BIS 300

Almost half of Americans use online banking and the statistic is growing. Banking is even going mobile. There are multiple banking applications available for smartphone users. If there’s not an “app” for your banking needs then there’s a strong possibility that your bank has a mobile version of their site making mobile banking easier than ever.
How is internet/smart phone banking possible? The answer lies within the application and implementation of management information systems. These information systems contain components that work together to provide information. With the technology available today, banks have basically taken their information systems and expanded them to management information systems. Essentially using the data they already have but using it in a way to achieve business goals, such as the convenience of online banking.
Before internet banking customers were forced to bank during the bank’s limited business hours, often time, banks opened after you were at work and would be closed by the time you got off work. Additionally, customers were forced to wait in excruciatingly long lines during peak business hours in order to handle their financial needs. Customers would have to endure all of that just to check the balances of their accounts. In order to better serve customers and their needs, internet banking was implemented.
In the beginning, internet banking was extremely limited. Customers could check their balances and possibly do intra account transfers. Now, customers can do everything online from signing up for loans and mortgages to transferring money to setting up automatic bill bay. By implementing online banking , customers can do all of their financial transactions at home at their convenience without ever having to leave the comfort of their home. The long lines of yesteryear are gone, giving customers more flexibility and options in the way they do banking.
Some banks, like ING Direct, don’t even have a physical, banking location. All services, transactions, etc. are done online or by phone. Due to all of the money saved on buildings, staff, supplies, etc. – web based banks are able to provide higher interest rates for customers.
While online banking sounds great on paper, one question remains. How safe is it? Half of Americans are banking online but how many online banking users are computer savvy? Truth is, not many. With so many inexperienced users, security breaches are bound to happen. If a newbie user downloads a Trojan horse, he could be a victim of keylogging, thus all of his personal information is stolen leaving him vulnerable to identity theft. How can security breaches be prevented? The solution, once again, lies within technology.
One of the industry leaders in online baking and online banking security is Bank of America. Bank of America has a unique site key, the site key being a unique picture for the customer to recognize. This site key is a way for the customer to know that they’re really logging in to Bank of America and for Bank of America to know that the customer is logging in via a recognized computer. If the site key isn’t there for the customer, the customer will know he is not on a legitimate Bank of America site. If Bank of America doesn’t recognize the site key, then they know that the user isn’t logging in via a recognized computer. If the computer isn’t recognized, the user is prompted to answer challenging security questions. Bank of America’s security doesn’t stop with a site key. They also offer a “safe pass” which is a unique pin number sent directly to the customer to use when making financial transactions. This safe pass offers an additional layer of security to the customer. A financial transaction cannot be processed without this unique pin number.
While there are many benefits to the customer, what is the benefit of online banking to the bank itself? One of the biggest reasons that banks continue to expand their technology with online banking is to prevent identity theft and fraud. When customers bank online they’re eliminating the possibility of mail fraud. If a customer can view a statement online, why bother getting a paper statement in the mail? By eliminating the paper, the customer is lowering their possible exposure to identity theft. Additionally, bills can be received and paid online further reducing your risk of becoming a victim of mail fraud. Another great benefit is the 24 hour banking concept. Since the customer can view their statement online 24 hours a day, 7 days a week fraud can be detected earlier thus reducing the damage. One of the best features is “alerts”. With the alerts, the customer is electronically notified whenever a financial transaction takes place within their account. This is another way of catching fraudulent activity earlier.
There have been many advantages for businesses to offer online banking. The main benefit is cost. Online transactions have eliminated the need for a teller or paper to process the transaction thus reducing the costs spent on employing additional staff. Additionally, many banks have created online databases with frequently asked questions that customers can refer to for additional assistance. If the online database isn’t sufficient, many banks offer an online chat service for customers to talk to a customer representative via their computer.
While banks have many advantages with online banking, there are some disadvantages. Since customers have the ability to bank online, they’re not forced to choose a bank in their vicinity. With online banking, customers can bank anywhere they want. This has caused greater competition among banks, which ultimately benefit the customer. In order to gain business, banks are offering lower fees, higher interest rates on investments, lower interest rates on loans and better security on their websites in an attempt to real customers in. Also, with many banks strictly offering online services, they are able to pass the savings of not paying for physical locations down to their customers by offering better, more competitive interest rates on loans and investments. The practices of strictly online banks have caused traditional banks to reevaluate their business strategy.
In closing, the advent of information systems in the banking world have made vast improvements on the way the world banks. Gone are the awful banking hours causing consumers to rush to their bank and wait in long, tedious lines to talk to a teller in order to check their balances. Information systems have allowed customers the convenience of banking from home, 24 hours a day, 7 days a week. Customers no longer have to meet face to face with a teller to process business transactions. They can trade stocks, check balances, pay bills, monitor IRAs and sign up for loans at home. Online banking has significantly lowered the costs to business by eliminating the need for additional employees and paperwork since everything is processed online. Online banking also offers security to the customer. Reducing their risk of mail fraud and ensuring their identity is true online. While this is a benefit to the customer, it’s a greater benefit to the banks that lose millions of dollars each year writing off bad debt due to identity theft. Also, since banks have instituted online web chat and databases filled with frequently asked questions which also reduce the number of people they must employ and reducing the amount of space and resources to keep a 24 hour call center up and running.
Advances in technology are a huge benefit to consumers and to businesses. With web based services, customers gain independence and businesses reduce cost. Online banking, through increased competition, has given customers more options and better rates. It also opens up banks to a plethora of customers that they would be unable to service if it weren’t for online services. By implementing technology, banks have created an easier, more convenient way for customers to handle their finances as well as creating ways for customers to access additional information and seek help.
Bill Gates said it best, “Information technology and business are becoming inextricably interwoven. I don't think anybody can talk meaningfully about one without the talking about the other.” Now that both businesses and consumers have experienced the efficiency and convenience of information technology, it would be hard to imagine one without the other.

Sources
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5.) Moore, John. "Unwary Customers Contribute to Online-Banking Security Woes - IT Security." IT Security - The Industry's Web Resource. 13 May 2008. Web. 19 Apr. 2011. .
6.) "Bank of America Privacy and Security." Bank of America | Home | Personal. 2011. Web. 19 Apr. 2011. .
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