What is E-banking? Categories

  • Post last modified:4 March 2024
  • Reading time:8 mins read
  • Post category:Business / E-Business
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What is E-banking?

E-banking refers to electronic banking or Internet banking in which customers can perform any of the banking functions through their bank accounts by connecting to the website of the respective bank. In e-banking, the bank maintains a web-enabled centralized database that holds the records of all its customers. Customers can access any of the facilities provided by the bank on the website by selecting the appropriate menu items.

Categories of E-banking

e-banking has changed the way both customers, as well as banks, perform their roles and functions. For example, today we have a new system to deliver cash instantly to customers by using Automated Teller Machine (ATM). Generally, the task of maintaining and monitoring e-banking in banks is assigned to its technical personnel.

For example, the Reserve Bank of India has appointed a group of employees to provide e-banking facilities to its customers. This group has divided the e-banking facilities into the following three categories depending on the access levels provided to the customers:

Information-only System

This system provides general-purpose information. This includes branch locations, interest rates provided by the bank, information regarding loans, and fixed deposits, and information about various products and services provided by the bank to its customers. The communication between the bank and the customer is normally carried out through e-mail, as there is no direct interaction between the customers and the application system the bank.

The information-only system also provides information on recruitment processes within the bank. You can download various application forms, such as recruitment forms, deposit forms, and withdrawal forms, from the bank’s website. Moreover, this system does not require any type of authentication or authorization of the customers to provide the required information to them.

Electronic Information Transfer System

This system enables customers to access account-related information. This includes information related to their balance, fund transfer details, transaction details, and bank statements. The retrieved information or data is in the read-only format.

To obtain the required information, the customers have to log in to their user accounts with their Internet banking IDs and passwords on the website of the respective bank. After customers have been authenticated, the requested information is retrieved from the bank application system in either batch mode or offline mode.

Fully Electronic Transactional System

This system provides bi-directional connectivity between a bank and its customers. Using this, customers can retrieve the required information as well as transfer their funds to other bank accounts. Customers can also update their personal information, such as e-mail address and mobile number, online on the bank’s website.

The fully electronic transactional system is based on various technologies, such as inter-bank payment gateways and legal infrastructures. Examples of fully electronic transactional systems include:


It enables customers to withdraw cash from their bank accounts easily and quickly, anytime and anywhere, without going to a bank branch. To operate an ATM, a customer merely needs to carry an ATM card. It is a specialized plastic card and has a specific combination of digits that act as an authentication ID. The customer can use this ATM card and enter its authentication ID in the ATM to withdraw money from his/her bank account.

ATM cards have simplified the money withdrawal process. Now, customers do not need to have checkbooks, banking hour restrictions, or paper-based verifications to withdraw money from a bank. Customers can also use ATMs to obtain information about their account details. Thus, the various functionalities of ATMs are as follows:

  • Funds transfer
  • Cash deposit information
  • Cash withdrawals
  • Account transfers
  • Pay bills
  • Balance queries

Credit Cards/Debit Cards

These cards enable the user to spend money, whenever or wherever required, within the limits fixed by the respective bank in which he holds an account. A credit card is similar to a post-paid card in which the customer has to pay the credited amount after reaching the given limit or completing the due duration. Debit cards are similar to pre-paid cards, that is, some amount of money is deposited in the customer’s account.

Whenever a customer uses a debit card to purchase something, the exact amount is deducted from the customer’s bank account through Internet banking. To use a debit card, a person has to open an account with the bank that provides the debit card.

A Personal Identification Number (PIN) is also issued to each customer along with the debit card. Whenever the debit card is used, the customer is identified by that PIN. When the customer purchases an item, he has to provide the PIN and the Internet security management authenticates that PIN.

Smart Cards

These cards refer to a standard credit card-sized plastic card with an embedded microchip containing integrated circuits. It is often called an electronic wallet. It provides memory capacity and computational capability that is capable of processing data.

Owing to its magnetic strip, a smart card can store a large amount of information as compared to a conventional card. In addition, it is more reliable and secure than credit or debit cards and can perform tasks, such as authentication, identification, data storage, and application processing.

Article Source
  • Glover S., Liddle S., Prawitt D. (2001). e-Business. Upper Saddle River, NJ: Prentice Hall.

  • Gupta V. (2006). e-Business. New Delhi: Research Book Center.

  • Khosrow-Pour M. (2007). Utilizing and managing commerce and services online. Hershey, PA: Cybertech.

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