e-Finance: Quo Vadis
4.ONLINE DELIVERY OF FINANCIAL PRODUCTS
The Banks have started offering banking services like checking your account status fund transfer, ordering demand drafts and writing out cheques, via the net. Soon these will form only a small part of the total array of services being offered by them. These Banks have embarked on a number of new initiatives to protect their stronghold and to leverage the net. They are offering value-added services to their customers and at the same time are trying to get into B2C and B2B e-commerce. They are even trying to get their finger into various transactions between the Government on one side and the business and the customer on the other. Banks are trying to become a part of the online value chain. For example, they are trying to tie up with corporates so as to become a part of their supply chain and enable electronic transfer of funds between the different components of the Supply Chain. They are doing this by acting as an intermediary between the corporations and their vendors by enabling online transactions at one place.
Some Banks are trying to setup portals for routing payments like Excise Duty and Sales Tax. Not content with that Banks are setting up secure payment gateways to tap the B2C online market.
Banks have taken the application process for personal loans, car loans, and mortgage, online. They plan to offer other financial products like Bonds and Mutual Funds through their financial service portal. This strategy is aimed by pre-empting the entry of new startups into this business.
Another bit of the Net strategy, involves providing infrastructure for B2C as well as B2B e-commerce. Banks are setting up secure payment gateways that will allow online retail shops to obtain instant credit card verifications. Once the buyer hits the pay button at a B2C portal, the buyer's credit card details will get encrypted and travel securely to the Visa or MasterCard approval system through the bank's payment gateway.
The banks are also setting up their own shopping portals. HDFC has a stake in a portal called easy2buy.com where HDFC bank customers can buy using their bank account number. Federal Bank has similar arrangements with Rediff.com and Fabmart.com. ICICI has setup Magiccart.com, an e-tailing site.
At the B2B end, Banks are offering Net Banking service that allows electronic fund transfers among a company, its vendors and dealers. Another service being targeted at this segment is cash management. This will reduce the float, which is present in physical processing of the payments.
The Banks are also trying to integrate their systems with the ERP/Supply Chain system of their clients. This will enable the bank to benefit from the movement towards e-procurement. E-Procurement involves making transactions online and processing the payment electronically.
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