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E-Banking A New Horizon

English Essay on "E-Banking A New Horizon"

Today’s age is of Information Revolution, having an impact on the whole globe. The role of the financial sector in energizing electronic commerce cannot be over-emphasized. Now E-Banking, rather more recently, web-banking has taken over the traditional banking and e-commerce is on the verge of displacement in the hands of mobile commerce. Practices of using credit and debit card networks, electronic money and smart card are on the threshold of becoming a routine-matter in the West.

In USA, the G-7 Heads of State issued Economic Communique at the Lyons Summit, articulating the appropriate implementation for retail electronic payment system. On the constitutional front, the codification of substantial portions of commercial law through Uniform Commercial Code (UCC) is also under way. Again to ensure the perpetration of UCC, the National Conference of Commissioners of Uniform State Law (NCCUSL) is striving hard to adapt to new contractual facility. Other nations are not far behind. However, the fructification of US plans is evident from the heap of revenues they are earning.

In Pakistan e-commerce is still in its infancy and has many barriers to cross chiefly being, non-availability of proper infrastructure (telephone lines of steam age, frequent failure of power), limited users of the Internet i.e., 1% of the total population, insecure transactions on the Internet, high bandwidth rates and monopolistically rigid role of PTCL. However, this is encouraging that the government, has been alerted and steps are being taken to develop an e-culture in Pakistan.

The government has generously allocated Rs 15 billion for this purpose. It has also decided to construct S IT universities costing Rs 15 billion. It also is to sign a $30 million contract for setting up a tele-housing project. The government has succeeded in reducing the rate of Internet bandwidth from $360,000 to $30,000, which is cheaper than India and even Dubai. (Through all this exercise we might just be able to emulate India where software exports fetch over $4 billion annually)

Here the situation is grim.(9essay.com) A study conducted by SZABIST revealed that 83% of the sample (95) listed companies, show potential whereas 55% are devoid of any solid planning for adopting the Internet. A 54% of the sample considered a slow pace of Internet growth in Pakistan in future. However 39% would welcome this era by floating web-sites. But it was pathetic that 99% of the sample showed that Internet is applicable to cash payments and receipts, and else is not ecommerce.

Modern nations have taken to Information Technology and taken adequate measures to put it at the grass-root level and then gear it up to shoot to the top. Even China is enjoying 15% share of information and communication in the GDP and is simply three times ahead of Pakistan. Taiwan with 26%, Australia 37%, USA 40%, Western Europe 20% and Asian countries with 16% are among other game players.

The adaptation to information technology by the state on modern lines, can wake us up to the demand and supply fact ors stemming from the ‘rational consumers’ and ‘enterprising vendors’.

Though insurance companies are not much responsive to the universal wave of e-business all over the world and so in Pakistan, yet the chief thrust still rests on the remaining body of the financial sector. A major mode of business-to-business payment “Electronic Funds Transfer” (EFT), helps others like digital cash and e-cash.

The latter two forms deal with small amounts during business-to-consumer interaction. The fundamental concerns regarding electronic payment system are: security, lest it may lead to entanglement in one of the clauses of computer crime, authentication - both the seller and the buyer should have faith in electronic currency, anonymity - both the parties should be able to ascertain the transactions as extraneous, divisibility just getting divided into parts and subparts to facilitate the exactitude of the transaction. The developing countries, however, may face problems in maintaining the level of telecommunications services, in developing a legal framework, advancing money against digital signatures, formulating encryption and revising banking procedures that may lead to further resistance and indifference within the financial institutions.

    Still options are open for DCs:
  1. By grouping together the small and medium-sized enterprises, they can share costs while creating e-financial services. This synergy might usher in a stage where they can complement each other’s weakness and capitalize upon the mutual strengths. This mode has worked successfully in Latin American countries.
  2. Banks, being heavy potential users of electronic and digital technologies, can adopt new procedures entailing low marginal costs, enabling themselves to respond to the clients’ new demands. Growing standardization also opens new vistas for banks where they can enlarge their package of traditional services through new channels, as well as specifically designed new products.
  3. Government, by regulating but not over-regulating newly-emerging e-society, and by adopting e-business can itself become a client for different sectors. Through this it can have direct feedback about the governance - in the perspective of Internet advancement, and regulation of the economy in an attempt to steer it towards e world. On the other hand, it can create a demonstration effect for private enterprise thereby encouraging them to venture into this modern sphere.

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