Financial Services in the Internet Era

Kamini Shah
Faculty Member in Financial Management
SEMCOM College
Vallabh Vidyanagar
E-mail :

Carrying bundles of notes for shopping, standing in long queues for paying utility bills , bringing home loads of groceries may soon turn history. With the advent of Internet and Credit Cards, the above is close to reality. E-commerce has become the buzz word of new millennium. The world wide buying over internet have reach approximately $20 million, a whopping 233 per cent rise over the $6.1 billion sales for 1998. Value based financial services have become a new economic imperative.

Many innovative financial services have evolved, during recent times, to cater the growing needs of service oriented customers. Financial services can be broadly categorized into two groups : Fund-asset based services and Fee-based / advisory services. We shall look into two of such services Retail Banking and Credit Cards, which has innovated various financial products with the development / rise of Internet –driven e-commerce.

Retail Banking :

In today's electronic age, adapting to Internet has become a matter of survival for banks. A number of leading bankers and industry observers now predict that the internet will radically alter accepted practices in the financial services industry. A bank that is not equipped with a robust line of electronic financial services and capabilities for marketing to and communicating with individuals on-line will face a vexing dilemma. The on-line customer will judge a bank, on price, choice, service, quality of decision support information provided.

Some e-commerce related financial application that have evolve with advent of Internet and with support of technology are :

  • Consumer, Mortgage loans via internet, reduces hassles of paper work and provides earlier approval.
  • Web enabled kiosks placed in real estate offices to enable home loan applications.
  • Windows-based touch screens and Windows –based PC videoconferencing technology that link the customer in real time to a call center where accounts may be opened, investments purchases, loan applications and so on.
  • Web-enabled acquisition of new customers seeking financing for homes, cars, personal spending and small business operations.
  • TV banking using additional gadget that provides access to Internet, so as everyday services can be availed.
  • Modem enabled telephones that allow consumers to download electronic cash onto a smart card and deduct it immediately from their current accounts.

The new age customer will surely like to have their accounts with the bank, that provides the highly customized and personalized services on-line. They shall expect services such as applying loans on-line and have loan packages customized for them at low prices without sacrificing any of the advice and personal interaction they receive from a loan officer. They will also seek to pay bills electronically. And many will want to view and control their full portfolio of financial services –from bank accounts and loans to mutual funds and retirement plans serviced by various providers in one place.  

Credit Cards – The Plastic Money :

Competition among card companies suddenly seems to be hotting up. After decades of existence credit cards have finally found a place in the Indian market. Credit cards have emerged as a viable alternative to the consumer finance schemes prevalent in the market place. Credit cards is the fastest growing segment in the consumer lending business today. According to an estimate, the credit card market is expected to grow by a whopping 500 percent to touch 18 million cards by the year 2002, up from only 3.1 million in 1997.

Innovation is the latest buzzword with the credit card issuers. Gone are the days of standardized cards with uniform characteristics. Card issuers are coming up with unique deals and services such as :

  • Amex (American Express) has announces that those who spend more than Rs 45,000 per annum on credit and purchases, the annual fee will be waived.
  • 'Earning and burring' scheme have been introduced by many players, to promote use of credit cards frequently. In this scheme for every fixed amount of credit purchases, one point is given. The points thus accumulated can be reduced later with option like free hotel stay, free petrol, shopping vouchers etc.
  • Some offer, for every purchase of merchandise more than say Rs 10,000 instant and flexible financing. The EMI facility can be available instantly.
  • The approval of purchase is given instantly thereby eliminating the lengthy loan sanction procedures. The customer is not required to make any down payments or advance EMIs.
  • Globally valid cards i.e. spending abroad and paying in Indian currency back home is also a great idea for most card users.
  • The Rail credit card from Stanchart offers  business and other frequent travelers by trains the convenience of booking the tickets on phone.
  • Various utility bills, like telephone, electricity etc. can be paid through credit cards.


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Kamini Shah
Faculty Member in Financial Management
SEMCOM College
Vallabh Vidyanagar
E-mail :

Source : E-mail May 5, 2004




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