Cyberbanking cashes in on Internet<\/p>\n
By Riyadi<\/p>\n
JAKARTA (JP): Domestic banking competition is already fierce
\nand will get fiercer in the near future as the cyberbanking
\nindustry looks set to become a reality in Indonesia.<\/p>\n
The flood of foreign banks onto the Internet is unstoppable.
\nEvery day, a new bank enters the Internet to promote its
\nservices. They will soon offer cyberbanking services here.<\/p>\n
Cyberbanking, doing banking in an open network environment, is
\na matter of time as a lot of multi-national banks are preparing
\nto enter the cyberbanking industry.<\/p>\n
In two to three years time, cyberbanking will be commonplace
\nin Indonesia, John Doggett, a director at the Bank of Boston said
\nin an interview with The Jakarta Post last week.<\/p>\n
Cyberbanking services are already in place. Security First
\nNetwork Bank and Wells Fargo, both of the United States, offer
\ncyberbanking. Most transactions with the two banks can be done
\nover the Internet via www.sfnb.com and www.wellsfargo.com
\nrespectively.<\/p>\n
Following their example, Deutsche Bank of Germany plans to
\nenter the cyberbanking businesses later this year.<\/p>\n
The market is already there but security has been the major
\nheadache for banks wanting to start cyberbanking, Doggett said.<\/p>\n
To start cyberbanking, banks first open a home page on the
\nInternet to announce, promote and market their products.<\/p>\n
The next step is account opening, and tight security on
\ncustomer authentication is needed so that the bank knows who its
\ncustomers are. For customers the provider's authentication is
\nalso important to make sure that the customer deals with the bank
\nhe or she really means to.<\/p>\n
Other transactions then follow, such as withdrawing, writing a
\ncheck, transferring money and so forth, all of which need a high
\nlevel of security.<\/p>\n
\"We don't want a hole there. We don't want a fortune
\ntransaction. We want to make sure that everything is secured. All
\nthese things require tight security measures,\" Doggett said.<\/p>\n
One suggestion is to use pass words to secure cyberbanking
\ntransactions. Another is to use chip cards. Using pass words,
\nhowever, is not very secure, so chip cards will probably prove
\nthe more popular choice.<\/p>\n
Even so, security remains a tricky matter in cyberbanking. Two
\nstudents from Berkeley cracked the code at Wells Fargo's Netscape
\nlast November. It forced Wells Fargo to stop its cyberbanking
\nservices for two or three weeks.<\/p>\n
The security breach at Wells Fargo shocked everybody
\ninterested in cyberbanking. However, it sent a good sign to those
\nengaged in research on electronic checking systems, said David
\nLittlewood, financial services sales manager of Sun Microsystems
\nComputer Company. His company provides the Java server for the
\nInternet.<\/p>\n
Sun and Bank of Boston are members of a consortium of some 80
\ncompanies, which undertake and sponsor research on the
\ncyberbanking industry, including the security aspects.<\/p>\n
Even when a security system has been developed, it still needs
\nto be integrated into a bank's existing operation, Doggett said.<\/p>\n
\"That's important because you have many different pieces of
\noperation. And each piece is potential to create a hole in the
\nwhole security system,\" Doggett said.<\/p>\n
Even when the security system can be integrated into the
\nbanks' operation, cyberbanking still needs to be adapted to the
\nbanking regulations in individual countries, which often vary
\nwidely.<\/p>\n
\"So, make sure that you are introducing a form of cyberbanking
\nwhich is consistent with the prevailing banking regulations.
\nCyberbanking in some countries will be more difficult than other
\ncountries. It depends on the nature of the regulations,\" he said.<\/p>\n
Computers<\/p>\n
The next problem is computers. Not everybody has a computer,
\nnot every body wants a computer and not all computers have
\nmodems.<\/p>\n
In the United States, for example, 35 percent of homes have
\ncomputers, half of them have modems and access to the Internet.
\nSo, only 15 to 17 percent of homes in the United States are
\nequipped to do cyberbanking.<\/p>\n
In Indonesia the figure is much lower. According to the
\nBandung Institute of Technology's Computer Network Research
\nGroup, there are presently about 10,500 Internet users in
\nIndonesia, compared to 20,000 users in Singapore and 30,000 in
\nMalaysia.<\/p>\n
The Internet is currently estimated to reach over 32 million
\npeople globally and is growing at a rate of 10 percent a month.<\/p>\n
Another problem is that conventional banking habits have to be
\nchanged. This is the major challenge test to see if people really
\nwant to do cyberbanking; whether individuals, corporations and
\nbusinesses want to make transactions over the Internet. However,
\nit very much depends on how banks market their cyberbanking
\nservices.<\/p>\n
\"It takes a lot of time to change habits. There is a long way
\nto go before we are really comfortable with cyberbanking,\" said
\nDoggett, who was here to promote cyberbanking sponsored by Sun
\nMicrosystems.<\/p>\n
Automated teller machines in the United States took 20 years
\nto reach popularity, while credit cards took 25 years. And now,
\nshopping over the Internet through cybermalls and cybercash or
\nelectronic commerce is becoming increasingly popular in the
\nUnited States.<\/p>\n
The total value of electronic commerce reached US$100 million
\nlast year. It is projected that electronic commerce will reach $7
\nbillion by the year 2000.<\/p>\n
Banking follows commerce. Therefore, it is expected that
\ncyberbanking will follow the success of the cybershopping
\nindustry.<\/p>",
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