A Review on the nature and risks of electronic banking operations

A Review on the nature and risks of electronic banking operations

The nature of operations in e-banks
The nature of banking operations in e-banks can be determined as follows:

1- Electronic transfer of funds: Electronic banks operate within the international information network by participating in a computer network that conducts electronic trading of a set of accounting restrictions between the creditor and the debtor in various banks and the electronic money transfer system aims to facilitate, expedite and settle payments between banks, resulting in better customer service through this banking process, which has a competitive advantage in global markets through electronic work that allows banks to spot funds through their current accounts in Central banks.

2- Card Service: E-banks provide outstanding services to high-profile customers such as Samba Diamond and Gold services provided to a specific category of customers in the form of credit cards and special discount, including the Sony card, which enables the customer to use them in more than 20 million of the largest places, and includes free 24-hour services with a special number.

3- Direct banking system with the customer: A group of major global banks has started to apply direct banking systems with customers from a computer located at home or office.

Through this service, the customer can perform routine operations such as transferring funds from one account to another.

4- Home phone: This service was established with the development of banking services in the world and this service (bank phone) leads to avoid queues customers to inquire about some services and this service lasts 24 hours a day.

There are forms of this service with Midland Bank which in America started this service under the name of the first direct account the bank is contacted by a special secret number that enables the customer to transfer money or order payment for the benefit of his creditors in Britain entered this service 1985 and was operated by a screen available to the customer at home communicates directly with the bank enables him to know all the information he needs, but in 1987 the voice service was added any conversation between the customer and the bank directly from Through the customer's computer.

5- Electronic banking: Electronic clearing services were introduced in 1960 automated Bank Services clearing and is based on the idea of transferring money from client accounts to the accounts of persons, organizations or other entities in any branch and any bank in another country, such as paying monthly salaries from the employer's account to the employee account, paying monthly dues from the account of the Insurance Authority or the Social Security Service to the beneficiaries or paying periodic obligations from the customer's account to government and private departments. The so-called "real-time total settlement system" (RTGS) within electronic clearing services allows this system in a secure electronic way to transfer money from one bank account to another easily where payments are made on the same day and at the same value of the day without cancellation or delay.

E-commerce is one of the largest sectors that use electronic networks to connect business networks and among the electronic payment methods that it uses to settle its payments we find electronic money which is a common value for advance payments, and electronic transfers that provide electronic transfer services through electronic channels, which in turn include services and other products for insurance and direct communication to conduct banking operations and electronic banking in the sense of providing products through electronic communication, the latter includes banking transactions via the Internet and banking transactions by telephone and in the latter. Banking transactions through other channels of electronic communication.



Risks of e-banking
The continuity of advanced developments in the field of informatics and its outstanding role in the field of trade will inevitably lead banks and financial institutions towards the Global Information Network - the Internet - as in the case of Us banks, European banks, particularly Scandinavian countries and even some Asian banks.

This changing financial landscape comes with new risks and challenges for banking management, regulatory and supervisory authorities, and will affect the advantages of e-banks and limit their handling in the face of the challenge facing the security systems of the sites and the most important risks facing customers and e-banks themselves:

1- Regulatory risk: Since the Internet allows services from anywhere in the world, there is a risk that banks may try to evade supervision and regulation.

Risks resulting from the potential for loss resulting from a system comprehensiveness defect, customer errors (user errors) or an inappropriate electronic software for banking and electronic funds (there is a new type of risk for organizations that play a role or issue electronic funds) so that computer systems can be compromised in the bank with the aim of not adequately insuring the systems and exposure to customer information.

Whether it is done from outside the bank or its employees, it is necessary to have adequate procedures in place to detect and hinder that penetration, completion of work or maintenance work arising from inadequate system design, inefficiency of systems to meet users' requirements and lack of speed in resolving this problem and maintaining systems.


2- Automatic risk: The failure of participants in the e-money transfer system or in the stock market in general to implement their obligations often results in the inability of another participant to implement their obligations on time.


3- Legal risks: Electronic banking transactions involve a high degree of legal risk for banks and banks can expand the geographical scope of their services through electronic transactions faster than they can achieve through electronic banks, yet in some cases banks may not have full knowledge of the laws and regulations applied in a country before they begin to provide their services, whether with or without a licence or without it, if not required.

When a license is not required, the virtual bank , which loses contact with its host country's supervisor, may find it more difficult to remain aware of regulatory changes and as a result virtual banks may be violated without consumer protection laws, including data and privacy, promotion regulations, and if they do so, they expose themselves to losses through lawsuits or offences that are not prosecuted due to conflicts of jurisdiction.

4- Reputational risk: Reputational risks arise in the event of a negative opinion towards the bank, which may arise from the lack of adequate and confirmed protections for the bank's data and customers' data, or some breaches of the bank's electronic systems and intrusion by strangers or employees of the bank itself, and this arises when there is a bad reputation for the bank in that respect, which greatly affects the bank's reputation and activity, and the number of customers, and reduces the bank's activity, thereby reducing profits.

Other risks: They can be included below:

The difficulty of monitoring credit operations: The risk here lies in the relationship between the customer and the electronic bank with which he deals, which, although normal in its content, is the greatest risk to that bank.

That relationship is only electronic data exchanged between the customer and the bank without any scope to verify its authenticity, or from the personality of that customer who may provide incorrect data to enforce what he wants as a result of the entry of such data into the bank and is certain that the bank will not be able to detect it and as a result of the introduction of such data to the bank that it may agree to borrow that large amount on the basis of those incorrect data

Scams: The bank may be subjected to organized scams by its customers who may try to work together for the purpose of scamming it and seizing large amounts of cash.

Money transfer: The greatest risk is the transfer of funds outside the country, which harms the national economy the most, and therefore determines the electronic bank, although it has a lot of inheritance, but there is a high risk both at the level of maintaining the funds of that type of bank and at the level of the national economy as a whole, and those risks should not limit the spread of this type of bank, but rather those responsible must consider those risks and develop the necessary technology in order to avoid them.

https://indian-forex.com/customavatars/1552873087jpg