Transcript 投影片 1 - Hong Kong Shue Yan University

Financial Institution
Econ 310
Group 7
Can traditional bank be replaced?
Background
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Hong Kong : International financial center
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Banking Industry : a significant position
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Local banking community
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Foreign banking community
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over 300 banks from 40 countries
Background
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Foreign bank
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provides competition
new ideas
distinctive banking products
Advanced technology in 21st century
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electronic money products
electronic delivery channels
Background
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Electronic money
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consumers pay conventional funds
store the value on a computer device
purchase goods
E.g. Octopus
Background
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E.g. Visa Cash
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Mondex
Background
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This project :
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Internet Banking
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Future development
Traditional Bank- Credit Rating
C
redit Risk
 A sset quality Risk
 M anagement Risk
 E arnings Risk
 L iquidity Risk
Internet Bank- Special Risk
L
iquidity risk
 O peration risk
 C redit risk
 A reputation risk
 L egal risk
Which risk can be controlled?
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Liquidity risk
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not able to meet its obligations to settle
full value when they come due
result in opportunity costs, defaults on
obligations or costs associated with
obtaining the funds from other source
lead to operational failure
Which risk can be controlled?
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Credit risk
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risk of a borrower or counterparty
failing to meet its obligations
increased by a loan through an internet
banking channel
approving loans electronically
Basel II - Operations Risk
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Operation
 Inadequacies or failings in the
processes or systems
 Lack of control to detect damage
from hacker, fraud, Trojan Horse
 Arises from fraud, processing
errors, system disruptions or other
unanticipated
Basel II - Legal Risk
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Legal actions or uncertainty in the
applicability or interpretation of contracts
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differences between electronic
and paper-based processes
uncertainty over laws govern a
specific internet banking
transaction
legally binding electronic
agreements overseas?
Basel II - A Reputation Risk
A Reputation Risk
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Unauthorized activity on customer
accounts
Disclosure or theft of confidential customer
information
Failure to deliver on marketing claims
Loss of trust
Basel II - A Reputation Risk
Year
Number of fraudulent website, emails or
telephone system
06
22
05
26
04
32
A Reputation Risk - clipping
Security of Internet Banking
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The liability for loss of customers
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In accordance with the Code of Banking Practice,
“unless a customer acts fraudulently or with gross
negligence such as failing to properly safeguard his
device(s) or secret code(s) for accessing the ebanking service, he should not be responsible for
any direct loss suffered by him as a result of
unauthorized transactions conducted through his
account”.
Security of Internet Banking
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How customers safeguard their data security
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Do not use your Online Banking Customer ID and Password for any
other internet banking accounts, on-line memberships or internet
services.
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Do not share your online banking customer ID or Password with anyone.
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Do not make up Your Password with easily recognizable combinations,
such as your birthday, phone number or vehicle license plate number.
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Do not use the same password for different online services, and
change your password regularly.
Security of Internet Banking
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From June 2005, individual banks offered different two-factor
authentication methods to customers. The Two-factor
authentication is a security measure recognized by the
information security industry to combat Internet banking frauds.
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•
Three common methods:
Digital certificate
Security token-based one-time password
•
SMS-based one-time password
•
Development of Internet
Banking in Hong Kong
Hong Kong i-banking Practices
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Services provided by the Hong Kong ibanking:
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account management
fund transfer
investment management
E-IPO services
insurances services
loads services
MPF account management
Hong Kong i-banking Practices
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Three management arrangements should be
considered:
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Internal communication management
Web development management
Customer relation management
Internal communication
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The senior management has kept clear
communication with
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the technical and operational staff on the system
design
the policies and procedures of i-banking
operations
Internal communication
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On-site examination programme by HKMA
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focus on authorized institutions’ e-banking
activities, technology risk management and
business continuity planning
update with the skills and knowledge related to ebanking
→Improvement on the security and services
quality of i-banking in Hong Kong
Web development
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Characteristic of Hong Kong i-banking sites:
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easy to use
sufficient assistance and guidelines.
convenient
The security systems of most of the bank
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advance information protection system
personal identification system.
Customer relation
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a critical factor affecting the success of any
business
i-banking shifts the relation of contact
customers and bank tellers
↓
customers and network linked with banks
Customer relation
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Traditional banking:
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budget a large portion of money
train up their staffs to be polite and patient and be
able to work efficiently
i-banking
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upgrade their i-banking system
new services are always introduced
I-banking hotlines to eliminate confusing or for
assistance
A case study of HSBC Ibanking
A case study of HSBC Ibanking
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HSBC I-banking is called online@hsbc
8 main functions:
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Money transfer
Time deposit management
View & pay bills
Investment management
Credit cards services
MPF Accounts
Insurance services
Personal loans approval
Money transfer
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Transfer money regardless of the regions
Transfer in 45 days advance can be set
Reference number is given after each
transaction.
If problem arose from the money transaction,
reference number can be used to ask for
assistance from HSBC
Time deposit management
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2 types of time deposit:
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HK dollars
Foreign currency
Current interest rate and details of time
deposit can be check anytime
View & pay bills
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Over 100 bills types available
45 days advance bills payment operations
can be set
Auto pay function for the bills can also be set
Investment management
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Different local securities, bonds and unit trust
can be bought and sold online.
Update quotes and market information is
available
Subscription for IPOS is available with a
lower handling fee
Credit cards services
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HSBC credit cards and Octopus Automatic AddValue Serviceonline can be applied freely online
Application forms are pre-filled with customers’
information
Credit cards limits, balance, bonus points left and
statement can be viewed online
Personal data can be updated and request to
increase their credit cards limit
MPF Accounts
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Balance and contributions can be viewed and
switched
Fund performance can be checked
Claim can be made by just doing some
simple clicks in online@hsbc
Real time process is used
Update information on banking services and
on many financial activities is provided
Insurance services
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Insurance services of HSBC in online@hsbc
including:
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Travel
Home
Accident insurances
Details of the insurance can be obtained
Claim can also be made
Personal loans approval
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Interest rates of personal loans package can
be checked
Personal loans can be applied online
Mortgage calculate is provided for customers
to easily calculate their mortgage rates
Security system of
online@hsbc
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128-bit Secure Sockets Laver (SSL) encryption
technology is installed
Firewalls is set up within online@hsbc
Correct combination of i-banking ID and password is
needed for accession
Online access will be disabled if 3 consecutive
incorrect passwords have been attempted
Inactive accounts will be logged off automatically
Advices are given to the users
Future Development of
Banking
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Internet Banking
However, Problems arisen on
Deposit of Money
Multi-purpose Card
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Concept of Electronic money
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consumers pay conventional funds to an issuer of
electronic money
in return for storing the value of those funds on an
computer device (chips) held by the consumer.
Use the electronic value to purchase
Multi-purpose Card
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Concept of Electronic money
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Issuer of the electronic money can earn interest
on the investment of the funds received
Issuer incurs a liability to make good claims on it
by holders of electronic value such as merchants
Multi-purpose Card
Issuer of a multi-purpose Card is
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taking money from the public
investing it,
in return for providing a means of
electronic form.
Electronic Purse
Function
payment in
Multi-purpose Card
Future Development
Sources of
Fund ( Input )
At the last Stage
Traditional bank can be replaced!
Q&A