Virtual Internet Banks

Banks have traditionally been in the forefront of harnessing technology to improve their products, services and efficiency. They have, over a long time, been using electronic and telecommunication networks for delivering a wide range of value added products and services. The delivery channels include direct dial – up connections, private networks, public networks etc. and the devices include telephone, Personal Computers including the Automated Teller Machines, etc. With the popularity of PCs, easy access to Internet and World Wide Web, Internet is increasingly used by banks as a channel for receiving instructions and delivering their products and services to their customers. This form of banking is generally referred to as Internet Banking, although the range of products and services offered by different banks vary widely both in their content and sophistication.

Broadly, the levels of banking services offered through INTERNET can be categorized
in to three types:

• The Basic Level Service is the banks’ websites which disseminate information on different products and services offered to customers and members of public in general. It may receive and reply to customers’ queries through e-mail,
• In the next level are Simple Transactional Websites which allow customers to submit their instructions, applications for different services, queries on their account balances, etc., but do not permit any fund-based transactions on their accounts,
• The third level of Internet banking services are offered by Fully Transactional Websites which allow the customers to operate on their accounts for transfer of funds, payment of different bills, subscribing to other products of the bank and to transact purchase and sale of securities, etc.

INTRODUCTION 3
1 The history and consolidation of Pure Play Internet banking 5
1.1 PPI banks in the US 9
2 Online Banking in Europe 11
2.1 E-banking 11
2.2 Internet-only banks 12
3 Strategies and services of Pure‐Play Internet Banks 22
3.1 Legal aspects in EU 33
CONCLUSION 38
REFERENCES 40