Electronic Banking

Electronic Banking

                Electronic Banking is a system of banking that most financial institutions are adopting following its development. Electronic banking involves the transfer of money through an exchange of electronic signals between banks and institutions such as credit unions (Kidwell et al. .2016). The transfer of funds via electronic banking occurs where someone withdraws cash from an Automated Teller Machine or uses a debit card to pay for goods or services.

This form of banking uses computer systems which record transactions involving the ownership, transfer of funds and methods of access to these funds. The different electronic banking systems vary in factors such as the size of the system and the organization. The transfer of funds electronically is known as electronic fund transfer which has its origin from any electronic terminal such as a telephone.

Electronic banking owes its existence to the Bank of America with the invention of data-processing machines, optical character recognition and use of robots to sort documents coming into place. The need to record the daily transactions of deposits and cash withdrawals, availing account balances information to clients and holding funds was a significant influence on the establishment of this form of banking. With its development, someone can pay bills online, and easily access banking services such as the purchase and sale of investments at one’s premises..

There are different forms of electronic banking which include, debit cards, Automated Teller Machines, which are in public places for customers to withdraw cash and confirm their account balances (Kidwell et al. .2016). Tele Banking is another form of electronic banking where one can use telephones to access banking services by dialling a specific number. E- Cheque is an electronic cheque where users write and present the cheque electronically. There are other forms of electronic banking, such as direct deposit and automatic bill payment.

Problems Relating to Electronic Banking

The electronic banking system faces various challenges amid its numerous benefits. ( Belas et al. 2016) Some of the issues that this form banking face are, insecurity, technical issues as it entirely depends on computer systems, difficulty in transacting, traditional banking habits and small budgets. Resolving these challenges would be a drastic milestone that financial markets and institutions would make and make the service of this system more outstanding.

Online banking faces a significant challenge on the issue of security. With the access to banking services made easier one can access own account without making a trip to the bank, this is inclusive of robbers. Stealing of money has become comfortable with access to personal information is the only requirement for cybercriminals (Kidwell et al. .2016). Unlike before, the theft of funds through fraud has been on the increase as it involves less physical harm. This challenge majorly affects the illiterate and older people who strangers take advantage of and access their personal information without their knowledge.

Secondly, technical problems affect the efficiency of electronic banking. The automated banking relies on computer systems and communication devices which are prone to damages. Systems can sometimes fail or crash, causing considerable losses to the banking institutions. The crashing of networks and mobile banking applications may cost financial institutions the loss of crucial data and funds and hinder clients from performing their daily operations.

Besides, the electronic banking faces the problem of transaction difficulty. The process of depositing and withdrawing from online banks becomes time-consuming, sometimes due to delays( Kidwell et al. .2016). With this being a new invention in the market, most online banks have not set up Automated Teller Machines and thus making it difficult for transactions to take place. The processing of cheque deposits may take quite some time before it reflects on the bank accounts.

Traditional Banking Habits is another problem that the banking system faces. A high percentage of the population all over the world do not use this form of banking as they are conversant with the traditional methods of banking. Capturing this part of the people by increasing the awareness of online banking would expand the market. Electronic banking can significantly solve the negativities of traditional banking, such as making trips to the bank.

Solutions

There is a need to introduce methods to solve the challenges facing electronic banking to enhance efficiency in the banking system. Financial institutions should ensure that their banking systems are secure from fraud. Customers hesitate to use the debit and smart cards due to the privacy risk as they are prone to cyber hacking (Belas et al. .2016). In addition to this, banks should create awareness of how safe their electronic banking and encourage the use of these systems by assuring the necessity of electronic banking.

The adoption of mobile technology solves the issue of reliance on computer systems which are prone to bugs and crashing, causing technical problems. Development of software systems that offer services regardless of delays and are not likely to technicalities. Digital strategies are coming up that are flexible to adapt to changes in the banking system.

Conclusion

In conclusion, most of these challenges are basically on customer satisfaction. The evaluation of aspects that focus on capturing the customer enhances the performance of the banking institutions. Providing efficient full online services goes a long way in attracting more customers as well as retaining the existing market. Solving the problems that customers report makes electronic banking reliable and more accessible.

Works cited

Belás, Jaroslav, et al. “ELECTRONIC BANKING SECURITY AND CUSTOMER SATISFACTION IN COMMERCIAL BANKS.” Journal of Security & Sustainability Issues 5.3 (2016).

Kidwell, David S., et al. Financial institutions, markets, and money. John Wiley & Sons, 2016.