Online Banking Benefits for Customers

1.
INTRODUCTION
Internet banking is predicted to transform and revolutionise the traditional industry . Banking activities are easily digitized and automated and, thus, from an operational perspective, lend themselves to the internet . The potential competitive advantage of the internet for banks lies in the areas of cost reduction and satisfaction of consumer needs. In relation to costs, electronic transactions are fraction of those conducted through the branch or even telephoneThe internet also offers ban ks the opportunity to better meet customer needs through enhanced interaction, data mining and customisation. Put together, the reduction of costs and increased customer satisfaction makes the logic of the internet compelling.
The growing popularity of in ternet banks stems from the fact that their services are much more attractive than those offered by traditional banks. The importance of internet banking is obvious for several reasons: it offers a cost efficient alternative to telephone and branch banking due to the relatively low maintenance and update expenses. It can be accessed at any time from any internet connection, and does not require any human interaction at the bank end.
1.1 Why Need: costs and can pass the savings on to the customer by offering better interest rates. One of the best things about banking online is that you can perform your transactions no matter what time of the day it is. You don't have to worry about when the bank is open. Online banks are always open. Money can be transferred using a credit card, a debit card through another bank, or by mailing in a check to the online bank. Another benefit is with banks that operate solely through the internet. Due to the cost savings from not having physical branches, these banks have lower operating
Online Banking - Wherever you are, you can bank with us.
Another benefit of online banking is pass through financial services where you are able to conduct secure transactions allowing you to instantly
transfer money to another person without having to write a check. The person receiving the money will have it in their account almost instantly. Many of the pass through services also offer a debit card that can be used like the ones issued by traditional banks, to enable the receiver of the funds to use the money for online shopping or to withdraw cash from an ATM. Online banking offers numerous benefits to its users. Thanks to online banking, you can now budget your spending more effectively, pay your bills online, and save yourself some money. Best of all, each of these tasks can be accomplished from the comfort of your own home. Budget spending more effectively Gone are the days when one had to wait a month at a time to view your official statement from the bank. Now, most banks post your transactions within one to three days of when they occur. This allows you to monitor your spending much more easily and effectively. Online banking helps you to avoid overdraft charges and also gives you the ability to make sure that all your transactions involving checks and your check card clear with no problem s. Online bill paying Stop wasting money on envelopes and stamps for your bills. With online
banking, you can now pay all your bills directly from your computer. Online bill pay normally takes an initial thirty minute setup, but after that, paying your b ills requires only a few minutes. You even have the option to create automatic payments for your bills each month. Online banking also gives you the ability to transfer money between your own accounts. So if your checking account is a little low, it only takes a few clicks of the mouse to transfer some money into it from your savings account.
Save money Online banking allows you to save a little money in several ways. No longer do you have to worry about searching tirelessly for a lost or canceled check . Online banking also saves you money by doing away with the need for postage or supplies to mail your bills. Finally, you ll never have to pay a fee to get a reprint of a lost statement, as online banking archives your past statements for you. Higher interest rates One of the best features of online banks is the high interest rates they can offer compared to brick and mortar banks as a result of the lower cost of operation. You can get much higher interest rates even for savings and checkings accounts. Competitive gain Online banking helps the bank to gain the competitive advantages over the rivals in the turbulent competitive market.
1.2 General problem statement Establishing Online banking infrastructure has been a challenging task for the developing countries like Bangladesh. At present, there is no infrastructure for performing Online banking activities in Bangladesh. So in this Internship Report , we propose a solution that can be effectively used to establish Online banking activities in Bangladesh . 1.3 Objective and scope of the work The primary objective of the Internship Report is to find out a feasible solution for the banking System of Bangladesh using a nation -wide network. Implementing a nation -wide Online banking system requires huge inve stment especially for the establishment of a backbone network. It really matters for a country like ours. But fortunately we need not go for establishing the backbone network; instead the high -speed optical fiber network previously owned by Bangladesh Rail way can be leased
partially to meet the requirement. This work also finds some comparison study with the existing system and finally focuses on few what -if analyses. The comparison study has been founded upon some important financial services such as fund remote transferring, letter of credit (L/C), assuring foreign exchange rate etc. It mainly finds the economic benefits. The what -if analyses have been formed using some internal matrices for performance evolution as such bandwidth utilization of the propos ed network. 1.4 Methodology Following methods have been used to accomplish this proposed solution:

Basic principles of existing banking system (Bangladesh) Study the major drawbacks of existing system by interviewing the current employees of different ban ks. Interviews are mostly taken through emails and in some cases through telephone and Internet chat.
Study the existing IT infrastructure of Bangladesh in context of Bank by interviewing the developer of different banking software vendors
Study the Online banking system from different resources that are available in different websites, books and online journals
Some of the what-if analysis has been used to measure performance of the proposed solution.
Design proposed solution.
1.5 Organization of the Internship Report Entire work has been constructed within a number of chapters. The chapters are organized in a systemic order to get a meaningful concept. Chapter 1 starts with brief description of current banking system of Bangladesh. It also includes objective and scope of the Internship Report ; research methodology used to serve this purpose and finally includes related research on the Online banking side. Chapter 2 discusses the current banking security system of Bangladesh. It mainly deals with the security principles, how money and other valuable assets are kept secured in traditional system and finally deals with the security of the software that are used to maintain banking functions.
Chapter 3 discusses some core functions offered by Trust bank . It covers banking functions, source of income of a bank. Through out this discussion some banking terminologies have been briefly explored. Then detailed discussions on two vital banking sectors (i.e. credit department and foreign exchange) have been made to reveal the scope of imposing the power of ICT to improve its performance. Chapter 4 explains the basics of electronic banking. It begins with a discussion on the different forms of Online banking as such PC banking, mobile banking etc. Business issues have also covered in this chapter. Chapter 5 is dedicated for the proposed infrastructure of Online banking from Bangladesh perspective. It includes both structural and functional description of the proposal. Chapter 6 measures the performance of the propo sed system in two sections. Firstly a comparison study between the present system and the proposed system has been made. Then some what-if analyses of the internal metrics have also been shown under various situations. Chapter 7 is the synopsis of the perf ormance measurement demonstrated in the previous chapter. It also provides the suggestions for the future works. 1.6 Target audience This Internship Report proposes a nationwide backbone for providing Online banking services especially for third world country in which IT infrastructure is improving slowly. So this can be of interest for those people who have interest to establish Online banking in third world country. 1.7 Limitations A country like Bangladesh is not so developed in the IT sector. I proposed a Nationwide banking that has some limitations: This is a general solution and it is not implemented by software.
This is not fully Internet banking because all transactions must be done by bank and customer cannot make any transactions by his home PC .

Server utilization is not shown here under different loads. Response time is not measured under different loads.
1.8 Related research With the rapid proliferation of Internet Technology banking sector now takes a different approach often termed as e bank ing. In one hand it offers ease of operation for both customers and consumers. Again, on the other hand, it diminishes the geographical bars between countries. But such improved services come at the cost of rigorous adaptation of business rules and policie s to cope with the new technology.
2.
Profile of Trust Bank .
Friends with confidence.
Trust Bank Limited is one of the leading private commercial bank having a spread network of 35 branches across Bangladesh and plans to open few more branches to cover the important commercial areas in Dhaka, Chittagong, Sylhet and other areas in 2008. The bank, sponsored by the Army Welfare Trust
(AWT), is first of its kind in the country. With a wide range of modern corporate and consumer financial products Trust Bank has been operating in Bangladesh since 1999 and has achieved public confidence as a sound and stable bank. In 2001, the bank introduced automated branch banking system to increase efficiency and improve customer service. In the year 2005, the bank moved one step further and introduced ATM services for its customers. Since bank s business volume increased over the years and the demands of the customers enlarged in manifold, our technology has been upgraded to manage the growth of the bank and meet th e demands of our customers.
In January 2007, Trust Bank successfully launched Online Banking Services which facilitate Any Branch Banking, ATM Banking, Phone Banking, SMS Banking, & Internet Banking to all customers. Customers can now deposit or withdraw money from any Branch of Trust Bank nationwide without needing to open multiple accounts in multiple Branches. Via Online Services and Visa Electron (Debit Card), ATMs now allow customers to retrieve 24x7 hours Account information such as account balan ce checkup through mini-statements and cash withdrawals. Trust Bank is about to introduce Visa Credit Cards to serve it s existing and potential valued customers. Credits cards can now be used at shops &
restaurants all around Bangladesh and even intern ationally.
Trust Bank is a customer oriented financial institution. It remains dedicated to meet up with the ever growing expectations of the customer because at Trust Bank, customer is always at the center.
2.1 Vision:
We aim to provide financial se rvices to meet customer expectations so that customers feel we are always there when they need us, and can refer us to their friends with confidence. We want to be a preferred bank of choice with a distinctive identity.
2.2 Mission Our mission is to make banking easy for our customers by implementing onestop service concept and provide innovative and attractive products & services through our technology and qualified human resources. We always look out to benefit the local community through supporting entrepreneurship, social responsibility and economic development of the country.
2.3 Positioning statement Trust Bank is a contemporary, upbeat brand of distinctive quality of service and solution that offers a rewarding banking experience as preferred choi ce of banking partner every time, every where.
2.4 Key Success Factors(KSF)

y y y y y y
Trustworthy Dependable Reliable Professional Dynamic Fair
3. Trust Bank Ltd, CDA Avenue Branch:-
Trust Bank, CDA Avenue branch has launched its formal banking activities on 20th September 2006, although the soft opening of branch proceeds from April, 06. It is the 19 th branch of Trust Bank Ltd., Located at the heart of G.E.C circle. Recently the location of G.E.C circle are largely filled up by various top classes banks financial institution, investment companies, fast -foods, restaurants, shopping mall, school, etc. Especially the establishments of various national and multinational banks are notable. On these banking surroundings, definitely there exists a lot of competition among them. Confirm the management of Trust Bank Ltd. has taken an intelligent decision to establish here one of its branch. To combat with others the infrastructure had designed in such a way that the first appearance will definitely attract the custom ers of all types. The excellent interior and exterior design of branch is comparable to any type of bank, located in abroad. The infrastructure costs about 2 & half crore. The greatest combination of modern tools and techniques makes the bank as one of the most beautiful branch in the country.
3.1 Organizational Hierarchy

Vice-President (VP)
q
Assistant Vice President (AVP)

q
Executive Officer(EO)
q
Principal Officer (PO)

q
Senior Officer (SO)

q
Management Trainee Officer (MTO)

q
Officer (O)
q
Junior Officer (JO)
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3.2 Human resources: The branch has 25 employees ranging from junior officer to VP. Besides this two security guards, one cleaner, one kitchen boy, two peons are constantly provide their services for the smooth indirect internal and extern al operation of banking activities.
3.3 TBL, CDA Avenue Branch at a glance: (Fig at not disclose-2007)
Cash Deposits Remittance Loans and Advances Import Export Fixed Assets Profit
3294379 188793086.07 136247.40 1141419369.42 136013900 Nil 14634496.51 3500000.00
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3.4 Activities of CDA AVENUE BRANCH

Customer Care Centre
Accounts opening
Remittance (Local)
Cash
Ladies Priority
Cash Receipt
Cash Payment
Financial Control Department (FCD)
Daily Accounts
Clearing
Foreign Exchange Department
Import & Remittance (Foreign)
Export
Loans & Advance Department
Continuous
Demand
Term Loan
Time Loan
a.CC (Hypothecation) b.Overdraft c.SOD d.Cash Collateral e.Loan Against Trust Receipt (LTR)
o o o
PAD Inland Bill Purchase (IBP) Foreign Documentary Bill Purchase (FDBP)
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3.5 Line of Products : Product & Services rendered by the branch. TBL carries out all traditional functions which a commercial bank performs. Such as mobilization of deposit, disbursement of loan, investment of funds, financing export and import business trade and commerce and so on. Products and services offered by TBL can be visualized from the diagram in the following diagram: -
Depository service
CAD, SB, STD, FDR, TSSS, TMDS, TMMS TES, MBDS, LSS, IFFDS
Cash credit, Cash Collateral, OD, LTR, IBP, Credit services p Term loan (Ind), Term loan (Com), Time loan, Car loan, Any purpose loan (Staff)
Remittance service
DD, PO,OBC, IBCA
Foreign Trade Service
Import, Export
Guarantee services
Inland bill purchased
Locker service
Preservation of valuables
Miscellaneous
Sale of prize bond
Besides these the branch also offers some specialized card services to its customers and bank officers, linking with 12 leading commercial Bank. These are:y y Q-Cash Debit Card Q- Cash Credit Card
Various products under retail banking: -
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Car loan Household Durables loan Doctor s loan Travel loan Hospitalization loan Any purpose loan Apon Nibash loan (House Finance) CNG Conversion loan Marriage loan Advance against Salary
3.6 Information Technology (IT) & Automation
All the branches of the TBL are fully computerized. New software(Flora Bank) is now in use to provide faster, accurate and efficient service to the clients. The bank is continuously striving for better services through extensive automation of its branches. We are soon going to launch "One Branch Banking" through on-line connectivity. The bank has set up a full -fledged IT division to keep abreast of the latest development of IT for better service in the days to come.
3.7 Online Charge

Up to 50000 50000 Any Amount Tk 50+Vat 15% 0.1%+ Vat 15%
** Within Chittagong the charge is recently removed.
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3.8 Online Income: January to December -2007: =16,614/= January to July-2008: =46,290/=
3.9 Online Cost: Fixed Each Month =28,175/=
3.10 Number of Booth: There are 8(Eight) ATM booth all over the country and alliance with all the private banks in the country. ** All the information about the ATM BOOTH(Income & Expenses) maintains by the Head Office.
3.11 Strength
1. Managerial Excellency: The top management of the bank, the key strength for the Trust Bank, has contributed heavily t owards the growth and development of the bank. The top management officials are highly qualified professionals, so they have a good idea about the current situation.
2. Company Reputation: The Trust Bank has created a good reputation in the banking indust ry of the country. Their main customers are army persons. The popularity of this bank is increasing day by day also in the general public area.
3. Sponsors: The Trust Bank has been founded by the Army Welfare Trust. The main sponsor for the bank is Sena Kalyan Sangstha (SKS). The chairperson of this bank is the Chief of army Staff and directors are appointed by the Sangstha. That is why the sponsor does not have any - problem for the fund.
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3.12 Weakness 1. Limitation of Information System (PC Bank): PC bank is not comprehensive banking software. It is desirable that a more comprehensive banking system should replace PC bank system. 2. Turnover Problem: The turnover problem is treated as a weakness for the Trust Bank because the employees do not stay far a long. So there will be a chance of brain drain from this bank to other bank and as a result the bank may suffer from managerial in competency. 3. Advertisement Problem: Another weakness for the Trust Bank is advertisement. Their media coverage is so poor that people do not know the bank thoroughly.
3.13 Opportunity
1. Diversification The Trust Bank can pursue diversification strategy in expanding its current line of business. They serve not only the army but also the general people. 2. Business Banking The investment potential of Bangladesh is foreign investors. So TBL has opportunity to expand in business banking. 3. Modern Facilities and Computer: From the very beginning, the Trust Bank tries to furnish their work surroundings with modern equipment and facilities. For speedy service to the customer, the Trust Bank had installed money -counting machine in the teller counter. The bank has computerized banking operation under software called PC banking. Moreover computer printed statements are available for internal use and occasionally for the customers. The Trust Bank is equipped with telex and fax facilities.
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4. Stirring Branches: From the formative stage of the Trust Bank tried to furnish their branches by the impressive style. Their well -decorated branches get attention of the potential customer. This is one kind of positioning strategy. The Sena Kalyan Bhaban Branch and Gulshan Branch are also impressive and are comparable to foreign banks.
5. Interactive Corporate Culture: The corporate culture of the Trust Bank is very much interactive compare to other local organizations. This interactive environment encourages the employee to work attentively. Since the banking job is very much routine work oriented, lovely environment boots up the work capabil ity of the employees.
3.14 Threat 1. Severe Rivalry in Banking Industry: The contemporary banks of the Trust Bank like, Dhaka Bank, Dutch Bangla Bank, National Bank, Mutual Trust Bank, Mercantile Bank are its major rivals. They are carrying out aggressive campaign to attract lucrative clients as well as major depositors. The Trust Bank should remain vigilant about the steps taken by these banks, as these will in turn affect the Trust Bank strategies. 2. Multinational Banks: The Rapid expansion of multinati onal bank poses a potential threat to new PCB's. Due to the booming energy sector, more foreign banks are expected to operate in Bangladesh. Moreover, the existing foreign banks such as HSBC, Citi N.A, and Standard Chatered are now pursuing an aggressive b ranch expansion strategy. Since the foreign banks have tremendous financial strength, it will pose a threat to local banks to a certain extent in terms of grabbing the lucrative clients. 3. Default Culture: Default culture is very much familiar, in our cou ntry. For a bank, it is very harmful. As the Trust Bank is new, it has not faced it seriously yet.
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4. Performance of Trust Bank Limited
TBL a blend of expertise and technological excellence is in place of meet varied needs of modern customers. The bank aims at mobilizing untapped money of the country and prudent deployment for production activities in the form of lending at a competitive interest rates/loan pricing. Towards attainment of its goals and objectives, the bank pursues diversified credit policies and strategic planning in credit management. To name a few, the bank has extended micro credit, consumers durable scheme loans, house building loans etc. to cater to the needs of the individuals, which in turn has helped thousands of families. The bank also extends loan in the form of trade finance, industrial finance, and project finance, export & import finance etc. The bank's credit polices aimed at balanced growth and harmonious development of all the sectors of the country's economy with top most priority to ensure quality of lending by averting growth of non -performing assets. The performance of the bank has been projected below with the help financial statements, statistical graphs and charts:
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Performance at a glance
In million(taka) Particulars Authorized capital Paid up capital Share money deposit Statutory Reserve Retained Earning Total equity Deposit Loans and Advances Import Export Foreign Remittance Investment Total Asset Total Income Total Expanse Operating Profit Total Provision Profit Before Tax Provision for Tax Net Profit ROE ROA Credit Deposit Ratio EPS Employees Branches 0.12 0.23 250.35 1148.99 525.74 561.30 1.20 10.40 202.00 1427.92 84.77 78.94 5.83 5.21 0.62 0.25 0.37 0.02 0.00 0.46 1.48 64.00 8.00 10.98 15.34 276.32 2553.72 1603.95 625.90 22.60 22.00 363.11 3153.04 235.03 164.29 70.74 16.48 54.26 28.30 25.96 0.26 0.02 0.63 103.88 124.00 10.00 (140.16) (51.63) (0.04) 0.63 (532.63) 138.00 11.00 68.14 0.19 0.01 0.97 194.70 209.00 13.00 216.38 0.30 0.02 0.75 44.16 273.00 15.00 364.62 0.41 0.03 0.53 (106.38) 337.00 18.00 10.98 (124.82) 236.16 2991.19 1897.63 1349.20 71.15 46.00 493.19 3424.33 347.10 469.03 (121.93) 18.23 (140.16) 2002 1000.00 250.00 2003 1000.00 250.00 2004 1000.00 350.00 2005 1000.00 350.00 150.00 24.60 (70.30) 454.30 4483.26 4358.31 2761.00 326.60 151.30 1896.92 7858.83 535.49 447.06 88.43 20.29 68.14 2006 2000.00 500.00 200.00 67.88 102.81 870.69 9042.18 6804.45 5628.20 930.20 197.90 3220.78 12085.82 1046.36 782.09 264.27 47.89 216.38 2007 2000.00 500.00 250.00 111.16 275.92 1287.08 13601.10 9250.59 8495.40 1533.80 244.50 4544.64 16312.81 1557.23 1117.12 440.11 75.49 364.62
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Authorized & Paid-up Capital
2000 1500 Taka 1000 (Million) 500 0 2002 2004 Year 2006 Authorized capital Paid up capital
The above chart presents the Authorized Capital & Paid up Capital from 2002-2007. It is seen that the all things are positive indication for the bank to compete in the competitive banking business in Bangladesh.
Retained Earning Statutory Reserve & Share Money Deposit

800 Taka ( Mi 600 400 200 0 2002 -200 Ye a r 2004 2006 Retained Earning Statutory Reserv e Share money deposit
The above chart presents the Share money deposit, Statutory Reserve & Retained Earning from 2002-2007. It is seen that the all things are positive indication for the bank to compete in the competitive banking business in Bangladesh.
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Total equity
2002 2003 2004 2005 2006 2007
The above chart presents the total Equity from 2002-2007. It is seen that the all things are positive indication for the bank to compete in the competitive banking business in Bangladesh.
12000 10000 8000 6000 4000 2000 0 2002 2003 2004 2005 2006 2007 Export Import
The above chart presents the total Import from 2002-2007. It is seen that the all things are positive indication for the bank to compete in the competitive banking business in Bangladesh.
The above chart presents the total Export from 2002-2007. It is seen that the all things are po sitive indication for the bank to compete in the competitive banking business in Bangladesh.
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Operating Profit
2002 2003 2004 2005 2006 2007
The above chart presents the Operating Profit from 2002-2007. It is seen that the all things are positive indication for the bank to compete in the competitive banking business in Bangladesh.
Net Profit 400 300 200 100 0 -100 -200 2002 2003 2004 2005 2006 2007 Net Profit
The above chart presents the Net Profit from 2002-2007. It is seen that the all things are positive indication for the bank to compete in the competitive banking business in Bangladesh.
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5. Online Banking- TRUST BANK

5.1 INTERNET BANKING Trust Bank has introduced Internet Banking in order to provide customers for better service. Its time of internet and any body from any where by their unique Id and password can access their account from specific website
(www.trustbank.com.bd) to know about their account. Here user can see Balance and mini statement of their account.They can print out any transactions by giving date range in the specific field also for preserve it as a document. That mini statement needs not any signature verification that will be auto generated statement. Our Bank has achieved noteworthy progress in the field of information technology during the year under review. In January 2007, the Bank successfully launched online banking services which facilitates any branch banking, ATM banking, phone banking SMS banking and internet banking. All the branches are currently using centralized banking software for their daily transaction processing and routine reporting .The Bank has subscribed to ATM VISA Debit and Credit cards, which is an important milestone in automation of our banking services. Besides, services like phone banking, SMS banking and internet banking have considerably reduced the customers counters. 5.2 ATM and Debit Card : Look into your pocket. Is there a Trust Debit Card? If yes then you are free to move anywhere round the clock all over Bangladesh without carrying cash. Even the card can be used without a secret code (PIN) in departmental stores, shopping centers or restaurants, petrol pump or even for paying phone bills, just like a credit card. Additionally you can enjoy overdraft facility prior to subsequent approval. To make the life hassle -free take the Trust Debit Card without giving a second thought. pressure on the cash
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Services Linked with the Trust VISA-Electron Debit Card

24 x 7 hours banking. Cash can be withdrawn from any VISA logo marked ATM

Bank A/C can be accessed using the card through out Bangladesh Merchandises can be purchased from shopping outlet, departmental stores, and restaurants and so on by this card

Over Draft (OD) facilities (if approved) 100% Over Draft (OD) cash withdrawal facility can be availed Supplementary card for spouse and children of the primary cardholder upon request
Additional Services provided wit h the card

Account balance inquiry from ATM Mini statement inquiry from ATM Utility bill payment(Currently Banglalink) Personal Identification Number (PIN) change facility
Conditions
Cash can be withdrawal limit Tk. 20,000.00 to 50,000.00 by maximum four transactions a day

Single snap cash withdrawal limit is maximum 20 thousand a day Personal Identification Number(PIN) can be changed no more than 2 times a day for security measures
ATM will retract the card for every three times wrong PIN entry during transactions for security purpose. In case of retraction, customer's nearest branch or card division must be contacted
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How to Apply for a Debit Card
Must be an account holder of Trust Bank Limited to earn the eligibility for owning a card
Trust Debit card will be issued within 3-4 working days as per customer's interest & subsequent instructions
The Bank has subscribed to VISA Electron (debit card), which enables the customers to withdraw money from their accounts through ATMs without turning to cash counters. The Bank is a member of Q-Cash ATM network which is a consortium of 14 member banks. At present, Q-Cash has 84 ATMs and 250 POS terminals throughout the country, out of which 8 ATMs are attached with our branches. Besides, the Bank has establish ed itself as the settlement bank for the entire Q-Cash network. 5.3 Interface with other ATM networks: Being the settlement bank for Q -Cash network, our Bank has played a lead role for expansion and sharing of ATM network with different banks at a competit ive rate. For instance, Q -Cash has recently signed a quadr -party agreement with Dutch-Bangla, Trust and Mercantile Bank to create a common transaction routing platform. Dutch-Bangla Bank has 151 ATMs and 700 POS terminals nationwide. Besides, in November 2 007, Q-Cash signed a similar agreement with BRAC Bank, which had a network of 64 ATMs and 500 POS terminals. Signing of these agreements will make 24 -hour banking transactions flexible for the customers of all banks involved in this expanded network. By sh aring the networks, participant banks will be able to eliminate per transaction toll charged by BISA, since the shared network of Q-Cash, Dutch-Bangla and BRAC Bank will be considered as a big network and transactions within this network will be settled locally.
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5.4 Introduction of VISA Card Eyeing a bright prospect, your Bank has successfully launched VISA credit cards to serve its existing and potential customers, although a very stiff competition is prevailing in the market. Presently, we are marketin g five types of credit cards, viz, VISA Classic Local, VISA Classic International and VISA Dual Card. We expect that sizable revenue will flow from credit cards. 5.5 BENEFITS OF ONLINE BANKING. Anywhere 24 hours 7 days banking

Internet banking, Tele bank ing and ATM/POS One Stop Shop for all you banking need. Significantly reduced time in banking transactions Sophisticated customer information at the fingertips and can be provided anytime.

Online Inter-branch Transfer Any Branch pay order System Digital Signature/photo image while transacting Display Customers Balance, Transactions, and Statements online. Automatic Sweep in & out Locker Service Availability TBL 5 to 9 Extended Service Bill payment -Utility Service Bill -Tuition Fees -Mobile Phone Bills

Versatile Products availability Fast Cash Fast Loan Auto Loan Consumer Loans High Performance Account Savings Insurance Account
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Monthly Income Plan Monthly Deposit Plan. Cash withdrawal from you account at any branch of the Bank. Deposit in you account at any Branch of the Bank. Transfer of money from you account to any other account with any Branch of the Bank.
5.6 Benefits for customer include

Increase in business efficiency Flexibility- the system may be tailored to the needs or particular customers;
Easy to use, training is simple and no sophisticated equipment is required.
5.7 Drawbacks of Online banking Security: Electronic links tends to be exposed to attacks from both thieves and vandals. Internet hackers have found ways to steal passwords as th ey pass through one site and use them to break into computer system. Technology Problems: One issue is the lack of standards. The lack of standard also affects the ability of organizations to establish a stable link. Legal Issues: Laws governing electronic commerce are mostly nonexistent or are just being written. Legislatures, courts, and international agreements will have to settle such still open questions as the legality and force of E -mail contracts, including the role of electronic signatures.
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6. RECENT TREND OF ONLINE BANKING

6.1 Electronic Business and Online Banking Recent developments in information and communications technology (ICT) and the rise in the volume of banking business performed electronically are causing what will be a vital catalys t for changing the business policies of financial institutions.Online banking as a segment of electronic business, which, in turn, encompasses all types of business performed through electronic networks. Electronic channels are used for both business -to-business and business-tocustomer transactions, such as ordering goods, delivering software or paying for such transactions. Online banking is considered to be a segment of e -business to the extent that banks are involved in the conduct of business transacti ons via electronic media; other non -banking financial products and services (e.g. insurance), not to mention products and services from other sectors of business, may be sold electronically as well . In other words, Online banking is not a banking product; rather, it describes the way transactions are conducted. Nowadays, in fact, banks are involved in e business in a variety of ways, including cooperation with Internet service providers (ISPs), the issuing of e-money or the execution of payments. Two fundamental aspects of Online banking are the nature of the delivery channel through which activities are performed, and the means for customers to gain access to those channels. Commonly delivery channels include closed and open networks. Closed networks have no such membership requirements. Currently, widely used access devices through which Online banking products and services can be provided to customers include point of sale terminals, automatic teller machines, and telephones, PCs. 6.2 Different forms of Online banking: The terms PC banking , electronic banking , Internet banking , Telephone banking SMS banking or mobile banking refer to a number of ways in which customers can access their banks without having to be physically present at the bank branch. Online banking may be understood as term that covers all these ways of banking business electronically .
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6.2.1Tele-banking Tele-banking service is provided by phone. To access an account it is required to dial a particular telephone number and there are several options of services. Options included

Checking account balance Funds transfer between current, savings and credit card accounts Bill payments Stock exchange transaction Receive statement via fax Loan payment information
6.2.2 PC Banking The increasing awareness of the importance of literacy of computer has resulted in Increasing use of personal computers through the entire world. Furthermore, incredible plummet of cost of microprocessor has accelerated the use of computer. The term PC banking is used for banking business transacted from a customer s PC. Using the PC banking or home banking now customers can use their personal computers at home or at their office to access their accounts for transactions by subscribing to and dialing int o the banks Intranet proprietary software system using password.
6.2.3 Types of PC Banking Basically, there are two types of PC banking. The first type is online banking, in which bank transactions are conducted within closed networks. The customer needs specialized software provided by his bank. The second type is Internet banking, which German banks have been offering since the mid-nineties, although the only product they were offering at the time was information. Unlike closed networks, Internet bankin g permits the customer to conduct transactions from any terminal with access to the Internet.
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Internet Banking
Internet banking would free both bankers and customers of the need for proprietary software to carry on with their online banking transactions. Customer behavior is changing rapidly. Now the financial service is characterized by individuality, independence of time and place and flexibility. These facts represent huge challenges for the financial service providers. So the Internet is now considered to be a strategic weapon for them to satisfy the ever -changing customers demand and innovative business needs.
Adequate legal framework and maximum security are the two essential factors for Internet banking. The comprehensive security infrastructur e includes layers of security from the network to the browser, including sophisticated encryption that protects customers from intrusion when they access the bank over the public network.
Mobile Banking
Mobile banking (also known as M-Banking, m banking, SMS Banking etc.) is a term used for performing balance checks, account transactions, payments etc. via a mobile device such as a mobile phone. Mobile banking today (2007) is most often performed via SMS or the Mobile Internet A mobile banking conceptual model
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"Mobile Banking refers to provisio n and a ailment of banking- and financial services with the help of mobile telecommunication devices. The scope of offered services may include facilities to conduct bank and stock market transactions, to administer accounts and to access customized information. Most services in the categories designated Accounting and Brokerage are transactionbased. The non-transaction-based services of an informational nature are however essential for conducting transactions - for instance, balance enquiries might be needed before committing a money remittance. The accounting and brokerage services are therefore offered invariably in combination with information services. Information services, on the other hand, may be offered as an independent module. Trends in mobile banking The advent of the Internet has revolutionized the way the financial services industry conducts business, empowering organizations with new business models and new ways to offer 24x7 a ccessibility to their customers. According to a study by financial consultancy Client, 35% of online banking households will be using mobile banking by 2010, up from less than 1% today. Upwards of 70% of bank center call volume is projected to come from mobile phones. Mobile banking will eventually allow users to make payments at the physical point of sale. "Mobile contact less payments market by 2010. [2] Many believe that mobile users have just started to fully utilize the data capabilities in their mobile phones. In Asian countries like India, China, Bangladesh, Indonesia and Philippines, where mobile infrastructure is will make up 10% of the contact less
comparatively better than the fixed -line infrastructure, and in
European
countries, where mobile phone penetration is very high (at least 80% of consumers use a mobile phone), mobile banking is likely to appeal even m
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Mobile banking business . The bank-focused model emerges when a traditional bank uses non -traditional low-cost delivery channels to provide banking services to its existing customers. Examples range from use of automatic teller machines (ATMs) to internet banking or mobile phone banking to provide certain limited banking services to banks customers. This model is additive in nature and may be seen as a modest extension of conventional branch -based banking. Mobile Banking Services Mobile banking can offer services such as the following: Account Information 1. 2. 3. 4. 5. 6. 7. 8. 9. Mini-statements and checking of account history Alerts on account activity or passing of set thresholds Monitoring of term deposits Access to loan statements Access to card statements Mutual funds / equity statements Insurance policy management Pension plan management Status on cheque, stop payment on cheque
Payments & Transfers 1. 2. 3. 4. 5. 6. Domestic and international fund transfers Micro-payment handling Mobile recharging Commercial payment processing Bill payment processing Peer to Peer payments
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Investments 1. 2. 3. Portfolio management services Real-time stock quotes Personalized alerts and notifications on security prices
Support 1. Status of requests for credit, including mortgage approval, and insurance coverage 2. 3. Check (cheque) book and card requests Exchange of data messages and email, including complaint submission and tracking 4. ATM Location
Content Services 1. 2. 3. General information such as weather updates, news Loyalty-related offers Location-based services
Based on a survey conducted by Forrester, mobile banking will be attractive mainly to the younger, more "tech-savvy" customer segment. A third of mobile phone users say that they may consider performin g some kind of financial transaction through their mobile phone. But most of the users are interested in performing basic transactions such as querying for account balance and making bill payment Challenges for a Mobile Banking Interoperability: There is a lack of common technology standards for mobile banking. Many protocols are being used for mobile banking HTML, WAP,
SOAP, XML to name a few. It would be a wise idea for the vendor to develop a mobile banking application that can connect multiple banks. It would require
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either the application to support multiple protocols or use of a common and widely acceptable set of protocols for data exchange. There are a large number of different mobile phone devices and it is a big challenge for banks to offer mobile banking solution on any type of device. Some of these devices support J2ME and others support WAP browser or only SMS. Overcoming interoperability issues however h ave been localized, with countries like India using portals like R-World to enable the limitations of low end java based phones, while focus on areas such as South Africa have defaulted to the USSD as a basis of communication achievable with any phone. The desire for interoperability is largely dependent on the banks themselves, where java enabled applications are of better security, easier to use and offer development of more complex transactions similar to that of internet banking while SMS can provide the basics but becomes a hassle to operate with more difficult transactions. Security: Security of financial transaction, being executed from some remote location and transmission of financial information over the air, are the most complicated challenges that need to be addressed jointly by mobile application developers, wireless network service providers and the bank s IT department. The following aspects need to be addressed to offer a secure infrastructure for financial transaction over wireless network : 1. Physical security of the hand-held device. If the bank is offering smartcard based security, the physical security of the device is more important. 2. Security of the thick-client application running on the device. In case the device is stolen, the hacker should require ID/Password to access the application.
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3.
Authentication of the device with service provider before initiating a transaction. This would ensure that unauthorized devices are not connected to perform financial transactions.
4. 5. 6.
User ID / Password authentication of bank s customer. Encryption of the data being transmitted over the air. Encryption of the data that will be stored in device for later / off -line analysis by the customer.
Scalability & Reliability: Another challenge for the CIOs and CTOs of the banks is to scale -up the mobile banking infrastructure to handle exponential growth of the customer base. With mobile banking, the customer may be sitting in any part of the world (a true anytime, anywhere banking) and hence banks need to ensure that the systems are up and running in a true 24 x 7 fashion. As customers will find mobile banking more and more useful, their expectations from the solution will increase. Banks unable to meet the Application distribution: Due to the nature of the connectivity between bank and its customers, it would be impractical to expect customers to regularly visit banks or connect to a web site for regular upgrade of their mobile banking app lication. It will be expected that the mobile application itself check the upgrades and updates and download necessary patches. However, there could be many issues to implement this approach such as upgrade / synchronization of other dependent components Personalization: It would be expected from the mobile application to support personalization such as : 1. 2. Preferred Language Date / Time format
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3. 4. 5. 6.
Amount format Default transactions Standard Beneficiary list Alerts
Actually mobile banking is a variation of Internet banking. Mobile banking is a good example of how the lines between the various forms of e -banking are becoming gradually blurred. Due to the new transmission technologies such as WAP (Wireless Application protocol) portable terminal like mobile ph ones, personal digital assistant (PDA) or small hand -held PCs are providing bank customers with access to the Internet and thus paving the way to Internet banking. It assures immense flexibility and makes the financial services independent of time and place. However, the use of mobile banking is still in a nascent state. The slower transmission speed of the WAP standard and the limited amount of information available are just two of the factors inhibiting the use of those terminals.
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7. Present Involvement of ICT in banking of Bangladesh

Due to immense advances of information and com munication technology (ICT), it Certainly introduced new dimensions for the global E -banking community. It provides some attractive features for the customers than those offer ed by traditional banking system such as to open an account; it takes less time than traditional system. Other services offered like free fund transfer and free payment cards etc. In case of traditional banking system a fund transfer, for instance, used t o take several days whereas electronic banking is capable to perform the same operations within few seconds. Customers are getting better services now because of the development of ICT in E -banking and so bank now can perform its function with high speed a nd accuracy. But it is very frustrating to note that banking industry from Bangladesh s perspective still follow the so -called manual procedure .
7.2 Scope of Online banking in Bangladesh For any electronic banking system the major cost goes for settin g up a backbone network. For a country like ours it s a matter of huge investment. Fortunately Bangladesh Railway has a high -speed optical fiber network parallel to the railway path owned by Bangladesh Railway. Its total capacity is about 2.5 Gbps. This fiber optic network covers almost every important parts of the country. Hence, it can be used as the backbone network of electronic banking in Bangladesh. Some of the multinational companies like Grammen mobile phone company, Ranks ITT of Bangladesh have alr eady started to use this high-speed optical fiber network and they are providing their services even in rural area. So we can utilize this opportunity in case of Embanking in Bangladesh .
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7.3 Infrastructure of Online banking. The block diagram representa tion is shown in this section.
Fig 5.1: Block diagram of Online system
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7.4 Description
structural
In the above configuration all bocks are symmetric except for the role of central bank differs slightly.
In central zone (i.e. Dhaka) Bangladesh Bank (Head Office) is connected with every other Head Office and branch office is connected to its head office in the same region. Bangladesh Bank(Head office) is given the legal authority to get any sort of information regarding the transaction flow from any bank (Head Office).
In the regions other than Dhaka (i.e. Chittagong) the role of Bangladesh Bank is handed over to Sonali Bank Principal Branch if there exists no branch of the central bank.
In both regions each bank forms a local network (might be wire d or through radio link) where the head office or principal branch play the central role.
In some relatively remote area (Rangamatee) where total number of branches of all banks is very few (for instance a total of 5 branches are there) the above configura tion is not a feasible one. In such cases, all branches, irrespective of banks, should form a local network. This is because establishment and maintenance cost will be much higher for a number of very small LAN instead of a single moderately sized one.
Unlike other unit it has no governing entity. Here every branch communicates directly with its Head Office.
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Every Head Office is having its own VSAT to be connected with the Internet. One is shown in the diagram. Alternatively, Internet connection can be a ssured by direct connection with the sub-marine cable as a future solution. It is shown as the dashed box in the diagram. In the diagram of the proposed infrastructure the magnified box shows a special module entitled others connected with the head offic e. It is used to represent to facilitate for the utility bill payments such as water, gas etc. As a result, customer will be able to pay their utility bills at any branch of any bank. It would obviously reduce the immense pressure on some specific branches as being followed now. Again, it presents some non -banking financial service providers such as insurance company.
7.5 Strategic risk from management perspective
Financial institution s board and management should understand e -banking risks and evaluate the risk and cost to minimize associate risks prior to offer e banking service. Strategic risks result from (bad) business decisions taken by management. Specifically, the danger of not being able to keep up with rival technologies is the source of the gr eatest strategic risk. Technology is so important for e-banking operations that there is a correspondingly great needs to invest in new technologies. Innovators assume most of the risk. It is often impossible to foresee whether a new product will survive o n the market or whether a project can be successfully brought to conclusion. Failed IT projects can raise the amount of misallocated investment; thus, instead of reducing costs, e banking would have precisely the opposite effect. Therefore, some institutions are pursuing the strategy of imitation. Such banks not only save costs on IT development but also have the advantage of knowing that a technology has proved to be feasible and that the market has shown initial signs of acceptance. A major disadvantage o f this strategy is that if circumstances cause the technology to be entered into production too late, the market segment could already be occupied.
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The rapid pace of innovation in e -business is requiring banks to make e -banking strategy decisions as quickly as possible, since technological innovation and customers tastes may radically change. Frequently there is no way to predict which technology and which terminals (e.g. mobile phones, television set, Pads) will prevail. Missteps in the planning and imple mentation of strategy engender considerable risks. The responsibility for these decision lies with the senior management of the bank.
7.6 Reputational risk Banking business is especially sensitive to fluctuations in confidence. Therefore, Reputational risk, particularly in a relatively new field of business, represents a special challenge for banks. Customers confidence in their bank can be shaken if the bank is not able to provide secure and trouble -free e-banking services. The same is true if services such as responding to inquiries or processing orders are not performed at the speed that customers have come to expect in the electronic age .
7.7 Legal risk Legal risk arises from violations of, or non-conformance with laws, rules, regulations, or prescribed practices, or when the legal rights and obligations of parties to a transaction are not well established. Given the relatively new nature of many retail electronic banking and electronic money activities, rights and obligations of parties to such transactions are, in some cases, uncertain. For example, application of some consumer protection rules to electronic banking and electronic money activities in some countries may not be clear. In addition, legal risk may arise from uncertainty about the va lidity of some agreements formed via electronic channel. Online banking schemes may be very attractive for money launderers if the systems offer liberal balance and transaction limits, and provide for limited audit ability of transactions. Application of m oney laundering rules may be
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inappropriate for some forms of electronic payments. Because electronic banking can be conducted remotely, banks may face increased difficulties in applying traditional methods to prevent and detect criminal activity. As electronic business expands, banks may seek to play a role in electronic authentication systems, such as those using digital certificates. The role of a certification authority may expose a bank to legal risk. For example, a bank acting as a certification authority may be liable for financial losses incurred by parties relying on the certificate. In addition, legal risk could arise if banks participate in new authentication systems and rights and obligations are not clearly specified in contractual agreements.
7.8 Other risks Traditional banking risks such as credit risk, liquidit y risk and market risk are also Present in e-banking sectors.
Credit risk It is the risk that counter-party will not settle an obligation for full value, either when due or at any time thereafter. Banks engaging in e -banking activities may extend credit via non -traditional channels, and expand their market beyond traditional geographic boundaries. Inadequate procedures could heighten credit risk for banks. Banks engaged in electronic b ill payment programs may face credit risk if a third party intermediary fails to carry out its obligations with respect to payment. Liquidity risk It arises from a bank s inability to meet its obligations when they come due, without incurring unacceptable losses, although the bank may ultimately be able to meet its obligations. Liquidity risk may be significant for banks that specialize in electronic money activities if they are unable to ensure that funds are adequate to cover redemption and settlement dem ands at any particular time. In addition, failure to meet redemption demands in a timely manner could result in legal action against the institution, and lead to Reputational damage.
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Market risk Market risk is the bank of losses in on and off balance sheet positions arising from Movements in market prices, including foreign exchange rates. Banks accepting foreign currencies in payment for electronic money are subject to this type of risk.
7.5.1 Security resolve strategy It is obvious that security issue that deserves the highest importance in such system where security breach could occur enormous disaster. Hence, it imposes security in two levels: Customer level authentication Application level IP level
7.5.2 Customer level authentication It is very much needed to ensure the security of all levels in E -banking. One of the parts is customer authentication. In traditional system, to authenticate customers the central bank maintains a policy when they open account like it stores the photo and signature of the customer and later this process is used to verify customers. In our proposed system, customers can authenticate themselves by digital certificate, which is obtained from certificate authority.
7.5.3 Application level security management In application level, many transactions are occurred electronically. Each transaction is required more than one message. Each message should have some desirable properties: 1. Authenticity 2. Confidentiality 3. It is unforgivable 4. Integrity 5. Not reusable
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Digital signature In this process, signer signs the message and sign can be verified by anyone that it really comes from signer, so signer cannot forge later and nobody can modify the message while in transit . To ensure authenticity, receiver can verify the signat ure and understand that the message really comes from sender. Hash algorithm and asymmetric encryption is used to perform this operation.
Digital certificate Digital signature is performed by using asymmetric encryption that involves two keys: public key and private key. Sender signs the message using his private key and receiver decodes it using senders public key, as public key is public anybody can get this key and can pretend to be as authentic and it can be continued until intended user inform other u sers. To avoid this problem digital certificate can be used. It is widely used for network security applications . The certificate authority provides the certificate and authority is trusted by everyone. It signs the message that contains user identificatio n and public key. It also specifies which algorithms and parameter are used to perform digital signature.
Certificate authority If we present the organ gram of the bank authority, it should look like the following figure:
Fig :Organogram of the Bank
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To provide certificate bank authority can follow this policy. The policy could be like this: the higher level employee can provide certificate to lower level for individual bank and finally it must be authenticated by the central bank. So that it can be used for any branch of any bank in any city.
Control access mechanism From the fig 5.3 we can use the following notations: R (i) > R (j) Such that i is at the higher rank than that of j. S (j) implies the sensitivity level of data j. And finally, A (i, j, x) = 1 I.e. person with R (i) has the x access on data whose sensitivity level is S (j). X read, write, append.
Otherwise A (i, j, x) = 0 Each employee must be assigned a predefined role or rank prior to the system starts working. And it must be maintained i n a consistent way. We call this phase Rank Assignment and Management (RAM). RAM: It is one of the most critical phases of this module. At the very beginning, each employee is assigned a rank in accordance with his/her qualification. An employee with highe r rank can read the data designated for another employee (whose rank is lower). Only the employee with the highest rank has the right to read, write and modify data of another employee (with lower rank) if there is anything wrong. Due to promotion of emplo yees the rank must be dynamically updated. The update must be done by the top rank employees. So, it is done periodically. Before any transaction occurs the instruction A (i, j, x) is checked. If it returns 1 it Completes the transaction. But if it returns 0 it stops the transaction and writes the history in an error log file. Error could be done for three reasons: 1. The rank of the employee is not set or updated properly 2. The sensitivity level of data is not set or updated properly
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3. The rank and sensitivity level are set properly but the employee is not legitimate to access the data. When case 1 or 2 occurs the system takes the update or initialization process. But in case of case 3 administrative countermeasures must be taken to stop such illegal Attempt to access data. 7.5.4 IP level security (IPSec Protocol) IPSec is designed to secure communication across LAN, WAN and Internet. In the age of Information Technology many attacks like IP spoofing and various forms of Eavesdropping and packet sniffin g may occur. Through these sorts of attacks attacker can get authentication and read transmission information like logon information and database content . There are a number of security features that are mandatory for IPv6 and optional for Ipv4.The securit y features are implemented as extension headers that follow the main IP header. There are two extension headers for IP level security.
The extension header for authentication header is known as the Authentication Header (AH)
Another extension header for pr ivacy in called the Encapsulating Security Payload (ESP) header. In case of ESP there are mainly two options with and without authentication.
Security Associations (SA): For exchange communication Security association (SA) acts as a one -way relationship between sender and receiver and it secures the traffic. For two -way exchange, two security associations are required . A set of policies and keys for communicating future are specified by it . Three parameters are used to identify the security associations. T hese are

Security parameter index (SPI) IP destination address Security Protocol Identifier
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Below table shows the SA identified by SP
SPI
Authentication Authentic algorithm key A key
Replay protection
Encryption algorithm
Encryption key
01234567
e.g., Keyed MD$
secret Timestamp
89ABCDEF Table: Security association
e.g., RSA
Public/private
IPSec provides security. Two headers are used to implement security features. These are: authentication header (AH) and Encapsulating security payload (ESP ) header.
Two modes of operation: Both AH and ESP supports two modes of operations. 1. Transport mode: It provides protection for upper layer protocols like means UDP or TCP segments that operate above IP in a host protocol stack. 2. Tunnel mode: Tunnel mode transformation means that packet appended after a New IP header.
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AH transformation: The authentication header deserves authentication and data integrity. AH contains the following fields:

Next header (8 bits) Length (8bits): Length of Authentica tion Data field in 32 -bit words. Reserved (16bits) Security Parameter Index (32bits): It specifies the SA. Sequence number (32 bit): It prevents reply attack. Authentication Data (variable): An integral number of 32 -bit words. It provides authentication us ing MAC algorithm.
Authentication and integrity of data is computed usually using Keyed MD5 technique.
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7.5.5 A brief overview of MD5: The details of MD5 algorithm are beyond the scope of this study. It takes an input a Message of arbitrary length and produces as output a 128-bit message digest. The input is recessed in 512 -bit blocks. The MD5 algorithm is performed over the IP packet plus a secret key by the source and hen inserted into the IP packet . At the destination, the same calculation is performed n the IP packet plus the secret key and compared to the received value. It assures both authentication and integrity. Specially, the MD5 calculation is done in the following equence: Key, key fill, IP packet, key, MD5fill Where key=the secret key for this security association Key fill = padding so that key + key fill is an integer multiple of 512 bits IP packet = with the appropriate fields set to zero MD5fill = padding supplied by MD5 so that the entire block is an integer multiple of 512 bits. The au thentication data is calculated over the entire IP packet, excluding any fields that light change during the transmission. These fields are set to zero at both source and estimation. In order to reduce overhead this network implements AH transport mode. It is calculated over the transport layer payload (TCP).
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ESP transformation
As IP header contains the destination address and possibly source routing directives and op-by-hop option information, the intermediate routers would not be able to process much packet.
ESP Header format:

Security Parameters Index (32 bits) Initialization Vector (variable): must be a multiple of 32 bits. Payload Data (variable) Padding (variable) Pad Length (8 bits) Payload Type (8 bits)
Tunnel mode ESP can be best described u sing a simple example as follows. Suppose that an external host wishes to communicate with a host on a network protected by a firewall, and ESP is implemented in the external host and the firewalls. In fact, it relives hosts on the encryption (i.e. done by the network of the process ing overhead of
firewalls)
The following steps occur for the transfer of transport of TCP segment from the external host to the internal host.
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1.
The outer packet is routed to the destination firewall. This packet contains sufficient information for routing.
2.
Each intermediate router needs to examine and process he outer IP header but does not examine the cipher text.
3.
The destination firewall processes the outer IP header. This process recovers the Plaintext inner IP packet depending on the SPI information in the ESP header and then the packet is transmitted in the internal network.
4.
The inner packet is then routed to the destination. So in our proposed network security is a vital issue. So we can implement security fe atures as a Encapsulating security payload (ESP) header because it provides both Confidentiality and optionally authenticity and for that purpose we can use tunnel mode ESP because it is possible counter traffic analysis in this mode.
Key management IPSec provides key determination and distribution for secure communications. The Detailed is out of scope of my Internship Report . IPSec supports two types of key management:
Manual:
System
administrator
manually
distributes
keys
for
communicating with internal and external network.

The system is on demand creation of keys. IPSec supports default automated key management protocol like ISAKMP/ Oakley and consist of the following elements:
Oakley key determination protocol: it is based on Diffie -Hellman algorithm.
Internet Security Association and Key
Management Protocol: for
managing keys, it provides a framework and specific protocol support, including formats. So in our proposed Internship Report , we can use Oakley key determination protocol because it adds some of the advantages over Diffie -Hellaman.
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7.5.6 Employee level authentication Suppose Bob wants to send some money to another account that contains Alice of Another city. To serve that purpose Bob needs to go to bank and after that he may confused about who is responsible for that purpose. According to Central bank (Bangladesh bank) policy, all employees cannot access full information of all customers. There are always some restrictions. Suppose cash officer deals with cash. In our proposed system, we can use Central bank policy to authenticate employees.
7.5.7 Utilization of Network
A message from a client to a server or from a server to a client has to go through several protocol layers and may have to be transmitted through one or more networks. In our discussion every transaction must be traversed through the Central Unit of the bank (usually Head Office located at Primary Zone (Dhaka)) So, there is every possibility that thousands of requests take place simultaneously on the fiber optic network ba ckbone whose capacity is 1Mbps. Messages generated by an application (i.e. deposit, receive, other) have to go through a protocol stack that involves, at least, a transport layer protocol (e.g., TCP or UDP), an internet protocol (e.g. IP or IPX), and a net work protocol (e.g., Ethernet or Token Ring). We use the following equation to find out the utilization of the proposed network.
Where
is the arrival rate of message and service time is the time spent at a
resource ( in this case the Network) receiving service from it each time transaction visits or traverses the resource.
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7. Problem In Implementation of On-Line Banking (ebiz-1)

7.1 INFRASTRUCTURAL DEFICIENCIES To implement online banking in our state, the infrastructure is necessary, it is scarce according to our indigenous demand. Of infrastructure, we need the availability of electricity supply as well telecommunication up gradat ion. 7.1.2 BUDGET ALLOCATION An influential block towards execution of online banking environment is budge allocation indeed. The software, required to enhance the service is very intricate to develop because of lacking of apposite in -house. In this regards, banks with Online program are to rely on software developing concerns at extreme cost.
7.1.3 HACKERS The hacking, the serious crime of computer, causes the injury and hazard to the security and safety of users of computer involved in online techn ology. As a result, hackers are the influential troubles of users of online business of a bank.
7.1.4 CLIENTS A widespread wisdom is that retail on-line banking services will not be feasible for an economy as most people are illiterate. They are beyond the scope of normal banking service; so thinking about the on -line banking services is not only absurd but also anit-people. Keeping aside the issues of poverty alleviation and literacy movement, affordable market segment of financial sector is quite big: opening of full-fledged branches of foreign banking is a proof of that.
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7.1.5 BANKERS Problems with the market place and the structure of the industry are profound. The institutional structure of the marketplace will be changed radically. The definition of the customer marketplace is totally altered by electronics. Most of the discussion of on-line banking products talks about how we can serve existing customers, and how we can enhance the services the existence customers. What is coming, but not yet, i s how you can attract new customers electronically. Today, the only two established ways of attracting a bank customer is either by mailing them a credit card, or by opening a branch. It is quite likely that the banking world is going to find in the electr onic world ways of attracting customer without mail or branch, and that will make the new market place. On major problem for the banks are vendors who are misleading the banks in choosing the right system for the bank. It causes a huge financial damage to the banks if after installation is it found that system falls to meet the bank s need or already obsolete.
7.1.6 RISK Banks run the risk of signing up new insolvent clients who might prove more costly than profitable. The credit information available f or banks is often wrong so it is very difficult to check whether the customer has default on a card issued by another bank. A data bank is required to see the list of the defaulters. 7.1.7 PRIVACY Another central issue to the consumer is privacy. Consume rs using and thinking to use the online banking services worldwide demand clear rules, up front and understood-that will give them some ability to choose option A, option B, or option C, with regard to the use of the information that is generated by their transaction. But in this emerging industry database marketing is nothing but the manipulation of data over which customers feel that they want to have some kind of control. North American and European governments are going to set some rules in favor of customers so that the customers have at least some way about how they prefer to have their date dealt with, whether or not lists can be sold etc.
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7.1.8 Unemployment One preconceived widespread idea is that computerization may increase the unemployment pr oblem because computers will displace labor. But how much this idea is correct is the matter of empirical study. Productivity and profitability are very closely interrelated terms. Lower productivity due to overstaffing may turn any company into losing con cern. Furthermore, ensuring the full employment is not the duty of any commercial enterprise, if we believe in the market economy in true sense.
7.1.9 COST-EFFECTIVENESS Another misconception regarding the implementation of online banking is that it is not cost-effective. Majority of specialists and financial adopted the online banking philosophy strongly differ this opinion. None of the banks that have designed properly an automation plan and implemented it with proper cost benefit analysis became less superior to the banks without the systems. Actually, the acceptance of financial modernization philosophy mostly is a matter of vision to the future.
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8. Future Outlook of Online Banking in Bangladesh

The unimposing feature of globalization, since the gracious and superb
inauguration of itself, is free market economy across the whole globe for flourishing, flawless usage to ensure mass well -being. The irresistible race on liberal free market economy is on increase over the territory of state, paving th e path of transparent goal to achieve. Under the aegis of rushing globalization, distinct, vibrant culture of banking plays a few significant, noteworthy and creditable roles with classic features penetrate and grab the loyalty of targeted number of popula tion as instant as possible. With the passage of time, the economic aspects move and drive by little while across imminent impediments, strains as well tussles ahead.
Free cheques, free trade related affairs, ATM, free on -line bill payment are fundamental chores in mechanism of on-line banking to be substantiated. Alongside, it is authenticable that services of manifold natures ensured with the assistance of affordable, viable IT layout that has been offering a number of customers option, preference with service, even though, these about mentioned services were used to indicating and regarding as Electronic farm of banking in past. Prior to on-line banking culture, there were a few banks with electronic banking services, consequently, a bank is to obvious ly be a member of SWIFT Society of Worldwide Inter-bank Financial Telecommumcation to commerce unique and swift customers need and business need a clients, smart and worthwhile on-line banking services that have generated as access of all section of customers, which is expected to enable the prosperity of technology be furnished having these major conveniences to secure matchless, peerless fortune of Online banking: 1) Account credit card payment on-line benefits at participating on -line merchants, hence payments on purchase; discount of purchase can be coordinated with credit card in partnership business. 2) Instant credit approval unlike so -called delayed nature of learn payment and additionally there is a provision of additional cash consideration.
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3)
Bill payment, internal bill payment system acts much like the PC software of the past that scheduled payment and printed cheques.
4)
24 hours customer services by phone or e-mail is commodious to ensure bliss with customer rather than expensively branch based hum an services in 24 hours hurriedly, there for the temptation of Internet access replacing trouble torn banking.
5)
On-line mortgage and CD applications Bank s offering on -line mortgage and CD applications are ahead of the pack in bringing their products to the on-line market.
6)
Touch-tone bill pay augments on -line bill pay at no extra charge. An outstanding and sensible way to assuage the blocks to on -line banking is to make alternative interaction easy and cheap. A customer is in the need of checking balances and liquidity in his account with no chance of internet connection can jump into it medium touch tone phone without extra charge in the banking action. As our banking passing home and phone banking with the fastest change in computer technology throughout global platform.
7)
The management of our domestic banking technology in effect on web site interest lieu of MS-DOS process. Benefits, opportunities from striking impact of on-line banking is most likely to be able to capture the whole banking sector in a network with centrally regulated software in web-site that must eliminate problems and frequent inconveniences of all other banks adjoined to this process.
Above all, prevailing e -commerce helps man to grab the world in grip including trade, business and marketing similarly, a sensation and tense foments us much to run and chase after on -line banking by rescinding busy, loosing and time killing branch banking being not back footed before abysmal and profound global challenges.
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The prospective and prim se rvices on Online Banking are expected to be materialized after commencement of online banking to a large extent. a. Hold the Online chat session or seminars with financial expertise to help customer analyze their personal financial situation. b. Use real time e-mail or pager alerts to notify customers when they are in danger of bouncing any cheque for other activities. c. Give customers the option Via-e-mail or paying bills now or later and from which account. d. Offer clients a personal computer or just Smart Phon e possible with free Internet access essentially giving them a personal AIM in home. e. Offer VIP Customers a palm-held computer that gives them an access to real time banking information anywhere in the planet. f. Sponsor on Online Banking School that teac hes how to conduct transactions. g. Provide free, private, extra net sites m exchange for setting up an account. This site would feature pages to manage mortgage, auto health, home insurance and tax and education loan. h. Put the entire loan process for a new car or house Online, offer an on -line payment calculator and provide hyperlink to real estate agents on auto movers. i. Give customers an online personal finance program that would track their transactions according to purpose, category or tax deductibility. It should allow them to prepare summaries of their assets and liabilities and by comparing their financial ratios to other customers, it could even give them a certain amount of automated advice . j. Off late, 11 leading banks have brought their common customers services into a common network to start signatory Online Banking. In future these all banks along with some modern banking concern will come forward to foster the future and viability of this banking system.
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9. Role of Government
The ideal role of government in a country should be to promote an environment where the private sector can experiment and fully realize the inherent market efficiencies of new technologies. This is particularly important for countries like Bangladesh where very little has been done in development these technologies and skills. Government has to promote and support Online Banking also to make suitable policies. The government can take the following policies to promote online banking in our country. 1) The intergovernmenta l agreement for harmonizing the rules and regulation for e-commerce and banking can help in smooth
transformation of the world economy and its expansion in the direction of a unified world market. 2) The regulations should simply foster competition, protect intellectual property and privacy, and prevent fraud. Parties should be able to do business with each other under whatever terms they agree upon. But predictable and widely accepted legal principles to support electronic uniform commercial code are needed to simplify and encourage electronic commerce under consistent rules and rights. 3) Govt. can undertake perfect initiatives and politic inferences to construct feasible, imperative platform of information technology within affordable capacity. Alongside, fin ancial allocation should be wider to the banking sector in order to bring globally standard banking technology. 4) Adequate number of bank employee who will be pertinent, integral, and discerning with both computer and banking aptitude and cognizance to be suitable in the banking perspective to improve the banking sector. 5) Tele-communication sector in indubitable one of the imperative pre conditions to be adequate with a view to making fastest online banking services through wide area network. Unfortunately , this tale-
communication service of govt. is yet to reach to remote and rural area, where as the banking service has been over there a long time ago.
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6)
Frequent inflow of information technology in the shape of broadband Internet access, sub-marine optical fiber utility processed, might be patronized by govt. rapidly to step ahead in respect to information technology for enhancement of blessing of on -line banking. As well, this linkage of Internet service will be encouraging for implementation of online banking in Bangladesh.
A project of software development under the aegis of govt. and banks should be udder process to continue the function of banking software and expertise of banking network. Thus, both of banks and bankers enjoy the engagement in contribution to create creditable, demanding and world standard services for the sake of greater interest of nation and economy.
9.1 Recommendation As this research-based study on the Online banking lets me a provision to come to the closest contract of the original plot of this banking system. There are some recommendations to improvise the On -line banking in our country. 1) Autonomous Banking culture, reducing dependence on manual service, should be in abundance irrespective of govt. and non -Govt. organization in association with SWIFT to bring about the whole banking service for massive well being of people. 2) The report of taskforce with the title of Banking sector reform
committee with 21 major clauses on score of extinction of horrendous and problem some context that usurps our banking sector, has elaborately expressed the imminent enactment of suggestions of taskforce for the betterment of banking sector. 3) Subtle surveillance, spending service within the auspice of private ownership seem to get the highest priority to set up the most ineluctable and accelerated technical know -how and the foreign direct investment should be welcomed. 4) For Online Banking Bangladesh Bank can set a security standard to be used by Banks.
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5)
In connection with sustain ably emerging, growing on-line banking culture, enthusiastic bank work force by any means reaching into an unification or consensus on ground of eradicating discord from banking environment with the objective of surprising applausive plot, as stimulus and pre-requisite indeed.
6)
Bangladesh Bank should organize workshop and seminar of the importance and business value of IT in banking for creating awareness among the top management of the banks.
7)
Training should be imparted to the existing IT personnel. the ne w recruits for IT personnel should be provided with relevant education background.
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10. CONCLUSION
10.1 Discussion on results
The main objective of this Internship Report was to come up with a feasible proposal for implementing nationwide Online ba nking as well as ensure security. To ensure security we proposed some of the security features in chapter 5 that need to be implemented in various levels of the proposed infrastructure like application level security, IP level security, user level authenti cation as well as employee level authentication as it is very much needed to keep track who is responsible for transferring money from one account to another account. In chapter 7 we have shown the the network utilization considering three cases. Firstly, where IP level security (ESP) has been implemented. Then, performance has been measured using only ESP option. And finally the case that does not implements IP level security. The result shows that IP level security is at the cost of the performance. But security is a major issue in ebanking the performance degradation is accepted for the sake of security. Then the message (both for request and reply) size has been changed which, in turn, causes more bandwidth utilization. The larger the message size the more bandwidth is captured. Currently in our country accessing and transferring fund from remote area is a difficult and time-consuming task. Naturally it now takes 3 to 25 days. The key point is to note that the fund to be transferred is kept idle for the delay period. The proposed framework very clearly shows that it is a huge loss of money when considered collectively. So, it gains a remarkable save both for the customers and banks.
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10.2 Future works
There are a number of dimensions that individually d eserves further research.
Cost analysis is an important issue. Due to lack of time it has not been possible to explore here.
Detailed architecture is not covered here. It mainly encompasses the functional and some analytical dissertation of E -banking in Bangladesh. So, future work can be done on the functional architecture to simulate all sort of banking services.
Apart from the core banking functions some other functions such as stock exchange and insurance policy can go under study in future.
The work can be implemented in future.
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11. RECOMMENDATION:
As this research-based study on the Online Banking lets me a provision to come to the closest contact of the original plot of this banking system. There are some recommendations to improvise the On -line banking in our country. 1. Autonomous banking culture, reducing dependence on manual service, should be in abundance irrespective of govt. and non govt. organization in association with SWIFT to bring about the whole banking service for massive well being of people. 2. The report of taskforce with the title of Banking sector reform
committee with 21 major clauses on sore of extinction of horrendous and problems some context that usurps our banking sector, has elaborately expressed the imminent enactment of sug gestions of taskforce for the betterment of banking sector. 3. Subtle Surveillance, splendid service within the auspice of private ownership seem to get the highest priority to set up the most ineluctable and accelerated technical know -how and the foreign di rect investment should be welcomed. 4. For online banking Bangladesh bank can set a security standard to be used by banks. 5. In connection with sustain ably emerging, growing online banking
culture, enthusiastic bank work force by any means reaching into an unification or consensus on ground of eradicating discord from banking environment with the objective of surprising applausive plot, as stimulus and pre requisite indeed. 6. Bangladesh Bank should organize workshop and seminar of the importance and business value of IT in banking for creating awareness among the top management of the banks. 7. Training should be imported to the existing IT personnel, the new recruits for IT personnel should be provided with relevant education background.
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12. REFERENCES
Elias M. Awed (2000). The Structure of E-commerce in the banking industry. Proceedings of the 2000 ACM SIGCPR conference on Computer personnel research. Pp.144-150. Ahmad-Reza Sabetha, Markus Schneider (2003). Electronic payment systems. LNCS2770, pp-113-137, A.R. Dane, P. Radar Krishna (2001). An E -check framework for electronic payment systems in the web based environment. LNCS 2115, pp.91-100. Gird Redland, Kevil stolen (2004), and Using Risk Analysis to Assess User Trust . LNCS 2995, pp. 146 160. Ahmed S. Zaki (1983). Regulation of electronic fund transfer: impact and legal issue, Communications of the ACM 26. Pp.112-118. Gordon, E. & Natarajan.(1996). Banking: Theory, Law and practice. Mumbai: Himalaya publishing house. Chowdhury, T. A. An Overview of Banks and Their Services. Bangladesh: BIBM. Rahman S. & Bari. Credit Management in Banks. Bangladesh: BIBM Andley, K.K & Mattoo, V.J.(1996). Foreign Exchange Principles and Practices. New Delhi: Sultan Chand & Sons. Electronic banking from a prudential supervisory perspective.(2000, December). Deutsche Bondsman Monthly Report. Leow, Hock Bee (1999). New Distribution Channels in banking Services. Bankers Journal Malaysia, No. 110 E-banking, URL: http://www.american.edu/initeb/rw9257a/banking.htm Ranks- ITT ltd. URL: http://www.ranksitt.net/nwisp.php On line banking security: http://www.bankbranchonline.com/security.html Cryptography in Microsoft.NET Part II: Digital Envelop and Digital Signatures. URL: http://www.c-sharpcorner.com/Code/2002/Dec/DigitalEnvelop.asp Mohammad M. Islam Proposed ICT infrastructure for E-banking in Bangladesh Charles P. fleeter & Shari Lawrence fleeter. Security in computing India: Pearson education pet. Ltd. William Stallings. Network security essentials.. India: Pearson education pte. Ltd. W. Stalling (1999). Data and computer communication. India: Prentice-Hall http://www.tansu.com.au/info/security.html M. Arlitt and C. Williamson, Web Server Characterization Proc. 1996 ACM SIGMETRICS Conference on Measurement of Computer Systems, Philaadelphia, PA, May, 1996.
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Online Banking Benefits for Customers

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1.

Design proposed solution.

Profile of Trust Bank .

Friends with confidence.

restaurants all around Bangladesh and even intern ationally.

2.4 Key Success Factors(KSF)

Trustworthy Dependable Reliable Professional Dynamic Fair

3. Trust Bank Ltd, CDA Avenue Branch:-

3.1 Organizational Hierarchy

Assistant Vice President (AVP)

Principal Officer (PO)

Senior Officer (SO)

Management Trainee Officer (MTO)

Junior Officer (JO)

3.3 TBL, CDA Avenue Branch at a glance: (Fig at not disclose-2007)

3294379 188793086.07 136247.40 1141419369.42 136013900 Nil 14634496.51 3500000.00

3.4 Activities of CDA AVENUE BRANCH

Financial Control Department (FCD)

Foreign Exchange Department

Import & Remittance (Foreign)

Loans & Advance Department

DD, PO,OBC, IBCA

Foreign Trade Service

Inland bill purchased

Sale of prize bond

Various products under retail banking: -

3.6 Information Technology (IT) & Automation

3.7 Online Charge

** Within Chittagong the charge is recently removed.

3.9 Online Cost: Fixed Each Month =28,175/=

4. Performance of Trust Bank Limited

Authorized & Paid-up Capital

Retained Earning Statutory Reserve & Share Money Deposit

2002 2003 2004 2005 2006 2007

2002 2003 2004 2005 2006 2007

5. Online Banking- TRUST BANK

Services Linked with the Trust VISA-Electron Debit Card

Additional Services provided wit h the card

How to Apply for a Debit Card

5.6 Benefits for customer include

Easy to use, training is simple and no sophisticated equipment is required.

6. RECENT TREND OF ONLINE BANKING

comparatively better than the fixed -line infrastructure, and in

Amount format Default transactions Standard Beneficiary list Alerts

7. Present Involvement of ICT in banking of Bangladesh

Fig 5.1: Block diagram of Online system

7.5 Strategic risk from management perspective

Fig :Organogram of the Bank

Security parameter index (SPI) IP destination address Security Protocol Identifier

Below table shows the SA identified by SP

Authentication Authentic algorithm key A key

e.g., Keyed MD$

89ABCDEF Table: Security association

ESP Header format:

communicating with internal and external network.

Oakley key determination protocol: it is based on Diffie -Hellman algorithm.

Internet Security Association and Key

Management Protocol: for

7.5.7 Utilization of Network

7. Problem In Implementation of On-Line Banking (ebiz-1)

8. Future Outlook of Online Banking in Bangladesh

10.1 Discussion on results