2. Agenda
Basics of Banking and Banking Applications
Saving Bank Account
Transactions – Deposit, Withdrawal
Cheques
ATM Application
E-Banking
Biometric Devices and its scope in Applications
Important Questions
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3. Basics of Banking
What is a Bank: Accepting deposits of money from
the public for purpose of lending or investment,
repayable on demand and withdrawal by cash,
cheque, draft, order, etc.
Customer Segments:
Personal banking
SME/Commercial banking
Corporate & Investment banking
Private banking
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4. Relationship- Bank & Customer
Debtor & Creditor: Customer deposits money with bank hence
he becomes a Lender or Creditor of the bank. Bank has
accepted deposit from customer hence bank becomes a Debtor.
Pledger and Pledgee: When customer pledges (promises)
certain assets or security with the bank in order to get a loan,
the customer becomes the Pledger and the bank becomes the
Pledgee.
Bailor & Bailee: Banks acts as a caretaker for valuables &
securities in the safe custody, in this case, customer becomes
the Bailor and the bank becomes the Bailee.
Trustee & Beneficiary: When the Bank holds property for the
beneficiary, it becomes Trustee for the Beneficiary.
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5. Relationship- Bank & Customer
Agent & Principal: Bank acts as Agent of customer, provides
agency services to customer and is responsible for carrying out
customer’s instruction.
Lessee and Lessor: Bank acts as a Lessor when it rents out
space (e.g. locker) to customer who is a Lessee.
Advisor and Client: When a customer invests in securities, on
advice from the bank, the banker acts as an Advisor and the
customer as a Client.
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8. Savings Bank Accounts
Habit of saving among the citizens while allowing
them to use their funds when required
High liquidity and safety
Opening an account - Who Can Open
An individual or in joint names of the depositors
Minors provided they have completed ten years of age
Hindu Undivided Families (HUF)
Closing of Account - If a depositor closes the account
within 12 months of opening it, a small charge will
generally be made. All remaining cheque books and
passbooks should be submitted with a letter of closing 8
9. Opening a Savings Account
Two passport size photographs
Proof of residence
An introduction of the person from an existing
account holder.
PAN number / Declaration in form no.60 or 61 as per
the Income Tax Act 1961.
Account Transfer - Savings accounts may be
transferred from one office of the bank to another
office in India, free of charge on a written request
from the depositor and on return of the unused
cheque leaves, if any, along with the pass book. 9
10. Transactions
Deposits
Amounts received for the credit of a savings account
Cheques and Dividend Warrants
Withdrawals
Drawings from savings bank account will be by
withdrawal forms or cheques supplied by the bank
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11. Cheques
Written instruction you give to your banker to make payment
by debit to your account on demand
Cheque is a valid payment instrument from the date shown on
the face of it. Three months - normal validity
Bearer cheque is payable to the holder. An Order cheque is
payable to the person on whose favour it is drawn or
subsequent endorsees
Banks verify the signature on the cheque
Report loss of cheque to the issuing bank immediately and give
Stop Payment instruction to them
Cheques should not be issued without adequate balance in the
account or arrangements to pay
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12. Automated teller machine
Computerised telecommunications device provides the
clients access to financial transactions without the need of
bank teller
Customer is identified by inserting a plastic ATM card with a
magnetic stripe or a plastic smart card
Authentication by entering a personal identification number
If the currency being withdrawn from the ATM is different
from that which the bank account is denominated in the
money will be converted at a wholesale exchange rate
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13. Construction
CPU (control user interface and transaction devices)
Magnetic and/or Chip card reader
PIN Pad (similar in layout to a Touch tone or Calculator
keypad)
Secure cryptoprocessor, generally within a secure enclosure
Display (used by customer for transaction)
Function key buttons (usually close to the display) or a
Touchscreen (to select various aspects of transaction)
Record Printer (to provide the customer with a record of their
transaction)
Vault (to store the parts of the machinery requiring restricted
access)
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Housing (for aesthetics and to attach signage to)
15. Mechanisms found inside vault
Dispensing mechanism (to provide cash or other
items of value)
Deposit mechanism including a Check Processing
Module and Bulk Note Acceptor (to allow the
customer to make deposits)
Security sensors (Magnetic, Thermal, Seismic, gas)
Locks (ensure controlled access to contents of vault)
Journaling systems; many are electronic (a sealed
flash memory device) or a solid-state device (an actual
printer) which accrues all records of activity including
access timestamps, number of bills dispensed, etc. 15
16. Advantages
Usage:
Easy to use and Available 24X7
Quick and efficient, Anywhere banking
Cross banking facility
No need to carry cash always or depend on bank
timings
Low cost
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17. Alternative uses
Deposit currency recognition, acceptance, and
recycling
Paying routine bills, fees, and taxes (utilities, phone
bills, social security, legal fees, taxes, etc.)
Printing bank statements and Updating passbooks
Loading monetary value into stored value cards
Purchasing Postage stamps, Lottery and Train tickets
Cheque Processing Module
Adding pre-paid cell phone / mobile phone credit
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18. E-Banking -Online (Or Internet Banking)
Conduct financial transactions on a secure website. Advantages:
Transactional
Electronic bill presentment and payment – EBPP
Funds transfer
Investment purchase or sale
Loan applications and transactions
Non-transactional (e.g. online statements, check links, chat)
Financial Institution Administration
Support of multiple users having varying levels of authority
Low cost
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19. Types of Internet Banking Products
(Services)
Information Only System
Electronic Information Transfer System
Fully Electronic Transactional System
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20. Security methods
The PIN/TAN system where the PIN represents a
password, used for the login and TANs representing
one-time passwords to authenticate transactions
Digital certificates are used against phishing and
pharming, the use of class-3 card readers is a measure
to avoid manipulation of transactions by the software
in signature based online banking variants
To protect their systems against Trojan horses, users
should use virus scanners and be careful with
downloaded software or e-mail attachments
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21. Biometric Devices
Widely known as “the science of measuring physical
characteristics, to verify a person’s identity”. Divided into:
Physiological are related to the shape of the body.
Fingerprint
Face recognition
DNA
Palm print and Hand geometry
Iris recognition
Odour/scent
Behavioral are related to the behavior of a person
Typing rhythm
Gait and Voice
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22. Types of Biometric Devices
Fingerprint biometrics: Widely accepted, convenient
and reliable than other forms of physical
identification
Hand Geometry: Measure the geometry of the hand
rather than the fine skin patterns as found in finger
tip
Retina/Iris Scanners: Retina and iris have more
characteristics to identify and match than on the
hand
Facial Scan: An image is examined for overall facial
structure which works well over short distances
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23. Usage Methodology
The first time an individual uses a biometric system is
called an enrollment - biometric information from an
individual is stored
The first block (sensor) is the interface between the real
world and the system; it has to acquire all necessary data
The second block performs all the necessary pre-
processing: it has to remove artifacts from the sensor, to
enhance the input (e.g. removing background noise), to
use some kind of normalization, etc
In the third block necessary features are extracted. A
vector of numbers or an image with particular properties
is used to create a template 23
24. Advantages
A card-based access system will control the access of
authorized pieces of plastic, but not who is in possession
of the card
Systems using PINs require an individual only know a
specific number to gain entry; but who actually entered
the code cannot be determined.
On the contrary, biometric devices verify who people are
by what they are, whether by hand, eye, or voice
recognition
Contrary to using badges, sign-ins or other ways of
tracking employees, a biometric time clock assures that no
employee can punch in for another, eliminating time fraud24
25. Important Questions
What is saving account. List the steps of open saving
account. What are the documents required to open
Saving Accounts in the bank?
What are the advantages of ATM to customer?
What are the merits and demerits of Ebanking?
Why is the need of Biometric? Which devices are
used for Biometric? State any 2 types of Biometrics.
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Editor's Notes
Advantages Usage : Easy to use. Available 24X7. Quick and efficient. Anywhere banking. Cross banking facility. No need to carry cash always or depend on bank timings. Physical security : A common method is to simply rob the staff filling the machine with money. To avoid this, the schedule for filling them is kept secret, varying and random. The money is often kept in cassettes, which will dye the money if incorrectly opened. Transactional secrecy and integrity: ATM often uses commodity components that are not considered to be "trusted systems". Customer identity integrity: There have also been a number of incidents of fraud by Man-in-the-middle attacks, where criminals have attached fake keypads or card readers to existing machines. These have then been used to record customers' PINs and bank card information in order to gain unauthorized access to their accounts. Various ATM manufacturers have put in place countermeasures to protect the equipment they manufacture from these threats Device operation integrity: Openings on the customer-side of ATMs are often covered by mechanical shutters to prevent tampering with the mechanisms when they are not in use. Alarm sensors are placed inside the ATM and in ATM servicing areas to alert their operators when doors have been opened by unauthorized personnel. Customer security: multiple security cameras and security guards are a common feature
1. Information Only System : General-purpose information like interest rates, branch location, bank products and their features, loan and deposit calculations are provided in the banks website. There exist facilities for downloading various types of application forms. The communication is normally done through e-mail. There is no interaction between the customer and bank’s application system. No identification of the customer is done. In this system, there is no possibility of any unauthorized person getting into production systems of the bank through internet. 2. Electronic Information Transfer System : The system provides customer-specific information in the form of account balances, transaction details and statement of accounts. The information is still largely of the ‘read only’ format. Identification and authentication of the customer is through password. The information is fetched from the bank’s application system either in batch mode or off-line. The application systems cannot directly access through the internet. 3. Fully Electronic Transactional System : This system allows bi-directional capabilities. Transactions can be submitted by the customer for online update. This system requires high degree of security and control. In this environment, web server and application systems are linked over secure infrastructure. It comprises technology covering computerization, networking and security, inter-bank payment gateway and legal infrastructure.
