Electronic Banking PDF

Chapter 1 access your account. Many financial institutions use INTRODUCTION TO ELECTRONIC BANKING ATM or debit cards and Personal Identification (e-banking) Numbers (PINs) for this purpose....

Chapter 1 access your account. Many financial institutions use INTRODUCTION TO ELECTRONIC BANKING ATM or debit cards and Personal Identification (e-banking) Numbers (PINs) for this purpose. Some use other types of debit cards that require E- BANKING your signature or a scan. The use of computers and telecommunications For example, some use radio frequency enables banking transactions to be done by identification (RFID) or other forms of “contactless” telephone or computer rather than through technology that scan your information without direct human interaction. contact with you. The federal Electronic Fund Transfer Act (EFT Act) covers some electronic Features include: consumer transactions. electronic funds transfer for retail purchases automatic teller machines (ATMs) automatic payroll deposits and bill Internet Banking, also known as net-banking or payments. online banking, is an electronic payment system that enables the customer of a bank or a financial Electronic banking has vastly reduced the institution to make financial or non-financial physical transfer of paper money and transactions online via the internet. coinage from one place to another or even from one person to another. This service gives online access to almost every banking service, traditionally available through a Relies on intricate computer systems that local branch, including fund transfers, deposits, and communicate using telephone lines. online bill payments to the customers. A method of banking in which the customer conducts transactions electronically. WHERE DOES E-BANKING TRANSACTIONS Is a form of banking in which funds are transferred through an exchange of electronic signals rather OCCUR? than through an exchange of cash, checks, or other types of paper documents. 1. Transfers of funds occur between financial institutions such as banks and credit unions. TYPES OF E- BANKING 2. They also occur between financial institutions and commercial institutions such as stores. 1. Internet Banking. 2. Mobile banking. 3. Automated Teller Machine (ATM’s). HOW DO E-BANK USERS ACCESS THEIR FUNDS? 4. Smart Cards. 5. Electronic Funds Transfer (EFT). A common method of access (or identification) is by access code, such as a personal identification 6. Electronic Clearing Services (ECS). number (PIN) that one might use to withdraw cash 7. Telebanking. 8. Door-Step Banking. from an automated teller machine (ATM) machine. ELECTRONIC BANKING ONLINE BANKING E-BANKING RANGE IN SIZE Small System Electronic banking, also known as electronic fund ▸ ATM network, a set of interconnected automated transfer (EFT), uses computer and electronic teller machines that are linked to a centralized technology in place of checks and other paper financial institution and its computer system. transactions. EFTs are initiated through devices like Large System cards or codes that let you, or those you authorize, JENDALL MALAGU  ▸ Federal Reserve Wire Network, called Fedwire. ▪ has democratized the consumer's ability to This system allows participants to handle large, be in total control of their money regardless time-sensitive payments, such as those required of where they happen to be located. to settle real estate transactions. ▪ gives customers the ability to access their HISTORY OF E-BANKING financial accounts via cell phone, laptop, or other devices that have been linked to their accounts, is a welcomed banking resource. Shifting from brick-and-mortar to click-and-mortar approach. ▪ Brick and mortar: traditional ON THE PART OF THE BANK ▪ Click and mortar: modern / digital 1. Business Activity Review TIMELINE: E-BANKING Business owners, accounting staff and other approved employees can access routine banking 1950s Bank of America as one of the First activity such as deposits, cleared checks and Institutions to Develop the Idea of Electronic wired funds quickly through an online banking Computers for Banking Tasks interface. 1981 New York City Banks Test At-Home Banking 1983 Bank of Scotland Institutes First UK Internet 2. Improved Business Productivity Banking Services E-banking leads to productivity gains. 1994 Stanford Federal Credit Union Offers U.S. Automating routine bill payments, minimizing the Internet Banking need to physically visit the bank 1996 NetBank is Founded 1999 Bank of Internet USA is Founded 3. Lower Banking Costs 2001 Bank of America Has 3 million Online Banking relationships and costs are often based Customers on resource requirements. 2006 80% of US Banks Offer Internet Banking 2009 Ally Bank is Launched 4. Reduced Banking Errors 2010 Online Banking is Growing Faster Than the Automation of payments, wires or other Internet consistent financial activities ensures payments 2018 Online Banking Is Standard Practice are made on time and may prevent errors caused by keyboard slips or user errors. BEST BANKS IN THE PHILIPPINES - FORBES 5. Increased Scrutiny and Reduced Fraud 2023 2024 Increased scrutiny of corporate finances through 1 CIMB Bank PNB audits and anti-fraud measures requires a high 2 PNB Union Bank PH level of visibility for all financial transactions. 3 BPI Maya Bank 4 Union Bank OFBank REASONS WHY ONLINE BANKING IS 5 BDO UnionDigital Bank 6 LandBank UNO Digital Bank IMPORTANT IN TODAY’S TIME 7 PSBank GoTyme Bank 1. Security assured 8 RCBC LANDBANK 2. Access: no problem 9 Maya Bank Metropolitan Bank & Trust 3. No hidden fees (MetroBank) 4. Convenience guaranteed 10 Robinsons Bank 5. Monitor your accounts closely ADVANTAGES NATIONAL ONLINE BANK DAY – observed annually every 2nd Monday of OCTOBER. 1. An online account is simple to operate. 2. It’s convenient, because you can easily pay your bills and transfer your funds between accounts from nearly anywhere in the world. IMPORTANCE OF E-BANKING 3. You do not have to stand in a queue to pay off your bills. ▪ offers ease of access, secure transactions 4. It is available all the time. and 24-hour banking options. 5. Funds get transferred from one account to the other very fast. JENDALL MALAGU  6. You can keep an eye on your transactions and business still applies to electronic banking account balance all the time. business, the former risk management system must have the proper necessary DISADVANTAGES supplement according to the change of environment and operation mode 1. Understanding the usage of internet banking might be difficult at first. 2. You cannot have access to online banking if I. The System of Encrypting Client you don’t have an internet connection Identity 3. Security of transaction is a big issue. Encryption client identity system 4. Password security is a must. guarantee authenticity, legality, and 5. Your banking information may be spread out effectiveness of the customer on several devices. information to prevent theft account, 6. If the bank’s server is down, then you cannot identity risk. access your accounts II. Information Disclosure System of 7. If the bank’s server is down, due to the loss the bank of net connectivity or a slow connection, The information disclosure system urged then it might be hard to know if your the bank to keep customer protection transaction went through. and privacy laws and regulations, it can 8. You might get overly marketed too and help to restrict bank legal risks and become annoyed by notifications. reputation risks. 9. You might become annoyed by constant III. Service Agreement emails and updates. Bank and the customer have the law relationship of financial service, the electronic payment service agreement ON THE RISK CONTROL OF ELECTRONIC between the bank and its customer can BANKING improve safety consciousness of the customer, preventing the 1. Access to Electronic Banking Market comprehensive business risk. IV. Electronic Equipment Safety Must be Strict Measures Electronic banking can reduce pressure, Electronic equipment safety is the reduce the operation cost, it is a good unity of applied and the in-ternal control window and means for the bank to show its system, its function is to ensure the image and competitive ability. integrity, authenticity and confidentiality 2. Strict Approval of Electronic Banking of the data and the operation process. Government, and other concerned V. Emergency Treatment Measures institutions must regulate laws about the According to the possible risk due to new ways of transacting in banks. internal procedures, service, product 3. Follow the Termination Rules of transfer caused by abnormal condition, Electronic Banking the bank should ensure that emergency The financial institutions that have the measures electronic banking that decides to cancel all VI. Safety Assessment Measures electronic banking services or part types of Safety evaluation refers to in process of electronic banking services developing electronic banking business should report the termination reason and the electronic banking safety strategy, disposal scheme to Central Banking. financial institutions should inspect and 4. Improve the Risk Management System assess the safety test and control ability of Electronic Banking on the safety strategy, internal control Prudence principle and measures of risk institution, risk management and the management according to traditional consumer security. JENDALL MALAGU  AMLA : ANTI MONEY LAUNDERING ACT : PHILIPPINE SYSTEM The Anti-Money Laundering Act (AMLA) of 2001 or RA 9160 criminalizes unlawful activities such as graft and corrupt practices, fraudulent practices, robbery and extortion, swindling and plunder, amongst other activities. AMLA laws and regulations target criminal activities including: 1. market manipulation 2. trade in illegal goods 3. corruption of public funds 4. tax evasion 5. as well as the methods used to conceal these crimes and the money derived from them 6. Sneaking cash into foreign countries to deposit 7. Deposit cash in smaller increments to avoid arousing suspicion 8. Use illicit cash to buy other cash instruments. REPORTING SUSPECIOUS ACTIVITY I. Money-laundering investigations by law enforcement often involve scrutinizing financial records for inconsistencies or suspicious activity. II. The institutions must verify the origin of large sums, monitor suspicious activities, and report cash transactions exceeding $10,000 (Php 500,000). III. Even amounts of P500,000 and less must also be reported to the AMLC when certain circumstances qualify them as “suspicious” transactions. Some reasons include: IV. there is no underlying legal or trade obligation, purpose or economic justification [for the transaction] V. the client is not properly identified VI. the amount involved is not commensurate VII. [to the] … capacity of the client JENDALL MALAGU  Chapter 2 7. Johnson & Johnson MULTINATIONAL CORPORATIONS 8. Coca-Cola (operates with a decentralized structure where its regional bottling partners have control over local production and distribution.) WHAT IS AN MNC? 9. PepsiCo (Regional offices and business units manage their own product lines and marketing strategies.) Enterprise that is headquartered in one country but has operations in one or more countries. These companies benefit from decentralization by being able to quickly adapt to regional market It is a company that does business in a select few changes, customize their products and services, countries around the world and operates facilities and respond to local consumer preferences such as warehouses or distribution centers in at effectively. least one foreign country. Example: Global Centralized Corporation 1. Apple 2. McDonalds Global centralized corporations have a central 3. Google administrative office in the home country. They 4. Amazon may outsource production to developing countries to save time and production costs while making use of local resources. FOUR TYPES OF MNC A global centralized corporation is characterized 1. Decentralized Corporation by a centralized management structure that 2. Global Centralized Corporation makes key decisions and controls operations 3. International Company from a single headquarters or main office. 4. Transnational Enterprises Despite having a global presence, decision- making authority remains concentrated at the Decentralized Corporation center Decentralized multinational corporations have a Example: strong presence in their home country. The term 1. Apple 'decentralization' means there is no centralized 2. Walmart office International Company A decentralized corporation is one where decision-making authority, operations, and management are spread across different International companies utilize the resources of the locations or subsidiaries, often with a significant parent company to develop new products or degree of autonomy. These subsidiaries may features that will help them gain a competitive edge operate relatively independently but are still part in local markets. of the same corporate entity. An international company conducts business Example: activities in multiple countries, but it does not 1. Google necessarily have a strong integration or coordination 2. Nike of operations between these countries. Each 3. Netflix country's operations may function relatively 4. TripleOne independently. 5. Unilever 6. Nestle JENDALL MALAGU Example: 3. Long supply chains: Coordinating 1. Coca-Cola transportation from one country to another 2. Nestle can be very complex and time-consuming. 4. Managing geopolitical and economic risks: This refers to the political and Transnational Enterprises economic stability of the host countries. 5. Competition in the global market: Transnational enterprises have a decentralised Competing with other global companies can organisational structure with branches in several be more challenging. countries. The parent company has little control 6. Currency fluctuations: MNCs are affected over the foreign branches. by changes in exchange rates of multiple currencies. A Transnational corporation may have a narrower focus, which is regarding a particular market in a CULTURAL DIVERSITY: IMPACT ON country or region. A Transnational corporation may only produce goods or services that can be sold in a MULTINATIONAL BUSINESS specific market, such as cotton products, snacks, etc. I. Cultural Diversity Example: Culture is what shapes us, it is the 1. Toyota reason we have certain beliefs, 2. Shell influences how we behave and is what gives us our identity II. Attitudes towards appointment and COUNTRIES WITH THE MOST NUMBER OF deadlines MNCs BASED THERE Other cultures perceive time as cyclical and endless. More importance is placed United States 1,700 on doing things right and maintaining China 1,272 harmony, rather than worrying about Japan 615 getting things done “on time.” UK 313 III. Attitudes towards Agreements and Australia 189 Commitments Canada 170 a promise to give yourself, your money, India 169 your time, etc., to support or buy Taiwan 136 something: Try the product for two South Korea 112 weeks with no commitment to buy. France 108 IV. Cross Country difference in individual Switzerland 98 work values and attitudes Sweden 95 V. Diversity creates lack of cohesion Germany 93 VI. MNC Workforce Diversity Hong Kong 91 VII. Managing Diversity in MNC during HRM VIII. Challenges of working across culture CHALLENGES OF MULTINATIONAL COMPANIES 1. Ethnocentrism (means thinking that your own culture or way of life is better than others. It’s like believing 1. Cultural differences: This refers to that your own customs, beliefs, and difficulties in the localization of products, practices are the best and judging marketing strategy, and corporate culture. other cultures based on your own 2. Different political and legislative standards. This can lead to unfair environments: MNCs have to adapt to views of people from different different regulations affecting their products backgrounds. JENDALL MALAGU  In simple terms, it's seeing the world through your own cultural lens and HARMFUL EFFECTS OF MNCs TO THE thinking everyone else should see it PHILIPPINES the same way you do.) 2. Parochialism (means having a 1. Most people are becoming less interested in narrow or limited perspective, often local products and businesses. focused only on one's own small 2. Some MNCs abuse the fact that labor rates community, interests, or issues, and in the Philippines is very low. not being open to or interested in 3. Some MNCs happen to be one of the largest broader or different viewpoints. Earth pollutants In simple words, it’s like only caring 4. In terms of taxes and other fees, several about what’s happening in your own MNCs owned by other countries do not pay neighborhood or small group and appropriately ignoring the bigger picture or what’s going on outside your immediate MULTINATIONAL ENTERPRISES BASED area.) IN THE PHILIPPINES IX. Positive ways when adopting cultural diversity Several reasons explain the lack of Philippine MNEs. ▪ Largely agricultural in less developed country FACTORS WHICH CONTRIBUTE TO THE ▪ The country’s economic, social and political GROWTH OF MNCs structure is still “semi-feudal” ▪ 1. Market Expansion Example: 2. Market Superiorities 1. Jollibee 3. Financial Superiorities 2. San Miguel Corp 4. Technological Superiorities 3. SM 4. Max’s Group 5. Krispy Kreme ADVANTAGES DISADVANTAGES 6. Pancake House 7. Yellow Cab Pizza Co. 8. Max’s Restaurant Access to consumer Laws 9. Max’s Corner Bakery Access to Labor Intellectual Property 10. Jamba Juice Overall development Political Risk 11. Teriyaki Boy Technology Loss of local 12. Dencio’s businesses 13. Sizzlin’ Steak Research and Loss of natural Development resources Exports and Imports Money flows MNCs help in curbing Transfer of Capital local monopolies JENDALL MALAGU