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Submitted By ID No-1201010716 3rd semester, MBA Department of Business Administration Leading University, Sylhet.
Rahat-Al-Islam
leading university
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LETTER OF TRANSMITTAL
Lecturer & Assignment Supervisor MBA Program Department of Business Administration Leading University, Sylhet, Bangladesh.
Dear Sir, It is my great pleasure that I have the opportunity to submit a report on E-banking system in Bangladesh. Project works make a bridge between the academic and the practical knowledge. The topic of my report is E-banking system in Bangladesh. For this purpose, I have worked mainly on basis of theoretical works on e-business and e-banking system to correlate them and therefore conclude my report with some personal opinion and recommendation. I tried my best to put meticulous effort for the preparation of this report. Any shortcomings or flaw may arise as I am very much novice in this aspect. I will wholeheartedly welcome any clarification and suggestion about any view and conception disseminated in my report. Thanking you for your kind supervision. Sincerely yours,
LEADING UNIVERSITY
Madhuban, Sylhet 3100
2nd December, 2012
LETTER OF AUTHENTICATION
To Whom It May Concern
This is to certify that, Rahat-Al-Islam ID# 1201010716 MBA Program of Leading University, Modhuban, Sylhet 3100, Bangladesh has prepared this Assignment Report on the topic E-banking system in Bangladesh: A Study on Different Bank of Bangladesh. Under my direct supervision. During this Assignment report preparation, he has followed my instructions and guidelines accordingly. In this regard, I also hereby certify that, this Assignment report prepared by Rahat-Al-Islam is authentic and mutually exclusive.
________________________ Mr. Md. Rahimulla Miah Assignment Instructor and Lecturer Department of Business Administration Leading University Modhuban, Sylhet- 3100 Bangladesh
ACKNOWLEDGEMENT
My special thanks goes to Md. Rahimulla Miah, Honorable instructor for my course of Management Information Systems (MGT-555) whose outmost effort in providing necessary help to complete the assigned task turned into reality. I would like to thank my instructor for bringing out time from his very tight schedule and guide me through all the way to complete this project. I am grateful to my friend Anik who has helped me lot, and at last but never the least I am grateful to the Almighty Allah for allowing me to come up with a complete project work on MGT-555.
Table of Contents
Section
Contents
Page number
2 Overview on E banking
1 Introduction
Abstract
3.1 Product and services available in BD 3.2 Customer response 3.3 Dutch Bangla bank Ltd. as a pioneer 3.4 Comparative analysis among 5 banks 3.5 Findings and analysis
4 Problems and prospects of e banking in BD 4.1 SWOT analysis 4.2 Limitation and constraints of e banking in
Bangladesh
Abstract
In Bangladesh, Banking industry is mature to a great extent than earlier period. It has developed superb image in their various activities including electronic banking. Now modern banking services have launched by some multinationals and new local private commercial banks. Electronic banking is one of the most demanded and latest technologies in banking sector. This paper tried to unearth the present status of electronic banking in banking sector in Bangladesh. As a third world developing country, Bangladesh is far behind to reach the expected level of global banking system. At present the banks in Bangladesh are using the limited electronic banking services. E-banking product and services include wholesale products for corporate customers as well as retail and fiduciary products for individual customers. Foreign commercial banks and private commercial banks are relatively in a better position to provide on line banking services. Dutch bangle bank is acting as a pioneer in this sector. Customers who are habituated with online banking thinks that online banking services are relatively good then manual system, but they not satisfied with the quality of services and bank personnel behavior to that extent. Although E banking activities are experiencing lots of limitation and constraints such as lack of awareness and human capital, inadequate infrastructure, this sector has a high prospective. People are now getting interested in online transaction and government has laid out some plans for developing ICT infrastructure. Bangladesh bank takes some major initiative in this regard and nationalized bank should concentrate in improving their online services spread and quality.
Chapter-1
Introduction
1. Introduction In Bangladesh, multinational banks are operating for long besides our nationalized, private and specialized banks. However, much of the resulting research has concentrated on providing evidence of the association between consumers usage patterns of ATMs and their demographic profiles (Hood, 1979; Murphy, 1983) and, more recently, consumer psychographic profiles (Stevens et al., 1986). Besides, the banking services of nationalized, private, and multinationals are different by quality of their services. Multinational banks are offering better services than others. They offer better customer services, personal financial services, corporate facilities, trade services with the help of efficient operational department, credit department, information technology department and the most important department is the marketing department. Presently they are thinking to offer door-to-door services, 24 hours banking services with electronic banking, pay and cash management through internet services. Moreover, waiting to introduce intensive e-banking of the multinational banks in Bangladesh. Customer always demands better services, security, and round the clock banking. Multinational banks are considering customers needs and demand in the first line of preference. Moreover, trying to offer and introduce the demanded services by the Bank and changing their offering based on the needs of present and potential customers. Only a few studies regardless of research context have been conducted which focus on the attributes of innovations, as perceived by potential users (Ostlund, 1974; Taylor, 1977). This paper tries to highlight the present condition of electronic banking in Bangladesh. Despite huge demand from the business community as well as the retail customers particularly the urban customers, electronic banking (e-banking) in Bangladesh is still at a budding state due mainly to a number of constraints such as unavailability of a backbone network connecting the whole country; inadequacy of reliable and secure information infrastructure especially telecommunication infrastructure; sluggish ICT penetration in banking sector; insufficient legal and regulatory support for adopting e-banking and so on. It is important to recognize that the present state of technology based banking in Bangladesh permits the banks to perform B2C transactions only whereas B2B transactions are yet to be established. Successful implementation of e-banking will help to conduct both B2C and B2B transactions [8]. 1.1: Origin of the study This report is prepared for Md. Rahimulla Miah Course instructor of Management information System (MGT-555) Department of Business at University of Leading as a partial requirement of the course. Our course instructor has assigned the students of the Department of Business, MBA 3rd semester to make a report on the current status and prospect of E-banking in Bangladesh. The standard procedure for the long, formal report is followed here as part of the instruction of the course instructors. 1.2: Objective of the Study This research has taken into consideration to accomplish the following objectives:1. To unearth the development of e-banking in Bangladeshi banking sector 2. To explore the Structure of electronic banking in Bangladesh 3. To explore the electronic services offered by various bank in Bangladesh 4. To find out the common features of electronic banking in Bangladesh
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1.3: Methodology Secondary data has been collected from various publications and survey reports. We use sampling for analyzing current status of E banking in Bangladesh. For this purpose we use stratified sampling. Our sampling consists of five bank from three different sectors of private commercial bank, foreign bank and nationalized bank
Private commercial bank Private commercial ban Private commercial ban foreign bank nationalized bank
Dutch bangle bank limited Eastern bank limited Dhaka bank limited Standard chartered bank limited Sonali bank limited
Site Design
Site Design: The study area mentioned in the map of Sylhet City Corporation
We collected our data from websites of the mentioned bank and various survey report and other publications. 1.5 Limitations Every study has some limitations. We faced some usual constraints during the completion of our report. The major limitations are: Lack of experience acted as constraints in the way of careful exploration on the topic. Busy working conditions (4)
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Figure-3, ref:[7]
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E-banking
The term Internet Banking or E-Banking Internet both are used as supplement. E-Banking is the one of the major part of E-Financing. E-Banking is web-based Banking. In other words E-Banking refers to the banking operations, which is done over World Wide Web. However, more comprehensive and wellestablished definition is given by the United Nations Conference on Trade and Development (UNCTAD).This definition covers almost all area of E-Banking. Internet banking refers to the deployment over the Internet of retail and wholesale banking services. It involves individual and corporate clients, and includes bank transfers, payments and settlements, documentary collections and credits, corporate and household lending, card business and some others (UNCTAD, 2002) . E-Banking information architecture is modeled as client-server architecture. A client operating through a PC linked to Internet opens the special E-Banking site of his bank and then, using a set of special secure numbers, gets access to his bank accounts and has the opportunity to consult them, as well as to make all necessary payments and transfers from his personal accounts. When the transaction number is exhausted the bank sends him a new set of numbers for his individual transfer sessions. In some cases the bank provides customized software. The bank software program can also be utilized offline, for example for preparing the payment orders offline and then making the actual order online. The client receives all numbers separately, mainly by mail. The bank also provide clients with similar facilities in its premises so that clients can use the bank equipment such as an ATM or a special facility linked to the main terminal facility called MultiMate, permitting them to effect the same account examination, payment and transfer operations without consulting the bank staff. Now a day due to emerging global economy, e-commerce and e-business have increasingly become a necessary component of business strategy and a strong catalyst for economic development. The new information technology is becoming an important factor in the future development of financial service industry, and especially banking industry. [6]
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E c o n o m i c A s p e c t o f E - B a n k i n g i n Bangladesh
Advantages of e-banking in Bangladesh:
There are a substantial number of educated unemployed youth forces, with ability to read and write English exist in the country. They can be trained within a required skill in a short time. Short term Benefits: Reduce extra time; Increase productivity and efficiency; Eliminate duplication and wastage; Cut down maintenance, and shortage cost; Curtail security cost. Long-term benefits: Create new opportunities of jobs for jobless; Participate in the countrys economic health; Proper Planning and monitoring; Proper use resources. Job creation: The issue of computers eliminating jobs of people is quite emotional and painfully real. But it has two sides that automation will eliminate certain types of job like record keeper and also create jobs like administrator, system analyst, programmer, operator etc. and help to reduce unemployment problem. Contribution to GDP: Banks with a national economy, work towards building national capital, increasing national savings and mobilizing investments in trade and industry
Benefits from the customers point of view: The main benefit from the bank customers point of view is
significant saving of time by the automation of banking services processing and introduction of an easy maintenance tools for managing customers money. The main benefits of e-banking are as follows:
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Increased comfort and timesaving-transactions can be made 24 hours a day, without requiring the physical interaction with the bank. Quick and continuous access to information. Corporations will have easier access to information as, they can check on multiple accounts at the click of a button. Better cash management. E-banking facilities speed up cash cycle and increases efficiency of business processes as large variety of cash management instruments is available on Internet sites of banks. Private customers seek slightly different kind of benefits from e-banking. Reduced costs: This is in terms of the cost of availing and using the various banking products and services. Convenience: All the banking transactions can be performed from the comfort of the home or office or from the place a customer wants to. Speed: The response of the medium is very fast; therefore customers can actually wait till the last minute before concluding a fund transfer. Funds management: Customers can download their history of different accounts and do a what-if analysis on their own PC before affecting any transaction on the web. Economical benefits: E-banking serves so many benefits not only to the bank itself, but also to the society as a whole. E-banking makes finance economically possible: I. Lower operational costs of banks II. Automated process III. Accelerated credit decisions. IV. Lowered minimum loan size to be profitable. Potentially lower margins: I. Lower cost of entry. II. Expanded financing reach. III. Increased transparency. Expand reach through self-service: I. Lower transaction cost. II. Make some corporate services economically feasible for society. III. Make anytime access to accounts and loan information possible. [2]
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Chapter-3
Figure-4 , [16]
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3 . P r e s e n t s t a t u s o f e - b a n k i n g i n Bangladesh
As a third world developing country, Bangladesh is far behind to reach the expected level of global banking system. According to a report published in The Daily Star (4th April,2010) Bangladesh ranked118th in the global Network Readiness Index in 2009-10 up from 130th a year ago, showing an upward trend in the information and communication technology sector. Total numbers of Banks in Bangladesh are forty seven. Banking sector in Bangladesh on the basis of utilization of electronic devices can be subdivided into three groups Foreign Commercial Banks and Private Commercial banks especially 2nd(except few banks) and3rd generation Private Banks :Fully Online banking 1st generation private banks and some 2nd generation Private Commercial Banks: Medium range Online banking system; Nationalized Commercial Banks , Specialized Banks and Few foreign Bank branches of this subcontinent :Low grade online banking system. At present the banks in Bangladesh are using the limited electronic banking services. It is expected that bank can attain more profit and offer better services to its customers by, introducing on line banking facilities.
According to the report published in The Financial Express(3rd November,2009) Bangladesh Bank gave the ground breaking directives to commercial banks through a circular issued on 2ndNovemebr,2009, saying that from now on their clients can pay power, water, gas and phone bills from bank accounts and transfer funds within a bank or to other banks. The central bank said that online payments will be treated like any other cash transaction although it reminded the banks that these money transfers would be regulated by the countrys strict Anti-Money Laundering Act. Meanwhile, Bangladesh bank started Automated 11Clearing house on trail basis from 8thNovember, 2009.Bangladesh Bank also declared that the clearing house wont accept any cheque from 1st April 2010 if size of the cheque is not as per the guideline of the MICR system. But in developed nations MICR procedure is now replaced by more sophisticated procedure such as cheque truncation process [2]
The country had only about 400,000 credit card holders at the end of June last year, according to Bangladesh Bank Payments and transactions by credit cards were nearly Tk11billion in June 2008 --- one of the lowest in the world In Bangladesh digital divide among the Dhaka city and rest of the country is conspicuous. E-business as a whole is confined among very few business organizations and on line banking business is expediting process of the e-business of the country
3 . 1 E- b a n k i n g p r o d u c t a v a i l a b l e i n B a n g l a d e s h
E-banking product and services can include wholesale products for corporate customers as well as retail and fiduciary products for individual customers. Ultimately the product and services obtained through internet banking may mirror product and services offered through other bank delivery channels. A brief description of e-banking products are described below An automated teller machine (ATM) is a computerized telecommunication device that provides a financial institutions customers with a method of financial transaction in a public space without a need for a human clerk or a bank teller. A debit card is a plastic card which provides an alternative payment method to cash. While making purchases. The amount of a transaction is typically displayed on a card reader, after which the customer swipes the card and enters the pin number. There is usually a short delay while the EFTPOS (electronic fund transfer at point of sale) terminal contact the computer network (over a phone line and mobile connection) to verify the authorize the transaction. system. A credit card is different from a debit card in that it does not remove money from the users account after every transaction. In the case of credit card the issuer lends money to the customer. It is also different from a charge card though this name is sometimes used by the public to describe credit cards. This requires the balance to be paid in full each month. In contrast the credit card allows the customer to revolve their balance at the cost of having interest charged.
Debit card:
Credit card: A credit card is a system of payment named after the small plastic card issued to users of the
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Credit card facility fully cannot be extended in the country, as common gateway between financial institutions cannot be established. Pricing mechanism of the products of country is not competitive, rater it is very much volatile. This creates a negative impact on the customers. This means a retail shop or a checkout counter in a shop or a variable location where a transaction occurs in this type of environment. Additionally point of sale sometimes refers to the electronic cash register system being used in an establishment. Point of sale system are used in restaurants, hotels and stadiums as well as retail environment in short , if something can be sold, it can be sold where a point of sale system is in use. This is such a service in which a financial institution doesnt return the rejected checks with the monthly statement to their customer, rather they provide statement of rejected checks with their monthly statements. The banks store the rejected checks for a certain time period (usually 90 days). During this time period a customer can adjust /rectify the account if any imbalance is found between his own record and the bank statement provided by the bank. After the expiration of the stipulated period the rejected checks are spoiled and the bank maintains a micro film copy for a period.
Check Truncation:
Home banking:
At first bank introduced telephone bill payment (TBP) so that customer could be able to do their banking activities from their home. The next version for the home banking was Video Home Banking (VHB). The internet is expected to be a major factor for home banking.
It is an electronic network for financial transaction. ACH process large volume of both credit and debit transactions which are originated in batches. ACH credit transfers including direct deposit, payroll payment and payments to contractors and vendors. ACH debit transfers including customer payment of insurance premiums, mortgage loans and other kinds of bills. Businesses are also increasingly using ACH to collect the customers online rather than accepting credit or debit cards. Wire transfer is a process which ensures fast and appropriate timing of fund transfer from the sender to the recipient. This kind of transfer of money could be either within the country or abroad. Funds are transferred under the following network: FED wire ( federal reserve communication system) Bank wire CHIPS (clearing house interbank payment service) SWIFT ( the society for worldwide interbank financial telecommunication) :
Wire transfer:
For sending foreign remittance four nationalized banks and fifteen private banks are working collaboratively with mobile phone service operators. Recently remittance could be sent in Bangladesh by banking channel through account transfer (normally takes 3 working days) or in the form of instance cash (takes 24 hours). Foreign resident people can send their money and PIN (personnel identification number) through mobile phone. As a result money transfer becomes relatively easy, quick and hassle free. But this system also superseded by mRemittance system. Mobile remittance service ormRemittance was introduced in the country opening doors to millions migrants workers to help transfer their hard earned money easily, effectively and most importantly, swiftly. The first ever remittance service for Bangladesh 17
M remittance
was jointly launched by two local banks Dhaka Bank ltd. and Eastern Bank ltd. and the countrys second largest mobile operator ,Banglalink. The security of a system is the extent of protection against some unwanted occurrence such as the invasion of privacy, theft and the corruption of information or physical damage. At this system is developed through the internet there is a big chance of hacking through our system. Current browsers counter security threats with a network communication protocol called secured sockets layer (SSL). SSL is a set of rules that tells computers the step to take to improve the security level of the communication. The automated clearing house (ACH) is an electronic network for financial transaction. ACH processes large volumes of both credit and debit transactions. Which are originated in batches other retail and fiduciary products and services may include balance inquiry, funds transfer, downloading transaction information, bill presentment and payment, loan application, investment activity and other value added services. Core Banking Cluster Banking Phone Banking SMS Banking Various Cards ATM Shared (VISA/MASTER) ATM own (VISA/MASTER) PC Banking Banking KIOSK Offline Branch Computerization E-payment The credit card is available from VISA, MasterCard and VANIK. Some foreign banks provide electronic fund transfer (EFT) services. It is at an early stage and used on a very limited scale. Microchips embedded Smart Card is also becoming popular in the country, particularly for utility bill payment. Automated teller machine (ATM) is expanding rapidly in major cities. A group of domestic and foreign banks operate shared ATM network, which drastically increase access to this type of electronic banking service. The network will gradually be extended to other parts of the country. [4]
F i g u r e - 5, r e f : [13]
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Out of five hundred customers who have been using on line banking system, following results have been gathered from the questionnaire through using snowball sampling technique. In following table Customers Response who have been using on line banking system (% of Respondents who expressed Yes comment) is presented.
Figure-6, [12]
Comment On line Banking services is relatively good than manual system On line banking provides good Customer service Just in time services in Banking can be provided Bank Personnel behave properly Dealing officer is well conversant about their respective Desk work Technologically improved but quality of banking services worsen off Better E-business environment
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The truly online core banking software, Flexcube has been running since 2004. To ensure better customer service, the bank is upgrading its core banking software from its present version to Flexcube Universal Banking Solution (UBS). In parallel, the whole setup of hardware is being upgraded to cope with the increased volume of transactions from different delivery channels. The core teams formed in this regard are working day-night in configuring & testing of the new system which is expected to go live soon
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EMV compliant chip cards of all the banks in the world; Non-EMV Visa & MasterCard cards of all the banks in the world; DBBL's proprietary cards (Nexus).
It took 3 years for DBBL to implement what Visa and MasterCard both deem as the future card standard. It encompasses the digital age and the new technologies that have emerged in the electronic age. Visa and MasterCard both realized that the normal card is 40 years old and the amount of fraudulent transactions were loosing customers billions. North America will be have NexusPRO card compliant by2016. But now DBBL already the only fully NexusPRO compliant and certified. DBBL's entire infrastructure (including ATMs) has had a costly upgrade to enable NexusPRO to Bangladesh.
DBBL has put its level of innovation and standard of customer support to a new height by setting another milestone in the history of banking sector by adding two units of Mobile ATM booths to its existing ATM network. DBBL has become the first bank in the country to provide such unique service and convenience to the customers. The DBBL Mobile ATM Booth, which is outfitted in a custom-made van, is available anywhere anytime and allow customers to deposit cash / cheque, withdraw cash, inquire account balance, print mini statement, pay utility bills and to access all other services offered by a standard ATM
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Around 87% of the total population of Bangladesh is un-banked. To bring such a huge population into the banking channel, DBBL is implementing a system to launch mobile banking soon. The project is in its final stage now. With this facility any person having a mobile number will be able to use his number as a bank account. In this mobile account they will be able to do the following:
Mobile Banking
Cash deposit to any Agent of DBBL Cash withdrawal from any Agent of DBBL Cash withdrawal from DBBL ATMs Funds transfer to another mobile account Utility bill payment, Tuition fee payment, Air time top-up. Receive remittance from home and abroad Salary disbursement Disbursement of Govt. allowances Merchant Payment Balance Inquiry
Customers get various types of services in these ATM booths like 1. Cash Withdrawal 2. Balance Inquiry 3. PIN change 4. Fund Transfer (within Accounts) 5. Mini Statement 6. Cheque Book Request 7. Statement Request 8. Bill Payment for DBBL Credit Card Grameen Phone City Cell TeleTalk Bangla Link Alico Premium Electricity Bill etc. Customers of other Banks can enjoy the DBBL ATM facilities with some conditions. The Banks connected with DBBL ATMs are: Southeast Bank The City Bank United Commercial Bank Standard Bank National Credit & Commerce Bank Bank Asia Mercantile Bank Trust Bank 23
Mutual Trust Bank First Security Bank Dhaka Bank AB Bank IFIC Bank Janata Bank Jamuna Bank Eastern Bank Pubali Bank Sonali Bank In the month of December, 2010 the total number of Cash withdrawal from ATMs was 230 million and the corresponding amount of withdrawal was Taka 13.20 billion Almost 1.74% of total withdrawals were from ATMs To provide uninterrupted quick and faster service, the Bank has introduced Fast Tracks (FT) in the country. These FTs are comprised of several ATMs, Deposit Kiosks and Customer Service helpdesk officers. The customers have the facility to deposit cash or cheque, withdraw cash, pay utility bills etc at the FT. DBBL has setup 50 FTs within 6 months of introducing it. The activities of FT are summarized below 1. Cash Withdrawal: 2. Cash Deposit. 3. Account Opening 4. Customer Request Form A list of such services is given below: I. Customer's request form for Account Transfer
Fast Track
II. Cardholder's Request form for a new Debit Card (MasterCard Debit / Maestro / Visa Debit/Visa Electron) or Credit Card (MasterCard / Visa) III. Request form for Replacement of a Card (Debit/Credit) for any of the following reasons: IV. Request for re-issue of PIN. Re-issue of PIN may be requested by a customer who have forgotten his PIN or in the fear that his PIN may be compromised to another person. V. Request for Account Linkage Auto debit VI. Request form for refund of Cash not dispenses from ATM but account debited. VII. Application form for availing Internet, SMS & Alert facility on bank account 24
Dutch-Bangla Bank offers a complete electronic banking facility for companies around the clock. Most multi-nationals use this service because it is advanced, secure and affordable. DBBL creates a custom banking service to suit any business of any size. The services have a wide range that includes cash flow services, distribution banking and salary accounts. If a company knows what type of custom and tailored banking service they need, DBBL can provide it instantly and at minimal cost (usually free of charge). DBBL has created Employee Banking program which allows:
Seamless and error free distribution of salaries Providing employees with timely salary payments Lower manpower needed Reduces cash theft and misappropriation Transactions are properly logged for your easy reference Highly secure way of distributing money No cash at hand in the office, all cash finally distributed through the largest ATM network in Bangladesh
Call center
Considering the growing number of customers, card holders & transactions, DBBL has setup a Call center. It is a world renowned Cisco hardware-based call center comprising of all the services a call center can provide, e.g, Interactive Voice Response (IVR) by virtue of which the customer will be able to choose 25
his options using the keypads of a cell phone and listen to the responses related to his account or card or transactions from the system or though live agent. The customers can dial at16216 from any land or mobile phone and go to IVR or Live agent, and get desired services.
Green IT
Dutch-Bangla Bank has always been careful about environment. DBBL has taken initiatives to make its IT infrastructure as "Green IT". Environment friendly options like virtualization, power management and proper recycling habits towards certifying our data centers as "Green" are under our active consideration.
DBBL has set up its new data center and DRS to accommodate all the above setups. The DBBL's data center is one of the most sophisticated data centers of the country equipped with state-of-the art design, security and sophistication.
Account Summary
Account Details
The customer can see or print his transaction activity in a given account for a particular period.
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bank.
The customer can transfer funds from one of his accounts to another of his accounts within the
The customer can pay his utility bill (like Electricity, WASA, GAS, Telephone, Mobile, ISP etc.) The customer can setup, modify or delete standing instructions for transferring fund from one of his account to another account (his account or 3rd party). The customer can open a term deposit by transferring funds from one of his current or savings accounts with the bank. He can also modify the TD and redeem / part-redeem it.
Pay Bills
Standing Instructions
Loan Repayments
The customer can make payment of the loan installment from his CASA account
The customer can make a request for account statement for a required period. The bank will manually service this request. The customer can make a request for a Cheque book.
Statement Request
The customer can choose an account and enter the Cheque number for which the status should be
The customer can query on the interest rates on CASA & Term Deposit Products.
The customer can query on the Foreign Exchange (FX) Rates using this function. The customer can buy a refill number for his pre-paid mobile phone or ISP link. The customer can change his Internet Banking Password using this function. Additional Internet Banking Features for Corporate Banking The customer can initiate the LC application through Internet Banking. 27
Letter of Credit
The customer can initiate the Bank Guarantee through Internet Banking.
The customer can view his Loan Limits and Limits Utilization through Internet Banking [9]
EBL
74 49 23
Dhaka Bank
24 54 19
Oracle, Flexcube UB S
Flexcube
eB B S I VR
Flexcube Flexcube Trans Master for Prepaid Credit and Debit Card
O/S WA
Shared ATM
Tranzware,CompassPlus
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Parameters
Account Summary Account Details Account Activity Transfer Funds Pay Bills Standing Instructions Open/Modify Term Deposit Loan Repayments
DBBL
EBL
Dhaka Bank
Stop Payment Cheque Interest Rate Inquiry Foreign Exchange Rate Inquiry Refill Pre-Paid Card
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Others:
DB B L Mobilebanking Fast Track Electronic Student Booth (ESB) Internet Payment Gateway(IPG) Call center New Data Center and DRS Gr e e n I T Online remittance transfer Employee banking program X X X X X X EB L X Dhaka Bank X X Standard Chartered Bank Limited X Sonali Bank Limited X X
Basis of comparison:
Location of ATM:
Metro political areas: Governed by City Corporations, these are the cities of Bangladesh. Such as: Dhaka Chittagong Khulna Rajshahi Shylet Borishal Rangpur
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14%
69%
me tropo litan are a 77%
towns 17%
Town 4%
c i ti e s 83%
Ci ti e s 96%
towns 13%
c i ti e s 87%
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Foreign commercial banks and private commercial banks are relatively in a better position to provide on line banking services.
E-business is still not very much progressed in Bangladesh. Mass awareness is not feasible. The country faces problem of developing human-ware. Without preparing human capital at the level of international standard, we cannot be able to compete in global market and successful ebusiness cannot be feasible. From the field level study we observe that still nationalized commercial banks and specialized banks are lagging behind off on line banking services. Moreover, customers are not satisfied with the quality of the services. They are not also very happy with the behavior of the bank personnel. However, it reveals that e-business especially with the help of on line banking can manage economy of Bangladesh in a far better way as customer relationship management increases. Local Banking software should be developed
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properly and must have greater accessibility within the country and outside the country. Moreover, to produce hardware especially computer and its accessories, local entrepreneurs are not taking any sort of strategic planning. Bangladesh Bank should adopt latest technology but due to lack of vision they are adopting old technology i.e. introduction of MICR for Bangladesh Bank automation procedure. MICR system should be substituted by cheque truncation system. The shortage of technology-based human resources and poor telecommunication infrastructure needs to be overcome to break low equilibrium trap. Bridging the digital divide would provide technology-based human resources, who can contribute to raise gross domestic product (GDP), national savings, investment, creation of employment and moving out from the vicious circle of underdevelopment. .Numerous problems have been identified from the field survey on line banking system in Bangladesh. Some of them are in the followings: Inefficiency and inadequate knowledge of the bank management about the on line banking. Lack of proper Strategic plan to gain and retain market share of the indigenous banks. Lack of international standard communication channel. High cost of establishing on line banking system. Inadequate back and front office management. Lack of integrated plan among the banks and the Central Bank authority. Inefficient Clearing House Facilities. Inappropriate software and less trust by the Bank authorities on local software. Biased-ness of the management of bank towards foreign software. Legal barriers and appropriate policy frame work. The number of customers taking banking services does not capable to bear the cost of additional equipments like computer, computer accessories , Internet etc. from their own organization or at home. Biometrics should be more strengthened. Using Internet facility still very costly and people has little knowledge in operating computers. A few numbers of cyber caf is available but for banking purpose customers do not feel safe to use these facilities. As a result total numbers of customers who are habituated in on line banking systems are limited. In these circumstances investment for establishing e -banking facilities seems profit less. Although on line banking has bright prospects, it involves some. [6]
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Chapter-4
Problems and prospects of E banking in Bangladesh
Strength:
Internet Banking is still to grow more in Bangladesh; most of the banks are providing several services of E- Banking. Thus, this product will enjoy the benefit of first mover. It is cheap for both banks and customers; banks will be able to lower overhead costs and make more profit out of it. Moreover, this requires less man power for banks; customers can save time and avoid hassles. E- Banking is convenient as the service is available all the tome at just aclick away
Weakness:
The system may have a problem of security breakdown which refers to the problem of identification of customers whos initiating transaction. As in Bangladesh The transaction can only be cancelled via Internet while the Internet infrastructure in our country is not satisfactory and supportive to provide all time access to web. So, there comes the problem in executing service with its full functionality.
Opportunity:
Non- Branch banking is becoming popular in Bangladesh; thus many banks are offering nonbranch banking facilities. A person is able to withdraw or deposit money in any branch of the bank he has account with. Moving to E- Banking gives an edge in such cases. All types of internet services are being appreciated and applied by people of different walks as this eases the activities. So, such an attractive offer package provided by E- Banking will be popular everywhere very soon
Threat:
People have concern about security & privacy; they like to fell money with their hand; they actually don't believe in virtual money transfer 34
In the field of IT new technology is coming every day. The one which is very popular today might get obsolete tomorrow. So to have a competitive edge over competitors the banks must always update their services. Despite the presence of online internet service in Bangladesh, its scope is underutilized. The reasons include high service charges, lack of awareness, poor telecommunication systems, government policy, low buying power of potential clients and lack of institutional support. [3] The strengths and weaknesses are the internal factors of the banks in operation of E- Banking while the opportunities and threats are the external factors
Erstwhile technology
Bangladesh Bank should adopt latest technology but due to lack of vision they are adopting old technology i.e. introduction of MICR for Bangladesh Bank automation procedure. MICR system should be substituted by cheque truncation system. Numerous problems have been identified from the field survey on line banking system in Bangladesh. 35
Some of them are in the followings: Inefficiency and inadequate knowledge of the bank management about the on line banking. Lack of proper Strategic plan to gain and retain market share of the indigenous banks. Lack of international standard communication channel. High cost of establishing on line banking system. Inadequate back and front office management. Lack of integrated plan among the banks and the Central Bank authority. Inefficient Clearing House Facilities. Inappropriate software and less trust by the Bank authorities on local software. Biased-ness of the management of bank towards foreign software. Legal barriers and appropriate policy framework
Financial risks
Although on line banking has bright prospects, it involves some financial risks as well. The major risk of on line banking includes operational risks (e.g. security risks, system design, implementation and maintenance risks); customer misuse of products and services risks; legal risks (e.g. without proper legal support, money laundering may be influenced); strategic risks; reputation risks (e.g. in case the bank fails to provide secure and trouble free e-banking services, this will cause reputation risk); credit risks; market risks; and liquidity risks. Therefore, identification of relevant risks, and formulation and implementation of proper risk management policies and strategy formulations and implementations are important for the scheduled banks while performing on line banking system. [4]
in2006. A total of 159 Internet Service Providers (ISPs) have now been connected with this system of which 64 are actively providing services. Internet connection is slow with bandwidth range 32 kbps to 56kbps for dial up and 64 kbps to 8 mbps for broadband. Under this scenario, as a part of government decision of building digital Bangladesh, the existing capabilities of ICT sector is likely to increase rapidly in bringing all upazilas under internet services and this will contribute in widening the scope of e-banking throughout the country. The overall computer density in the banking sector is 1.64. For foreign commercial banks (FCBs) the computer density is 45.34, where as for NCBs the ratio is only 0.41. The specialized bank scenario is almost same as the NCBs, 0.43. On the other hand, private commercial banks have comparatively higher ratio, 4.94. As a whole 81.81 percent bank does not have any local area network (LAN), 30 percent have WAN (Wide Area Network) but for some banks many branches are outside of WAN connectivity. At present, all foreign banks of our country are using online banking system; they are invested a lot for their automation banking services. They are the pioneer of implementing electronic banking systems in Bangladesh, but now most of the private banks of our country are using electronic banking systems. In our country different banks are offering electronic banking services in different ways, some are offering ATM (Automatic Teller Machine) services, some are tele-banking and some are electronic fund transfer, debit card, credit card etc. Recently, the governments emphasis on building a digital Bangladesh, setting up ICT park, raising allocation for developing ICT infrastructure, waiving taxes on computer peripherals and other measures including the automation program of banking sector led by the Bangladesh Bank and competition among the scheduled banks in improving customer services have accelerated the prospects of e-banking in Bangladesh [4]
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Chapter-5
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Infrastructure development
Internet penetration is a key factor for the growth of e-banking. Christiansen (2001) reports that the take off phase of Internet banking needs at least 30 percent Internet usage among the population. Moreover, since Internet penetration alone is not adequate for online banking expansion, the government may provide subsidy for surfing cost, organize training facilities with private partnership, widen multiple access facilities like web, telephone, ATM etc., and initiate motivation programs for the users and the target population. Moreover, adequate legal framework and security are essential for flourishing internet banking. VSAT operating license should not limit the bandwidth. Moreover, high bandwidth charge is another constraint in widening internet access to a greater number of people. Therefore rationalizing the charge could make the use of internet affordable to all New ISPs should be attracted into the business for promoting greater competition in the industry. More high-speed fiber optical data communication infrastructures should be well established for speedy data communication for domestic and global high speed communication system. This will help to attain better e-business including on line banking system. Competitive situation should be
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arranged so that e-business management can be improved through efficiency and effectiveness of customer services. The policies relating to long distance and international voice traffic need review to remove impediments to growth of e-commerce that relates e-banking as well. As a part of building digital Bangladesh, measures are needed to improve existing ICT infrastructure and address relevant issues including governance and institutional strengthening. A package of required rules, acts, laws, and regulations pertinent to e-banking adoption and development may be formulated. In this respect, lessons and experience of countries that have already expanded e-banking can act as useful guides. BTRC as a regulatory body should work with long term vision, mission and fulfillment of goal oriented strategies. They should work as a facilitator rather not creating hindrance. VOIP should be legalized after examining and finalizing proper rules and regulations in the country The Bangladesh Bank may consider the following steps: Take steps to orient bank officials on benefits of e-banking. For instance, BB may offer short courses (e.g. using the Bangladesh Bank Training Academy) on e-banking including analysis of costs and benefit from the perspectives of customers and the banks, present status, and opportunities and challenges. To avoid risks involved in e-banking, risk mitigation policies and strategies need to be adopted as a part of the package approach to implementing e-banking. Mobile banking is a prospective area for two reasons: it covers almost all activities involved in retail banking; and mobile phone network has already been spread all over the country covering more than 30 million people. Because of convenience, a sizeable share of the unbanked people can be brought under the network especially in rural areas with flourishing mobile banking. In this context, it is important to formulate relevant acts, policies, and adopt operative guidelines. For the scheduled banks, it is important to: Review their business strategy and create the required space for adopting e-banking services in order to remain competitive and attract new customers. Strengthen ICT department through providing training to IT personnel and procuring required hardware and software. Create separate unit in each branch for rendering ICT related operational activities under the supervision of the ICT department. Train all staff in basic ICT related matters in phases [3]
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6. Conclusion:
Web based banking service or E-Banking, the latest generation of electronic banking transactions, has opened up new window of opportunity to the existing banks and financial institutions. It permits business process re-engineering, serving borderless market, to achieve zero latency leading to improvements in customer service levels and better risk management because of real-time settlement. Since its evolution in 90th decade, it is having unprecedented growth. The growth rate is higher in Developed Countries, and comparatively lower in LDCs countries like Bangladesh. The E-Banking sector is highly prohibitive for the new entrants although the inception cost is lower with high growth rate. The brand preference of the customer, existing network, physical existence, security and safety, supplier bargaining power, substitute product of non-banking sectors have made the way thorny. However, new comer with innovative idea and strategy definitely can make position in this sector. The analysis of the evolution and present status of E-Banking make us some room to make commandments for the government, new entrants and existing e-banks for effective utilization of the opportunity to accelerate the economic growth. [5]
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7. REFERENCES
[1.] www.marketratesinsight.com [2.] Md. Abdul Hannan Mia, Mohammad Anisur Rahman, Md. Main Uddin E-Banking: Evolution, Status and Prospects. [3.] Mohammad Mizanur Rahman E-Banking in Bangladesh: Some Policy Implications [4.] http://www.scribd.com/doc/90973836/The-Current-Status-and-the-Prospect-of-EBanking-in-Bangladesh [5.] www.bizresearchpapers.com [6.] http://www.scribd.com/doc/97280075/7/Analysis-of-the-Findings [7.] www.watchdata.com [8.] http://ithandbook.ffiec.gov/it-booklets/e-banking/introduction/e-bankingcomponents.aspx [9.] www.dutchbanglabank.com [10.] www.bizresearchpapers.com/12.%20Nupur.pdf [11.] [12.] [13.] [14.] [15.] [16.] [17.]
www.geog.cam.ac.uk www.geog.cam.ac.uk www.csc.com www.bdoza.wordpress.com www.Bangladeshbank.org www.scribd.com www.onlinebdinfo.blogspot.com
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8. Research Questions:
Research questions which the study will try to get answer are given below: What is the government involvement to generate more and more qualified IT professional? What keeps the e-banking customer loyal? What are the major service quality dimensions to satisfy the customers in e-banking?
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