Internet BankingInternet BankingKey IssuesKey Issues

Internet Banking Working Group

May 14, 1998

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Presentation plan

Key issues for European banks International co-operation Next steps

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Key issues for European banks From online banking to Internet banking Cyberfinance and eurofinance Standards Infrastructure Smart cards Regulatory environment Competition versus co-operation

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On-line banking and Internet banking

Opportunities and threats Online banking experience

• Limited competitive impact• Distribution channel complementarity

Internet banking anticipation• Major cost reduction• Value chain upheaval

Internet• a channel• ..or a placenta ?

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On-line banking and Internet banking

How reliable are channel transaction costs data ? Hidden Internet costs

Who will benefit from cost reduction ? Existing players Newcomers

Service pricing What coverage? What service offerings? Bundle or unbundle?

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Internet banking Opportunities

New services• Lifecycle asset management• Transaction management• Trust infrastructure management

Threats Lack of competitive differentiation Diminution of customer loyalty Disintermediation

• …or value displacement

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Internet and Euro Coping with a large-scale system overhaul What is the combined impact ?

On technology deployment• New architecture

On marketing approach On the market structure

From national to transborder retail banking

From national to transborder retail banking

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Standards Adopting US standards ?

OFX Integrion SET

Adapting US standards ? How to organise input

The future of national standards HBCI Etebac

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Internet banking standardsEDIFACT,(SWIFT?)

SSL SRT OFX OBISET OTPTransactionStandards

Content

Confidentiality/Integrity

Authentification

FreeChoice

Free Choice

Free Choice:- PIN/TAN- Dig. Certif.- Smartcard

SSL

HBCI

SSL

Integrion

Merged in the future

SSL

Source: Brokat

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Standards Which forum ?

The role of traditional standards bodies• CEN very active in electronic commerce

The role of financial industry bodies• ECBS

Which scope ? Technical Business User interface

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Infrastructure What are the requirements ? Geographical coverage

National or European Basic architecture

Intranets or extranets ? Integration or interconnection ?

Project development and ownership Public, private or cooperative ?

• Who should be responsible for Development? Operations? Conflict resolution ?

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Smart card use

How critical ? Optional Integrated

What services ? SET Enhancement Generic security Stored value

Which standards ? How useful is EMV ?

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Regulatory environment Transborder regulation Trust infrastructure oversight Customer protection Treatment of new players

Virtual banks Technology providers and system integrators

New risks Remote banking System reliability

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Competition and co-operation

New rules of the game• Banks and other financial services suppliers• Banks and technology providers• Banks and their customers

Co-opetition

Competition Co-operation

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International co-operation Banking Information Technology Secretariat (BITS)

Part of The Bankers Roundtable• 125 largest bank holding companies in the United States, represented

by their senior executivesCreated to ensure banking sector input into

• Standard setting• New payment architecture design and implementation• Public policy discussion of remote banking and related issues

Organisation• High-level board• Small secretariat• Working group network

Security & Risk

Assessment Steering

Committee

Security & Risk

Assessment Steering

Committee

Board of DirectorsBoard of Directors

Catherine AllenCEO

Catherine AllenCEO

BITSAdvisory Group

BITSAdvisory GroupBITS StaffBITS Staff

Research & Communic-

ationsSteering

Committee

Research & Communic-

ationsSteering

Committee

de novo Meta-

Architecture Working

Group

de novo Meta-

Architecture Working

Group

Industry Review

Working Group

Industry Review

Working Group

StandardsSteering

Committee

StandardsSteering

Committee

Legal and Public Policy

Working Group

Legal and Public Policy

Working Group

PrivacyWorking

Group

PrivacyWorking

Group

International co-operation BITS Structure

International Co-operation BITS: Selected Initiatives

Privacy Security

• Certificate Authority Business Case Analysis Global Security Architecture White Paper

Meta Architecture Standards

• OFX/Gold Process - Draft II• Smart Card Standards White Paper

Legal and Public Policy• Digital Signature Legislation• White House Electronic Commerce Strategies

International Co-operation BITS and FIWG

Several informal meetings Mutual interest in co-operation Priority areas

• SET Smart card integration Governance

• Trust infrastructure and Security• Standards development

Next step• High-level meeting late June/early July

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Next steps Common projects

Transborder projects Common infrastructure Standards

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Next steps Is there a need for an Internet banking forum ?

Bringing together • Financial institutions and technology providers• Traditional players and newcomers• Public authorities and private sectors

Allowing a sharing of data and experiences Developing consensus on critical issues