Online Banking and Phishing

Moreno III, Rufino Gerard G.

MBA-JD

FEU I.D. 2012517342

DLSU I.D. 11290293

Information and Communications Technology and the Banking Industry

I. Introduction

II. ICT and the Evolution of the Banking Industry

III. Impact of ICT on the Banking Industry

IV. Threat to online banking: Phishing

V. Conclusion

Introduction

        One of the modern tools being currently used for rating or measuring a modern business enterprise today is its ICT infrastructural layout or how it uses ICT for its competitive advantage. This is a clear indication of the importance of ICT for business establishments.

        Banks in particular adopt Information and Communication Technology to improve the efficiency and effectiveness of the services it offers to its customers, improve business processes, as well as to enhance and improve managerial decision making and workgroup teamwork. This helps strengthen their competitive positions in the rapidly changing/emerging economies and environment.

        There is no doubt that commercial banks play an important role in the economic development of any nation. The need to be efficient and effective in running the banks as leading players of financial services providers of a nation cannot be overstated. Recent advances in the technological world have led to remarkable changes in the ways businesses are run compared to the past.

        ICT affects all processes associated with modern day banking. From the daily routines of preparing payroll and order entry, to strategic activities such as the acquisition of a company, ICT surfaces as a key element.

ICT and the Evolution of the Banking Industry

        In the past, banking took place only on physical establishments of banks.

        The bank branches were only open 9am-3pm Monday to Friday, which was very inconvenient for people or customers/client who worked full time or students who have classes. Also, banks had to employ many staff to deal with customers as this was the only way that services could be provided.

        Banking as a business is no longer just the domain of the traditional the high street banks - the major supermarkets also offer banking services to their customers. There are also banks that are purely online operations with no local branches at all. All this change has come about because of the rise of the internet and widespread access to broadband.

The ATM

        The first step towards automated banking came upon the invention of the Automatic Teller Machines or ATM as they are usually called.

        The first ATM was installed into a bank almost 50 years ago. The first ATM was put into use by Barclays Bank in its Enfield Town branch in North London, United Kingdom, on 27 June 1967.^[1]

The ATM allowed customers to get hold of their money without having to fall in line in queue. This saved a lot of customer’s time, and at the same time saved the bank a huge amount of money since fewer staffs were needed. ATMs are open 24 hours a day, unless on maintenance, and so they are a very convenient way of having some cash especially in time of emergencies.

        ATMs operated by the banks have a daily withdrawal limit. This is to reduce the chances of personal loss through fraud and it makes it more likely that there will be physical cash remaining in the machine for other customers.

        All ATMs require you to insert your debit card and enter your PIN number using a number keypad. If the PIN is correct, then you are allowed to proceed. If there is a 'stop' on the card, such as it have been reported as stolen, then the machine will retain the card.

        ATMs provide customers with their bank account balance, they can issue money, print statements and even take cash deposits. Customers are able to use almost any ATM in any bank, supermarket, malls etc. ATMs also offer additional services such as changing your PIN number or top up your mobile phone.

        ATMs use a simple menu system to offer their services. The customer simply selects the service they want either by pressing the touch screen or a physical button. This feature is helpful especially to the elderly who are not familiar with complicated processes.

        The first 24-hour automated teller machines (ATM) were introduced in the Philippines in the 1980s.^[2] The country’s ATM network grew by 300 percent between 2001 and 2015—from less than 4,000 ATMs in 2001 to over 16,000 ATMs in 2015. According to data from the Bangko Sentral ng Pilipinas as of September 2015, there were 16,781 ATMs nationwide.^[3]

Call Centers

        Call Centers were the next major step forward for banks.

        Customers make a large number of telephone calls to their bank and there weren't always enough staff in the branch to take calls and serve customers. These affected numerous transactions which resulted to large opportunity costs both for the customers and the banks.

        So banks began to set up separate facilities where large numbers of workers spend the day answering telephone calls from customers. These staff didn't just deal with customers from one branch; they could be speaking to customers from any branch around the country.

        Call centers saved banks a lot of money because they could deal with a large number of calls from customers quickly and efficiently. Customers benefit by being able to contact the bank from anywhere to find out their balance, transfer money, pay bills and so on.

        Now that telecommunications around the world is fairly inexpensive, many call centers are not even located in the same country as the bank. And Majority of banks now outsource their customer services.

        However, some customers still want the face-to-face contact and prefer to visit their local branch to conduct their business. These are common in large and complicated transactions, people who do not have access the technology to do so and old people who do not embrace such advances in technology.