Cowrie Shells to Virtual Currency
Somewhere in the remote corners of Madhya Pradesh, traders
in the local tribal market places accept cowrie shells as
a valid currency. Tribals in this area still barter a
cow for four pigs and paper currency is precious. On the other
hand, here we are at a stage where stock traders in metros are
logging online on the net to transact their business. Rapid
advances in technology and communication will see a drastic
change in the position of paper currency too.  Now
if you are a customer of ICICI Bank or HDFC Bank or Global
Trust Bank, your bank will pay your electricity bills, insurance,
cell phone bills and also transfer funds to your business client
online. In fact, on the newly launched service www.icicidirect.com,
you can even trade stocks and shares online. Net banking
or e-banking has been prevalent in the developed world for quite
some time. The number of online banks in Western Europe has
grown from 863 internet-enabled banks in 1998 to 1845 by the
end of 1999. In the US the number of people banking online is
6.3 million and 6.1 million trade online.
In India, only newly established banks have taken up this concept
because only these banks have been fully computerized.
Considering the fact that these services are offered free of
charge, the effort is commendable. Both HDFC and ICICI have
free demonstrations on their respective websites, which
are self-explanatory and can guide a first time user on how
to use the facility. Another bank offering this facility is
Global Trust Bank. While the sites of old public sector banks
like Canara Bank, Vijaya Bank are quite static with just application
forms and information on services available, the sites of ICICI
and HDFC can do online fund transfers.
 These
two new private sector banks have adopted the net wholeheartedly
and unleashed a host of initiatives to harness its full power.
At one end, they offer small, value added services like
utility bill paying facility, buying of shares and selling of
mutual funds. At the other, they are venturing into Business
to Business spaces to allow big corporations and their vendors
to conduct all their transactions online. This is taking place
on secure foolproof payment gateways which will pacify
anxious retail online traders.
With this concept, the net will offer one-stop financial
services to the average banking customer. This will increase
the total revenues per customer while reducing transaction costs
via the net. ICICI Bank's major drive began in March
1999 when it managed to get 4,000 registrations for its retail
banking Internet initiative. Today it claims to have
nearly 100,000 internet registrations and is planning to set
up kiosks so that people can walk in, conduct transactions and
walk away. HDFC Bank claims more than 45% of its transactions
are actually done on the telephone, or the ATM, or the internet.
It is quite obvious that this is due to lesser costs and also
convenience. So as time passes, it is natural that many more
banks will follow suit.
 The
advantages are clear and hard hitting.
- Banks can now process transactions much faster.
- Transaction timings won't be confined to 10 to 2 pm.
- It will be truly Anytime, Anywhere, Any bank facility.
- The transaction cost is reduced from Rs 45-50 to just
Rs 1-4.
- The ability to connect banking services to payments makes
it a seamless transaction.
For example, HDFC Bank has a tie up with utility companies
to pay phone bills from a customer's account directly to the
company over the phone or the net. (Read more about it in the
Net Banking article in our Trade and Commerce page) ICICI being
the first bank to introduce this feature with its www.billjunction.com,
has now launched Online Trading on its www.icicidirect.com
So after all is said and done, with this large potential, the
only hurdle now ironically is the customer. Of the HDFC
Bank's 650,000 customers only a 100,000 are using the net banking
facility. Despite the huge assurances of the transaction being
secure, the Indian customer is still wary of the net.
At present, the convenience of the net is most optimally utilized
by Non Resident Indians. NRIs can now open and operate
an account from any country and also transfer funds to their
relatives here with a click of a mouse. So eventually will
paper currency vanish one day? Just ask the cowrie shell
trader in Madhya Pradesh!
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