1. 1. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 1/45 GROUP C COURSE WORK PRESENTATION: Technology Based distribution channels / Networks in Financial Industry Group C Members: Mukalele Rogers - 13/U/21067/EVE Ssemujju Bernard - 13/U/21338/EVE Makerere University
2. 2. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 2/45 Presentation Introduction and Outline Introduction The Financial Industry is increasingly using Technology- Based channels and computer Networks to distribute financial services to people. In this presentation, we look at some of these technologies as listed in the following outline. Outline a) Phone Banking/ Call Center b) Mobile banking c) Internet banking d) ATM e) POS f) CDM Cash Deposit Machines g) Email / SMS notifications
3. 3. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 3/45 a)Phone Banking/ Call Center Definition: A service provided by a bank, that enables customers to perform financial transactions over the phone, without the need to visit a bank branch or automated teller machine. Mode of Operation: A customer must first register with the institution for the service, and set up some passwords for customer verification. To access telephone banking, the customer would call a special phone number set up by the financial institution. Services which a customer may access through phone banking include: obtaining account balances, mini statements, electronic bill payments, customer care and financial information services.
4. 4. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 4/45 a)Phone Banking/ Call Center contd The service can be provided using an automated system, using speech recognition and DTMF technology or by live customer service representatives.
5. 5. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 5/45 Phone Banking/ Call Center contd Examples of banks with call centres which offer phone banking services include: Bank Call Center Number Hong Kong Bank 03-76268899 KasiKorn Bank 02-8888888 Bangkok Bank 1333 Oman Arab Bank 24754444 Al Rajhi Bank +966920003344
6. 6. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 6/45 a)Phone Banking/ Call Center contd Advantages: Customers can access and manage their accounts conveniently. Phone banking times can be longer than branch opening times, and some banks offer the service on a 24 hour basis. Phone banking reduces the cost of handling transactions. Phone banking reduces the need for customers to visit a bank branch. Disadvantages: Few banking services can be handled using phone banking. Volumes of calls can increase to the extent that the call centre personnel can not respond to all in time. DTMF technology usually caters for a few languages. Banks have restrictions on which accounts may be accessed via telephone banking.
7. 7. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 7/45 With the introduction of smart phones with WAP support enabling the use of the mobile web in 1999, the first European banks started to offer mobile banking on this platform to their customers. b) Mobile banking Mobile banking is a system that allows customers of a financial institution to conduct a number of financial transactions through a mobile device such as a mobile phone or personal digital assistant. The earliest mobile banking services were offered over SMS, a service known as SMS banking.
8. 8. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 8/45 b) Mobile banking Benefits Saves time - Simply use a mobile device to check account balances, schedule and manage payments, top up your credit card, transfer money between accounts and open more accounts, etc. Convenience - offers everyday banking, anytime, anywhere. Offers facilities to conduct bank and stock market transactions Enables a customer to administer accounts and to access customised information.
9. 9. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 9/45 b) Mobile banking : Illustrative Video mFoundry video about the changing trends and benefits of mobile banking. Click on graphic to play.
10. 10. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 10/45 Challenges of mobile banking 1. Handset operability Due to various types of mobile phone devices, it is a big challenge for banks to offer mobile banking solution on every type of device like devices supporting Java ME , SIM Application Toolkit, a WAP browser, or only SMS. 2.Security Secure transmission of financial information, is the most complicated challenge that needs to be addressed jointly by mobile application developers, and the banks' IT departments.
11. 11. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 11/45 Challenges of mobile banking contd 3. Reliability With mobile banking, the customer may be sitting in any part of the world) and hence banks need to ensure that the systems are up and running in a true 24 x 7 fashion. As customers will find mobile banking more and more useful, their expectations from the solution will increase. Banks unable to meet the performance and reliability expectations may lose customer confidence. 4. Scalability Another challenge is to scale-up the mobile banking infrastructure to handle exponential growth of the customer base.
12. 12. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 12/45 Challenges of mobile banking contd 5. Application distribution Some banks have developed apps installed on mobile devices through which customers access mobile banking services. Customers are expected to regularly visit banks or connect to a web site for regular upgrade of their mobile banking application. However, there could be many issues to implement this approach such as upgrade / synchronization of other dependent components.
13. 13. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 13/45 Solutions to the above Challenges Overcoming Handset Operability Challenges: Initial inter operability issues have been localised. In India, for example, portal like R-World are been used to enable the limitations of low-end Java based phones. In South Africa, USSD has been utilised as a basis of communication achievable with any mobile device. Overcoming Mobile Banking Security Issues: Authentication of the device being used should be done to ensure that unauthorised devices are not connected to perform financial transactions. Overcoming Reliability Challenges: Cloud Computing Technologies should be embedded into the mobile banking systems to ensure 24/7 availability. Overcoming App Upgrade Challenges: Banks should develop a mobile application that checks the upgrades and updates and downloads necessary patches by itself.
14. 14. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 14/45 Sample Examples of banks offering mobile banking Region Banks Uganda Stanbic Bank UBA Bank Iran -Parsian Bank -Tejarat Bank -Pasargad Bank -Mellat Bank Mexico -Omni Life Bank -Bancomer Bank India -State Bank of India -Echo India Finacial Services UK Barclays Bank service called Barclays Pingit
15. 15. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 15/45 c) Internet banking Definition: Internet banking is a term used to describe the process whereby a client executes banking transactions using an internet browser. This kind of banking eradicates the necessity of physical movement to financial positions. This type of banking uses the internet as the chief medium of delivery by which banking activities are executed. The activities clients are able to carry out are can be classified to as transactional and non transactional.
16. 16. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 16/45 c) Internet banking Non transactional activities Account balance viewing Viewing of previous bank transactions Bank statement downloading Check book ordering Viewing of images of paid cheques M banking and E banking applications downloading Provision of account/ bank statements Transactional activities Electronic funds transfer Bill payments and wire transfers Loan application and repayments Buying investment products Internet banking has its advantages and disadvantages.
17. 17. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 17/45 Advantages of Internet Banking Effectiveness: At the touch of a button, actual time account balances and information are availed. This hastens the banking processes hence increasing their efficiency and effectiveness. Friendlier rates and free services: Self Care and Lack of overhead support costs results to banks offering higher interest rates on savings and charge lower rates on mortgages and loans, plus free services such as free checking of statements. Transfer services: Internet banking allows automatic funding of accounts from long established bank accounts via electronic funds transfers. Ease of monitoring: A client can monitor his/her spending via a virtual wallet through certain banks and applications and enable payments.
18. 18. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 18/45 Advantages of Internet Banking contd Ease of transaction: the speed of transaction is faster relative to use of ATMs or customary banking. Convenience: Banks that offer internet banking are open for business transactions anywhere a client might be as long as there is internet connection. Apart from periods of website maintenance, services are available 24 hours a day and 365 days round the year. Real Time Systems: Detailed information can be offered via internet banking in real time. For example one can be able to see transactions which have taken place in the past hour, compared to branch banking which might require 24 hours to update the information.
19. 19. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 19/45 Disadvantages of Internet banking Poor Banking relationship: Customary banking allows creation of a personal touch between a bank and its clients, unlike Internet banking. Ignorance about use: Banks with complicated sites can be cumbersome to navigate and may require one to read through tutorials to use the service. Not suitable for complex transactions : face to face meetings are better in handling complex transactions and problems, which can not be easily resolved through internet banking. Security matters: Complex encryption software is used to protect account information. However, there are no perfect systems. Accounts are prone to hacking attacks, phishing, malware and illegal activities.
20. 20. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 20/45 How to offer secure environment for financial transactions 1. User ID / Password authentication of banks customer. 2. Encryption of the data being transmitted over the internet. 3. Encryption of the data that will be stored in device for later / off-line analysis by the customer. 4. One-time password (OTPs) can be used to fight against cyber fraud. OTPs are requested by consumers each time they want to perform online transactions using the website banking interface. The password is sent to the consumers phone via SMS. The password expires once it has been used or once its scheduled life-cycle has expired. 5. Physical security: If the bank is offering smart-card based security, the physical security of the device is very important. 6. Use of a secure protocol such as HTTPS instead of HTTP.
21. 21. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 21/45 Internet Banking - Online Security Case Study: Al Rajhi Bank Click on graphic to play video.
22. 22. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 22/45 d) ATM An Automated Teller Machine is an electronic telecommunicatio ns device that enables the clients of a financial institution to perform financial transactions witho ut the need for a cashier, human clerk or bank teller. It is also known as an automated banking machine (ABM), cash machine, cashpoint, cashline or hole in the wall.
23. 23. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 23/45 d) ATM contd Common ATM Services Cash withdrawals, Debit card cash advances, Check their account balances as well as get mini statements Purchase pre-paid mobile phone credit. If the currency being withdrawn from the ATM is different from that which the bank account is denominated in (e.g.: Withdrawing US dollars yet the bank account is in Uganda Shillings), the money will be converted at an official wholesale exchange rate. Thus, ATMs often provide one of the best possible official exchange rates for foreign travellers, and are also widely used for this purpose.
24. 24. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 24/45 d) ATM Mode of Operation: The customer is usually identified by inserting a plastic ATM card with a magnetic stripe or a plastic smart card with a chip that contains a unique card number and some security information such as an expiration date or CVVC (CVV). Authentication is provided by the customer entering a personal identification number (PIN).
25. 25. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 25/45 d) ATM contd Mode of Operation contd: Today the vast majority of ATMs worldwide use a Microsoft Windows operating system, primarily Windows XP Professional or Windows XP Embedded. Linux is also finding some reception in the ATM marketplace. An example of this is Banrisul, the largest bank in the south of Brazil, which has replaced the MS-DOS operating systems in its ATMs with Linux. DeLaRue Bank ATM running Microsoft Windows that has crashed due to a peripheral component failure.
26. 26. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 26/45 Advantages of ATM Reduces congestion and long queues in the bank branch. Provides round the clock services 24/7 including public holidays. Banks are able to expand their services to any corner of the world. Reduction in cost of operation as a result of less employees. Can be easily connected to inter switch ATM networks, enabling people to withdraw cash from ATMS of other banks. No need to carry large sums of cash during shopping and travel. ATMs reduce the workload of bank staff. ATMS provide privacy to customers during banking.
27. 27. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 27/45 Disadvantages of ATM Theft Risk: Personal safety is a risk with ATMs in empty parking lots, poorly lighted places, or behind bank buildings. ATM Fraud: There are thieves who clone ATM cards use hidden cameras to capture PIN code in order to steal money. Limitation of Cash Withdraws: ATMs do not allow users to withdraw money exceeding a certain set amount. Illiteracy: Many bank customers do not know how to operate Automated Teller Machines. High Fees: You will also be charged high fees for using Inter-switch ATMs not owned by your bank or those in foreign countries. Inefficient Deposits: Cash deposit facility is risky and normally takes a longer period of time before the deposited money is credited on the account. Card Retention: ATMS commonly malfunction and retain customer ATM cards Few Denominations: Most ATMS give out money using notes in particular denominations, denying users the choice of withdrawing other denominations.
28. 28. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 28/45 ATM Dos and Don'ts Dos DO protect/hide your PIN when youre entering it. DO choose a PIN thats difficult to guess but easy to remember. DO change your PIN from time to time. DO monitor your account regularly. DO report it immediately if your card is lost or stolen. DO be aware of your surroundings while at an ATM DO sign on your cards authorized signature panel with a ballpoint pen the moment you receive it. DO protect the cards magnetic stripe from scratches. DO look for fraudulent devices attached to ATMs Card Reader. If the machine appears to have any attachments or alterations, do not use it and report the problem immediately using the helpline numbers provided. DO Remember to take your card back from ATM/Merchant after completing your transactions. DO Try and memorize the PIN instead of noting it down somewhere. Don'ts DONT tell anyone your PIN. DONT let anyone else use your card. Never carry your Card along with PIN in your Wallet or Purse. DONT give card information over Phone or Internet. This includes your 16-digits card number and PIN. DONT use your mobile while using the ATM. DONT allow others to stand inside the ATM cabin when you do a transaction. Do not use poorly lit ATM locations DONT fold your card DONT expose card to magnetic devices. DONT ask for ATM assistance from a stranger. Do Not Use Helmets, Cap Etc While Entering The ATM Room.
29. 29. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 29/45 e) POS Point of sale (also called POS or checkout)is the point at which a customer makes a payment to the merchant in exchange for goods or services. At the POS, the retailer would calculate the amount owed by the customer and provide options for the customer to make payment. The merchant will also normally issue a receipt for the transaction. The POS in various retail industries uses customized hardware and software as per their requirements.
30. 30. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 30/45 e) POS contd Mode of Operation. Retailers may utilize weighing scales, scanners, electronic and manual cash registers, EFTPOS terminals, touch screens and any other wide variety of hardware and software available for use with POS. For example, a grocery or candy store uses a scale at the point of sale, while bars and restaurants use software to customize the item or service sold when a customer has a special meal or drink request.
31. 31. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 31/45 Features of a POS system Ease of use. Most POS systems are designed with a user-friendly graphical interface. Entry of sales information. Most systems allow you to enter inventory codes either manually or automatically via a bar-code scanner. Once the inventory code is entered, the systems call up the standard or sales price, compute the price at multiple quantities and provide a running total. Many systems make it easy to enter sales manually when needed by letting you search for inventory codes based on a partial merchandise number, description, manufacturing code or vendor. Pricing. POS systems generally offer a variety of ways to keep track of pricing, including add-on amounts, percentage of cost, margin percentage and discounts.
32. 32. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 32/45 Features of a POS system contd Updating product information. Once a sale is entered, these systems automatically update inventory and accounts receivable records. Sales tracking options. If you sell expensive goods and allow instalment purchases, you might appreciate a loan calculator that tabulates monthly payments. And if you offer rent-to-own items, you'll want a system that can handle rentals as well as sales. Security. In retail, it's important to keep tight control over cash receipts to prevent theft. Most of these systems provide audit trails so you can trace any problems. Taxes. Many POS systems can support numerous tax rates-useful if you run a mail order business and need to deal with taxes for more than one state.
33. 33. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 33/45 Types of POS terminals 1. Retail POS. These are POS terminals used in retail shops and supermarkets. A retail point of sale system typically includes a cash register comprising of: A computer, cash drawer, receipt printer, customer display, barcode scanner and a debit/credit card reader. It can also include a conveyor belt, weight scale, integrated credit card processing system, a signature capture device and a customer pin pad device. Some POS monitors use touch-screen technology for ease of use and a computer is built into the monitor chassis for what is referred to as an all-in-one unit. The POS system software can handle customer based functions such as sales, returns, exchanges, customer loyalty programs, promotions, discounts, foreign currency handling, multiple payment types, etc.
34. 34. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 34/45 A customer using a debit/credit card reader to make payments a POS. INSET LEFT: A barcode scanner in use.
35. 35. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 35/45 Types of POS terminals contd 2. Hospitality POS. Hospitality point of sales systems are computerized systems incorporating registers, computers and peripheral equipment, usually on a computer network to be used in restaurant, hair salons or hotels. Like other point of sale systems, these systems keep track of sales, labor and payroll, and can generate records used in accounting and book keeping. Typical restaurant POS software is able to create and print guest checks, print orders to kitchens and bars for preparation, process credit cards and other payment cards, and run reports. In addition, some systems implement wireless pagers and electronic signature capture devices.
36. 36. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 36/45 Types of POS terminals contd Pros of Cloud Based POS Cons of Cloud Based POS Independent from platform and operating system limitations Created to be compatible with a wide range of hardware. Cloud-based POS also helped expand POS systems to mobile devices such as iPads Database are easily backed up because user, sales and inventory data, is not stored locally, but on a remote server. The POS system is also not run locally, so there is no installation required. Instant centralization of data (important especially to chain stores) Ability to access data from anywhere there is internet connection Lower start-up costs. Subscription fees to cloud computing service provider increase costs of running. Weakness of having to depend upon intermediary communication services provided by insecure web browsers Disruptive effects of incidental loss of internet connection 3. Cloud-based POS: Cloud computing gave birth to the possibility of POS systems to be deployed as Software as a service, which can be accessed directly from the Internet, using any internet browser.
37. 37. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 37/45 f) Cash Deposit Machines (CDM) Cash Deposit Machines (CDM) are computerised Equipment setup by banks primarily to enable people to deposit money in cash form to bank accounts without visiting a teller at a bank branch. However, Theres much more to Cash Depository Machines (CDM) than simply putting money into bank accounts.
38. 38. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 38/45 Comparison of ATM and CDM features Facilities ATM CDM Cash Withdrawals Balance Enquiry Mini Statement Cash Deposit Cheque Deposit Utility Bill Payment Mobile Airtime Top-up Credit Card Payments Cheque Book Request Debit Card Pin Change
39. 39. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 39/45 g) Email / SMS notifications SMS and Email notifications enable you to actively monitor your accounts. When you set up SMS/Email alerts you can: Do SMS Banking (Request specific information on account balances, deposits and withdrawals to be sent to you automatically via SMS). Be notified of suspicious activity in real time via SMS or Email. Easily set up notifications to control what information you receive and when Set alerts to tell you when a deposit has cleared, your credit card has reached a particular limit and more. SMS banking is a type of mobile banking, a technology-enabled service offering from banks to its customers, permitting them to operate selected banking services over their mobile phones using SMS messaging.
40. 40. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 40/45 g) Email / SMS notifications contd SMS BANKING FEATURES: Balance inquiry Funds transfer Airtime purchase Bill payments Pay Utility bills ( e.g Electricity, and Water) Monitor and check your account balance Purchase airtime Request for mini-statements
41. 41. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 41/45 Case Study: Cente mobile CenteMobile is a 24/7 full banking service that allows customers to access their accounts using their mobile phones anytime and anywhere. HOW TO SIGN UP: Fill in a CenteMobile application from any Centenary Bank branch . Submit to the branch together with a photocopy of your ID i.e Driver's License, passport or voter's card Upon branch approval, you will receive an SMS with your PIN and recreate key to start transacting BASIC REQUIREMENTS: An account in Centenary Bank Valid ID A personal mobile phone
42. 42. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 42/45 Centenary SMS Banking Benefits Usually Free of charge: This is a free of charge service; you are only subject to the standard SMS usage fees by your telecom service provider. Secure and private: You will receive automated SMS notifications for certain transactions or events on your mobile phone as chosen by you during your service set up. Fast and convenient: Save time and enjoy the convenience of instant banking while youre on the go. Transactions review: You can view your last transactions from the convenience of your mobile phone. 24/7 accessibility: You can conduct your banking transactions anytime and anywhere from your mobile phone.
43. 43. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 43/45 Conclusion In this presentation, we have expounded over detailed content on Technology Based distribution channels used in the Financial Industry. We have covered the mode of operation, benefits, examples, advantages and disadvantages of technologies such as: a) Phone Banking/ Call Center b) Mobile banking c) Internet banking d) ATM e) POS f) CDM Cash Deposit Machines g) Email / SMS notifications. Any Questions?
44. 44. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 44/45 Possible Examination Questions 1 (a) Briefly describe any four Technology Based distribution channels used in the Financial Industry. (08 marks) (b) What are the major challenges regarding usage of the above technologies? (12 marks) 2 (a) Differentiate between Phone Banking and SMS Banking. (04 marks) (b) Outline the various advantages and disadvantages of using phone banking. (16 marks) 3 (a) Compare and Contrast the features of Mobile Banking and Internet Banking. (10 marks) (b) What measures can banks use to ensure effectiveness and efficiency of mobile banking? (10 marks) 4. (a) Describe the nature of Automated Teller Machines (ATM) operation. (08 marks) (b) Kizito Alex, a BIT student, has just obtained an ATM Card from his bank. Educate him about the essential ATM Etiquette. (12 marks) 5. (a) What is meant by the term Electronic Point of Sale? (02 marks) (b) Explain any three types of POS terminals in common use today. (06 marks) (c) Give any six factors to consider before acquiring a POS system for your business. (12 marks)
45. 45. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 45/45 End of Presentation Thank you for your Audience Makerere University SIMPLY MOUSE OVER THIS BUTTON TO EXIT
46. 46. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 46/45 DTMF = Dual Tone Multi Frequency BACK Acrnomym Masters Dictonary
47. 47. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 47/45 USSD = Unstructured Supplementary Service Data [a protocol used by the Global System for Mobile (GSM) communications cellular telephones to communicate with service providers computers.] BACK Acrnomym Masters Dictonary
48. 48. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 48/45 CVV= Card Validation Code [for Master Cards.] CVVC= Card Verification Value Code [for VISA Cards.] BACK Acrnomym Masters Dictonary
49. 49. BIT 1208 Information Technology for Financial ServicesEvening Group C Presentation: Slide 49/45 EFTPOS= Electronic Funds Transfer at Point Of Sale BACK Acrnomym Masters Dictonary