as spring board for Electronic Fund Transfer: © important function of bank. It is operated?E-payment Systems if can provide information abo: ech ut cust ise customers—ATM cardholders. a ATK account and also receive instructions foiple of handling cash deposits, transfer raga” Electionic Fund Transfer terminal tween accounts, bal withdrawals and Pay Bills. It may be online or offline ee seat . i avail banking facilit og) means any user with «pasate In off-line the Internet banking (or i computer and a by ‘i -s website t a browser can get conn: to his bank -s website to perform any of the virtual banking trace nected banking system the bank has a centralized g functions. In internet database that i k Banke bas ete ed database that is web-enabled. All the vices that the permitted on the int i i i sae selected ad firter Iran aeateeel nme. Any sence wef i ivi ae radiional ee oe Go f ng place to an alternative delivery channels with A eeicine fhe ane offices of bank are interconnected through verrestrial OF S there would be no physical identity for any branch. Ai fs, + ial) customer possessing ATM card issued by the Shared Payment Network pia can 7 to any ATM linked to Shared Payment Networks and perform his transactions. jance enquiries, cash ine ATM enables the Credit Cards/Debit Cards The Credit Card holder is empowered to spend wherever and whenever he wants with his Credit Card within the limits fixed by his bank. Credit Card is a post paid card. Debit Card, on the other hand, is a prepaid card with some stored value. Every time a person uses this card, the Internet Banking house gets money transferred to its account from the bank of the buyer. The buyers account is debited with the exact amount of purchases. An individual has to open an account with the issuing bank which gives debit card with a Personal Identification Number (PIN). When he makes a purchase, he enters his PIN on shops PIN pad. When the card is slurped through the electronic terminal, it dials the acquiring bank system—either Master Card or VISA that validates the PIN and finds out from the issuing bank whether to accept or decline the transactions. The customer can never overspend because the system rejects any transaction which exceeds the batance in his account. The bank never faces a default because the amount spent is debited immediately from the customers account. ICICI Bank’ Corporate Internet Banking (CIB) is a one stop shop for all your online banking needs. It gives you the power to execute critical bank transactions instantly from your office locations with no time lags and hence is an indispensable tool in today’s 24 x 7 high-speed business world. i : With CIB, you can dramatically cut your paperwork and enjoy the triple benefits of ‘efficiency, ease of use and economy’. Non-Transaction Services Real Time Account Balance Information Ownload of Account Statements in six formats Revcibtion for Account Statements by E-mail f - Sduest for Cheque Book, Stop Payment and FD Opening fade MIS to view all your trade-related banking information.(250) ae ca as ane cemetea | B0hir nS within own ICICI account (Self account transfer) to channel partners ICICI account (Own to External t | partners ICICI account (External to Own, Transfer funds Transfer funds Transfer funds from channel Transfer funds Utility Bill Payments to more than Online Tax payment facility ase to non-ICICl Bank accounts using EFT/NEFT/RTGS, 85 billers across India e-payment gateways. Mobile Banking In today’s hectic corporate world, it may not be always easy to keep tratk related to your finance and banking. Now with ICICI Bank’s secured M, sevens Service, you can access your bank accounts and carry out transactions ne Bank mobile. Get alerts and reminders at the right moment and more. Our pH Fou; ured Banking Service answers your business needs, all through the push of a j as EW bit, Push-based Alerts You will receive alerts for following transactions: ¢ Daily Closing Account balance Inward cheque returns above Rs 5000.00 © Outward cheque returns above Rs 5000.00 * Debit above Rs 5000.00 ¢ Credit above Rs 5000.00 *Charges—as per schedule of charges. Pull-based Alerts You can register for Pull-based alerts only through Corporate Internet Banking The corporate users can avail the following banking services: © Retrieve account balance ¢ Retrieve last five transactions ¢ Change SMS password ¢ Unsubscribe from Mobile Banking * Status of issued cheque .! ental for BS A powerful, scalable and flexible technology platform is ess ht manage growth and compete successfully. Finacle provides just the riBht Pe a ICICI Bank, thereby fuelling its growth. The bank has successfully Ieee ca of Finacle' and has deployed the solution in the areas of Ae ae ogi | Ban! e-banking, corporate e-banking and CRM. With Finacle, ICICI "hutp://www.infosys.conv/finacle/pdfficici.pdfEspayment Systems aility 10 easily develop new products targeted —a product targetti ‘i at specific segments such as ICICI joung Stars—a pr argetting childr , nts such as IC _ gatk ernd Bank@campustargetting students,” MeN Accountaddressing working wore! Data Warehouse Credit Card ©-Broking Staffware Call Centers CIF Finacle Core Banking Debt Online Solution Consumer e-Banking Mobile Micro Payments Corporate ‘ATM EFT Banking Switch Main Concerns In Internet Banking ve as if Ina survey conducted by the Online Banking Association, member ete cae e + the most important issue of online banking. There is a dual cies Baikine via tbe Customers’ privacy and protect against fraud. Banking oie one company handles Word Wide Web provides an overview of Interne! com some basic information ‘eure banking fo its financial institution clients and ther nn ryption on the Web. the transmission of confidential data is presented in Satan ees caeriplied: ana multi-layered security architecture comprising firewalls, és Toreeted from unauthorized 4igial certification ensures that your account information Pp acess: : itimate Internet users are * Firewalls and filtering routers ensure that only the legitimate ‘Irewalls ai filteril ‘ alowed to aces the SY (including the sophisticated public key * Encryption techniques used by the aed i flowing between the browser and the eneryption) would ensure that privacy of 8 Infinity system is protected.— ; E-payment Systems fait Cards as E-payment Systems Without doubt, the basic means of payment used and ini sactions till date is the credit card, Credit ¢ reasons aS the following: tiated via the Internet for consumer ards have proved popular for a number of 1. The system is familiar to users and was widel thus bolstering the users’ confidence. 2. Transaction costs are hidden from users (i.e. basicall to all customers, not just credit card users), St i i 3, Payment is simple anywhere and in any eumeney, this matching the global seach of 4, The credit-issuing company shares the transaction risk; helping overcome consumers’ fear and reluctance to buy goods they have not actually seen, from sellers they do not know (in the physical world this function was important because it engbled sellers to take payment from buyers they do not know; online this trust relationship is needed in both directions). : ly used before the advent of e-commerce, ly met by sellers, and passed on The disadvantages of credit cards for e-commerce include the fact that they cannot be used directly for small value payments or peer-to-peer transactions. Disadvantages of Credit Cards Credit cards have their own disadvantages. First, the relatively high transaction cost makes them impractical for small-value payments. Second, they cannot be used directly by individuals to make payments to other individuals (peer-to-peer transactions). Third, protecting the security of transactions is vital, especially in the virtual world where there is no payment guarantee to the merchant by a bank. Users’ fears about security issues seem to be a consequence of the newness and relative unfamiliarity of the medium, rather than the real tisks involved in the system. E-payments in India evolving to support e-payments in tandem with paper-based Payments after the Reserve Bank of India started promoting automation in the banking industry in the 1990s. The RBI initially set up an electronic clearing service (ECS) to clear -value, large-volume payments such as direct credits and debits within four days, on fe drive succeeded despite the varying automation levels of India’s banks. Just recently, the RB also built out the national EFT system for a special EFT (SEFT) system to act - a key Component of India’s e-payment system and to resolve last-mile connectivity issues bet entities, accordi FinanceAsia.com. : r Payment syaieas eich ‘as ECS and SEFT will in turn promote credit and gobi cand wie in India, while the issuance of chip-based Bayne carga Is eS ae on a ey i -time gross settl lement sys s i India’s payment system isa ge on, ropayment Systems Mie ish “_ yqrernational, the world’s largest credit card company, introduced their own stored Vise Ward (VISA Cash) in 195 under ficense from and incorporation of the technology value $4 by Danmont in Denmark. inane system of VISA Cash, the transaction is made on an existing financial network og visa, where Targe value payments are also transacted. The level of security is quite high. A ever, as all eransaction data go through the data centres of Visa International, anonymity be jeopardized. The transactions handled here are different from transactions by credit : The user's identification and authentication are not required at the time of payment. Bien bank does clearing of units of prepayment and deposit; thus the person concerned be identified. In this manner, it provides anonymity. The operational cost is relatively -jaigh, since all transactions pass through the network for settlement at banks. Cash of Visa International ‘Wewill now explore the system of Mondex which has been developed by National Westminster ‘Bank (hereafter, NatWest Bank), a major commercial bank in Britain. In December 1993, NatWest Bank announced an electronic low value payment system called Mondex. Mondex can be classified as a cash substitution system using smart cards, ‘hich in a sense is the same as VISA Cash, but the concept is notably different. In the - Mondex system, there is one issuing body—the originator of electronic value in the currency - of the country. This originator basically serves as an issuing bank in the Mondex system and issues to the Mondex member banks, the equivalent amount of electronic Mondex Value in | exchange for prime negotiable instruments or cash. Consumers as cardholders load Mondex | Mondex of Mondex International - talue on their card from a bank ATM, or a Mondex telephone. It can then be used as cash {for shopping. Using a wallet, which resembles a pocket calculator, customers can also ‘exchange electronic value between individuals. Therefore, once the electronic value has been 4rwn from a bank, only the person involved in the transaction knows the history of the "monetary movement. No one else can trace it. In addition, using a private or a public telephone connected to the Mondex system, the electronic value can be withdrawn, ited, or sent to a person at a remote location over the telephone network. By adding _ fader/writer functions to a personal computer, it will also be possible to send money over ‘the Internet, ‘Properties of Electronic Cash (E-cash) h YM implementing an_e-cash system. Specifically, e-cash must have the lowing four properties: monetaty value, interoperability, retrievability, and security. -. E-cash must have a monelary value; it must be backed by either cash (currency), a -Pank-authorized credit, or a bank-certified cashier's cheque. When e-cash created by oneE-payment Systems standards. hout standards, th i 1 Tetworks and different systems is ime ane Of diffe ‘ rent payment users into different id imposs ‘0 differen! weir th ably to buy and roast al Standards enable interoperability, giving ey , Fegardless of which bank is managing None of the above hurdles are insurmountable . Mo: ; ant few Years. These technical problems, cane oot es will be overcome within These techr " 's hope, will be solved moved and experience is gained. The biggest questi i sr a aes ea eatin concerns how customers will take the Key to Security: Cryptography ography relies on two basic components: an al, | & she key. Algorithm is the method used to encryp tp decrypt the message, For instance, in a system where letters are substituted for other Inters, the “key” is the chart of paired letters and algorithm is the substitution. (In modern cryptographic systems, the algorithms are complex mathematical formulae, and keys are strings of bits. If two parties want to communicate, they must use the same algorithm. In some cases, they must also use the same key. Many cryptographic keys must be kept secret. Sometimes algorithms are also kept secret, as the method of encryption may hold the very method used to decrypt the message) {ryptosystems are being increasingly used in encryption, authentication, integrity, non-tepudiation, and management of other crypto systems like key management. A crypto system is a mathematical function for processing data, and there is nothing secret about the function except the key.) gorithm (or cryptographic methodology), t the message, and key is the object used Examples of Encryption Techniques Caesar’s Method This is one of the oldest known techniques of encryption. It traces its history back to Roman times, It is a fashaperie method of enerypting a message. It involves shitting a es Of the message to a letter that appears & letters after it. In the method that = nett aio the Romans, k was equal to 3. What this meant was i te eth an - na re “a "0 the tight, For | ‘A’ would be transformed to ‘D’. .C to *F', and so on. i sinus a MB CDERGHUKLMNOPQRSTUVWXYZ a oertin e 4Y 3, you get DEFGHIKLMNOPQRSTUVWXYZABC where, 2 =A BeBe Ce n. Using this scheme, the plain text “SECRET” encrypts i her that the key is 3. This is clearly fk, namely 1 through 26, can easily crack it. {poste key system, the secret key being t tion, as trying all possible values ©es) “Wey Ravi, Tho terms getting too hectic. I'm having too many sleepless nights” HNFmsEm6Un BejhhyCGKOK JUxhiygSBCEIC OQYIh/Hn3xgik BeyLK1UcYiY Ixx2ICFHDC/A Fig. 6.2 Role of public and private key, the invention of asymmetric cryptography (mid-1970s) until recently, there were of algorithms that could factor such numbers and they all took roughly the (ed the last few years, a new algorithm—the General Number Field Sieve (GNegr invented that can factor a number more quickly than the previous algorithms, Tein algorithm problem used for El Gamal and DSS has a similar complexity. as ith Deg RSA Data Security challenge number (RSA-130) with 430 bits was issued. Ths nm, been factorized (April 1996), again using an effort distributed over the Net. The ios) used in factorizing RSA-130 is believed to be 500 Mips years (equivalent to com running 500 million instructions per second for a year). Such figures make it js = conceivable that with concentrated effort distributed over the Net, it is just possie factorize 2 512-bit number as the product of two primes. This means RSA system wit 5 private keys are potentially vulnerable to such attacks, In future, increase in computing speed will make it possible to factorize lage-= numbers. However, it is entirely possible that overnight someone will invent a new ap and al] the figures will have to be revised. : 4 Although popular media has floated the perception that DES keyspace is 9 a it is possible for anyone with a PC to break any DES-based crypto system itis the truth. Well, it is true that 56-bit key is too small, but not for the comp 2 PC. DES is vulnerable when attacked with an immense computing power. Eve becomes the new standard, we will see DES in use for some time to come. Digital Signature : je doc Digital signatures provide information regarding the sender of an electron it a technology has assumed huge importance recently, with the peels fe of (i remedy to one of the major barriers to growth of electronic gone data 0 ® ine? security. Digital signatures provide data integrity, thereby allowing the o be a same state in which it was transmitted. The identity of the sender can by third parties.