E-Banking
Agenda
Technology Commencement in Banking
Product Based Banking
Customer Based Banking
Data Warehouse
CRM
Alternative Delivery Channels
Banks Position in the New Economy
Technology Commencement
in Banking
 In 70’s, banks started to establish centralized data
processing centers.
 Essentially the roles of these data processing centers
are:
collect the handwritten documents from branches
compile the documents
manual data entry by the operators
generate reports for the bank staff and the central
bank
execute some banking transactions
Branch Automation
 In 80’s, banks started technology investments for the
branches.
 The first step is offline branches.
 Terminals connected to local branch computer
 Second step is online branches connected centrally. Most
of the transactions started to be performed in the
central mainframe.
Product Based Banking
 In the mid-1980s, banks accepted product based banking and
competed with their products.
 Banks developed new products for their customers.
Credit card
Credit deposit account (Super Account)
Debit cards
 Beside branch, banks brought new channels to give better service
to their customers.
ATM
POS
IVR
Plastic Cards
 The plastic card usage grown enormously in last 2
decade.
 Plastic card became the main media for bank customers.
 Number of credit card in Turkey:
Credit Card Type National Cards International Cards
Total
Visa
1.200.704
7.043.834
8.244.538
MasterCard
488.881
4.820.965
5.309.846
Other
13.599
36.884
50.483
total
1.703.184
11.901.683
13.604.867
data collected from BKM
Plastic Cards
 Number of debit card in Turkey:
Debit Card Ty pe
Electron (Visa)
Plus (Visa)
Electron ve Plus
(Visa)
C irrus ve Maestro
(MasterC ard)
Private Label card
Total
Debit card
6.230.782
68.304
2.881.126
14.225.245
6.893.479
30.298.936
data collected from BKM
ATM
 In the mid-1980s, that cash dispensers truly became
a worldwide phenomenon.
 It took 16 years for the first 100,000 cash dispensers
to be installed, but only four years more for the next
100,000.
 Now,ATM became the electronic face of banking for
most customers.
 Beside cash withdrawal, there exist various
transaction options from transfer to fund
buying/selling.
 Now there are 12.174 ATM installed in Turkey (Ref:
BKM)
Point Of Sale
New habits in shopping
Increased the use of plastic cards
Now there are 313.140 POS installed in Turkey
(Ref: BKM)
ATM and POS Application Architecture
Debit Card
Authorization
Switch System
Credit Card
Authorization
IVR
 Interactive Voice Response (IVR) is a software application that
accepts a combination of voice telephone input and touch-tone
keypad selection and provides appropriate responses in the form of
voice




IVR has come into our life at the beginnings of 90’s.
First step in Telephone Banking
Peak transaction volume in salary payment days for balance inquiry
Integrated with ATM system
Customer Based Banking
Product Based
• Customer introduction
on different systems
• Difficulty in creating
new products
• Different user
interfaces for different
environments
• Product based
Customer - Bank
relation
Customer Based
•One customer information
file
•Product factory
•Standard graphical user
interface
•Consolidated customer
data
Banking Application Architecture
Relationship Management
CIF
Product Factory
Portfolio
Management
POS
Deposit
(TD,DD)
FBS
Securities
Promissory
Notes
FX
Import / Export
Teletel
Loans&Credits
NBS
EFT
Cheques
Merchant
Telerom
Sales Support
System
CMS
Treasury
Payments
YKB HR
Teller (Branch)
I
N
F
O
C
E
N
T
E
R
Corporate Tables
DAL
Internet Banking
GL / Accounting
Settlement
Phone Banking
Reporting
Batch Operations
Internet Shopping
PCM
Campaign
Management
Credit Risk
Management
Management & Control
Productivity
Information Delivery
Delivery Services
ATM
Data Warehouse
 Electronic repositories of summarized historical data
 The main idea behind data warehouse is get all
company data working together so users can see
more,learn more, and make the organization work
better
 Data Warehouse helps users to identify trends, find
answers to business questions and derive meaning from
historical and operational data.
 Data access is easier and less costly
 Decision support solutions run faster and are more
accurate.
Data Warehouse Process
Life Cycle
Design
Transaction
Data
Extraction
Transform
Data
Scrubbing and
Cleansing
Partial
Solutions
Data
Mapping
Complete
Integrated
Solution
Extract
Data
Replication
Load,
index and
Aggregate
Data Histories
and
Summaries
Deliver
Publish
and
Subscribe
Data
Access
Tools
Integrated Data Warehouse Infrastructure
CRM
 CRM is an integrated sales, marketing and service
strategy
 CRM goals are :
Use existing relationships to grow revenue
Use integrated information for excellent service
Introduce more repeatable sales processes and
procedures
Create new value and loyalty
Implement a more proactive solution strategy
The Three Phases of CRM
Acquire
New
Customer
Differentiation
•Innovation
•Convenience
Enhance The Bundling
Profitability •Reduce Cost
of Existing
•Customer service
Customer
Adaptibility
•Listening
•New products
Retain
Profitable
Customer
Integrated CRM
Applications
Life Cycle
Partial
Functional
Solutions
Complete
Integrated
Solution
Acquire
Direct
Marketing
Sales Force
Automation
Enhance
Cross Sell
and Up Sell
Retain
Proactive
Service
Customer Support
Integrated CRM Applications
Alternative Delivery
Channels
Anytime, anywhere banking
–
–
–
–
–
Telephone Banking
Internet Banking
Mobile Banking
Television banking
Next ???
Telephone Banking
 7x24 banking through the phone
 Main components
Switch
IVR
CTI(Computer Telephony Integration)
Manage each call using the computer
Pop up the user information while transferring the call
Agent Desktop Application
Win32,ActiveX, HTML
Host Application
Telephone Banking
Infrastructure
Telecom
IVR
CTI
HOST
Internet Banking
• More and more banks are coming to realize that internet is a part of banks'
alternative delivery channel strategies activities concentrated in the business-toconsumer segment, focused on retaining clients
• In Internet banking, security is a primary concern. Security concerns have been
addressed from every angle within the architecture of the Internet banking
application.
Sample Internet Banking Architecture
Mobile Banking
Current Mobile Banking Applications:
SMS Banking
WAP Banking
STK (Sim Toolkit) Banking
SMS Banking
 Basic banking inquiry transactions(balance inquiry, funds, exchange
rate inquiry…) are performed by the cooperation of bank and the
GSM operator
 Security is the main problem
GSM
Network
GSM Operator
Application
Server
GSM
Operator
SMS DB
Leased line
Bank SMS
Gateway
Bank
SMS
DB
Bank Host
WAP Banking
 Wireless application protocol (WAP) is an application
environment and set of communication protocols for
wireless devices designed to enable manufacturer-,
vendor-, and technology-independent access to the
Internet and advanced telephony services.
 WAP is a global standard and is not controlled by any
single company
 Various banking transactions offered in WAP
environment by banks.
 Similar architecture with SMS banking
SIM Toolkit
 SIM card enables to keep and load different applications.
 SIM Application Toolkit has been agreed as a GSM standard
 SIM Application Toolkit is independent of phone
manufacturers and designs.
 SIM Application Toolkit allows the flexibility to update the SIM
to alter the services and download new services over the air
 SIM Application Toolkit is designed as a client-server
application. On the server side, SimCard platform and the
client side, phone that supports the SIM Application Toolkit
 In the near future, banks will start to offer banking
transactions in this platform.
Television Banking
 Digital television (DTV) is the transmission of television signals using digital
rather than conventional analog methods.
 Advantages of DTV over analog TV include:
 Superior image resolution (detail) for a given bandwidth
 Smaller bandwidth for a given image resolution
 Compatibility with computers and the Internet
 Interactivity
 Superior audio quality
 Consistency of reception over varying distances

Banks offer their banking transaction in this new environment

T-commerce in the near future.
What is the Next channel
Microwave
Banking
???
Channel Costs
2
1,5
1
0,5
0
Web
ATM
Call Center
Branch
Channel Integration Evolution
 Channel Integration evolution
 Reuse
 Efficiencies of Scale
 Reduction of Redundancies
The Role of Banks in the New Economy
 Internet and mobile devices have brought new rules to
economy and shaped the way to do business
 Banks has also evolved according to the new economy
and took their places in this new world to add value to
their customer
 The new ways to do business are :
e-commerce (B2C)
m-commerce
B2B
E-commerce - B2C
 E-commerce is the buying and selling of goods and services on the
Internet.
 Main feature of e-commerce
24-hour availability
 a global reach
 the ability to interact
provide custom information and ordering
and multimedia prospects,
 The Web is rapidly becoming a multibillion dollar source of revenue
for the world's businesses.
 Banks provide secure payments infrastructure - virtual POS
M-commerce
 Mobile commerce applications involve using a mobile
phone to carry out financial transactions- this usually
means making a payment for goods or transferring
funds electronically.
 As content delivery over wireless devices becomes
faster, more secure, and scalable, there is wide
speculation that m-commerce will surpass wireline ecommerce as the method of choice for digital commerce
transactions.
B2B
 A housands of companies that sell products to other companies
have discovered that the Web provides not only a 24-hour-a-day
showcase for their products but a quick way to reach the right
people in a company for more information.
 In the B2B, the bank role is to provide a reliable payment
infrastructure that add value to corporate business
 This infrastructure should cover:
Bill presentment
Bill payment
Different payment types(credit card, deposit account, loan)
Information after payment
E-Security
 To improve the e-business, all the users should feel secure to perform the
transaction this environment
 The main concepts in e-security are:
 PKI (public key infrastructure) enables users of a basically unsecure public
network such as the Internet to securely and privately exchange data and
money through the use of a public and a private cryptographic key pair that is
obtained and shared through a trusted authority.
 Public key is a value provided by some designated authority as a key that,
combined with a private key derived from the public key, can be used to
effectively encryption messages and digital signature.
 Private or secret key is an encryption/decryption key known only to the party or
parties that exchange secret messages. Public key is used together with a
private key
E-Security - continued
 Digital certificate is an electronic "credit card" that establishes your credentials
when doing business or other transactions on the Web. It is issued by a
certification authority (CA).
 CA (certificate authority) is an authority in a network that issues and manages
security credentials and public key for message encryption. As part of a public
key infrastructure, a CA checks with a registration authority to verify information
provided by the requestor of a digital certificate
 An RA (registration authority) is an authority in a network that verifies user
requests for a digital certificate and tells the certificate authority to issue it.
Smart Cards
 About the size of a credit card, a smart card is a plastic card with an
embedded microchip that can be loaded with data, used for telephone
calling, electronic cash payments, and other applications, and then
periodically "recharged" for additional use.
 smart card contains more information than a magnetic stripe card and it
can be programmed for different applications. Some cards can contain
programming and data to support multiple applications and some can be
updated to add new applications after they are issued
 Benefit of smart cards:
 enhanced security
 off line transaction
 programmable card
loyalty
customer information
Related Links
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www.ykb.com
www.teleweb.com.tr
www.bkm.com.tr
www.visa.com
www.europay.com
www.banktech.com
www.bai.org
www.mobilesimtoolkit.com
www.itworld.com