Internet banking or Cyberbanking, while relatively new, promises to be the way consumers, will bank in this new millennium. According to the data by Cybercitizen Finance, of the 58 million Internet user populations in July 1998, some 35 million (60 percent) were conducting some form of financial service activity via the Internet. Of these, over 18.1 million were managing their investments on-line. That was in 1998; by 2005, it is estimated that the total online population will exceed 300 million. In the US as of June 1997, based on information from 185 banks surveyed, the United States General Accounting Office (GAO), "projected rapid growth in online banking over the next year and a half as the number of U.S. banks implementing online systems is expected to increase about fivefold nationwide.
Additional Information
More recent data suggest that:
At least 3,610 federally insured depository institution - about 17 percent of all U.S. banks, saving associations and credit unions - offered some form of Internet Banking services as of February 1999. About 20 percent of these depository institutions offered fully transactional Websites…. According to FDIC and NCUA statistics, in the 11 months ending February 1999, the number of banks, thrifts and credit union with transactional websites almost tripled.
In Asia, a recent report by Asia Banker Journal (ABJ) reveals that Citic Ka Wah Bank of Hong Kong plans a HK$120 million upgrade of its information technology system to build an integrated financial and service delivery platform that encompasses retail, corporate and institutional banking. Cable and wireless HKT and HSBC have joined forces with Mastercard International to launch the i. Life Card - a smart card, which combines credit and debit functions, electronic cash, international calling service, and chip-based e-commerce. Taiwan Co-operative Bank has similarly launched an electronic banking department to move into the local e-commerce banking scene as part of its effort to promote electronic banking, Internet banking, online securities brokerage and e- commerce trading services.
In Australia, ING Bank has set aside A$3 million to promote its Internet Bank, according to the same report, and WESTPAC has launched the Business Internet Banking, which offers small businesses the same transaction and trading benefits that most global corporations enjoy. Unionbank of the Philippines has tied up with Diversified Financial Network to offer credit cards that may be used for online transactions, and the Bank of Korea's pilot service of the nation's electronic money, K-Cash, is to begin at a residential area in south Seoul.
In Malaysia, IDC Market Research Sdn. Bhd., in its recently published study, predicts that more than a million Malaysians will do their banking from home within four years. The research firm expects that users of local internet and intranet based online banking services will reach 1.1 million by the year 2004, with the total number of online banking accounts reaching 1.6 million, or 23 percent of all local Internet users that year. The Central Bank allowed the local banks to offer Internet banking services in Malaysia as of June 2000. So far, three banks have started to offer Internet banking services.
New Technology Requires New Law?
New information technologies such as Internet - allowing for the rapid acquisition, processing, transmission and application of information and secure and efficient communication from distance - have been transforming the whole of the services sector.
Through the use of these technologies, cyberbanking or Internet banking has emerged as a modern way of providing financial services to the consumers. It offers new possibilities for growth in this sector. On the other hand, a number of new problems, mainly of legal character, have appeared. These include contractual issues, evidence and burden of proof, security, liability, privacy and bank secrecy etc. To take full advantage of the possibilities, these problems have to be understood and overcame.
Generally in the financial services sector a wide range of activities which are now appearing on the Internet are subject to varying forms and degrees of law and regulation: banking, insurance, investment business, the offering of securities, the development of payment systems, money transmission and even the creation of value through a payment medium are all services currently being or about to be offered on the Internet. There should therefore be a concern about how the Internet will fall within the existing framework of laws and regulations. As far as banking sector is concerned, some legal scholars argue that:
The legal requirements associated with financial transaction will apply to those [online] transactions, just as they do for commercial activities in the physical world. As long a those cyberspace transactions are managed by a financial institution, there is little need for concern about compliance with legal requirements as financial institutions have many years of experience working within the framework of those requirements.
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