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Impact of e commerce on banking sector with Special Reference To ICICI Bank

E-commerce means when an individual does an online transaction which is commercial in nature. Indian business market (sector) is getting transformed into online business day by day. Individuals need not to go to market for buying things, all they need is a bank account with online banking services enabled along with internet connectivity. In earlier times banking sector used to provide services which are tangible in nature and the customers need to go to the bank for fulfillment of those services E.g. Cheques received by the sellers need to be submitted in banks for clearing their payments. But with the introduction of E-commerce in the economy the banks are providing online payment gateways to their customers for dealing in commercial transactions as it increases the competition among the other private banks.

 

➢  E-commerce can only be done via internet as the banks need to update their online banking services. With the introduction of E-commerce banking sector was hit hard, as in the initial stage people don’t believe on online transaction or E-commerce but as the time collapses

the E-commerce is getting large number of customers every day & due to competition in the economy banks are providing online banking services to its customers free of charge.

 

Central & states governments took various steps to divert people from tangible transactions to online transactions as it helps banks to maintain records electronically and does not need excess of employees for keeping records manually. Central Gov. in November 2016 took the boldest step ever in the history of country by implementing “demonetization”. As the result was very challenging for the banks because they have to upgrade their online banking services overnight which costs them a fortune.

 

Indian Banks have faced a very competitive challenge in order to retain their customers by the introduction of E-commerce. E-commerce needs online banks payment gateways to complete the payment process for the commodities customer buying. As banks need to maintain online servers and also have to maintain the security of confidential information of their customers by installing firewalls in their systems / online payment gateways which generates very high costs for banks to pay.

 

 

 

 

➢  Small Banks different from those larger city banks which normally have no actual budget restrictions in their e-banking service development and are able to have their own high level in-house IT professionals.

➢  The lack of finance resource and weak in technical expertise have been cited currently as two major obstacles in developing and maintaining e-banking services for many local smaller community banks located in remote and rural cities or counties.1

 

“ICICI BANK” is one the leading banks of the Indian banking sector, as ICICI was introduced in the 1994 and since then it has been providing ample of facilities to its customers. In 2014, it was the second largest bank in India in terms of assets and third in term of Market capitalisation.2

 

After demonetisation ICICI Bank has witnessed a significant rise in its debit and credit card usage. Within 7 days of demonisation, the bank saw a 100 % jump in usage of debit cards and over 40% in credit cards, including at restaurants, departmental stores and for healthcare services.  Among others, people are also using their cards at lodgings and for buying automobiles and accessories. "Debit card transactions have grown by 100 % over regular volumes within 7 days of demonisation, credit card transactions have increased by nearly 40% over regular volumes in the same period. ICICI Bank also witnessed point-of-sale and e-commerce transactions hitting over 1 million on 12th November alone, just within four days of the government's announcement to demonetise high value currency notes coming to effect. "This is a 70 % increase over regular volumes over the last 7 days,"3

 

ICICI was the first bank to champion its usage and introduced internet banking to its customers in

 

1996. With lower internet costs and increased awareness about electronic media, online banking established itself only in 1999. Other banks followed suit, including HDFC, Citibank, and Indusland bank. The Government of India enacted the IT Act, 2000 with effect from October 17,

2000 which provided legal recognition to electronic transactions and other means of electronic

 

commerce.  The  Reserve  Bank  of  India  is  monitoring  and  reviewing  the  legal  and  other

 

 

 

 

 

1 Navpreet Kaur et al. Int. Journal of Engineering Research and Applications ISSN : 2248-9622, Vol. 5, Issue 4, (Part

-6) April 2015, pp.39-49.

2 Wikipedia  https://en.wikipedia.org/wiki/ICICI_Bank

3 Times of India, (last updated on Nov 15, 2016, 04.39 PM IST)  http://timesofindia.indiatimes.com/business/india- business/Demonetisation-effect-ICICI-Banks-digital-card-usage-jumps/articleshow/55436069.cms

 

requirements of e-banking on a continuous basis to ensure that e-banking would develop on sound lines and e-banking related challenges would not pose a threat to financial stability.4

 

E-commerce and E-banking are two words which will be incomplete without each other as they need each other for successful transactions on the internet. Now a day’s people are very much addicted to the E-commerce websites which provide various products to be purchased online without any difficulty. The need to provide online banking services will never ends as banks provide secure servers for the payments so that customer can share their personnel information without any fear. RBI also keeps an eye on all the transactions made online as to prevent fraud. Moreover various security co. are also working for with the government or with the banks to provide secure payment methods to their customers. Banks should also initiate the steps for educating the rural areas people about the online banking services as it will save their time and it

will be easier for banks to maintain all the records electronically.

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Submitted by LP Team

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