SEMINARSKI RAD

Predmet: Engleski jezik 2

Tema: Money and bussines banking

Profesor: Student:
Maja Gocic Nikola Milenkovic PE10/21

Vranje, 2023
The Content:

1. Introduction...............................................................................................… 1

2. Eletronic banking...................................................................................….. 2

3.E-bussines…………….........................................................................…… 5

3.1. Developmet of eletronic bussines..............................................................6

3.2. Payments via the Internet..............................................………………… 7

3.3. Means of payments………………………………………………………7

3.4. Internet payments sistems……………………………………………….10

4. Internet banking……………………………………………………………13

4.1. Forms of appearance……………………………………………………..15

4.2. Advantages and disadvantages of Internet banking……………………..16

5. The advantages the eletronic payment transactions bring to the bank……18

6. Conslusion…………………………………………………………………20

Literatura....................................................................................................…..23
1.Introduction

The Internet offers an alternative and more portable way of doing online
banking. The Internet is a worldwide collection of interconnected computer
networks that connect different groups of users. It has the potential to become
a colossal borderless market covering tens of millions of customers. Many
companies are going online to increase their business, and numerous "virtual"
organizations have been established. Virtualization is the removal of
limitations of time, place and form and is possible due to the convergence of
computer and telecommunication technology and visual media manifested
through the Internet. It gives more control to customers by giving more choice
to the customer through access to more information at the push of a button.
When costs are considered, in the case of virtualization of deliveries over the
Internet, the savings are large. Several studies have concluded that the
Internet is a much more cost-effective delivery method than traditional
methods used to deliver financial services. For example, a study by Booza,
Allen, and Hamilton found that the cost of a typical full-service branch
banking transaction is $1.07, compared to 54 cents for telephone banking, 27
cents for ATM banking, and 1 cent for a transaction carried out. over the
Internet.
Because the Internet has the potential to reduce costs, improve convenience,
and increase customer awareness, the customer benefits the most. Customers
will be able to browse the electronic marketplace, check deals, conduct their
own transactions and even manage their own bank account.

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2. Electronic banking

"Internet way of life" or "Internet way of working" is a new way of life and
work, expanded by taking advantage of digital devices and digital connections
and, in connection with that, digital information, according to B. Gates, with
the aim of establishing current business reflexes and constant, interactive
strategic thinking.
The phenomenon of the Internet is in what the Internet provides, the changes
it initiates, it is a new mass media, a new culture and a new way of thinking
(B.Radenkovic, M.Ivkovic).

The foundations of the Internet were laid in the 1960s in America, although
the Internet as a term first appeared in the 1980s.
The first project to build a unique network is ARPANET (Advanced Research
Project Agency Network). It was funded by the US Department of Defense. In
the 1970s, universities in the USA joined this network, and in the 1980s,
academic institutions in Europe joined this network.
The defining of the communication protocol (TCP/IP - Transmission Control
Protocol/Internet Protocol) in 1974, with the final version in 1978, was of
crucial importance for the expansion of the network.
A turn in the development of the Internet occurred in the 1990s when it went
outside the academic environment, i.e. the legalization of commercial
activities on the Internet.
At the beginning of the new millennium, the Internet becomes a global
network.

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Although the Internet acts as a single worldwide network, it is a decentralized
organization united by a unique work technology. As such it has no owner.
Although there are standards, there is no one to monitor whether they are
followed.
Technically, the Internet is described as "the network of all networks," which
operates uniquely on a global scale, although there are many computer
networks that are not included in the Internet. It is true that the Internet is a
global computer network consisting of thousands of interconnected networks
that use the TCP/IP protocol (TCP/IP - Transmission Control
Protocol/Internet Protocol) for mutual communication. This protocol enabled
the universality of connecting computers of different architectures and the
independence of communication from Internet network connection
technology for special purposes, and "intranet" and "extranet" are specially
protected.
The Internet is essentially much more than a computer network. Its essence is
in what the Internet can provide by applying it in the business process, and
that is why the term "Internet technologies" is most often used. Only their
application makes the Internet an "information market", supporting "research
activities" and "business activities".
Modern digital multimedia technologies on the information and
communication platform are a necessary basis for global business processes:
- business communications
- electronic money transfer
- electronic transfer of technical documentation
- business transactions
- reservation and purchase services
- other processes.

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And in order for companies to operate successfully, they must become part of
global business processes.
Carrying out complete banking business directly from home, without physical
presence in the bank, is today a common occurrence in developed countries of
the world. Banks use different ways to enable clients to perform banking
transactions from home as efficiently and safely as possible.
Internet banking or cyber banking (CyberBanking) represents the
performance of banking business directly from home, through the Internet.
When performing banking transactions in Internet banking:
• no special software is required and there is no data stored on the client's hard
disk (higher security when performing transactions
• access to the bank and account is possible from anywhere in the world
(provided that there is a computer connected to the Internet at that location)
• the bank takes care of maintaining its own hardware, software and security
system

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 3. E-business

Traditional business is based on the use of structured paper documents in

previously defined and generally accepted communication between
participants in the business process.
Business in which business transactions are primarily carried out
electronically is known as electronic business (e-business).
From different points of view, electronic business can be defined in different
ways.
From the point of view of communications, it represents the delivery of
information, products/services, or payment via telephone, computer network,
or some other means.
From a business point of view, it represents the application of new, digital
technologies over already automated business transactions.
From the point of view of services, it is a tool that provides service users with
information about companies and offers services with better insight into the
offer, faster and cheaper.
From an online perspective, it provides the possibility of buying and selling
products and information via the Internet and other online services.

In general, electronic business is "buying and selling of information, products

and services via a computer network and support for any type of business
transaction via digital infrastructure."
The most popular channel of electronic business is the Internet.
There are two basic models of electronic business:
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- B2C – Business to Consumer
A form of business on the Internet that provides a direct interface between
businesses and consumers. Consumers order products and services
electronically from companies. The Internet provides various possibilities for
the company's marketing performance and enables mass consumer access to
products and services electronically.
- B2B – Business to Business
It includes electronic business that takes place between companies (from
discovering/finding suitable goods, negotiations, ordering, issuing invoices,
payment, distribution of documentation, and sometimes even specific goods
or services, support,...).

There are even more complex forms of business:

- B2B2C (Business to Business to Consumer) i
- C2B2C (Consumer to Business to Consumer), which are a combination of
the previously described, as well as
- C2C, a new form of trade directly between consumers.

3.1. Development of electronic business

E-commerce is a long-term business. It is not enough to just implement new

technology. It is necessary to make many organizational changes, to create a
new business model.
Electronic business on the Internet starts from the »Web site« - presentational
character. In the next phase it is E-business, buying and selling, then it

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expands by sharing information and growing into an intelligent e-business
"end to end" business process.
Electronic business mostly means doing business via computer, but with the
further spread of mobile telephony, more and more business transactions will
take place via mobile phone. According to forecasts by the Gartner Group, in
2004 at least 40% of B2C electronic commerce will take place via intelligent
mobile phones using the wireless application protocol (WAP - Wireless
Application Protocol).

3.2. Payments via the Internet

Payment models in Internet business

The two basic payment models are:

- Cash-like, a system that implies a subscription. In such systems, a certain

amount of money is taken from the customer before the trade is completed.
This group includes: Smart card, electronic cash and bank checks.

- Check-like, a system where payment is made at the moment of purchase

(pay-now) or after the purchase is made (pay-later). An example for the pay-
now group is ATMs (Automated Teller Machine), and for pay-later is an
example of paying with credit cards.

3.3. Means of payment

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- Electronic or digital money - represents an electronic replacement of paper
money, and as such can be stored and spent.

- Electronic checks – an electronic document, digitally signed, similar to a

signed paper document, which instructs the signatory's bank to pay the
amount of money from the signatory's account within a certain period. An e-
check can be sent and received like any e-mail.

- Credit cards - data from the card is exchanged via the Internet, without
encryption, the problem is the secrecy of the data and the identity of the real
card owner;

- Encrypted credit cards - credit card information is sent in the form of an

encrypted message, the recipient (seller) checks the customer's identity as a
credit card owner, the seller checks the card information and digital signature,
the bank sends a confirmation of correctness;

- Third-party confirmation - credit card numbers do not travel over the

Internet, but through a financial intermediary.
Ways of payment via the Internet

• Phone-card combination

• Payment by cash on delivery - the user finds the requested goods on the
Internet
- Orders by logging in on the website.
- The goods are delivered by a delivery person or postman
- Payment will be made directly to the delivery person
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- The bad side is that a part of the goods is returned, it has not been taken
over, and the costs have already been incurred.

• Payment via giro account - the user finds goods on the Internet
- From the website, he receives the price and the giro account number to
which he should pay the money.
- The user pays in the bank and sends a confirmation to the merchant.
- The goods are then delivered by post or courier.
- The downside is that the user has to go through a big procedure with the
bank, and the goods arrive later.

• Payment by card - Phase of information from the electronic catalog

- Phase of agreement and contracting / registration on the merchant's side,

verification and confirmation of authentication, service selection and
ordering, checking of the customer's account balance and creditworthiness,
order confirmation/.
- Payment phase / sending encrypted data, checking and confirming encrypted
data, sending decryption key and sending debit invoice, decrypting and
confirming the service, sending confirmation/.
- Banking post-processing phase / receiving data on executed transactions,
debiting the user's account, forming summary orders by merchants, making
payments to merchants /.

• Electronic checks
• Electronic order
• Payment via third-party confirmation / First Virtual /

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- On the merchant's website, the customer finds the requested goods and fills
in the FV PIN
- The merchant checks the FV PIN
- The merchant initiates a payment transaction via FV by sending him the
following data: merchant's FV PIN, customer's FV PIN, amount, currency,
product description.
- First Virtual sends an e-mail message to the customer, to which he should
reply and confirm the purchase. This message contains the following
information: merchant's name, amount, product description.
- The buyer confirms with yes or no, whether he accepts the purchase or
rejects it. It does this by e-mail. If he does not respond within a certain period,
the transaction is cancelled.
- First Virtual sends a message to the merchant that the sale has been accepted
and that after the 91st day the money will be paid into his account.

3.4. Internet payment systems

More than 150 different payment systems are defined on the Internet:

- Payment with ordinary cards: First Virtual

CyberCash E-cash

- Payment with smart cards: NetCash

Mondex

The difference between E-cash and NetCash methods of payment /using a

regular or smart card/ is in the flow of money, which in the first case goes

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from the bank, and in the second from the buyer directly to the seller, because
he owns the money on his smart card. In both cases, the buyer first performs
the transaction - in both directions, with the bank. In the first case, the seller
informs the bank and asks for a confirmation of the completed payment, and
in the second case, he transfers the money to his bank.

- Micropayments: Millicent
NetBill
CyberCoin

These systems, as the name suggests, are used for small payments /under $1/.
Millicent's system implies that the customer buys a card, like a phone card.
The money is taken off her. It is forwarded through a broker who collects it
and periodically delivers it to the seller.

- Russian payment systems: PayCash

Cyberplat

They are done in cooperation with specific banks. PayCash ensures complete
anonymity, the user opens an account via the Internet, receives a PIN and a
PASSWORD and further disposes of it using the aforementioned codes. The
bank uses adequate security systems. CyberPlat works using cards and
electronic checks. The buyer forms a basket with goods, the seller digitally
signs this request and it is considered an invoice. The customer with his
signature - signs the bill, which is now considered a check. The seller delivers
the check to the bank and the money is transferred from the buyer's account to
the seller's account, of course with all checks by the bank.
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- French payment system: Cleline

- Banking systems: Billpoint, Ecount, EmoneyMail /owned by

WingspanBank/, Gmoney, MoneyZap, PayMe, PayPal.

- Non-banking systems: Bills, Checkfree, DirectPayment, MoneyCentral,

YahooBillPay, VirtualPay, StatusFaktory.

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4. Internet banking

The beginning of PC banking or Internet banking dates back to 1980, but the
development of Internet banking and the growth of the number of users was
slow until the beginning of the nineties. In May 1995, Wells Fargo Bank
created the first Web banking program for doing business on the Internet. In
the same year, the first specialized Internet bank in the world was founded -
Security First Network Bank, headquartered in Atlanta, USA.
In April 1996, the millionth user of Internet banking services was registered
in the USA, and in the following 18 months, the number of users of Internet
banking services increased to 4.2% of all American households. In December
1997, the number of Internet banking users rose to 4.2 million users.
The development of the Internet and the growth of the number of Internet
banking users is closely related to the development of information
technologies.
Faster, safer, easier and simpler business on the Internet are the goals that the
increasingly demanding financial market sets before banks and other financial
institutions. In order to fulfill the aforementioned goals, the volume of
investment in information technologies is drastically increasing in the world.
Banks will strive to modernize their business every day and make it as easy as
possible for their clients to do business.
The reasons why banks appear / work / on the Internet are the following:
Creating the image of an innovative company, which is able to offer its users
the most modern technological solutions.
- Better and more interactive possibilities. For a bank that fights for each of its
clients in market conditions, the most important thing is communication with
them. In classic conditions, the bank could communicate only during working
hours, or through an information counter that would work continuously. This
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way of doing business created limitations in communication. The interactive
possibilities of communication via the Internet are practically unlimited, and
it is only a matter of what level the bank is interested in getting involved.
- The possibility of rationalizing the potential of the bank. By transferring
certain services to the Internet, the bank reduces business costs, because it
does not have to open a new office space, equip it and hire new employees to
increase the number of clients. This is particularly interesting for those
geographical regions where the bank does not have a network of branches or
has a small number of customers. With the Internet, the bank can cover a
significantly larger geographical area without opening new branches. A large
amount of information that the bank can make available to its users is, in
principle, not available to a wider circle of its users. This refers to the
possibilities of placement and lending under the most favorable conditions,
foreign payments, advisory functions, etc.
- Self-service banking is useful, both for the bank and for the user, because
the user has services 24 hours a day, 7 days a week, and the bank works 24
hours a day without increasing the number of employees.
- With its appearance on the Internet, the bank proves its competitive
capabilities and its development as a solid, stable and technologically
advanced company.

The experiences of more advanced countries show that a bank without a

developed electronic banking system will no longer be able to survive. The
reason for this is the competitive offer, i.e. the need for better quality financial
services.

From the point of view of consumers of banking services, it is to be expected

that lower bank costs result in higher interest on deposits, lower commissions
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on services and especially the possibility of paying online /free!-/. It is not at
all insignificant that they do not have to wait in lines, waste time and all this
only during the working hours of bank counters.

4.1. Forms of appearance

Banks are conservative institutions by nature. In the beginning, the banks

remained on the sidelines, but by looking at the advantages and problems,
they started with information only, then with two-way communication, and in
the third step with transactions.
- Informative presentation is a one-way communication where banks only
introduce themselves to their existing or new, potential users via the Internet.
It mainly has an advertising character. Most banks have done it.
- Two-way communication between the user and the bank - via e-mail or
interactive access to a service. This is also data of a marketing nature, but
there is a possibility, with the user's identification and authentication, that the
bank will make additional information and services available to him.
- Banking transactions on the Internet are the highest level of communication
between the bank and the client.

When talking about internet banking, two forms of work are understood.

The so-called on-line banking service requires the installation of software on

the "client", that is, on the user's PC, so it is also called "software-based".
Without that software, the user cannot work. Therefore, it is limited to work
only from one PC. Software for this purpose are Quicken, Microsoft Money
and others.

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Internet-based banking - means access to the banking service from any
computer connected to the Internet, from home, work or travel.

Banks that are 100% on the Internet, that is, that do not have a "physical
presentation", offices, counters, are being considered in particular. The
banking they offer is Internet-based, that is, they can be accessed from any
computer on the Internet, without special software.

The most common transactions of banks on the Internet

- Access and overview of user account balances

- Records of all transactions
- Payments
- Money transfer from account to account
- Change of information
- Ordering checks
- Contacts.

4.2. Advantages and disadvantages of internet banking

Advantages of internet banking

Internet banking has a number of advantages compared to the so-called

traditional (branch) operations of banks. The advantages are mainly reflected
in the unlimited time and space, speed of transactions, low price and a wide
range of banking products and services.

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Disadvantages of Internet banking

The disadvantages of Internet banking are most pronounced in the absence of

security when conducting business, legal (non)regulation, lack of privacy,
alienation and aversion to innovation, and the danger of misuse of Internet
banking for criminal purposes.
Security, that is, the lack of security and protection systems on the Internet are
crucial factors in the growth and development of the Internet.

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5. The advantages that electronic payment transactions bring to the
bank

1. Data entry and control of payment orders is left to the client. It is about
thousands of orders that would otherwise have to be entered and controlled by
bank employees.
2. The price of an individual transaction is 10 to 15 times lower than the price
of processing a transaction in the classic way over the counter /8/.
3. Providing a better service to clients at the same time as taking over the
management of their account / from ZOP/ in the bank.
4. Rapid expansion of the client base in a wider geographical area, because
the client can entrust the management of his account to any bank - that is,
even where the bank does not have any counter in the area where the client
lives and works.
5. Reduction of costs through unnecessary opening of counters and
employment of counter workers.
6. Reduction of paper costs as well as postal costs in daily business because
they are formed at the client (orders, statements, PTT stamps).
7. Taking over clients from banks that do not offer electronic banking means
an increase in the number of clients and profits from this business.
8. Very easy takeover of a large number of clients in a very short time,
because the number of bank employees is not a limiting factor.
9. Reduction of lines in banks, because a bank that works in a classic way and
has a large number of clients can expect customer dissatisfaction by waiting
in long lines.
10. Electronic banking forces a high degree of data access protection both on
the client's side and at the bank, which is not the case in classic business.

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11. The possibility of redirecting counter workers to other jobs / e.g.
marketing activities for the sale of electronic banking services, which would
increase even more the number of clients determined for a fast and
comfortable way of working, from their offices.
12. The possibility of establishing new market channels of business
communication, in the bank-client-bank relationship.
13. And much more.

It would be realistic for the bank to gradually add new services such as credit
operations, securities operations, etc. to the electronic payment system (which
was introduced on January 1, 2003) and thereby create a new service that is
fast, reliable and at an acceptable price - electronic banking services for its
depositors.

On the other hand, the installation of electronic payment infrastructure can be

used for the installation of electronic banking, which achieves significant
savings in the purchase of equipment. The fact is that the new technology of
future electronic payment transactions in banks will become a recognizable,
comfortable way of working for clients, so it is normal that the same comfort
will be required for other bank services. The advantage will be given to those
banks that saw such a trend and approached development in a modular and
flexible manner with clear intentions to build such services.

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6. Conclusion

The development of Internet technologies everywhere in the world, including

in our country, has led to the possibility of doing business electronically. It is
a complex operation that requires the engagement of experts from various
fields and considerable financial investment. Business and financial subjects
in the RS are interested in electronic business for easier communication with
domestic and foreign partners and commercial advantages on the market.

The beginnings of Internet banking are linked to the USA. The first banks to
provide complete Internet banking products and services were Wells Fargo
Bank and SFNB Bank. From that time until today, over 200 global banks
offer their clients a complete assortment of Internet banking products and
services.

Internet banking is the fastest, most economical and most efficient way of
conducting banking business. Internet banking makes it possible to perform
banking business 24 hours a day, 365 days a year, directly from home or from
anywhere in the world where there is a computer and an Internet connection.
The advantages of the Internet in relation to classic (branch) banking are
reflected in the unlimited time and space, the speed of transactions, low prices
and a wide range of banking products and services. In addition to the obvious
advantages brought by doing business on the Internet, Internet banking also
has certain disadvantages, primarily expressed in the form of lack of security
in business, legal (non) regulation, lack of privacy, alienation, aversion to
innovation and the danger of misuse of Internet banking for criminal
purposes.

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Internet banking is a recent phenomenon, which has been taking place, at a
faster or slower pace, for the last thirty years. The banking industry is quite
inert and prone to traditional and proven methods, so a real revolution in the
field of banking is yet to come.

The Internet is an independent computer network that unites information,

people, telecommunications and computers. From a network primarily
intended for military purposes, it has grown into a network that unites the
entire human population and is available in every corner of the world. Banks
have accepted the Internet as a tool for providing the most efficient system in
the performance of banking business. The main task of banking institutions in
the world will be to ensure the highest quality, easiest, most efficient and
especially safest performance of banking operations on the Internet. Serbian
banks will have a long way to go until they build their own computer systems,
capable of enabling smooth and safe Internet banking operations.
The two basic models of payment via the Internet are cash-like and check-
like, while the means of payment are: electronic or digital money, electronic
checks, credit cards, encrypted credit cards and third-party verification. Ways
of payment via the Internet can be a combination of phone cards, cash on
delivery, giro account and card payments. Payment systems include ordinary
cards, smart cards, micropayments and Russian payment systems. The most
common tasks of banks on the Internet are: access and review of user account
balances, records of all transactions, payments, transfer of money from
account to account, change of information, ordering of checks and contacts.

The development of technology has led to the automation of business and to

the improvement of the delivery of financial services. Initially, automatic

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teller machines (ATMs) were introduced, then EFTOPS, telebanking, online
banking, smart cards.

Legal regulation is of particular importance for the reliable functioning of

electronic business. The »Law on electronic business and electronic
signature«, which is in the process of being passed in our country, is a
necessary prerequisite for the legal basis of electronic business, as well as for
inclusion in international organizations and flows.

For the banking sector of the population, the Internet is a new distribution
channel, which offers a shorter time needed to perform banking transactions
and greater spatial convenience than the traditional branch banking sector,
thus becoming attractive to large and fast-growing segments of users of
banking services.

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LITERATURA

(1) Prof. dr Božidar Radenkovic, »Elektronsko poslovanje stanje i

perspektive«, ppt prezentacija, specijalisticke studije, 2001-2002.
(2) Prof. dr. Nahod Vukovic, »E-business«, ppt prezentacija,
specijalisticke studije, 2001.-2002.
(3) Dr Vojislav Vaskovic, »Bankarstvo na Internetu«, prezentacije sa
specijalistickih studija, 2001-2002.
(4) M. Ivkovic, B. Radenkovic, Internet i savremeno poslovanje, 1998.
(5) Bil Gejts, Poslovanje brzinom misli, 2001.
(6) V. Pantovic, S. Ðinic, D. Starcevic, Savremeno poslovanje i
internet tehnologije, 2002.
(7) Pexim, »Put do uspešnog E-banking rešenja«, Zbornik radova,
Vrnjacka Banja 2001.
(8) Zepter Komerc Banka, Banja Luka, »Sistem elektronskog
bankarstva ZKB«, Zbornik radova, Vrnjacka Banja, 2001.
(9) NetseT d.o.o., »Tehnologije zaštite elektronskog platnog prometa«,
Zbornik radova, Vršac, 2000.
(10) RB General Electronic, »E-Banking system«, Zbornik radova,
Vršac, 2000.
(11) Expertski grupa, »Nacrt zakona o elektronskom poslovanju i
elektronskom potpisu«, april 2001. www.gov.yu

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