Banks and Financial Institutions are service-providing organisations. They serve very large number clients spread all over the country. These institutions provide service through a network of branches and cater to the needs of their customers in different areas with personalised service. Traditionally they were all operating by manually processing of data, applying "pen & ink" as tools and recording data in several ledgers, books and registers. They were depending on newspaper and other media publicity for reaching their customers whenever any important message on a mass coverage had to be conveyed. Manual service was cumbersome, slow and tardy. Customers had to wait in queue before the counters extending these services to secure their turn to be attended by the dealing staff. They had to fill up multiple forms and other printed stationery needed by the service provider and had to remain at the premises of these Institutions for a lengthy duration to complete their transactions.

Similarly transactions between sister branches of the same institution and the data transmission to the head office and other controlling offices, if any, were all done conventionally through manual process. The system was slow and tardy. It was costly, as the banks and other institutions had to engage a large array of clerical and supervisory manpower to carry out and later to check and re-check the accuracy of manual tasks. Despite these lengthy steps, errors in calculations and wrong data copied or incorporated went undetected and posed a serious problem to reconcile the accounts at fixed intervals.

The developments in information technology, the advent of the personal computer and networking technology in the Eighties brought about partial relief. Initially the job at each seat was computerised by stand alone personal computers. This reduced errors in calculations and other types of data. Customers were provided error free service and were supplied printed account statements. The enormous expansion in banking and financial institutions in the eighties could not have withstood operational breakdown but for this timely innovation in the work system. Still extensive manpower employment could not be dispensed with. Overcrowding in the counters of the banking and financial institutions continued.

It is in this context during the last decade that Internet and the concept of e-commerce entered the scenario of global banking and financial institutions. Simultaneously sweeping structural and functional changes were overtaking the International banking and financial market. These are described hereunder.

Growing deregulation in national financial markets and the revolution in telecommunication and data processing technologies resulted in the better integration of financial markets in all countries between the domestic financial system and the foreign banking and non-banking institutions.

The conservative era prohibiting Banks from venturing into any field other than traditional banking was given away to a liberalized thinking that banks should be permitted to sell products hither to barred to them like, retail lending, loans against property and selling products like insurance benefits, mutual funds etc. Thus came the concept of Universal Banking.

There was consequently an explosion in the growth and turnover of transactions and number clientele for the banks thanks also to growing international commerce and more and more nations joining the club of developed and fastly developing nations.

The catalytic agents that enabled all these metamorphosis in banking and financial services were the advent of the fourth generation personal computers, development of Internet and networking technology as also the advancement in telecommunication facilities. Global players like Citibank and GE Capital are now able to reach vast number of clientele spread geographically in different areas through limited branches they have set up, by skillfully reaping the benefits in Internet banking and e-commerce. The bank employee who earlier attended to simple clerical processing and kept outside the realm of business policy and business planning, now has turned out to be a knowledge worker, no longer bored with monotonous repetitive figure-calculations and duplication of records. Productivity of employees improved by leaps and bounds and along with that the compensation package. What is Internet and how this had facilitated all the changes?

Internet is a network of networks. It is not a single network, but a global interconnected network of networks providing free exchange of information. It implies the most pragmatic use of information technology as medium of universal communication. It has brought unprecedented changes in society. Spanning the entire globe the Net has redefined the methods of communication, work, study, education, interaction, entertainment, health, trade and commerce. It provides interesting services like e-mail, e-commerce, file retrieval and other Internet tools. The influence of Internet on every aspect of our life is immense. It has revolutionalised our perception and has made us all a part of one single "global village". It has brought about the value of knowledge and intellectual capital as prime assets of multinational corporate business houses in the new Information Age.

The World Wide Web, which is a part of the Net, is a collection of web pages. It contains information that can be a combination of text, pictures and hyperlinks. The increasing popularity of the Net is on account of the World Wide Web. The web allows easy navigational facility. Clicking on a link can lead us to our destination. Web pages contain multimedia applications including sound files. Web pages allow user interaction, and subsequent data processing after user intervention and inputting his command or request. It processes such information/request and flashes back appropriate response to the user on the screen.

The versatile facilities and opportunities provided by the Internet and World Wide Web led to the development of electronic commerce. This became possible when the Internet transformed from the original system of providing static web pages, into interactive two-way medium thanks to advancement in software technology. Electronic Commerce is a system, which includes transactions that center on buying and selling goods and services to directly generate revenue. Electronic commerce builds on the advantages and structures of traditional commerce by adding the flexibility offered by electronic networks. E-commerce helps conduct of traditional commerce through new ways of transferring and processing information, since it is information, which is the heart of commercial activity.

E-banking and electronically providing financial services are branches of electronic-commerce. The primary problem faced by both service providers and seekers through the electronic media at the earlier stages was to ensure security, integrity of the transmitted & stored data, secrecy and to prevent unscrupulous hackers interfering and manipulating transactions. They could intercept messages from the electronic media, and get access to sensitive data like "passwords" and credit card numbers and thereafter cause extensive hacking of the web-sites. Extensive cases of "computer-crimes" and computer-frauds" happened at the earlier stage.

But every necessity serves as the mother of new innovation and invention. The problem was quickly tackled by software engineers developing new devices like Site Security Firewalls, Filtering Routers, Secured Socket layer, 128-bit encryption environment, Verisign Digital Certification etc. A firewall is a dedicated system designed to provide a layer of security between corporate systems and the public Internet. Incoming network connections can be (selectively or totally) prohibited, making it possible for users to dial out but impossible for others to dial in. A router can filter packets of information based on predefined rules. Secured Socket Layer or SSL protocol provides browsers and web-servers with three important security services - encryption, certificates and message integrity. Integrity is the mathematical way of checking if the message received by the browser or server has been tampered with. Encryption solves the risk of unauthorised persons reading the user's data as it travels around the net. The encrypted data is scrambled so that unauthorised persons do not understand it even if they access the data. In electronic transactions the user can encrypt a digest with a private key to create a digital signature. These innovations cleared the barriers for the fast development of all facets of electronic commerce.

Internet and World Wide Web came to be extensively used in banking transactions in a number of ways. This has provided immense benefit to the customers, ensured total accuracy of transactions. The concept providing services to the customers for 24 hours per day and 7 days per week (any time, any where banking) became possible and further without the customer visiting the bank, but remaining at his own place before his desk-top. Development of specialised software suited for use by banks and financial institutions became prized options and many new products came into usage. In particular banks and financial institutions have benefited on three broad areas as under:-

• Hoisting their web site on the word wide web to publish their corporate image on the global level and furnish detailed information about the products, services they offer, as also the terms and conditions thereof. If today one wants to know about some service offered by American Express or Citibank or Standard Chartered Bank, he need not have to visit these institutions or seek information over the phone, he can simply surf to their respective web pages on the Internet and in case he desires to know some additional particulars over and above what has been stated in the site, he can get the same through e-mail

Total elimination of manual processing of date in terms of internal routine like inter-branch reconciliation, monthly salary processing, posting and finalisation of financial accounts and annual statements consolidating the transactions distributed at several centres etc. led to labour productivity by leaps and bounds. The tasks earlier handled by 10000 workers can now be turned out by a mere 500 to a maximum of 1000 workers. All that the human worker has to do is to input the primary data from control records to generate vouchers. All subsequent processes are automated.

• Selling products to individual customers (B2C commerce) by banks, insurance companies, stockbrokers, mutual-funds etc

• Selling products to Corporate Customers, which may be broadly characterised as B2B Commerce.

The World Wide Web provided a most convenient means for universal communications. Banks and Financial Institutions hoisted their web-sites on the web and able to provide information about their profile, about the key persons in the management, about their products and services, and rules and terms of service etc. Through this means the interaction with the clientele is total. No length of newspaper advertisements or other media publicity can surpass this mode of information transmission, since the sites are indexed through search directories and even a person who have no inking about the particular Bank or Institution will be made to visualise the data, when he searches on the appropriate subject. Thus the web serves as a constant means to introduce the organisation concerned throughout the entire globe.

A vast organisation employing thousands of persons and operating with a geographical spread develops enormous internal routine and administrative systems and procedures. At a single point much of this can be computerised, but the task of inter-linking data of different geographical units is achieved by linking the network of different branches/geographical units through an Intranet. An Intranet is a wide area network and works on the same methodology as the Internet, but it is restricted to specific users or Institutions and external access is not allowed. The head office or administrative offices are thus linked with the systems of the branches through Intranet. In this process MIS returns for any branch can be directly compiled at the administrative office or Head office. This also solves the recurring problem of reconciliation of inter-branch accounts.