Introduction

Background
Online Banking or Electronic Banking is a new but emerging technique in Bangladesh. it has not
been long time that the banking sector of Bangladesh adopted automation but the positive thing
is the speed of transformation that means the change is happening so fast and Bangladesh is
adopting the modern method of banking appropriately. Since it has been launched, online
banking is getting more and more popular. Online banking pioneers in Bangladesh are the
multinational banks but other local banks (both the public and private) followed the trend almost
in a paralleled way. A number of private as well as local banks are going online now considering
the demand and necessity of fast banking. Online banking not only provides banking facility for
24 hours, moreover it helps countries to get attached with one another and helps to advance in
trade and commerce. It actually helps to be interlinked, to go global and to stay updated with the
current money and asset management techniques. The online banking is also referred as
Electronic banking or Internet banking. As the world is going global so people from different
countries are now getting engaged in business and other activities thus they now need very fast
and easy access to bank accounts to fulfill the exchange formalities.
In Bangladesh many banks have adopted online banking, these banks are HSBC, SCB, Citi Bank
NA, Dutch Bangla Bank, City Bank, Bank Asia, Eastern Bank, Jamuna Bank, UCBL, AB Bank
etc. All of them have adopted the online banking but there is difference in the style of providing
the service, some are quite advanced and some are at the initial stage. Our study is all about to
discover and present the current status of online banking in Bangladesh. Besides this, we also
identify the scopes and challenges of online banking in Bangladesh.

Objective of the study

Page | 1

Our primary objective is to fulfill the requirement of the course Fundamentals of Management
Information System. Along with the primary objective there are several secondary but strong
objectives as well. These objectives include:

Learning about the overall online banking status in Bangladesh

Exploring the opportunities and challenges of online banking in Bangladesh

Knowing about the online banking structure and services in Bangladesh

Exploring the contribution of information technology in banking sector of Bangladesh.

Methodology
We have already gone through many articles related electronic banking and the online banking
scenario in Bangladesh. For our study we mainly rely upon secondary sources of data. For this
we already went through news paper articles and survey reports.

Description
Page | 2

Online Banking
Online banking is a banking system which enables electronic payment system and electronic
fund transfer through the help of websites of institutions. These institutions can be retail bank,
virtual bank, credit union or building society. To access a financial institution's online banking
facility, a customer with Internet access would need to register with the institution for the
service, and set up some password (under various names) for customer verification. The
password for online banking is normally not the same as for telephone banking. Financial
institutions now routinely allocate customers numbers (also under various names), whether or
not customers have indicated an intention to access their online banking facility. Online banking
is very much popular with another similar term E-Banking which means electronic banking.
Electronic banking not only means having the access to banking services for but also involves
some transactions, rights and responsibilities. The features electronic banking includes:

Electronic Fund Transfers

Disclosures

Errors

Lost or stolen ATM/Debit/Credit cards

Over drafts for one time debit card transaction and ATM cards.

Limited Stop Payment Privileges.

Additional Rights.

Types of Online Banking: Depending upon the modes of Online Banking, it can be
classified in two types:
Page | 3

Internet Banking: Internet Banking is done through PC. The PC is connected with the banking
website through internet connection. A modem or phone line and an internet service provider or
wireless technology is needed for such kind of facility.

Electronic Banking: Electronic Banking is done through electronic devices like Automated
Teller Machine (ATM), Tele Phones or Cell Phones and Debit cards.

Online banking services- Including both internet banking and electronic banking, different types
of online banking services are:

Payment against paid order or pay order encashment.

Demand draft encashment

Opening or redemption of FDR from any branch of the same bank.

Remote fund transfer

Cash withdrawal

Cash deposit

Account statement

Clearing and balance enquiry within branches of the same bank and

L/C opening, loan repayment facility to and from any branch of respective bank under its
own online network.

Page | 4

Why to Choose Online banking:

Now a common question can come to our mind why should we opt for electronic or online
banking? Answer to this is, despite of having some drawbacks in the online banking process such
as the security issues, online banking is preferable because it has made the banking process and
transactions easier . Yes security is a great concern but online banking has also back ups for
protecting the security and privacy of the customers. There are much strong logics for which
online banking can be chosen, among these:

Easy management of accounts while seating at home

Being updated with all the transactions records

Being acknowledged with the latest transaction

Receiving or sending payments through internet or credit cards

Paying different types of utility bills without being physically present at banks and also
being acknowledged about the policies and procedures regarding bill payments.

Easy transfer of funds from one account to another account

If lost or forgotten, recovery of PIN numbers

Allows to manage future finances like applying for credit or mortgage

Through online banking consumers can also compare that which bank is giving high
interests in deposits and which bank is giving low interests in loans.

Allows to be acknowledged with the standing debts.

Last but not the least, online banking saves time, saves paper works and allows us to do banking
transactions in a comfortable environment. So, these are the reasons which made online banking
lucrative.

Page | 5

Online Banking Growth in Bangladesh

Modernization in the banking sector was badly needed in order to cope up with global challenges
and competition. As an essential step towards digitalization, online banking has been familiarized
in Bangladesh. From the 1st decade of the present century, huge changes have been brought to the
banking system of Bangladesh. Although, total automation has not been brought and still a long
way to cover but Bangladesh is day by day improving its online banking status. Now, almost all
of the private banks and even some public banks also introduced minimum online banking
facilities like ATM booths, electronic fund transfer, bill paying facilities etc. Now, Bangladesh
Bank has been more alert to deal with the probable troubles related to online banking and thats
why has strengthen laws in order to closely supervise the scheduled banks. The Bank Company
Act and the Money Laundering Prevention Act 2002 has been updated. Now these Acts are
consistent with the international laws. Bangladesh is not only updating the technology but also
the base and structure of the banking sector.
Extent of Online Banking in Bangladesh:
Now, most of the banks are providing online banking facilities but degree of service varies from
one to another. Depending upon the extent of service they are providing, they can be classified
into three categories
1. Classical Banks
2. Modern Banks
3. Electronic Banks
Classical Banks are the Banks which are giving least or very minimum online services. These
banks are at the early stage of online banking. These banks have no centralized data base system
for which they lack in information and coordination and as a result they fail to take quick and
effective decision. The classical banks are:

Sonali Bank
Page | 6

Rupali Bank

Janata Bank

Agrani Bank

Bangladesh Shilpa Bank

Bangladesh Krishi Bank

Although, now the nationalized banks have move forward and introduced online banking system.
Sonali, Rupali, Janata and Agrani Bank have now online banking facilities like ATM service
under Q-Cash brand. Rupali bank is quite new to online banking and offering limited services, it
has 40 ATM booths. Sonali Bank is at advanced position than Rupali bank. Besides of higher
ATM booths, it has also ABB facility (Any Branch Banking) and recently Sonali Bank launched
credit card. Janata Bank was the first to introduce Online banking among the NCBs
(Nationalized Commercial Banks). It has also the debit and credit card facility. Agrani bank is
also ahead at ATM facility and EFTS (Electronic Fund Transfer System) than Sonali Bank and
Rupali Bank.
Modern banks are those which provide some of the functions of online banking. It means, these
banks are the partial online banking service provider. These banks are providing ATM cards,
debit cards and credit cards and also providing the facilities like one-stop services and quick
money transferring associated with international money transferring agencies like Western
Union, Money Gram etc. These banks are also coming up with a strategic plan which focuses on
online banking and they are competitive in nature thus trying to update their banking
technologies. The modern banks are:

Pubali Bank

Prime Bank

Habib Bank

Uttara Bank
Page | 7

UCB Bank

The electronic bank is the term which indicates all the business performed through electronic
network. The electronic banks use sophisticated computer and networking technology to provide
day to day banking services. These banks maintain their whole business process electronically.
There are both Local and foreign banks in this category. The electronic banks are:

Dutch Bangla Bank

HSBC Bank

Standard Chartered Bank

Citi Bank NA

Commercial Bank of Ceylon

Eastern Bank Ltd

BRAC Bank Ltd

Bank Asia Ltd

Online Banking Products in Bangladesh

Automated Teller Machine:
This is a computerized telecommunications device that allows the customers to withdraw cash in
anywhere without the presence of a human clerk or bank teller.
Debit Card:

Page | 8

A debit card is card made of plastic which allows the users to pay for purchases without cash
transaction. Here, money is deducted but from the bank account of the buyer. In case of debit
card transaction, delay may occur as electronic fund transfer at point of sale contacts with the
computer network to check the validity.
Credit Card:
Credit card is also plastic card but unlike a debit card, here money is not deducted from the bank
account. Credit card means paying on credit, here bank gives loan to the client. The purchasing
amount is added to the customers account as loan and end of the month or quarter bank collects
that with interest.
Cheque Truncation
In this system the banks do not send the rejected cheques to the clients rather they reserve those
cheques for a certain period and sends clients the notification about those cheques thus they can
make the adjustments needed.
Point of Sale:
Point of sale is a retail shop or checkout counter in a shop or variable location where transaction
occurs. This also refers to the electronic cash register system being used in an establishment.
POS is used in restaurants, hotels, stadiums as well as retail environments.
Retail Automated Clearing House Service
The automated clearing house is an electronic network for financial transactions. It processes
large volumes of debit and credit card transactions. Debit transactions include consumer
payments on insurance premiums, mortgage loans and different kinds of bills. ACH credit
transactions include direct deposit payroll payments to contractors and vendors. Now ACH are
widely used to collect payment from customers online.

Page | 9

Wire Transfer:
This is a process which ensures fast and appropriate timing of fund transfer from sender to
recipient. It follows the network of Fed Wire ( The Federal Reserve Communication System),
Bank Wire, CHIPS ( Clearing House Inter Bank Payment System) and SWIFT ( The Society for
Worldwide Inter-bank Telecommunication).
Online Banking Status of Bangladesh
Dutch Bangla Bank
Dutch Bangla Bank has been the pioneer of Online Banking in Bangladesh. It was the first bank
that went fully automated. The electronic banking division was established in 2002 and in 2003 it
was fully automated. Dutch Bangla Bank introduced ATM card first in Bangladesh. Dutch
Bangla Bank has the highest numbers of ATM booths and it uses low profitability route for this
sector. For the low cost structure, many other banks use their technological infrastructure.
Fast Track- Dutch Bangla Bank Fast Track is an expansion of branchless banking that was
hugely accepted by the other banks also. Fast Track was launched by Dutch Bangla Bank in
November 2009. A fast track is associated with 6-12 ATM booths and it has also deposit
machines in different locations from where customers can deposit cash, cheque, refund warrant,
dividend warrant etc. Through fast tracks, existing customers send requisition for cheque books
and can collect debit and credit cards. Within a very short time now there are 153 fast tracks in
the country.
Mobile Banking- Dutch Bangla Bank Mobile banking makes access to banking and advanced
payment transactions at affordable cost from the authorized agent point in anywhere from the
country. The service is faster than other forms of banking services and provides service to rural
area people as well.
HSBC Bank
HSBC Bank is much advanced at internet banking and as being a multinational bank it has huge
capital and technological base which helping it to go for high degree of automation. HSBC bank
Page | 10

now allows to access account from anywhere of the world. The features of HSBC online
Banking:

Access to account on 24/7 basis

Viewing balances and transactions

Making transfers between eligible HSBC accounts.

Online Bill Payments

Creating, viewing, amending and canceling standing orders.

Applying online for different products.

Updating customers email address, contact no and personal details.

Performing foreign exchange enquiries.

E-Statements- viewing, printing, and downloading E-statements to track transactions.

Total banking portfolio, Net worth and Account summary- check/update customers
personal information/account.

Time Deposits- Placement of new time deposits, check or update customers personal
information and accounts.

Standard Chartered Bank

Standard Chartered Offers the client a comprehensive range of cash management services.
Whether it is a financial institution, a multinational corporation or a domestic company,
Electronic Banking has the capability to support full range of cash management reporting and
Page | 11

transaction initiation needs. It provides a secure, reliable and effective link between the client
and his/her accounts anywhere across the Standard Chartered Network.
BRAC Bank Ltd
BRAC Banks security system for internet banking is really strong. They use Security Socket
Layer (SSL) technology to ensure that the information exchanged between the bank and client is
not revealed to a third party. BRAC Bank is also advanced at providing innovative online
banking facilities. In Bangladesh, they introduced e-commerce first. They also offer all time
banking facility through 24hours call center, only through call centers customers can have
banking service available. They also provide SMS banking facility. BRAC Banks initiative to
make money transferring easier has brought the product called bkash which is hugely popular
and also used in sending and receiving remittances.
Eastern Bank Ltd
Customers having account with Eastern Bank Limited (EBL) can enjoy Internet Banking (IB)
facilities of Eastern Bank Limited. Customers may approach for may approach for the IB facility
either at the time of account opening or any time after account opening. The EBL IB facilities are:
account information, term deposit information, loan management, bill payment, online payments,
customer services and session summary.

The City Bank Ltd , Bank Asia and the Mercantile Bank
The City Bank has the facility of account check and statement print including query about cheque
book information.
Bank Asia has almost same facilities; in addition they have internal fund transfer facility along with
bill payment and mobile phone recharge.
Mercantile Bank has a separate schedule for internet banking. They have the facility of money
Page | 12

transaction, deposit and withdrawal

Besides the above mentioned banks, almost all of the other foreign and private banks are providing
online banking in Bangladesh and lifting up the performance standard and expectation more and
more.

Software Used in Online Banking in BD

The widely used software of banking sector of Bangladesh are:

1.

Core Banking Software

Switching Software

Credit Card Software

Mobile Banking Software

Payment Gateway Software

Core Banking Software

Core operations of a Bank includes maintaining a ledger of various transactions, keeping customer
information, interest calculation of loans and deposits, adjustments to accounts on withdrawal and
deposits of funds etc. Previously these operations were done manually. With the advent of ICT
(Information & Communications Technology), efforts were done to automate various banking
processes using software applications so as to make them simple, efficient, effortless and cost
effective. Thus, the platform where ICT is used to perform the core operations of a bank, like those
mentioned above, is known as Core Banking System and the software used for this purpose is called
Core Banking Software.
In Core Banking System (CBS), the data, instead of huge ledgers, are stored in backend databases in
digital form. The same software can be made available in various branches of a bank using a WAN.
Page | 13

The advantage, a customer can operate on his account from any branch of the bank and if the bank
owns Internet Banking or ATM facilities, then the customer can operate on his account from virtually
anywhere.
CBS has facilitated better operational efficiency by ensuring improved housekeeping and preventing
seepage

of

income.

Inter

branch

reconciliation

has

become

faster

and

accurate.

Thus, Core Banking System has radically changed the way in which banks function. The greatest
advantage of having a Core Bank System is that introduction of new facilities and products wouldn't
be a time-consuming process, and branch clearings would become instantaneous. Electronic funds
transfer between banks, online trading in the stock markets etc. are examples, which were unheard of
in banks pre Core Banking System era.

The Core Banking Software available locally are Flora Bank Online of Flora Systems Ltd., Bank
Ultimas of Leads Corporation, Ababil of Millennium Software and Stealer of ERA Infotech.

2.

Switching Software

A Switching Software is an ATM/POS transaction processing and management system which is used
for the following specific purposes:
Production of Debit Cards which in addition, includes insertion of customers data into the system and
storing the inserted data into a database,
Pre-authorization of on-us debit transactions (transactions made by banks own cardholders at banks
own ATM/POS) or remote on-us debit transactions (transactions made by banks own cardholders at
ATM/POS of another bank). Note: pre-authorization includes validation of Card Number, PIN, date of
expiry and card status (normal, stolen, lost, blocked, hot etc).
Page | 14

Routing of on-us and remote on-us transactions to Core Banking System (if debit card) or Credit Card
System (if credit card); off-us transactions (transactions made by cardholders of other banks at banks
own ATM/POS) to a switch or credit card system of issuing bank, or to a local/national payment
network (Q-Cash, Cash Link etc), or international payment network (MasterCard, VISA, American
Express, Diners Club, Discover etc) for its authorization,
iv)

Fraud management,

v)

Health monitoring of all the connected ATM and POS terminals,

vi)

Settlement and reconciliation.

The standard Switching Software adheres to open system concepts and client/server or 3-tier
architecture. The transaction processing engine resides on proven and robust UNIX platforms while
the user and ATM device interfaces reside on Windows client workstations. System data is stored in
an ANSI compliant relational database like Oracle.
In a typical environment, a switching system provides support to the hosted ATM/POS terminal, an
ISO8583 interface to the Core Banking System or other banks core banking system, and connectivity
to regional, national or international networks. Other interfaces may include a host security module
(HSM) for PIN verification, card output device (or card personalization system) for production of
card, automated notification system for sending sms to the cardholders and ancillary applications for
credit card, Call center etc.
The following switching software are in use in different banks in Bangladesh:
SL

Name

Software
IST/Switch

Oasis Technologies Ltd., Canada Dutch Bangla Bank, Prime

iSwitch

(now FIS Global Services, USA)

Inter Block, Srilanka

of Name of Developer

Used by (bank)

Bank
UCBL, Islami Bank
Page | 15

SL

Name

3
4

Software
Cardsuite
Phoenix / Iris

5
6

3.

of Name of Developer

Tranzware
ITM

Used by (bank)

Tieto Enator, Latvia

TPS Pakistan Limited, Pakistan

One Bank, EBL

BRAC, Standard Bank, Dhaka

Compas Plus Ltd., Russia

Uronet Worldwide, USA

Bank
ITCL
AB Bank (Cash Link)

Credit Card Software

A Credit Card Software is a Credit Card transaction processing and management system which is used
for the following specific purposes:
Production of Credit Cards which in addition, includes insertion of customers data into the system,
and storing the inserted data into a database,
Pre-authorization and final authorization of on-us credit transactions (transactions made by banks
own cardholders at banks own ATM/POS) or remote on-us credit transactions (transactions made by
banks own cardholders at ATM/POS of another bank). Note: pre-authorization includes validation of
Card number, PIN, date of expiry and card status (normal, stolen, lost, blocked, hot etc) and final
authorization includes debiting card limit.
Routing of on-us and remote on-us debit transactions to Core Banking System via switching system;
off-us transactions (transactions made by cardholders of issuing banks at banks own ATM/POS) to a
switch or credit card system of another bank, or to a local/national payment network (Q-Cash, Cash
Link etc), or international payment network (MasterCard, VISA, American Express, Diners Club,
Discover etc) for its authorization,
iv)

Fraud management,

v)

Health monitoring of ATM and POS terminals, if connected to Credit Card System
Page | 16

vi)

Settlement and reconciliation.

The following Credit Card Software are in use in different banks in Bangladesh:
SL

Name

1
2
3

Software
Transmaster
CardPro
CTL Prime

Tieto Enator, Latvia

Dutch Bangla Bank, EBL
SunGurd System Access, USA
Prime, National, BRAC, BEPS
Card Tech Limited, Cyprus (now Tsys Premier, MTBL, Lanka Bangla

iCard
Tranzware

Limited)
Inter Block, Srilanka
Compas Plus Ltd.

4
5

4.

of Name of Developer

Used by (bank)

UCBL, Islami Bank

AB Bank

Mobile Banking Software

A Mobile Banking Software is an application used by a bank to register mobile users, agents and
merchants; authorize and record cash-in, cash-out, P2P, P2B, B2P, P2G, G2P and ATM transactions.
The P2P, P2B, B2P, P2G and G2P stand for Person to Person, Person to Business, Business to Person,
Person to Government and Government to Person respectively.
In Bangladesh, Dutch-Bangla Bank, for the first time, started Mobile Banking services on 31 March,
2011 using the software named Sybase Mobilizer. BRAC Bank has selected the Fudamo as their
mobile banking platform. It is now (April, 2011) under implementation. Commercially available
mobile banking software are listed below:

Name of the software

Developer

1. Sybase Mobilizer:

Sybase 365, Germany (now, acquired by SAP, USA)

2. Comviva:

Comviva Technologies Ltd., India

3. mCheck:

mCheck Limited, India

Page | 17

4. Fudamo:

Fundamo Limited, South Africa

5. Obopay:

Obopay, Inc., USA

A Mobile Banking Software should have the following features:

Provide connection to the mobile users, agents and merchants via a mobile operator using sms,
USSD, UTK, STK or BREW. The sms stands for Short Messaging System, USSD for
Unstructured Supplementary Services Data, UTK for UIM Tool Kit (where UIM = User
Identity Management), STK for SIM Tool Kit (where SIM = Subscribers Identity
Management) and BREW stands for Binary Runtime Environment for Wireless.

Provide facilities to perform following activities by Agents, Consumer or Merchants:

Consumer, Agent and Merchant Registration

Cash : Cash-in/Cash-out through Agents, Bank Branches and ATMs

P2P: Fund Transfer from one customers mobile account to the mobile account of another
customer

P2B: Utility Bill payment, Tuition fee payment, Mobile TopUp, Merchant payment, Buying
Bus/Railway/Airline ticket, Cinema Ticket

B2P: Salary disbursement by corporate bodies / Industries / Office, Remittance uploading

G2P: Disbursement of government elderly allowances, freedom fighters allowances etc.

Other features:

Audit trail

Maker & Checker

PIN verification if interface is ussd / stk / utk / brew.

If interface is sms, PIN verification through IVR

sms for some Mobile Network Operators (MNO) and ussd/stk/utk/brew for some other MNOs

All transactions need to send confirmation message to the customer by sms

Page | 18

Revenue sharing between parties such as Bank, Agent and MNO

Merchant Commission deduction from Merchant payment and sharing between Bank and
MNO

5.

vat deduction at the month end by the system

Fee and charge definition for different services

Interest calculation on deposit accounts

Credit facility to the Agents and interest calculation

End of Day processing

Payment Gateway Software

A payment gateway software is a software that helps in authorizing payments for e-commerce
transactions. It is equivalent of a physical POS terminal located in most retail outlets. Some of the
main features of a payment gateway include:
Software application designed especially for ecommerce, although it can be used to authorize
payments in traditional brick and mortar businesses.
Encryption of payment and personal data.
Communication between the financial institutions involved and the business and the customer.
Authorization of payments.
Some payment gateways feature tools that can help customers figure out shipping and handling costs,
as well as sales tax. There are also fraud detection tools and other features that can be used with a
payment gateway.
Functions of a payment gateway Software

Page | 19

A payment gateway software facilitates the transfer of information from cardholder to merchant portal
(such as a website, mobile phone or IVR service) to acquiring bank to payment association to the card
issuing bank. When a customer orders a product from a payment gateway-enabled merchant, the
payment gateway performs a variety of tasks to process the transaction:
When a customer selects items to be purchased from the merchants website and proceeds for
payment by pressing the 'Checkout' or equivalent button, the payment gateway software at the bank to
which the merchants website is linked activates and the customer enters his card details.
The payment gateway then brings the transaction details from merchants web-server to its own server
located in the bank using SSL (Secure Socket Layer) encryption.
If the transaction is made by on-us card, the payment gateway forwards the transaction information to
the Core Banking System (if debit card) or to the Credit Card System (if credit card) of the bank.
If the card is off-us (or not on-us), the payment gateway forwards the transaction information to the
card association (i.e., Visa/MasterCard).
If an American Express or Discover Card was used, then the processor acts as the issuing bank and
directly provides a response of approved or declined to the payment gateway.
f)

Otherwise, the card association routes the transaction to the card issuing bank.

The card issuing bank receives the authorization request and sends a response back to the payment
gateway via card association with a response code. In addition to determining the fate of the payment,
(i.e. approved or declined) the response code is used to define the reason why the transaction failed
(such as insufficient funds, or bank link not available)
The payment gateway receives the response, and forwards it on to the merchant website (or whatever
interface was used to process the payment) where it is interpreted as a relevant response which is then
relayed back to the cardholder and the merchant.
Page | 20

i)

The entire process typically takes 23 seconds

The merchant close a "batch" of transactions made by different customers in an interval for settlement
purpose. Bank only make settlement for the closed batches.
During settlement, the payment gateway checks and deposits the total of the approved funds in to the
merchant's account. This could be an account with the acquiring bank if the merchant does their
banking with the same bank, or an account with another bank.
In the above process, serial number (a) to (d), (h) and (j) to (k) narrates the functions of a payment
gateway software.
Many payment gateway software also provide tools to automatically screen orders for fraud and
calculate tax in real time prior to the authorization request being sent for authorization. Tools to detect
fraud include geo-location, velocity pattern analysis, delivery address verification, computer finger
printing technology, identity morphing detection, and basic AVS (Address Verification System)
checks.
There is a growing support by acquirers, issuers and subsequently by payments gateways for Virtual
Payer Authentication (VPA), implemented as 3-D Secure by VISA, SecureCode by MasterCard and
J/Secure by JCB, which adds additional layer of security for online payments.
In Bangladesh Dutch-Bangla Bank has launched the countrys first payment gateway software in the
brand name of Nexus Gateway on 3 rd June, 2010. The software named Card Suit E-Commerce
has been procured from the Tieto Enator, Latvia. The Nexus Gateway accepts DBBLs Nexus Cards,
debit and credit card suits of MasterCard and VISA (issued by any bank in the world). Thereafter
BRAC Bank launched its internet payment gateway at the end of year-2010.

Page | 21

Impact of Online Banking in Bangladesh

As days are passing, more and more digitalization in the banking sector is occurring. Now whole
banking procedure is actually on the way of automation. This has lead to the advancement of the
nation and also offering the customers to be updated and to enjoy the most convenient banking
facilities.
Few banks have a fully automated Management Information System (MIS), many of them use a
combination of manual and automatic system and others use manual system mainly.
Now, online banking has reduced the hassles and sufferings of the customers as they have to wait less
now in long queues for hours.
Now the banking has become less time consuming thus productivity has increased.
The potential of a fully automated MIS is that it allows a bank to manage its portfolio better ,
increases efficiency, enhances transparency and accountability at all levels.
Now we are getting the advantage to be updated with the account balance and status.
Now we are not only getting account information 24/7 , we can now also know important queries like
loan rates, facilities and banking policies and procedures easily.
However, even commercial banks will require share infrastructures and common standards so that
costs associated with providing financial services to a dramatically larger client base can be reduced.
Shared infrastructures facilitate the flow of information within and between financial institutions and
also integrate institutions and their clients to the global financial system and the world wide digital
economy.

Page | 22

SWOT Analysis in Online Banking of BD

Strength
Internet banking is still a fresh concept in Bangladesh, so which banks will grab full automation
quick, those banks will surely enjoy competitive advantage.
Low service cost of online banking is a great advantage. It will allow more and more people to go for
online banking thus banks profitability will increase.
The online banking is the most convenient way, so customers will be highly satisfied
Weakness
Security is a great issue, it must be stronger.
Internet infrastructure of Bangladesh is at developing stage, so yet there are constraints.
Opportunities
Popularity of non branch banking growing day by day
Internet facilities are becoming cheap and available day by day which will make easier access to
online banking
Threat
Fastest advancement in technologies, it will be tough for banks in Bangladesh to be always updated.
Lack of resources and economic status of the major portion of the population is a biggest challenge
indeed.

Page | 23

Recommendation
The constraints mentioned earlier must be eliminated. Otherwise the benefits of online banking cannot
be enjoyed fully. The plus point of our country is our human resources, people of this country have
huge potentials but they need proper education and direction. Proper skill development is must.
Online Banking is a thing which can really increase the economic growth and will make us fit for the
global competition, so Bangladesh must remove the obstacles as soon as possible and should go for
full automation. The computer literacy and knowledge about internet must be familiarized to the rural
areas. Along with the government, the private organization should come forward to face the
challenges. Poverty alleviation is also a must agenda in order to establish digitalization in banking and
as well as in other vital sectors of the country. The banks need to be more competitive and should
come up with effective strategic planning.

Page | 24

Conclusion

Online banking is the system which enables customers to access banking service anytime and from
anywhere. It allows customers to enjoy most convenient and easiest ways of banking. Its the
contribution of Online Banking which has reduced paper work and introduced a eco friendly and
comfortable system. It has not only lessened paper work but also reduced human sufferings thus
increased productivity because now people have less hassles so they can be more attentive towards
their work. Any invention of science has both the pros and cons, online banking are also not an
exception to this. The main challenge is security issues; especially a poor and technologically not
advanced country like us have to be very alert in this regard. The banks must have the needed security
first and then should go for automation. We have to be very careful that modernization never can
encourage any type of criminal activities. Undoubtedly huge economic growth is associated with the
online banking growth, so for the better future of the country we must adapt the new technology as
soon as possible.

Page | 25

Reference
http://www.scribd.com/doc/90973836/The-Current-Status-and-the-Prospect-of-E-Banking-inBangladesh#scribd
http://bankinfobd.com/blog/internet-banking-in-bangladesh
http://forum.daffodilvarsity.edu.bd/index.php?topic=10332.0
http://www.consumer.ftc.gov/articles/0218-electronic-banking
http://www.wbiconpro.com/602-Delwar.pdf
http://www.assignmentpoint.com/business/banking/development-of-electronic-banking-inbangladesh.html
http://banglabookspdf.blogspot.com/2014/11/online-banking-advantages-disadvantages.html
http://it-in-banking.blogspot.com/2013/10/various-software-systems-for-bank.html
http://bankinfobd.com/services/internet-banking
http://bankinfobd.com/banks/46/services/City_Bank
http://www.bracbank.com/international_remittance.php

Page | 26

Page | 27