Online Banking and Phishing

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Checks

The cheque is a paper document issued by the bank that you write upon to authorize the transfer of money from your account.

Before, clearing of a check takes a lot of time and stalls a lot of business transactions.

But now because of technology, the waiting time for clearing a checked has been diminished. The ink used in the account number portion of the check is now actually magnetic, and a standard machine-readable font is used. This allows millions of cheques to be processed automatically by the clearing banks using Magnetic ink Character Recognition (MICR) machines and optical scanners.

Debit card

A debit card is a small plastic card containing a secure embedded chip. The chip contains your Personal Identity Number (PIN) and account number.

This is called a 'chip-and-pin' system. It works by inserting the card into a card reader. The reader makes a connection with the chip. Then you enter your secret PIN into the reader to confirm that the card belongs to you.

The PIN and the encrypted data from the chip is sent to the bank's computers either by phone or over the internet. If the PIN you entered matches the one stored in the chip then the bank will authorise the payment.

The reason that the debit card is so much more popular than the traditional cheque is that it is fast, convenient and fairly secure unless another person knows of your PIN number.

You can also pay for items by phone or online by quoting the relevant card details to the shop.

Debit card usage in the Philippines remains relatively low as most cardholders still prefer conventional cash withdrawals from automated teller machines (ATM).[4]

Online banking

For centuries, banks had remained more-or-less the same. But thirty years ago, along came the internet.

Very soon after that, the banks realized that this was yet another way for customers to use their services without having to visit a physical branch.

In the Philippines, according to the latest information from the Internet and Mobile Marketing Association of the Philippines (IMMAP), close to half of the Philippine population is now online.[5] Nearly nine out of 10 Filipino consumers do their shopping online, based on a study commissioned by Visa International. The Visa eCommerce Consumer Monitor 2014 also reveals that the top reasons for online shopping are convenience (58 percent), price (47 percent), and deals (46 percent). So the internet has now become a major part of our society. And online banking is one of those services

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Online banking enables people to:

- View and download their bank statements

- Set up and view direct debits or standing orders

- Pay bills such as gas or electricity

- BACS transfer money to another account

- Send a message to their bank

The bank site will usually offer additional products that you might be interested in such as loans or insurances. These saves the bank expenses for promotion such as salaries and incentives of employees doing such tasks.

Because you can do virtually everything online, there are now banks that are purely internet based with no physical branches at all.

According to the Banko Sentral ng Pilipinas, as of September 2015 there are currently 117 banks Philippines which have Electronic Banking Facilities as approved by the BSP.

Some Advantages of Online Banking:

- Customers can access their accounts 24 hours a day without having to have branches open.

- The customers do all of the work themselves so staff numbers can be reduced.

- Traditional banks are very expensive to run, rental for a branch costs hundreds of thousands or millions of pesos per year. On top of that are staff costs, insurance, heating and lighting costs. It has been estimated that banks can save around 50% on the cost of transactions through the use of on-line banking.

- Banks can attract new customers to their online business for a fraction of the cost it takes to get one through the door of a branch.

- Because of the lower operating costs, internet banks can offer very attractive incentives. They often have higher rates of interest for savers and lower rates of interest for borrowers.

- An advertisement in a Sunday newspaper about a new internet account can generate over 200,000 visits to the website in a day. A traditional bank could never cope with this amount of customers in a day.

Some Disadvantages of Online Banking:

- Fraud is more likely with an online service than the fraudster physically visiting a branch.

- There is a need to be always one step ahead of thieves so investment must be made in coming up with new ways to keep customer accounts secure.

- Less customer contact and so it is harder to build personal relationships with customers.

- It is harder to sell other services to customers that may be on offer. When you see a customer in person, you can say, 'have you thought about this insurance / bank loan / service?' The same happens online, but it has less impact.

- Banks have to employ specialist web developers and expensive computers to run the site.

- If the web site goes down then customers cannot access their accounts.

Impact of ICT on the Banking Industry

Impacts of ICT on Productivity

ICT has productivity increasing effects on labor productivity and total factor productivity of companies. ICT-induced productivity such as online banking has varying effects between different sectors and among countries.

The use of computers and other related devices simplifies the task of getting customers' data and calculating money to conclude transactions. This enables a single employee to serve hundreds or thousands