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Internet Banking: A Technology in Search of Acceptance   Term Paper ID:27121 Click to get this paper

Essay Subject: Examines the potential dangers of internet-based banking. Reviews the history of internet banking, the banking industry's commitment to the concept, the technological implications, & analysis of the possibility of public acceptance.... More...

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Paper Abstract: Examines the potential dangers of internet-based banking. Reviews the history of internet banking, the banking industry's commitment to the concept, the technological implications, & analysis of the possibility of public acceptance. Paper Introduction: INTERNET BANKING: A TECHNOLOGY IN SEARCH OF ACCEPTANCE Introduction and Thesis Argument On January 21, 1997, the Royal Bank Scotland announced that it had completed the technological fine-tuning and was now Britain's first fully-fledged Internet Bank (1). The announcement generated the suspected editorial comments that suggested that retail banking is dead, and that a brave new world of cyber transactions are the wave of the future. Is Internet Banking the trend to watch out for? That's the leading question behind the banking industry's top-to-bottom redesign of the entire retail operations of some of the world's largest banks, a concept some analysts are calling "Future Banks." This concept is a mix of all the elements Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. (1996, Jan./Feb.). 6. At this point in time, electronic banking is broken down into twobroad areas: consumer-oriented electronic banking and corporate-orientedelectronic banking. The only way moneywill ever be totally secure is if it is buried in an airtight case underthe ground, where it might be safe but will never work and grow. Reynolds, J. Certificates and trust in electroniccommerce, Information Management & Computer Security, 5: 177. (1995, August). When this became unwieldy, such as when the two parties lived indifferent cities or countries, this oral authorization changed to a writtenform when paper cheques came along in the 13 s. Financial services andthe Internet - what does cyberspace mean for the financial servicesindustry? Doing business on the World-WideWeb. 16. (1998, January 1) Say goodbye to bankers' hours,Management Review, 87: 18. One studyby Booz, Allen & Hamilton found that a typical payment transaction on theInternet costs a bank 13 cents, compared with 54 cents for a telephonebanking transaction, and $1. (1995, June). 8. The steadily growing popularity of PCs, the Internet,online services, and electronic gadgets of every kind, means more and moreindividuals are benefiting from technology's push into the consumer world.Electronic money introduces an entirely new scheme for transactingbusiness. . (1998, January 1). INTERNET BANKING: A TECHNOLOGY IN SEARCH OF ACCEPTANCE Introduction and Thesis Argument On January 21, 1997, the Royal Bank Scotland announced that it hadcompleted the technological fine-tuning and was now Britain's first fully-fledged Internet Bank (1). A cellular phone conversation can be intercepted by anyone with asuitable receiver. Morgan |New York |www.jpmorgan.com |No ||Royal Bank of |Scotland |www.royalbankscot.co.uk|Yes ||Scotland | |/ | ||Nations Bank |N. Oliver, S. 3. Many banks integrate their online services with other areas of thebank so that corporate clients can bundle services, both for theirconvenience and the bank's profit. 9. A model for monitoring Web site effectiveness.Internet Research. As more and more customers became accustomed to banking, there werelonger and longer lines, so the use of ATMs (Automatic Teller Machines)were created to make banking easier for both customers and employees.Customers could get money any time of day or night, and banks could controlthe crowds. 2. Technological Implications In considering the technology of Internet Banking, there are difficultissues that arise once terms like "new paymenttechnologies" and "digital money" enter the discussion. Security considerations of doing business via the Internet: Cautions to beconsidered. (Cash is the most common method bynumber of transactions per day, but the estimated average value of a cashtransaction is tiny, $1 , compared to that of a wire transfer, $4 million.Electronic funds transfer or EFT, wherein an individual accesses thepayment system by means of a debit card reader or a personal computer,basically brings the wiring of money down to the level of the retailtransaction (26). Aldridge, A., White, M.,& Forcht, K. The Thornton May Files, InformationManagement & Computer Security, 4: 3. The announcement generated the suspectededitorial comments that suggested that retail banking is dead, and that abrave new world of cyber transactions are the wave of the future. From electronic money to electroniccash: payment on the Net, Logistics Information Management, 294. Martin, J. By the end of last year, a survey ofbanks with more than $1 billion in deposits found that 45 percent offeredPC-direct banking (19). & Young, M.A. 28. 15. This allowed banks in different cities and even differentcountries to communicate with each other to verify that sufficient fundswere on deposit to clear financial transactions (7). & Lander, L.C. Wilson, S. Wilson, S. Internet Research. 7:1, 16. To select the online bank that best meets itsneeds, a company should consider how each candidate originally got into theonline business (37). Aldridge, A., White, M., & Forcht, K. First UnionNational Bank in Charlotte targets businesses of $2 million and under, andcan set up their online accounts in one day. (1994). 27. Birch, D. Martin, J. New York: Harper Collins, iii. Internet Research. Analysis The French have a saying, "The more things change, the more they staythe same." That saying could sum up the current situation with InternetBanking. (1997, May). Security considerations of doing business via the Internet: Cautions to beconsidered. Securityconsiderations of doing business via the Internet: Cautions to beconsidered. Notes 1. The virtual community: Homesteading on theelectronic frontier. Industrial Management & DataSystems. In actuality, many banks' corporate online services arenothing more than extensions of services they designed for their high-net-worth clients (17). Aldridge, A., White, M., & Forcht, K. By 1997, more than 4, banks around the world hadsome sort of presence on the Internet and/or the World Wide Web. (1994). EMS is aserious attempt to build a comprehensive electronic money system that isnot only practical and efficient, but one that can also be understoodaround the world while at the same time reflecting the regulations thatgovern the banking system as it exists today (43). Oliver, S. (1997, February). That forces newcomerssuch as ING Direct to spend millions of dollars on advertising to raisetheir profiles and gain credibility. Retailing in computer-mediatedenvironments: Electronic commerce across Europe International Journal ofRetail & Distribution Management, 25: 29-37. Oliver, S. Structure and process in modern society,Glencoe, IL: Free Press. The user-friendliness of a site is an indicator of how convenient the bank's onlineservices are. These are: 1) Reluctance of banks to reveal (orgive access to) too much of their internal EDI operations, which willalways limit true corporate Internet banking; 2) Reluctance of manyconsumers to embrace new technologies because of old-fashioned yet veryreal fears; and 3) Difficulties in accepting the concept of what "money"really is (29).Bank Reluctance Security is the biggest concern that banks face when analyzing thedecision of whether to offer online banking to all corporate clients. Security considerations of doing business via the Internet: Cautions to beconsidered. New York: Harper Collins. (1997, July 7). (1997). When isvirtual virtuous: Organizing for innovation? 44-45. 24. A second-tiertechnology, Intranets, which are private networks within institutions thatuse web browser technology, are being used by many banks as a useful toolfor sharing internal information and for work-group collaboration (12).Table 1: Select Institutions for Online Banking|Bank |State/Nation |Website |Online || | | |Banking ||Banco Santander |Spain |www.bancosantander.com |Yes ||Bank of America |California |www.bofa.com |Yes ||Bank of Australia |Australia |www.commbank.com.au/ |Yes ||Bank One |Ohio |www.bankone.com |Yes ||Bankers Trust |New York |www.bankerstrust.com |No ||Bradesco |Brazil |www.bradesco.com.br/ |Yes ||Canada Trust |Canada |www.canadatrust.com |No ||Chase Manhattan |New York |www.chase.com |Yes ||Chinatrust |Taiwan |netbank.chinatrust.com.|Yes || | |tw/ | ||Citibank |New York |www.citicorp.com |No ||Credit Suisse |Switzerland |www.credit-suisse.ch/ |Yes ||Deutsche Bank |Germany |www.deutsche-bank.de/ |Yes ||European Federal |Antigua |www.eurofed.com/ |No ||First Chicago/NBD |Illinois |www.fcnbd.com |Yes ||First Union Bank |N.Carolina |www.firstunion.com |Yes ||J.P. Wilson, S. Virtual Competitors: As technologyraces ahead, the banks face new rivals, Maclean's, 52. This allowed banks to talk to each other, but moreimportantly, it allowed customers to call in to banks and speak withbankers. Day, A. (b) How much does it cost? Thisis a real concern, since computer hackers who have cracked the internalsecurity codes of several major banks have been able to steal severalhundred million dollars annually, in what Interpol calls an "unreportedcrime, unreported because banks do not want clients or the public to know"(3 ). The reason for this strong possibility is that today's typical bankcustomer does 8 percent of his or her basic banking, including billpayments, deposits, and withdrawals, through automated teller machines orby telephoning centralized call centres. ING Groep, the world's thirdlargest bank, with $35 billion in assets, did not even consider buying upan established network of branches, as Hongkong Bank did when it paid $63.5million for The Bank of British Columbia in 1986 (39). 4 : 42. History of Internet Banking The generally-accepted definition of banking suggests that it is thebusiness of dealing in money and instruments of credit (5). It is agood package of services, typically, but the services offered corporationsare much more extensive. 17. In addition, Internet Banks create the possibility of new forms ofmoney, as well as new attitudes about that money. Keep in mind that virtually allmoney center banks and many smaller ones now maintain Websites wherebusiness and consumer clients can see what services are offered. The next technology was the telephone, which put a voice to thecommunications. Corporate online banking provides smaller businesses with real timeand complete access to their accounts through computer and Internet links.Many companies are initially attracted to online banking because it enablesthem to monitor accounts on a 24-hour basis. Martin, J. Financial services andthe Internet - what does cyberspace mean for the financial servicesindustry? (1997). The next step in technology, and the one which many bankersthought would pave the way for true electronic banking, was the creation ofthe debit card, which would eliminate the expense of writing, canceling,clearing, and storing cheques (9). Internet Research. 12. Virtual competitors: As technologyraces ahead, the banks face new rivals, Maclean's, 52. Oliver, S. Internet Research, 114. 42. Of thatnumber, however, only 62 banks in the world offered online corporatebanking services, according to the Online Banking Report (1 ). This is basically a software system that creates,secures, and exchanges electronic notes in multiple currencies. Banks areusually differentiated from other financial institutions by their principalfunctions of accepting deposits -- subject to withdrawal or transfer bycheck -- and of making loans. The other way of protecting privacy, the way thatworks, is to make sure that no one gets any information about you in thefirst place. 44. 7:1, 13. Cash managers of small and midsizecompanies have been driving the development of online banking, because theyhave a greater need to control their margins and profitabilities bymonitoring funds. Over the past century, technological advance has made thatapproach more difficult. Security considerations of doing business via the Internet: Cautions to beconsidered. Banks need to beconservative. Say goodbye to bankers' hours,Management Review, 87: 18. 3 . and(c) How is security maintained? Birch, D. 95:2. Internet Research 2: 7. Balance information ismaintained in a secret, uncrackable coded string of digits, that aremaintained by a bank and transferred to the account holder in the form of a"smart" plastic card with an imbedded microchip, or which can also be kepton a computer hard drive (27). It is estimated that more than 3 percent of all banksnow have sites on the Internet's World Wide Web (11). 34. 65-68. 45. Parker, C.M. (1996, April). However motivated, banks have respondedto the call for more online services. (1996, April). Banking Industry's Commitment Consumer-oriented electronic banking lets customers access their ownrecords by using either touch-tone phone links or dial up connectivity viaa private PC through a modem. Certificates and trust in electroniccommerce, Information Management & Computer Security, 5: 177. (1997, May). Internet Research, 113. Certificates and trust in electroniccommerce, Information Management & Computer Security, 5: 175. Back in 12 , both the buyer and the seller wouldhave to meet in person in front of the banker to orally grant permission tohave the funds debited from one account and credited to another (23). Intranetand extranet systems offer enhanced security for all users, preciselybecause they are systems that have limited or no public access. Ever since the Genoa Bankingconcepts discussed earlier, banks have relied on establishing a mystique ofpower and force. Certificates and trust in electroniccommerce, Information Management & Computer Security, 5: 177. 7:1, 15. The reason: clients with computers usually earn higher incomesand represent a larger share of bank profits. Banks such as First UnionNational Bank of North Carolina, and Royal Bank of Scotland have developedonline banking products specifically tailored to their smaller businessclients (15). (1997, July 7). (21). (1997). Martin, J. A card's digital currency balance can be"recharged" by placing it in an ATM (a PC's balance is recharged by gettingon-line with the bank) and downloading funds from one's account (28). This implies that electronicbanking over the Internet is always going to be a tradeoff between securityand privacy and efficiency and potential profitability. Royal Bank of Scotland, for instance, is targetingcorporations that need to expedite EDI (electronic data interchange)transactions. An existing bank client can be set up in two to four months;a new client in up to six months. The Internet, the publicly accessible electronic communicationssystem, is usually the first step for any bank to move some or all of itsoperations online. Virtual Competitors: Astechnology races ahead, the banks face new rivals, Maclean's, 52. (1997). (1997, March 17). But most analysts see these and other technology changes asevolutionary rather than revolutionary, typically superficial rather thanprofound. Birch, D. Halhead, R. 36. This flies in the face ofmost research, including that of Booz, Allen, & Hamilton, the managementconsultants, who report that up to 16 per cent of US households will beusing Internet banking by the turn of the century (4). Most consultants agree that when a company decides to open an onlinebanking account, it needs to authorize which departments and who withinthem will have access to the account. For example, $1 million put in an overnight depositaccount from 5 p.m. Oliver, S. (1997). 41. The more a bank'scustomers use EFT, the less money that bank has to spend on clearing andrecording checks, and the less money is wasted on bad checks. Considering theseterms, one arrives at the question, "What is really new and what impactwill it have?" For instance, if there are changes in the way money is paidfrom one party to another, will that bring about changes in the characterof money itself? This freedom of communication, however, led to problems, becausebank employees were spending more time on the phone dealing with customersthan they were on doing the business of banking. 11. A module-based conceptualframework for largescale expert systems. (1997). Lichtenstein, S. Wilson, S. 23. (1997). Even meetings in the middle of the Mojavedesert may not be entirely private in a world of shotgun microphones andspy satellites. 7:1, 13. Wire transfer today accounts for more than 8 percent of the dollarvolume of payments in the World (25). 7:1, 16. Aldridge, A., White, M., & Forcht, K. Conclusions The validity of electronic banking relates directly to privacy. Our first priority was toestablish a brand" (42). "A cash manager wants to take excess cash andexercise it. In general, there appear to be three main barriers towidespread acceptance. Starting up a full-service Internet bank can cost as little as $1million, according to Booz, Allen & Hamilton, a New York-based managementand technology consulting firm. The virtual community: Homesteading on theelectronic frontier. 35. During the past two years,many businesses that were unable to achieve this flexibility have turned tononbank, financial-services companies to obtain what was once the soledomain of conventional commercial banks (16). Internet Research. Here arerandom selections from the banks that offer online corporate banking forthe small to midsize banking clients. (1997, July 7). (1997). Harvard Business Review. Certificates and trust in electroniccommerce, Information Management & Computer Security, 5: 177. Kaula, R. Say goodbye to bankers' hours,Management Review, 87: 18. A large part of this technology was created and developed byCitibank of New York, which in 1995 received two valuable technologypatents covering EMS and electronic money in 1995 by the U.S. They also point out that it takes more foran established bank to go completely on the Internet because new servicesmust be integrated within existing systems and regulations (4 ). (1997, May). (1998, January 1). Customers can transfer funds, checkbalances, determine outstanding and pending actions and so on. to 9 a.m. Internet Research 2:11. Securityconsiderations of doing business via the Internet: Cautions to beconsidered. So-called "firewalls" can also be part ofan intranet or extranet system, preventing access to sensitive account databy unauthorized persons, departments or agencies. Rheingold, H. In recent years, however, this distinctionhas become blurred, as more and more non-banking companies have moved totake over the traditional business of banks (6). Banking historians have found that merchants in Genoa, Italy, weremaking payments by transferring bank account balances back in 12 AD (22). For the computercodes of the bank online customer must be protected within that company'soperations (38). It developed rapidly in the 18th and 19th century in England,primarily to support the expansion of industry and trade. This new banking approach is called "VirtualBanking" and the banks that do this successfully are the ones that will bethe banking leaders of tomorrow. Schofield, J. The firsttechnology to have a major impact on banking was the invention of thetelegraph. Part of the answer lies in thepast. 14. local times, can generate $4 million to $5million in interest during that 16-hour period. 39. Aldridge, A., White, M., & Forcht, K. 7:2. A model for the future of electronic commerceInformation Management & Computer Security, 5, 167. May, T.A. "Banks haven't gone out of their way to presentcorporate clients with sophisticated online banking programs. One is to let people have informationabout each other but impose legal controls on what they do with it. In 1995, representatives from banks around the country setup the Banking Industry Technology Secretariat, an organization that willresearch and study security needs and standards and measure those againstprivacy standards and laws and use that information to develop protocolsfor online financial transactions. (36) Typically the fees are based on a bundle of services rather than thevolume of transactions. Electronic commerce - would, could andshould you use current Internet payment mechanisms? 1 . Aldridge, A., White, M., & Forcht, K. If you can get a 7 percent return on $1 million over a four-hour period, you're going to do it" (34). For instance, considerthe technology and applications of the system known as The ElectronicMonetary System (EMS). Virtual Competitors: As technologyraces ahead, the banks face new rivals, Maclean's, 52. "The major banks still standtallest when it comes to trust and name recognition. (1995, August). 7. A model for the future of electronic commerceInformation Management & Computer Security, 5, 17 . Dieckmann, M. 31. (1996, June). 4. Say goodbye to bankers' hours,Management Review, 87: 21. 19. 8 for the same service at a bank branch (41). (1997, February). Internet Research. Buck, S.P. The improvement oftelephone technology allowed for answering machines to handle questions,and this eased the burden somewhat (8). 25. Real electronic commerce - smart cardson the superhighway, Internet Research, 118. 18. Thereare two ways of protecting privacy. & Young, M.A. (1997). & Young, M.A. 4 . E-mail across the Internet is bounced from one machineto another until it finds its destination -- and can be read by anyonecontrolling any one of those machines. All banks offering online service emphasize the steps they take toensure the privacy and security of transactions and most of them usesophisticated levels of security including 128-bit encryption. The "behind the scenes deposit transfer" remains the same as itdid in Genoa in 12 . One cardholder can make a payment to another withoutbank involvement, by placing both cards in a "digital wallet" that writesdown the card balance on one card and writes up the balance on the other bythe same amount. 22. (1997, May). It appears that there is a secondary reason for this security concern,one that has not been widely circulated. IsInternet Banking the trend to watch out for? Martin, J. That will come,typically, in the guise of bargain rates for services. One executive at that bank recalls that he was actuallysurprised to find some out-of-town clients stopping by while in the city tosee what an Internet bank looked like (35). (196 ). Small and midsize companies, with annual sales of between $1 millionand $25 million, have a strong need to contain banking costs, which canoften eat up 1% to 2% of revenue, while at the same time accuratelyhandling and monitoring their business accounts and at the same timeoperate in a realm of total firewall security. Another 38 percent planned to offer the service.And, while only about 3 percent of those banks offered Internet bankingservices, 53 percent now have such service menus under development (2 ). Say goodbye to bankers' hours,Management Review, 87: 18. Corporationsare in the unenviable position of requesting a service they cannot clearlydescribe, and the services they are being presented with are frequentlyincomplete. The Thornton May Files, InformationManagement & Computer Security, 4: 37. 32. Thatis the approach of privacy laws, embodied in statutes such as the FairCredit Reporting Act. Birch, D. Those figures mightbe correct, but do they suggest the future? This attitude of "mystery" was important in creating theidea that since banks were the official handlers of money, that they werein business to handle all the details of "money" that the average consumer(whether an individual or a corporation) does not need to know (31). Carolina |www.nationsbank.com |No ||NedBank |South Africa |www.nedbank.co.za |Yes ||Wells Fargo |California |www.wellsfargo.com |Yes | Intranet technology can also be used for classified and encryptedcommunications between banks and particular clients, just as phone linesmight be dedicated for particular purposes. (1995). (1997, July 7). Schofield, J. Electronic commerce - would, could andshould you use current Internet payment mechanisms? 13. Consumers and merchants will be able to perform fairlycomplicated financial transactions without having to go to a bank (45). Electronic security systems now in useincorporate sophisticated authorization and encryption codes, but one riskis that of carelessness on the part of the end user. (1997, Febrary). In actuality,those funds are accumulated and used by banks as part of their "overnightdeposits," monies that are put in high-interest bearing accounts for shortperiods of time. Chesbrough, H., and Teece, D. There is one outside party thatmight legitimately want access to such accounts: the federal government.But one curious aspect of online banking has been the near absence offederal regulations to date. (1997). 7:1, 17. (1997). 26. 111. Maybe. What has actually changedover the years is the way one party would authorize the transferal of thosefunds to a second party. For example, many banks' online services allow electronic billpayment, but they do not provide invoices. Facts on file. 29. Buck, S.P. Internet Research, 113. Financial services andthe Internet - what does cyberspace mean for the financial servicesindustry? & Swatman, P. As an incentive to fight against this fear, several banks that providecorporate online banking allow certain clients to invest overnight funds.This can generate substantial profits for a company that has significantbut temporarily idle cash funds, allowing it to put those funds to work forfour, nine, 12, or 24 hours. Why banks love EFT is the simple fact that it makeswiring money much cheaper and therefore more profitable. Patent andTrademark Office (44). Most of these banks are developing aggressive, sales-oriented culturesand going after new customers with new banking channels. Some experts agree that this is because thegovernment realizes its an evolving industry and too much regulation tooearly could stifle innovation.Changing Attitudes Toward Money Where once marble lobbies, huge pillars and towering buildingsrepresented banking stability, today's successful banks are judged by theirautomated telephone systems, sophisticated software and the way that bankfunctions on the Internet. Forinstance, many banks still like to put "holds" on deposited checks, usingthe statement that it takes "five working days" to clear. Also, credits often cannot beproperly apportioned among multiple accounts, causing problems withreconciliation" (18). This drive to develop online banking, curiously, has been customer-driven rather than bank-generated. The attitude seemed to be thatalthough in house corporate Internet banking could be more profitable andcould be more efficient, there was a perceived safety factor involved inhaving the funds under an external set of controls (33). The biggest hurdle we faced is thatING is relatively unknown in Canada. As a general rule, however,Intranets limit access within a given organization (13). So it really does not make any difference whether those digits areexpressed in ink, pixels, or binomial formulas. Moreover, virtual banks tend to attract the banks' most covetedcustomers. Desktop electronic currency transfers can similarly bemade by electronic mail. Pricing is based on the kinds oftransactions used and the volume of information passed. Managing Office Technology. Schofield, J. This paper will examine that potential danger by exploring: (a) thehistory of Internet Banking, (b) the banking industry's commitment toInternet Banking, (c) the technological implications, and (d) an analysisof the reasons that the technology is available, but will probably not bewidely accepted or used by the general public. Schofield, J. The implications of electronic money in today's globally networkedworld are enormous. Buck, S.P. Designed to change and be as flexible as the ever-improvingtechnological developments in software, the system is the first to support,in a secure fashion, electronic cash payments for both retail and wholesalecustomers. (1997, January). Like a traveler's check, a digital currency balance is a floatingclaim on a bank or other financial institution that is not linked to anyparticular account. Thetraditional banking industry is facing these and other challenges as thepossibilities of Internet banking open up. 15-23. Smaller companies are billeda flat rate based on the functions used; larger companies pay on atransaction volume basis. Internet Research. 43. . Many conversations take place over telephonewires -- and it is hard to check the entire phone line and every switchingstation for eavesdropper's. Certificates and trust in electroniccommerce, Information Management & Computer Security, 5: 177. A model for the future of electronic commerceInformation Management & Computer Security, 5, 167. A model for the future of electronic commerceInformation Management & Computer Security, 5, 166-169. Educating tomorrow'smanagers for telecommunications and EDI: A cross-cultural experienceInformation Technology & People, 64. At the beginning of this paper, the question was raised as towhether corporate customers would accept and embrace the concept ofInternet Banking. 37. 2 . Banking, in the form of making loans at interest, dates back toantiquity. Securityis increased by the use of passwords and authorization controls and codes,and by the encryption of data. The Internetbanking concept is the most visible of these channels, the most confusing,possibly the most profitable while at the same time possibly the mostdangerous (3). Internetacceptable usage policy for organizations, Information Management &Computer Security, 184. & Swatman, P.M.C. 21. (1996, June). Safety and security are selling points. A model for the future of electronic commerceInformation Management & Computer Security, 5, 17 . A thirdtechnology is called "Extranet" and in this technology, banks provideInternet and Intranet access to their customers and suppliers. However, by attrition, thenumber of companies with an idle $1 million are few and far between, sothere have to be greater incentives for a company. If corporate onlinebanking became commonplace, the amount of funds available for theseovernight deposits would dwindle (32).Consumer Reluctance Even though most banks that offer corporate online banking to clientswhose annual transaction turnovers are greater than $1 million, and eventhough they offer sophisticated arrays of up to 4 report formats thatallow clients to monitor their accounts, there is still some reluctance ofcorporate managers to totally embrace the technology. (1997, May). 2256 5. Parsons, T. 33. (1997, May). (1998, January 1). Breaking down the barriers to freeinformation exchange, Logistics Information Management, 34-37. 38. When approached by a bank to begin corporate Internet banking, thereare three key questions a company should ask the bank directly, since theinformation is rarely, if ever, found at a Website: (a) How long does ittake to open an online corporate account? That's the leading question behind the banking industry'stop-to-bottom redesign of the entire retail operations of some of theworld's largest banks, a concept some analysts are calling "Future Banks."This concept is a mix of all the elements believed necessary for banks tosurvive onslaughts from brokerage firms and mutual-fund houses and fromindustry consolidation and technology (2). (1997, June). (1997). Rheingold, H. Wilson, S. A second form of digital money -- an alternative tothe deposit-transfer method of payment -- has recently appeared on thehorizon. No system is foolproof,however; industry encryption standards are constantly being upgraded tokeep ahead of potential cybercriminals (14). Developments in cryptography are responsible for what is beingcalled "digital currency." That works like this. May, T.A. (1998, January 1). Remote, paperless, andinstantaneously executed authorization of funds transfer, in the form of"wiring" money from one account to another, has been around since the mid-19 s, following the introduction of the electric telegraph (24). Some analysts believe that this is due to the fact that, even thoughonline banking gives some corporations more than just an account-monitoringtool, that managers tend to fear internal security problems as well.Employee theft and embezzlement is not an unusual business challenge, andmany managers in a survey expressed reluctance to assume all bankingcontrol of the company's funds in house. The rise of online banking will allow companies to do somesophisticated bargaining and comparison shopping for banking services,since the physical location of the bank itself becomes less important.Atlanta Internet Bank, for example, has only a suite in a downtown officebuilding, but its client base now comes from all 5 states and 15 foreigncountries. The first term to come to grips with is "digitalmoney" which is really nothing more than a spendable balance represented bydigits on a customer's balance sheet in a bank and as such, that is hardlynew. (1997, February). (1997, May). Wilson, S. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.