By Neora Shem Shaul

Have you thought recently of checking your current account balance on the Internet? From now on, you can. The starting signal was given last month, and banks in Israel began the great battle for the on-line customer. Meaning us. Without us leaving the house - certainly not in the kind of rain falling outside.

The starting signal was given by Supervisor of Banks Zeev Abeles on November 18, 1997, when he gave permission for banking information to be provided via the Internet to customers of Israeli banks. For the time being, the permit covers obtaining information only, but, in the future, actual banking transactions will be allowed. In short, 1998 will be a good year, or at least a very energetic one, in Internet banking in Israel.

The main task facing the banks is not, in fact, to persuade surfing customers that Internet banking is worth their while. They know it’s worthwhile, and are waiting impatiently. The banks will have a more serious job on their hands coping with themselves, meaning, assimilating Internet technologies, and the security practices which flow from them, into the traditional banking system.

Initially, the banks’ customers will be able to obtain information via the Internet relating to an individual account: balance enquiries; recent transactions; overall revaluation; future credit card debits; shekel loan revaluations; short term loan revaluations; provident fund and saving scheme revaluations; securities portfolio; foreign currency balance and movements; details of foreign currency deposits; and so forth. At the second stage, services will be expanded to include other areas, such as giving instructions relating to an account. The operation of these services will be approved in stages, and with regard to the lessons learned from operating the banking information services in the format now permitted.

To enhance the level of information security and the maintenance of confidentiality, the banks will only be able to offer the services to customers known to them for a year. The initial contact between a bank and a customer will not be allowed via the Internet. The banks will also be required to explain to their customers the security procedures in place to protect the information transmitted on the Internet. Incidentally, if this reassures you, the banks are obliged to report attempts at penetrating the system, and abnormal occurrences, directly to the Supervisor of Banks.

"It’s no wonder that the Bank of Israel is strongly emphasising information security, as this is a critical matter in operating commercial and financial services on the Internet," says Asher Yoshpa, general manager of Security 7, which specialises in information security solutions for the Internet. "New research published in the USA shows that most companies that operate commercial and financial sites on the Internet have experienced attempts at breaking in to their sites. The research shows that 80% of the companies encounter at least one serious attempt at a break-in per month. In fact, all the organisations covered by the survey reported a large number of attempted break-ins. The sites exposed to the largest number of attempts to penetrate them, according to the organisations’ reports, were commercial sites offering the possibility of executing transactions, among them, government offices, financial institutions, and organisations that sell products on the Internet."

It sounds frightening

"You have to remember that there are effective information security products, some produced by Israeli companies, which are considered world leaders. Without going into technical details, one can say that if the information and the network are protected cleverly and well, and various loopholes are closed, it is possible to provide a high degree of information security. By way of example, one can point to the many international companies that each carry out billions dollars worth of transactions a year via the Internet."

Even more reassuring is the point of view of Yossi Levy, deputy general manager of Mataf, the company that computerises the First International Bank, including information security services: "Transferring information on the Internet is no more scary than transferring it by telephone or fax. In fact, it is less so, since there is awareness of the problem, and it is looked at through a magnifying glass, so that the level of security is higher. As far as we can tell, anyone who takes the possible risks into account and protects his system accordingly, won’t be harmed. When break-ins into financial sites were investigated, it turned out that they occurred because the protection system wasn’t working properly."

First International Bank On-Line

The first bank to receive approval, at the beginning of December, was the First International Bank, which already provides services under the name "First International On-Line". Any long-standing customer of the bank can obtain - free of charge for a six month trial period - specific information about his accounts, securities, saving schemes, mortgages, and more. A First International virtual customer also has an advantage: he can exploit special bargains for surfers not offered in the ordinary branches.

Results are already available. According the data provided by First International Bank, in recent weeks the daily rate of entries to the virtual branch has stabilised at hundreds of enquiries a day, most of them people who have just joined up to the service, who have already managed to make use of it.

First International Bank’s relative maturity in the field is due to a long period of preparation since the beginning of 1997.

To ensure that the level of information security meets the standards set by the Supervisor of Banks, and furthermore, is capable of withstanding break-in attempts from the world at large, Mataf hired consultant services from Canadian company Mtech, which employs professional hackers - experts at breaking in to computer systems -who try, without knowing the customer, to break into his system to reveal loopholes and make recommendations as to how to close them.

Hapoalim on Internet

Rumour has it that Bank Hapoalim is next in line to receive approval. The Bank of Israel’s spokesperson refused to comment about the rate at which approvals are given, but a glance at Bank Hapoalim’s site gives a clue. They look ready. Bank Hapoalim will soon be informing its branches about registration procedures for Internet services, and even before officially announcing Internet activity, they have provided surfers who happen to visit the site a comprehensive simulation of all the possible options the new services offer. Hundreds of enquiries have already been receive, and the bank expects the system to be used intensively, as soon as the long-awaited approval is received. Among future services on the site will be: transfers between accounts; purchase and sale of securities, including trading by the Tel Aviv Stock Exchange continuous trading method; various payments; ordering of cheque books and credit cards. At the moment, for all the planned future services, true access exists only to information services relating to current accounts, investments, and credit, as well as general banking information, a dictionary of banking terms, exchange rates, and so on.

Click - Bank Leumi

Bank Leumi has set up a home banking system, called "Direct Surfing", on the Internet. Access, as with all the others, is via a standard browser, and it will be available to any customer of sufficiently long standing who registers at a branch of the bank. This week, Bank Leumi announced it had received approval to operate the site. Surfers will be able to obtain up-to-date information on their current accounts, investments, shekel deposits, foreign currency, securities, saving schemes, details of credit card transactions, and their loan and mortgage position.

The simulation on the site does not go into every level of detail in every category, but focuses on information services relating to current accounts in Israeli currency. It is interesting that most of the sites, when it comes to presenting detailed information about accounts, abandon their amazing Internet-style design, and revert to the aesthetic level of account statements that look as though they have been printed on an old dot matrix printer. Perhaps this is so as to give customers what their eyes have already become accustomed to?

Telebank Internet

At first there was Telebank Direct and Telebank Terminals. They were joined by Telebank Electronic Mail and Talking Telebank - a service that facilitates communication with the bank’s "talking computer" to obtain information by pressing the telephone number pad keys. Now there is Telebank Online - Discount Bank’s Internet services. They too are still waiting for approval.

What made the banks turn to the Internet? A survey by Jupiter, New York shows that the traditional banks have been forced to enter the electronic field immediately, before electronic trading companies, that are not among the banks’ traditional competitors, come into this rapidly growing area and conquer it. In 1996, 2.5 million households obtained their banking services via the Internet. The projection was that, by the end of 1997, this number would grow to 4.5 million, and that by the year 2002 there would be 18 million households connected to Internet banking.

About 70 banks around the world already offer their services on the ‘Net, and their number is growing fast. At the beginning of the year, the projection was for 600 online banks by the year 2000, but it already appears that this estimate is too conservative.