CET 3010 – Spring 2009
Technologies Used in Online Banking
Online banking is banking that is done online by secure websites. It allows customers to
pay bills, transfer funds, view statements, view information on loans and purchase and sell
investment. Another feature is online banking through your mobile phone. Most banks have
the option for online banking. . Online banking has several features that make the lives of the
members of each bank a little bit easier (Wikipedia).
Bill payment is now a key feature of online banking. It allows for the members to pay
bills from the friendly confines of their own homes or any location that has an internet
connection. Bank of America has this feature. People can pay their electric bill, car payments,
and credit cards from their secured website (Bank of America).
Electronic funds transfer is another key feature of online banking. It allows for the user
to transfer money from their checking to savings account and vice versa. It also allows from a
person to transfer money from his or her account to another person’s. Kennedy Space Center
Federal Credit Union is one of the many banks that offer this. It uses several automated systems
including Fedwire and Bankwire to allow this to happen (KSCFCU).
With online banking, you can view new and old statements. Wachovia allows its
customers to view 90 days of transactions on all their accounts including checking, savings, CDs,
credit cards and installment loans. Wachovia allows you to view, print, and save 7 years of bank
statements and also posted checks (Wachovia).
You can also conduct investments online. SunTrust Bank allows you buy or sell stocks
online. You can monitor holdings and they offer Lehman Brothers Morning Meeting Flash
Mobile banking offers many of the same features of online banking but instead of using
and desktop or a laptop computer it is conducted through your cellular phone. PNC Bank offers
mobile banking to its members and they allow them to check account balances, view recent
transactions, schedule bill payments, and transfer money (PNC).
Why these technologies provide a competitive advantage
Online banks gain a competitive advantage on traditional banks in several ways. The first
source of advantage is in the physical security of the facility. A traditional brick and mortar bank
must secure not only the information system, but also the monetary instruments. An online
bank would have no need to keep money on hand. The same encryption and firewall
technologies that an online bank would use for data security would also be required of a
From the corporate side, dashboards allow the management of the bank to instantly see
everything that is going on. The fact that all transactions are completed electronically makes it
much easier to import the data to the dashboard with the use of an online transaction
The customers benefit from better customer service by being able to use a web based
dashboard that allows them to see the status of all accounts in one look. They do not need to
look at separate statements or papers for each account.
Decision Support systems
With the use of knowledge based decision support systems, employees’ time is not
taken up with simple tasks such as loan approvals. The rules to follow can be programmed into
the knowledge management system and the decision support system can use them to make a
loan decision. Employees would rarely need to become involved in a loan decision. By tying the
system together with the dashboard, management would be able to gain instantaneous data on
the amount and types of loans being performed.
Customers can use dashboards and other information delivered electronically to make
informed decisions about their finances and where they stand versus their goals.
Outsourcing would allow banks to start with less capital. Large IT development teams
would not be necessary to support the online activities of the bank. A turnkey system could be
provided by an outside company and supported by their employees. Due diligence on the part
of the bank would ensure the integrity of the supplier.
Since there are no face to face transactions, online banking can function with far fewer
employees. There is no demand for tellers, and reduced demand for other customer service
positions that deal with face to face transactiona in a brick and mortar based bank. A phone
support team backed up by a knowledge management system could handle nearly all customer
needs at the bank level. With all transactions being electronic, fewer consumables would be
used, lowering operating expenses for the bank.
Examples of use of the technology by companies within the industry
The internet has proved to be nothing short of transformative for how banks interact
with their clients. One bank in particular, USAA, has adopted online banking not out of
convenience but out of necessity to service its 6.8 million customers worldwide [USAA 1]. USAA,
based out of San Antonio, has only 6 physical locations in the US and Europe that can handle in-
person transactions. As a result, USAA has put considerable effort developing its online interface
in order to meet the demands of customers who are unable to visit one of the bank’s branch
offices. Additionally, the bank’s primary customer base includes members of the military, who
may be limited to conducting transactions online if they are serving overseas [Wikipedia 2].
USAA’s website, typical of most banks, has measures in place to ensure security for its
customers who choose to bank online. The website itself utilizes HTTPS and a SSL certificate
from the moment you access it. Customers must first log in using a username/account number
and a password. In order to curb unauthorized users from gaining access to accounts, strict
password policies are put into place. These policies usually require passwords of a certain
complexity or force the user to change their password on a regular basis. Once the user is
logged in, they may be required to input their pin number or answer predefined questions in
order to use some of the website’s features [OpenID 3].
USAA allows customers to manage checking, savings, investment, insurance, and credit
card accounts all from one web portal [USAA 4]. Users can check account balances, make
payments, and receive financial advice from experts. USAA is also the only bank that allows
customers to deposit checks from home using a scanner with a service called Deposit@Home
[USAA 5]. Along with being able to receive account statements electronically, customers are also
able to view interactive graphs visualizing account usage and trends. USAA also offers a website
designed specifically for phones so customers can do banking while on the go.
For banks that do not utilize online banking to the degree USAA does, there are other
third-party websites that can offer a similar experience. One website in particular is Mint.com, a
personal financial management service that allows users to analyze and track their banking and
investment accounts through a sophisticated web interface [Wikipedia 6]. Mint.com can also
offer users advice on how to budget their expenses or how to find better deals through various
banks or lenders [Mint 7].