By Sam Felix Pradeep Kumar, Sekhar Puppala, and Dheeraj Agarwal, Infosys Technologies



Online banking was long considered to be a ground breaking offering that would not only enhance the banks’ capabilities in terms of services offered on the go but also as a possible change in operational and strategic business models.


info Now almost all banks across the globe offer online banking with different capabilities and the competition is intense. With ever-increasing competition, banks have devised new ways to maintain their revenue streams. The core of the idea, however, still remains to offer more value and convenience to the customer. Technology-enabled online banking has opened a plethora of possibilities for the banks to vie for that special place in the wallet of the customer, and online banking now does not stop at basic html pages showing limited information and as a privilege to “high end” customers.


Online Banking platforms have been in existence for more than a decade now and offering online banking is now as good as a commodity. Hence the present focus is not on getting the customers to adopt online banking, but, instead, having the customer adopt the latest technology in online banking. With more and more customers enrolling for online services, the banks are under constant pressure to provide distinctive and unique features catering to niche segments. Technology is an enabler that banks cannot afford to neglect.


Customers (both corporate and consumer) are driving the technology needs of banks. Features like single-window single-sign-on, 24x7 operations, etc. are base offerings for the online channel. Shorter transaction time, account details, bill payments, basic calculators like interest calculators—once value-added services—are now considered standard for online channel. Imaging solutions are deployed in trade finance, as it is becoming increasingly important to store all transaction-related data in electronic format, including paper-based information. This reduces the reliance on paper-based files and allows the bank to have a comprehensive electronic overview of each trade finance transaction.


New age services such as integration with core banking systems, various financial products for integrated view, and security enhancers like digital keypad and mobile authentication are nice-to-have features and could act as a differentiator in customers’ adoption of a particular bank. Supporting WAP browsers and smart phone apps are also high on the agenda of many follower banks and can also be seen as tactical moves to attract more customers to use the online channels. Using popular media like YouTube and Facebook not only educates existing customers, but can also draw in non-banking customers and help the bank penetrate deeper into niche segments transcending geographical boundaries with ease. Similarly, multi-country, multicurrency offerings reinforce the idea of a “global” bank.


Active personalization, rich Internet online collaboration capabilities using web 2.0 technologies, comprehensive account management, and data analytics are all examples of capabilities and services that will drive differentiation, allowing a bank to break free from the competition.


The next generation banks need to exhibit the idea of “people orientation.” Customers can freely customize the information and financial services that interest them. According to a customer’s personalized Internet banking layout, banks can know the potential demands to achieve cross-channel selling and realize target marketing. Web 2.0 also opens up a world of possibility for retail customers, such as communication using social media software.


In terms of advanced analytics and customer orientation, multi-bank reporting using SWIFT MT940 allows customers to analyze daily cash positions across banks. Mobile applications are also growing in popularity. Banks currently offer apps for smart phones and iPhones. However banks that focus on app development and compatibility for android phones, various Palm devices and also utility and entertainment apps for devices such as the iPod Touch will have a better chance of demonstrating technology leadership.


A plethora of services and how they stack up


Website Design

In the online banking era, the banking website has assumed the function of customer service in terms of identifying the needs of the user and offering relevant products and services. The design of any banking website assumes importance and the stress is on creating a website that is easy to navigate, secure to use and can empathize with the customer’s needs through customization and personalization. Personalization is a key differentiator and ranges from the ability to set a preferred color, theme or layout for the website to the ability to set up an account to save for a specific goal/objective.


Cross Selling: Today, websites are designed to allow the banks to cross-sell products to target customers. Banks have realized the value of the data they own about their customers and have incorporated cross-sell engines, ensuring that the right information reaches the customer who is in need. For example, for a customer who is paying a higher interest rate mortgage with a competitor, the content is designed to promote mortgage products with cheaper interest rates compared to the competitor. Such a focused cross-sell strategy definitely helps the bank to position the right product to the right set of users.


Community : Websites also act as an online community, bringing together customers to network and interact with each other by reading and posting blogs or comments. Such online communities transform the website into a live and vibrant network of individuals who share their abilities, expertise and interests. It enables the customers to get more valid and useful information about the various products and services from like-minded and “like-me” customers than they might get through other sources. Consider the case of Bank of America which has established five Twitter accounts that customers can follow: BofA_Help, BofA_Careers, BofA_News, BofA_Community and BofA_Tips. Tweets to or from BofA_Help and @BofA_Careers are direct communications with the employees of the bank. Tweets on @ BofA_News, @BofA_Community and @BofA_Tips are one-way communications from Bank of America and the customers can follow these tweets to catch the latest information. BofA_Help currently has over 10,000 followers.


Tools: Websites come with built-in tools and calculators and the functionality of the tools continues to grow. Tools enable customers to understand the financial implications of any loan or investment before stepping into it. Numerous tools are available which allow for budget-creation, setting up alerts and bill reminders, and establishing financial goals. Wells Fargo provides access for all users to Wells Fargo Labs with the tagline “Come out and play.” The Lab provides a platform for the users to test the latest ideas and technologies online, from still-in-development beta offerings to newly launched products. There is also an option to share the experience with friends and to provide feedback on the ideas and technologies.


Reports: Consumer banking websites today provide the ability to aggregate the accounts of any customer from different financial institutions and provide an overview of how much money they have, how much they spend each month and how much they owe. A few banks provide interactive client analysis statements to enable monitoring of the account-summary information for a month and comparing it with the previous 12 months to spot trends in account activity. Corporate banking websites enable automated file and report delivery, allowing clients to schedule, file imports and exports, as well as run any standard or custom report even when they are offl ine or out of the offi ce.


Website Integration

Website integration is a must in these times with customers accessing multiple applications of the same bank at the same time. Banks provide single sign-on to multiple online commercial banking applications, including cash management, credit, foreign exchange online, trade services, ACH, wires, treasury information reporting and remote deposit. A few banks even allow more than 60 applications to be accessed through single sign-on.


Websites are also integrated with mobile devices in many ways:

1. Text Messaging: Text banking allows customers to quickly request and receive account information via text message.

2. Mobile Websites: Mobile websites allows customers to access account information and make transactions from phone browser. While consumer mobile banking is oriented more toward fund transfer, account enquiry and balance check, corporate mobile banking enables customers to monitor global account balances and intraday activity, approve outgoing wires and initiate wire transfers, anytime, anywhere.



Website Security

Online transactions, whether consumer or corporate, tend to invoke an inherent risk to safeguard one’s interests. Combating fraud has become a continuous process and has forced banks to concentrate more on website security initiatives. Providing a safe, secure and robust website with well defined fraud resolution processes and SLA not only gains customer confidence but also creates a positive image for the bank.


User identification, data encryption (below 128 bit), audits and alarms, card verification codes (CVV/ CVV2/CID), online security portal, virtual keyboard and dedicated fraud management team are some of the standard security measures implemented by banks.


In order to monitor and prevent Internet banking fraud and other security breach attempts the following technologies and procedures are a “must have” for all the banks in addition to the standard features: extended validation SSL certificates working in conjunction with anti-phishing and malware protection on browsers, utilization of multiple factor password authentication, enforcing re-authentication while accessing sensitive tools, hiding accounts, Verified by Visa/Secure Code, digital signature, digital certificates, secure tokens, session log out, Back and Refresh activity, hot listing and blocking of fraudulent accounts, use scramble pads against key-logging viruses.


Further to the primarily front-end authentication controls listed above, the following security measures are really cutting-edge and competitive differentiators for any bank. These security measures will provide holistic end-to-end security for consumers as well as corporate clients:

• Date/Time and IP/ISP Restriction: Customers can select the days and specify time interval, the IP address and the Internet Service Provider (ISP) from which they connect to personal internet banking.

• Geolocation: Geolocation services provide detailed information about a consumer’s worldwide location, line speed, domain, etc while performing online transactions.

• Biometrics: Biometrics are used to verify a person’s identity by a unique physical attributes (e.g. fingerprint, iris recognition, palm print) that distinguishes the individual from any other person.

• Securing the perimeter: Denying access to the environment in which the Internet service operates by unauthorized external parties is a key target for ensuring the overall security of the system. Some of the measures in place to achieve this include Multi-Tier Infrastructure segregated into separate security trust domains and industry standard Intrusion Detection System (IDS), monitored 24/7 by a centralized security-monitoring group.

• Customer Application Control Features: Some functional features to enable the customer to more easily control the use of the system, activity log tools (audit trail) and advance authorization structure.

• Security and fraud monitoring and incident response, including new vulnerability notification and response, security incident response program, contingency and recovery and rule-based and anomalous behavior. Fraud monitoring should be done on customer Internet sessions, profile information, and transaction details to obtain a risk score.


The Way Forward

To remain competitive and address every possible banking need of their customers and remain profitable, banks can adopt the following key strategies:


1. Personalized services: There is an ever increasing need to differentiate from other providers. Differentiation is not just in terms of products offered but also services. Personalized services are a key focus area for online banks. This helps the bank offer a unique value proposition to their customers. Based on customer preferences, chosen products, spending habits, banks can engage customers by personalization of offers.


2. Channel integration: More and more customers seek seamless experience for their entire banking products line like one-stop payment for all card types, bill payments, cash management and other portfolio management services, etc. Integration of online banking with core banking systems and other applications is a key strategy for online banks. Usage of emails, SMS for information supplement to other channels like phone, etc., provide a unique multi channel approach to manage customer interactions. Banks should support one application to view all product holdings rather than offering separate product-based applications. The data components must be laid out in a manner that allows the customer to move across product holdings and carry out STP transactions. Linking to core banking and robust middleware is one way to achieve multiproduct integration.


3. “Glocal” banking capabilities: Banking services that are linked up across geographies, yet allow local services on the go. Multi-country, multi-currency, multi-market capabilities are the new in thing in online banking services.


4. Interactive features: Online analytical capabilities, various tools and calculators, anytime chat and several other interactive features offer a one-of-its-kind banking experience. Utilization of popular social media such as Facebook, Google maps and YouTube and other proprietary platforms built on Web 2.0 technologies can help banks reach out to even nonbanking customers, greatly increasing the bank’s reach and awareness. These interactive features not only enhance services but are also used to educate customers on various services and driving best practices. Customers can participate in Web2.0-enabled financial social networks (FSNs) through the bank for collaborative learning as well as achieving specific financial goals.


5. Secure transactions: Security, online fraud and identity thefts have been important factors in hampering adoption of online channels. Robust security feature practices such as secure tokens, scramble pads, two-factor password authentications, advanced authorization structure and virtual keyboards make the transactions more secure. Similarly well defined service level agreements in case of fraud, customer education, communication and defining actionable items both from a customer and banks view, a customer-centric process, dedicated security monitoring, security appraisal and also well laid out disaster recovery plans are the need of the hour.


6. Customer migration: The need to migrate customers from physical banking and contact centers to anywhere, anytime banking channels is a very stated need. Banks have employed various means to help achieve this migration. Dedicated frontline staff, cash incentives to frontline staff, special rates on deposits opened online, discounted transaction fees, special offers and fee waivers on transactions generated online, customer education, etc., are some of the major themes that banks have started to follow for customer migration and retention.




Website design, website integration, technology and security are key elements that determine the success and reach of any online banking site. A bank website that offers an easy-to-use interface, enhanced security, integration with tools and services, and is built on the latest technology will have significant mindshare among its customers. Technological innovations and capabilities are conceptualized each passing day and it would be for the banks to leverage the capabilities offered and improve users’ experience on the website. Banks can look at ways to collaborate with customers to understand their needs better and accordingly create products and services, so that the expectations are met. Banks can also look at ways to deploy the technology and tools available to improve customer stickiness and bring increased business. The technological resources are plenty and the customers’ needs are diverse. It is for the banks to identify the relevant technologies and put them to use, so that their customers’ needs are met. Banks are also expected to understand the “unstated needs” of customers and offer relevant solutions that would lead to customer delight and not just customer satisfaction.