Security and privacy of electronic banking by

Drivers of Electronic Banking 
As internet continues to expand, the convenience associated with electronic banking will attract 
more customers. One expectation of e-banking is that it will replace the need for writing checks, 
or carrying a lot of cash. In today’s market, “according to the preliminary data from the latest 
Federal Reserve survey of patterns of consumer spending, almost four-fifths of consumer 
expenditures are handled by checks, directly or indirectly. According to Consumer Federation of 
Kenya (COFEK), mobile phones now drive Kenya’s consumer spending. 
Kenyan consumers are 
increasingly turning to social media and mobile phone advertising to guide their spending.
A survey of Kenyans’ digital habits by research firm TNS RMS East Africa found that 73 per 
cent of Kenyans would be happy doing their entire Internet surfing on their phones. Further, 67 
per cent use social media to research brands, and around half of them would like to be able to 
purchase products through social networks. “Growth in Internet access offers big opportunities 
for brands and marketers that can be explored with the right strategies,” said the TNS associate 
director of technology, Mr. Bob Bugoyne. 
A report by the Central Bank of Kenya shows that the number of mobile money users in Kenya 
increased to 19.2 million in 2011, with 15.21 million of them being M-PESA customers. 
Whereas P2P (person-2-person) transactions are still dominant, the report shows that business to 
persons and persons to business transactions are increasing. In the month of December 2011 
alone, the amount transacted between individuals and businesses stood at sh54.53 Billion, which 
translates to roughly 46 per cent of total amount transacted that month. In that month, M-PESA 
moved sh116.6 Billion. 
This means that electronic banking has a very large potential for use since many people expect 
that electronic checks will substitute paper checks. For consumers, electronic money means 
greater efficiency that using coins, notes, and traditional banks. The e-banking system brings the 
convenience of 24-hour, seven days a week, banking by offering home PCs tied directly to s 
bank’s computers. In addition, electronic money also offers greater security than paper-and-coin 
system.
The increasing application of advanced technological solutions in banking operations has 
transformed the country’s financial sector, and opened up avenues of reaching out to the 
unbanked population. Citibank Group has lauded the success of Kenya’s electronic commerce, 
and urged other economies in sub-Saharan Africa to replicate the Kenyan model. The US-based 
IJCSI International Journal of Computer Science Issues, Vol. 9, Issue 4, No 3, July 2012 
ISSN (Online): 1694-0814 
www.IJCSI.org
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Copyright (c) 2012 International Journal of Computer Science Issues. All Rights Reserved.

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financial conglomerate notes that Kenya’s e-commerce presents an operationally efficient and 
cost-effective payment and collection solution to the unbanked population. 
In a report dubbed: ‘Financial Trends of the Development Sector in Kenya and Africa’, the bank 
observes that with the expansion of electronic commerce, companies are now looking to 
streamline their processes — without compromising security, confidentiality, compliance, 
auditability and integrity of transactions. According to the Global System for Mobile 
Communications Association (GSMA), about 40 per cent of Africa’s one billion population has 
mobile phones, but only 20 per cent have bank accounts. Citibank also pointed out that Kenya 
was one of the largest recipients of aid in Africa, with a total of $1.8 trillion (Sh165.6 trillion) 
worth of Official Development Assistance (ODA) received in 2009.
But the bank raised concern that securely managing the receipt and distribution of donor aid 
flows within Kenya’s complex — and often paper-based market — creates many challenges. 
Kenya’s banking industry has witnessed tremendous changes linked with the developments in 
Information Communication Technology (ICT) over the years. The quest for survival, global 
relevance, maintenance of existing market share and sustainable development has made 
exploitation of ICT imperative in the industry. Application of ICT concepts, techniques and the 
development of policies and strategies has become a subject of fundamental importance and 
concern to all banks, and is a prerequisite for local and global competitiveness.