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53. Banks have over a long period of time, been using electronic and telecommunication networks for delivering a wide range of value-added products and services.
53. Banks have over a long period of time, been using electronic and telecommunication networks for delivering a wide range of value-added products and services. The delivery channels are used for anytime banking, anywhere bank home banking, internet banking, mobile banking, e-commerce, ATMs, easy access to the World Wide Web (WWW). The increasing attractiveness of internet banking can be attributed to several factors. E- banking delivers new services through additional capabilities, but these services themselves carry new risks. These risks can be characterized by the velocity of innovation in technological change and attendant customer service. Read the case let and answer- Which type of risk a bank is Prone to, through Internet Banking? A. The major driving force behind the rapid spread of e- banking is its acceptance as an extremely cost- effective delivery channel. The channel has also brought about a new orientation to risks viz., operational risk (transactional risk) security risk/ reputational risk (negative public opinion)/legal risk [money laundering risk/cross border risk/ strategic risk and other risks like credit-liquidity-interest rate- market risks. B. E-banking removes the traditional geographical barriers through the internet. However, the internet is not an unmixed blessing to the banking sector. The various limited number of risks are inaccurate processing of transactions / crackers-hackers /infringing customer's privacy/risk of customer's account accessibility. C. E-banking has enabled banks and other financial institutions to increase the use of internet banking for the receipt and delivery of their products and services. The only and main risk is exposure to money laundering resulting in legal punishments for non- compliance with Know Your Customer (KYC) rules of RBI. D. None of the above
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