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Virtual Banking

1. Introduction 1
2. Executive Summary 1
3. Trends in Retail Banking 2
4. About the Internet 2
5. Virtual Banking and Applications 3
5.01. Interactive Application 4
5.02. Smart Cards 4
6. Online Banking System Security 5
6.01. Cryptography 6
6.02. Firewalls and Routers 7
6.03. Trusted Operating Systems 7
7. Supervision and Regulations of Network Banking 8
8. Conclusion 12
9. References 14

Introduction

The Internet's explosive growth has initiated considerable activity in the financial services industry. For this industry, the Internet and, in particular, the World Wide Web, serve as a new vehicle for transmitting financial information, comparable to the invention of the telegraph 150 years ago and its use for transmitting financial information. Although computer networks only transport financial information, many predict radical changes including the "dissolution of geographic markets into virtual financial systems" and the "loss of national independence."
These predictions are simplistic and are not based on analyzing this issue. However, the facts are (a) financial services are information commodities and (b) public computer networks offer a fast, cheap way to trade information. Public computer networks can radically improve efficiency and competition in the financial services sector. Increased efficiency and competition rely on three characteristics of these networks:
· Marginal costs of selling financial information over computer networks are small - in fact, typically negligible - compared with more traditional information channels;
· Public computer networks are essentially borderless, giving rise to the cross-border provision of financial services;
· Setup costs to establish a financial services business on a public computer network are small, which increases the contestability of financial services markets

Executive Summary

The Internet is emerging as...