Chapter 14 – Technologies and Terms used in Internet Banking


Online banking was long considered to be a tremendous new technology breaking offering that would not only enhance the banks’ capabilities in terms of services offered on the go but also as a possible change in various types of operational and strategic business models.

Now almost all the banks across the globe are there to offer online banking with different capabilities in their respective fields. With ever-increasing competition, banks have devised new ways to maintain their revenue streams. The core of the idea, however, still remains to offer more value, convenience and satisfaction to the customer.

ATM (Automated Teller Machine)

ATM is known as an automated banking machine cash machine, cashpoint, or cash line machine  that is an electronic telecommunications device which enables the customers of a financial institution to perform financial transactions without the need for a human cashier, clerk or bank teller.

On most modern ATMs, the customer is identified by inserting the ATM card with a magnetic stripe or a plastics mart card with a chip that has a unique card number and some security information such as an expiration date or CVVC(CVV). Authentication is provided by the customer entering a personal identification number (PIN).

Using an ATM, customers can access their bank deposit or credit accounts in order to make a variety of transactions such as cash withdrawals, check balances, or credit mobile phones. If the currency being withdrawn from the ATM is different from that in which the bank account is denominated the money will be converted at an official exchange rate. Thus, ATMs often provide the best possible exchange rates for foreign travellers, and are widely used for this purpose.

Website Security

With the advent of Online transactions, there has come a need that has forced banks to concentrate more on website security initiatives. Providing a safe, secure and robust website with well defined fraud resolution processes is one such initiative to handle frauds that happen online. User identification, data encryption (below 128 bit), audits and alarms, card verification codes (CVV/ CVV2/CID), online security portal, virtual keyboard and dedicated fraud management team are some of the standard security measures implemented by banks.

In order to monitor and prevent Internet banking fraud and other security breach attempts the following technologies and procedures are a “must have” for all the banks in addition to the standard features: extended validation SSL certificates working in conjunction with anti-phishing and malware protection on browsers, utilization of multiple factor password authentication, enforcing re-authentication while accessing sensitive tools, hiding accounts, Verified by Visa/Secure Code, digital signature, digital certificates, secure tokens, session log out, Back and Refresh activity, hot listing and blocking of fraudulent accounts, use scramble pads against key-logging viruses.

Further to the primarily front-end authentication controls listed above, the following security measures are really cutting-edge and competitive differentiators for any bank. These security measures will provide holistic end-to-end security for consumers as well as corporate clients :

  • Date/Time and IP/ISP Restriction : Customers can select the days and specify time interval, the IP address and the Internet Service Provider (ISP) from which they connect to personal internet banking.
  • Geolocation : Geolocation services provide detailed information about a consumer’s worldwide location, line speed, domain, etc while performing online transactions.
  • Biometrics : Biometrics are used to verify a person’s identity by a unique physical attributes (e.g.fingerprint, iris recognition, palm print) that distinguishes the individual from any other person.
  • Securing the perimeter : Denying access to the environment in which the Internet service operates by unauthorized external parties is a key target for ensuring the overall security of the system. Some of the measures in place to achieve this include Multi-Tier Infrastructure segregated into separate security trust domains and industry standard Intrusion Detection System (IDS), monitored 24/7 by a centralized security-monitoring group.
  • Customer Application Control Features : Some functional features to enable the customer to more easily control the use of the system, activity log tools (audit trail) and advance authorization structure.
  • Security and fraud monitoring and incident response, including new vulnerability notification and response, security incident response program, contingency and recovery and rule-based and anomalous behavior. Fraud monitoring should be done on customer Internet sessions, profile information, and transaction details to obtain a risk score.
Terms Related to Internet Banking

ACH/AUTOMATED CLEARING HOUSE : An “ACH” is a transfer between accounts. When a user of an Internet banking system requests to move $50 from a checking to a savings account, the transfer ends up in an ACH file. This ACH file contains the instructions for the bank’s core software on various transactions to perform.

ACCOUNT ANALYSIS : Method by which a bank will wave certain “hard charges” to their customers account depending on their average balance.

CASH MANAGEMENT : Software that allows retail Internet banking, plus features designed for corporate banking, such as payroll, wire transfers, tax payments and more.

EBPP/ELECTRONIC BILL PAYMENT & PRESENTMENT : Allows the customer to view bills (such as cable TV or utilities) via their browser and allows the option of payment. There are four stages to EBPP:

  • enrollment of customer
  • presentment of bill
  • customer’s approval of payment
  • payment of bill

EFT/ELECTRONIC FUNDS TRANSFER : The transfer of money from one account to another by computer.

EFTPS : The payment of taxes over the Internet.

EDI : Electronic data interchange (EDI) is the exchange of documents in a structured form between computers via telephone lines.

FASTPA (OR QUIC PA,etc.) : A local electronic transfer from one account to another. Payments are routed internally from the sender’s account to the receiver’s account without leaving the bank.

FEDI FILE : This is the file that contains ACH’s, which are moving money from an end user’s Account inside the bank (or credit union) to an account at another bank or credit union.

FEDI : Financial Electronic Data Interchange (FEDI) involves the computer to computer transmission of both payment instructions and remittance details using international message standards. An example would be trade payments – e.g. a retailer sending a payment to a supplier in payment of multiple invoices.

INTERNET BANKING (ALSO CALLED ONLINE BANKING, etc…) : The technology, tools and processes that give you access to your bank accounts and banking transactions from your personal computer. Typically this includes checking account balances, obtaining a list of transactions affecting an account, and perhaps transferring funds from one online account into another.

MEMO POST : A file that gets posted to your account when you perform a transaction that has not officially cleared. This is the feature that adds and subtracts funds from your account throughout the day, even though technically the money hasn’t left your account, because your bank operates in the batch mode. Real Time financial institutions do not need Memo Post.

NSF : “Not Sufficient Funds” in your account to cover the specific amount of a transaction.

Page Counter : Normally found at the bottom of a webpage, a page counter actually counts the number of times people have viewed the webpage.

SET : (Secure Electronic Transaction) A standard protocol from MasterCard and Visa for securing online credit card payments via the Internet. It is a three-way transaction: the user, merchant and bank must use the SET protocols. Credit card data and a digital certificate (for authentication) are stored in a plug-in to the user’s Web browser.

TIN : “Taxpayer Identification Number” assigned to you by the internal revenue service.

TRANSACTIONAL WEBSITE : A website that allows transactions, such as Internet Banking allows you to pay bills or transfer funds, or an e-commerce site that allows you to make purchases.