INTRODUCTION E-banking and Security Issues in E-Banking

The blog is about E-banking and security issues in E-Banking, often known as internet banking, which is a system that allows bank customers to access their accounts as well as information about bank goods and services via a personal computer or other intelligent devices.

Information technology is at the forefront of the information age. It is a very cost-effective method of delivering banking services, but it is not without risk.

Apart from cost savings, internet banking has also introduced a new set of threats, all of which are in a new form.

Regulators and supervisors all over the world are aware of several types of internet banking threats. Internet banking is that technology plays a big role as a risk management tool.

There is no finality in the types of hazards or the strategies to control them because of quicker and quicker information technology.

The economic and banking environments around the world have changed dramatically in the previous decade. The operating environment for banks in India has changed dramatically as a result of the economic and financial sector reforms implemented in the country since the early 1990s.

In India’s banking system, deregulation and reforms resulted in the formation of an efficient and competitive banking system. Banks can now diversify into universal banking, investment banking, bank assurance, mortgage financing, depository services, securitization, personal banking.

Globalization has the unavoidable consequence of improving the overall soundness of the financial system and facilitating global competition. At the same time, liberalization has allowed new competitors to enter the market and increased competition among banks.

Information and communication technologies considerably contributed to the exponential expansion and profit of financial institutions around the world in order to survive in this competition.

Customers will benefit from integrated financial services as a result of technological advancements. In terms of technology adoption for process automation and integrated financial services, Indian banks have been late to the game. However, due to recent changes, Indian banking is on the verge of a paradigm shift as a result of the global use of technology. There are a number of reasons that have influenced the adoption of technology in the Indian banking sector.


Following liberalization, the Reserve Bank of India made various adjustments to the banking sector’s basic structure and issued various rules on electronic banking, fund transfers, core banking solutions, payment systems, clearing services, and online banking. As a result, banks will need to adapt to rapid technological advances. Furthermore, the Indian Banking Association (IBA) has assisted banks in establishing a platform to debate various concerns related to computerization and automation of procedures, thereby resolving the issue of adaptability.

This shift has an impact on bank human resources because it changes their working hours and processing time, and the IBA has provided a highly convenient environment for immediately resolving the issue. Last but not least, the Central Vigilance Commission has played an important role in facilitating branch computerization by adopting directive measures to accelerate the process.

The problem was closely tied to improving the bank’s vigilance administration. This aids in improving the automation process and enforcing tight banking regulations whenever necessary.

All of the above causes contributed to the evolution of the Indian banking sector, and advances in technology have resulted in numerous changes to the payment system and the banking system as a whole. This progress has changed the way banks use technology and electronic modes to deliver services.

Banks can now reach their customers anywhere, at any time, and customers may now access their accounts instantly from any location on the globe. Customers are growing more demanding as the competition heats up.

To match consumers’ expectations, banks will need to upgrade their branches to provide a wide range of services such as ATMs, telephone banking, and mobile banking. Effective customer service, including tailored and value-added products to suit the unique demands of individual customers as well as to satisfy the diversified needs of customers, is the key to attracting and retaining consumers. This blog deals with the Security Issues in E-Banking across the banking sectors.



According to R.K. Uppal, “Electronic Banking is electronically handling of all types of banking business, primarily over the internet.”

According to McMillan, “E-Banking is the process of conducting banking with the use of electronic tools and facilities.”


  1. Customers are need not visit the bank. Customer transportation time and costs are reduced.
  2. Customers receive an instantaneous message after completing a financial transaction via the internet, card, or other means, allowing banks and customers to preserve complete transparency.
  3. Because the customer can rapidly determine his future financial transactions, he can rapidly determine his present balance.
  4. NEFT [Net Fund Electronic Send], ATM Cards, Mobile Banking System, and several apps such as PAYTM, BHIM, and UPI [Unified Payment Interface] can all be used to transfer money quickly.
  5. Data can be swiftly transferred to individuals or organizations engaged in the transaction.
  6. Computers have aided banks in updating their data on a daily basis, reducing time, physical labor, and saving paper and space, among other things.
  7. The introduction of ATMs and plastic money [i.e. Credit Cards, Debit Cards, VISA Cards, and so on] has provided bank customers with a highly convenient way to deposit and withdraw money, as well as to conduct other financial activities, from anywhere in the globe.
  8. There is no prospect of giving inaccurate, incorrect information or implementing fraudulent activities because the messages are delivered swiftly to the people involved in the transactions. [People used to refer to the number on a currency note as the Cheque Number of an amount paid to a third party via a bank’s issue of a check.]
  9. The implementation of various high-tech tools has aided banks in calculating various charges and tax amounts to be charged and collected in everyday financial operations. This also eliminates the risk of mathematical errors that could occur if transactions are completed manually.
  10. E-banking has given bank customers the ability to manage their accounts on their own. Bank transactions have now become a two-way process, rather than a one-way procedure in the past.


E-Banking keeps its clients informed about new products, services, and features that are on their way.

The following are some of the functions of E-Banking:

  • Customers can see their current account status right away.
  • When a credit or debit card is lost, the customer can either block it immediately on his own or notify the appropriate bank. In a matter of seconds, the bank can disable such missing cards.
  • A bank customer can change the password chosen for using his credit or debit card on his own to retain secrecy and confidentiality.
  • Customers may rapidly check the foreign exchange rate for various currencies from different nations using the internet, allowing them to make informed investment, for investment, or sale and purchase decisions.


E-banking services are categorized into two categories based on their websites:

Informational Websites: Customers can access general information about the financial institution and its products or services through informational websites. Websites provide customers with access to a wealth of information about the bank.

Transactional Websites: Transactional websites allow clients to execute transactions through the website of a financial institution, such as beginning banking transactions or purchasing items and services. A simple retail account balance query for a massive business-to-business money transfer is all examples of banking transactions.

Transactional websites, which often permit the electronic interchange of personal client information and the transfer of payments, expose a financial institution to a greater risk than basic informational websites.


Customers can make any type of transaction using online banking:

  1. Inquiry into account balance
  2. Make a bank draft application.
  3. Making payments to their customers
  4. Multiple accounts can be accessed at the same time.
  5. Request information on numerous current and planned schemes, such as loan transaction processes and account schemes.
  6. Sign electronic checks
  7. Money is transferred from one account to another.


The different channels and a variety of platforms to provide e-banking are:

  • Internet Banking and Online Banking
  • Managed Network.
  • Mobile phone banking, and
  • PC Banking and Offline Banking
  • Telephone banking
  • TV-based Banking.


E-banking exposes formerly closed systems to open and potentially dangerous surroundings, increasing Security Issues in E-Banking. Breach with serious criminal intent (fraud, theft of commercially sensitive or financial information), breaches by “casual hackers” (defacing websites or causing websites to crash), and faults in system development and/or setting up going to lead to security breaches (genuine users seeing/being able to transact on other users’ accounts).

All of these Security Issues in E-Banking have the potential to have severe financial, legal, and reputational ramifications.

Many banks are discovering that their systems are being probed hundreds of times per day for flaws, however, the damage/losses resulting from security breaches have so far been small. Some banks, on the other hand, may build more sensitive “burglar alarms” to better understand the nature and frequency of failed attempts to break into their systems.

It’s easy to exaggerate the security threats and security issues in E-Banking associated with internet banking. It’s worth remembering that the Internet has the potential to eliminate some of the errors caused by manual processing (by increasing the degree of straight-through processing from customers through banks’ systems).

This reduces the risk of tampering with transaction data (but the possibility of customers entering data erroneously remains). There could be significant security advantages as e-banking evolves, concentrating widespread attention on security threats.

Financial institutions must have at the very least:

  • A strategic approach to information security that incorporates best-practice security controls into the development of systems and networks.
  • Active testing of system security measures (e.g. penetration testing) and rapid response to emerging threats and vulnerabilities.
  • Continuous assessment of marketplace changes is all part of a proactive approach to information security.
  • a sufficient number of people with experience in information security
  • Active usage of security management and monitoring technologies based on the operating system
  • Strong information security procedures in the workplace.
  • As part of their ongoing monitoring, line supervisors will raise these issues with their institutions.


  1. Have a clear and publicly communicated plan that is led from the top and considers the impact of e-banking.
  2. An effective procedure for monitoring success against it.
  3. Take into account the impact of e-provision on their business risk exposures and manage them appropriately.
  4. Conduct market research and implement systems with sufficient capacity.
  5. Scalability, implement proportional advertising strategies and ensure appropriate personnel coverage and a viable business continuity plan.
  6. Ascertain that they have sufficient management information in a clear and understandable style.
  7. Maintain enough personnel experience, incorporate best practice controls, and test and update these as the market evolves. Use system-based security management and monitoring tools to their full potential.
  8. Ascertain that crisis management methods can handle Internet-related incidents.

Conclusion of  Security issues in E-banking

In recent years, the banking industry has been a leader in the e-business world. The e-banking revolution has transformed the banking industry by breaking down barriers of Security Issues in E-Banking. However, while e-banking offers many advantages to both users and banks, it also increases traditional banking dangers and Security Issues in E-Banking.

Developing countries confront numerous hurdles to the successful implementation of e-banking programs when compared to developed countries. Increased customer satisfaction is one of the advantages that banks get when they use e-banking.

Customers may access their accounts at any time and from anywhere. E-bank encourages them to participate more, resulting in stronger bank connections. Banks should provide convenience to their clients by providing service through many distribution channels (ATMs, the Internet, and physical branches) and expanding the number of functions available online.

Expansion of product options and geographic reach are further advantages. With all of these advantages, banks can succeed in the financial sector.

You can register your grievances in RBI regarding Security Issues in E-Banking at

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