Online Banking Process in Agrani Bank Limited
Subject: Economics, Finance | Topics:

Introduction:

As a student of Master of Business Administration (MBA) program of the Bangladesh Open University (BOU), I have to prepare a Master Paper on any organization that will be accepted as satisfactory for the partial fulfillment of the requirements for the degree of MBA. I, hereby, declare that the work presented in this Master Paper is the outcome of the research performed by me under the kind supervision Prof. M.A. Hakim, Department of Accounting & Information Systems and Faculty of Business Studies, University of Dhaka. I am working according to the instructions and guidance of my supervisor to have a trustworthy Master Paper on “Online Banking Systems in Financial Institutions in Bangladesh; A Study On Agrani Bank Limited.

STATEMENT  OF THE PROBLEM:

Banking sector plays a vital role in economy of Bangladesh. There are different types of Bank in Bangladesh such as Central Bank, State-owned Commercial Bank, Private Commercial Bank, Specialized Bank, Foreign Bank, Islami Bank, Exchange Bank etc. All of the Banks have its different information systems. But all of them are using a system of latest technology in some of the sectors in their banks, not in all the sectors. Infrastructure of information systems is not good enough and so the internal and external environment is badly affected. The lack of coordination among organization, government, customers and banks is present. The managements are facing the problems of decision making without information systems. After all the customers is not satisfied enough with the existing service provided by the banks with or without information systems. A better Online Banking Systems (OBS) can ensure the satisfaction of customers and hence ensure the maximum revenue of its organization.

PURPOSES  OF THE STUDY:

The purpose of this study is to improve the infrastructure of the online banking systems and ensure the better usage of OBS in secured way. The study will also find out the different latest useful online systems in the Banking sector and finally explore the better ways to make the right decision by management.

BACKGROUND OF THE STUDY:

Bangladesh is a developing country and Bank plays a vital role in the economy of a developing country like Bangladesh in many aspects. The Financial sector of Bangladesh largely depends on bank and hence it has been playing vital role in economy of Bangladesh. Agrani Bank Limited (ABL) is one of the largest banks controlled by Bangladesh Bank (BB) under Ministry of Finance (FoF) of the People’s Republic of Bangladesh. The former name of Agrani Bank Limited is Habib Bank Limited and Commerce Bank Limited. According to “Bangladesh Banks (Nationalized) Order, 1972 (PO No. 26)”, Agrani Bank is created by six crore taka. It is registered Public Limited Company through Register of Joint Stock Companies and Farms on 17th May, 2007. Bangladesh Bank gives license on 5th June, 2007. All assets and liabilities are given under Agrani Bank Limited on 15th November, 2007 by “vendors contact” between Government and Agrani Bank which is affected on 1st July, 2007. Now-a-days, Online Banking in Agrani Bank Limited has revolutionary changed. There are 102 branches under online banking systems in Agrani bank Limited and others many branches are being prepared to go OBS.

Objectives of the Study:

The primary objective of the study is to offer me MBA degree fulfillment which is also an analysis of master paper under BOU. The general objective of the master paper is that it will provide experience to me on institutional problems and opportunities to utilize Online Banking Systems in Bangladesh. Moreover, the aim of the study is to explore, analyze and to find out challenges and opportunities of the Online Banking Systems in Bangladesh as an alternative delivery banking channel. Further, to define the risk factors, security, efficiency and limitations of the systems for our banking sector at operational level.

The specific objectives of the study are as follows:

.(i) To have a knowledge on online banking systems.

(ii) To know the function of online banking in ABL

(iii) To know the background of online banking systems in the financial institutions in Bangladesh.

(iv)To identify the emerging characteristics of online banking in Agrani Bank Limited.

(v) To measure the effectiveness of online banking in Agrani Bank Limited.

(vi) To contribute the growth of national economy through online banking.

(vii) To find out the problems on Online Banking in operation sector

(viii) To develop recommendations of Online Banking in Agrani Bank Limited.

Methodology of the Study:

Research method deals with behavior and instruments used in the study. According to the state of the problem, the research type is inter-organizational field research and consequently the methods are participant’s observations, Mass observations, Personal Interview, case study.

The methodologies that will adopt in the study are as follows:

 Nature of the Study:

The case study will be based on explorative research that is concerned with discovering the general nature of the problem and the variable that relate to it. The report will be prepared based on the guidance and instruction to be provided by organizational supervisor with the consultation of academic supervisor.

Location of the Study:

The Study will be conducted at Agrani Bank Limited, Mirpur Branch,Dhaka.

 Sources of Data:

Both primary and secondary data would be conducted for analyses to attain the objectives of the project paper.

Primary data will be collected from the different types of management and customers as well as the different bank, some executives of IT & MIS Division in Agrani Bank Limited .

Secondary Data will be collected from different NOCS (Network Operations and Customer Services), Accounting & Finance and HRM Department of ABL. Some performance data may be collected from the monthly review and previous research paper which will be available in the ABL web site and other library of different Banking sector’s offices. The study will utilize historical sources like documents, remains, etc to study events or ideas of the past. So, the research can be categorized as analytical research or historical research. Both quantitative and qualitative data will be used in this report.

Sample Selection:

The larger the sample size the research result will be more efficient. But there are approximately 1.2 crore customers and ten thousand of different level of managements are under all the organizations. It is very difficult to cover all the customers and management and hence sample will be selected only from the Head Office & Mirpur Branch, Dhaka. Sampling will be designed by the Judgment and convenience sample of non probability sample.

Respondents Selection:

Entry level management, mid level management, and top level management of ABL and some beneficiaries like computer operator, different level executives & different customers should be interviewed to make the internship report authenticated and effective. Both of the men and women will be considered to take as a population.

Methods of Data Collection from Primary Sources:

All the primary data will be collected through survey method. Direct Survey and indirect survey method will be conducted at the whole time of data collection by mail questionnaires, telephone interviewing and personal interviewing.

Instruments of Data Collection:

Primary data will be collected via a questioner method from the management and customers as well as ABL professionals of Head Office & Branch level. Open ended and closed ended questioners will be developed for them. Question will be developed to cover most of the related to different types of information systems and their infrastructures and outcomes. Question may be multiple choice or subjective. Multiple choice of the question answer will be limited from 20 to 5 options.

Findings and Analysis:

I have prepared this report from the background information and knowledge that I acquired from ABL. I did this report on “Online Banking Systems in Financial Institutions; A Study On Agrani Bank Limited”. I have tried to reflect my experience on my report in terms of Online Banking in Bangladesh. Both quantitative and qualitative analysis will be performed on the study. The quantitative analysis will be done in the area of Online Banking in Bangladesh with respect to its reliability, riskiness, security and availability. Furthermore, the qualitative analysis will be approached in customer service quality and customer satisfaction level.

LIMITATIONS OF THE STUDY:

The study may have some pitfalls. These may be as follows:

The study should have high degree of involvement regarding Questionnaire, collection of data, creation of database and analysis of data. In spite of providing best effort to collect and analyze related data and compare them within the stipulated time, the study may have the following limitations:

              i.            The main limitations of the study are lack of experiences of the researcher.
ii.            ABL authority could not provide all the necessary information those are confidential. So confidentiality of ABL authority is major limitation of study.
iii.            This study did not cover all the branches of the bank of the country.
iv.            The scheduled time 12 weeks for the study is not enough to make the study. The time should be one year.

Literature review on Online Banking Systems of ABL:

Now-a-days Online Banking Systems are an alternative delivery banking channel which is becoming very popular in the financial sector of Bangladesh.  Bangladesh entered into the new era of online banking services when ABL introduced this service in the country with the financial support for the account holders. Online Banking is an alternative banking channel which aim is to bring more people under the umbrella of banking services online banking offers financial services like cash deposit, cash withdrawal, merchant payment, utility payment, salary disbursement, remittance inflow and outflow and government allowance disbursement etc. ABL is the first state-owned commercial bank to grasp the opportunity. Today, financial institutes want to acquire and retain customers by offering new value added online commerce services. They want to introduce financial services for customers through online banking. Financial institutions recognize the online economy as an opportunity to strengthen their position through new products and services to create new revenue streams, attract new deposits, reduce fraud, and increase customer loyalty. Alternative delivery channel of a bank like online banking can contribute significantly to the growth of the national economy.

 Rationale and Scope of the Study:

The study will be the basic research in the financial sector of online banking system. It will also offer an insight for further study in this filed. The respective authority of financial sector may use the study as the benchmark for taking improved policy regarding the best use of online banking systems for the betterment of the financial organization like bank. The commercial banks will be benefited in respect of mass level banking services. The other commercial bank may follow the study for development of their online banking systems.

In this report the information has been collected from different website links and annual report of ABL, Head office, Dhaka. This study report will be important documents to learn the challenges and opportunities to launch online banking service in any commercial bank of Bangladesh.

BUDGET:

A budget should be estimated to perform the activities and preparing the master paper report. The particulars of the estimated budget for the master paper are as follows:

Sl. No

Particulars

Tk.

1.

Preparing of Paper Proposal Report 

2.

Preparing of Questionnaire and appointment of personnel for collecting data 

3.

Conveyance and  entertainment 

4.

Preparation of final Report and binding. 

5.

Preparation of  Draft Report 

6.

Stationary purchase, printing & photocopy etc. 

ACTIVITY SCHEDULE:

Activity schedule to prepare this master paper is as follows:

Sl. #

Activities

Times (Weeks)

1.

Concept Development

02

2.

Preparation of Report Outline and Proposal

01

3.

Questionnaire Preparation

02

4.

Survey and Collection of Data

02

5.

Summarization, Entering and Analysis of Data

02

6.

Draft Report Writing and Submission for Suggestion

02

7.

Final Report Writing, Printing, Binding and Submission of the Report

01

Conclusion and Recommendations:

Finally, I would like to conclude that online banking systems are a new alternative delivery banking channel in Bangladesh that will reach very soon at mass level and it will also contribute significantly to the growth of the national economy.

About the company:

Agrani Bank. as the name implies a stated owned  commercial Bank  Bangladesh. It has incorporated in Dhaka, Bangladesh as public limited company and its Head office of the Bank is located at   Motijheel, Dhaka.

In the word of consumerism, the business organization of the world strive for the consumers satisfaction as a number one business strategy whatever may the product of the organization, either service or non- service. Service is the product of the Bank building. The guard at the door is the first person represents the Bank; receive a customer with wishes in smiling face.

History of Agrani Bank:

The word AGRANI implies the meaning of its operation. Though it is a stated owned commercial Bank in Bangladesh, it is familiar with so many countries in the world such as export import Bank of United States, Export Import Bank of Japan. Despite it is a local Bank, it has spread its operation in the whole world through foreign Banking. To achieve the desired goal, it has intention to pursuit of excellence at all stages with a climate of continuous improvement, because it believes, the line of excellence is never ending. It also believes that its strategic place and business networking will strengthen its competitive edge over in rapidly changing competitive environment. Its motto is providing quality services to the customers all over the world. So the slogan of the Bank – “Local Bank global Network” is completely adjustable.

Mission of Agrani Bank:

Agrani Bank Limited has completed its successful existence on its career and now has taken a revolution of its business operation in 1971 searching for incremental improvement in productivity, operational efficiency and structure consequently, a new organization structure has been developing to business focus and priorities and competitive pressures.

Vision of Agrani Bank:

Vision of Agrani Bank is to always strive to achieve superior performance, be considered a leading stated owned reputation and performance. Goal of Agrani Bank Ltd is to establish and maintain the modern banking techniques, to ensure the soundness and development if the financial system based on banking principles and to become the strong and efficient organization with highly motivated professionals, working for the benefit of people, based upon accountability, transparency and integrity in order to ensure the stability of financial system.

Financial Performance of Agrani Bank Limited:

The Business of Banking consists of borrowing and lending. As in other businesses, operations must be based on capital, but Banks employ comparatively little of their own capital in relation to the total volume of their transactions. The purpose of capital and reserve accounts is primarily to provide an ultimate cover against losses on loans and investment. In Bangladesh, there are many types of Banks, which are formed as commercial Banks. But above all, Agrani Bank of Bangladesh Ltd. is a stated owned public commercial Bank. The full abbreviation of Agrani Bank of Bangladesh Ltd. Later the management of Agrani Bank of Bangladesh Ltd, changed the name of the bank as Agrani Bank Bangladesh Ltd, The Bank has got lending personalities, businessmen and reputed industrialists as its sponsors. The Bank will be immensely benefited from the valuable advice of the experienced sponsors of the Bank. The late chairman of the Bank contributed his untimely death caused vacuum in the leadership of the Bank. But within shortest possible time, the sponsors who in a position to select the next chairmen of the Bank. In 2010 Agrani Bank limited made commendable in all business arena, like Deposit, Credit, Fund Management, Investment and Foreign Exchange related business.

Functions of Agrani Bank Ltd:

The various operations are being functioned in the AGRANI BANK LTD, the major functions of Agrani Bank can be described briefly-

            1. Deposit mobilization,

            2. Payment function,

            3. Collection function,

            4. Fund Transfer,

            5. Investment functions,

            6. Issuing Letter of Credit (LC),

            7. Issuing Bank Gurantee,

8. Foreign trade services e.g. export, import, remittance etc.

9. Issuing PO/DD/TT/MT/FDD/FTT,

10.SWIFT operation,

            11. Operations of clearing house,

            12.Maintenance of internal accounts of the bank,

            13. Correspondent banking,

            14. Financing to export on profit or loss sharing.

            15.overseas banking.

Introduction:

Bangladesh is still lagging behind to avail the opportunity of e-business. However, banking sector as a whole has been introducing online banking system which plays complementary role to spread of e-business. Internet has opened a new horizon of e-business, creating immense opportunities for marketing products as well as managing organizations banking internationally. Gradually wire-less internet system has been creating a new paradigm and electronic fund transfer can have a suitable formation. E-business can improve the quality of the services, save customers valuable time, movement from one place to another and receiving the goods accurately. E-business brings a new channel of distribution process. But this leads to change in the regulatory issues, cross border trade through emerging new marketing distribution channel. This reduces transaction time, boundary less trade, and accuracy. In developed nations, e-business creates an opportunity to directly selling of the product to the customer without using any intermediaries. This process occurs mainly in the four systems: businesses to business (B2B), business to consumer (B2C), business to government (B2G) and consumer to consumer (C2C).E-business expedite the process of better customer relationship management. It also helps to attain enterprise resource management as well as “e” to “e” process. As such on line banking system can add value and value chain can be created in the e-business process. In turn it helps to raise gross domestic product of the country. Governments as well as different international organizations have also identified that underdeveloped banking technology creates hindrance on economic progress of the country. On line banking system is a way of conducting, managing, and executing banking transactions utilizing information and communication technology (ICT) and electronic communication networks such as the internet, intranet and extranet. Environment of electronic banking requires authentication procedures for electronic payment system, network environment, computer hardware and software, electronic hardware, legal bindings, etc. The security and authentication of modern banking are very much dependent on cryptography and its applications. Dilshad Hossain, an Officer of Agrani Bank Limited, argued that many banks have assumed that internet banking primarily increases information security risks and have not sufficiently focused on the effect on other banking-specific risks. Risk management disciplines have not evolved at the same speed and many institutions, especially the smaller ones, have not been able to incorporate Internet banking risk controls within their existing risk management structures. As information symmetry and free flow of information is gaining more importance due to globalization process, Bangladeshi companies have to compete in the world market to serve corporate and other clients with round the clock services. Access to computer would be beneficial to Bangladesh like any other country. Social and economic disparity and lack of Internet accessibility which creates digital divide is a great hindrance towards customer dissatisfaction of the business organization which ultimately results negative customer relationship management. As a result it creates negative impact on economic development of the country. E-business process creates an opportunity for doing business through arranging real time sharing business. Organizations can take help of transaction process through e-business solutions from around the world where on line facility can be available. Due to advancement of technology, business process of the globe is gradually becoming complex for which e-business especially in the banking sector can supersede the traditional business process. Through e-business the country can compete with the changing global business trend and on line banking can facilitate e-business.

Present Status:

Bangladeshi companies, organizations are facing problem to start full swing e-business. Network is a mode of communications with the computers. Networks of computers can be classified in following ways: Local area network, Metropolitan area network, and World Wide area network. Multiple computers connected through telephone lines, cable systems, and in wireless technology are also required. According to a report published in The Daily Star (4th April, 2010) Bangladesh ranked 118th in the global Network Readiness Index in 2009-10 up from 130th a year ago, showing an upward trend in the information and communication technology sector. In South Asia, India ranked 43rd, Sri Lanka 72nd, Pakistan 87th and Nepal 124th in the ‘Global Information Technology Report 2009-2010’ released by The World Economic Forum (WEF) on 3rd April, 2010.As such Bangladesh has to go long way to develop its network for arranging Digital Bangladesh by the year 2021 and public and private cooperation and strategic alliance is required to develop e-business system in the country.

 Electronic Payment Systems for e- business includes characterized by broad geographic presence and acceptance by a large number of merchants or programs. Participants in an electronic payment system may include users, financial institutions, business personnel, industrialist, merchants’, third party processor etc. WIMAX stands for Worldwide Interoperability for Microwave Access which offers wireless transmission of data via different transmission modes, from point-to-multipoint links to portable and fully mobile internet access. The Finance Minister recently argued at trial launching of operation of the country’s first-ever wireless broadband technology WIMAX. He commented that entrepreneurs of the telecommunications sector must reach the digital communications system to the doorsteps of the rural people. He hoped that the WIMAX technology will be available at every divisional headquarters within a year (Source: http://www.bangladeshinfo.com/gadgets/news_inner.php?nid=2343, July 22, 2009).

Telephone density is awfully little in Bangladesh. It is far much less in comparison with other developed nations of the world as well as neighboring countries. Kabir (2008) depicted that Mobile Phones (millions) are 36.4, Fixed Lines (PSTN) (millions) are 1.2 Total telecom users (millions) are 37.6, Tele-density (%) is 26.8 in the year 2008. Outside Dhaka, at present a few computer network infrastructures have been developed so far. Apart from some educational institutes outside Dhaka, observation finds that most of the LAN setups are Dhaka centric. Bangladesh has been connected to worldwide Internet Super High Way from 2006 through an under sea submarine cable. But this single submarine cable frequently faces disruption resulting in slow bandwidth.

A huge digital divide exists among the city of Dhaka, Chittagong and other parts of the country. Private-public partnership is a crucial issue for information and communication technology (ICT) development and application. Private enterprise and capital can lead ICT revolution in Bangladesh. This, however, would require the government to provide the basic business environment. Rapid growth in ICT is not possible without massive investments for ICT infrastructure and human resource development in the computer and electronics and telecommunication engineering courses through ensuring quality education. Still now call charge of cell phone is not competitive in Bangladesh. Bangladesh Telecommunication Regulatory Commission (BTRC) is not playing due role in the development process of communication sector. Infrastructural problems are creating less scope to successfully implement e-business.

 Under the private initiative, Internet was started in 1996 by ISN in Bangladesh. ISN is the first ISP operator in this country. Still now all the Internet service providers have the server in abroad, for which they are facing competitive disadvantage, as cost remains high. Security problem is still high in this country. Lack of digital accessible personnel is real problem for the country. Moreover, some software developers of the country aren’t well conversant with the market demand for which they cannot supply application software with faultlessness.

Policy makers of the country are not aware about the benefits of online banking .As such they don’t put significance on proper and systematic development of the process of online banking. In this connection it may be stated that Bangladesh bank is trying to implement automated clearinghouse through utilizing (Magnetic Ink Character Recognizer) MICR procedure. But in developed nations MICR procedure is now replaced by more sophisticated procedure such as cheque truncation process.

Total numbers of Banks in Bangladesh are fifty six. Banking sector in Bangladesh on the basis of utilization of electronic devices can be subdivided into three groups: i) Foreign Commercial Banks and Private Commercial banks especially 2nd (except few banks) and 3rd generation Private Banks: Fully Online banking; ii) 1st generation private banks and some 2nd generation Private Commercial Banks: Medium range Online banking system ;iii) Nationalized Commercial Banks , Specialized Banks and Few foreign Bank branches of this subcontinent :Low grade online banking system..

At present the banks in Bangladesh are using the limited electronic banking services. It is expected that bank can attain more profit and offer better services to its customers by, introducing online banking facilities. The foreign commercial banks operating in Bangladesh like Standard Chartered Bank, Citi Corp. N.A. and the HSBC are the pioneers to introduce the electronic banking facilities. They provide ATM, Debit Card, Credit Card, Home Banking, Internet Banking, Phone Banking, online banking etc. services.

Among the indigenous banks, the Private Banks are ahead of the public banks. Prime bank ltd. , Dhaka bank ltd., BRAC bank ltd., Dutch-Bangla bank ltd.,, Eastern and Mercantile bank ltd., are already stepped on towards electronic banking facilities. Apart from these banks, Mutual Trust Bank ltd., also introduced ATM service. Among the four Nationalized Commercial Banks (NCBs), Agrani bank ltd., has some access to the electronic banking facilities. Bangladesh Bank, the Central Bank of Bangladesh, is also trying to formulate the wide structure of electronic banking facilities. All of these private banks offering limited online banking services. Most of these banks only offer services by providing ATM card. Most of them do not offer wide range of internet banking facilities which is the main advantages of e-banking.  They Can deposit money in any branch and withdraw money from ATM machine- is treated the best e-banking facility available in Bangladesh While electronic money transfer starts in a limited edition. Agrani bank ltd. is also providing online banking services in a wide scale. Rupali Bank ltd. is also developing on line banking. BASIC bank which is 100 percent public owned but served as private sector banking has a technological advancement. Detail types of banking services offered by various banks are given in appendix.

A broad spectrum of internet banking services, a subset of electronic finance, is available in Bangladesh with different degree of penetration. The credit card is available from VISA, Master Card and VANIK. Some commercial banks provide electronic fund transfer (EFT) services. It is at an early stage and used on a very limited scale. Microchips embedded Smart Card is also becoming popular in the country, particularly for utility bill payment. Automated Teller Machine (ATM) is expanding rapidly in major cities. A group of domestic and foreign banks operate shared ATM network, which drastically increase access to this type of electronic banking service. The network will gradually be extended to other parts of the country.

Last couple of years shows dramatic improvement in the awareness situation in the banking sector regarding the comprehensive application of ICT. Local software companies have been starting competition to supply useful complete banking software with all the basic features of banking module. However, many forms of electronic banking services are not possible to offer in Bangladesh at this moment due to the technology backwardness, infrastructural underdevelopment and legal infrastructure. Those products would be very useful for export-oriented industry to reduce lead-time in export and keep comparative advantage in the international market.

For sending foreign remittance four nationalized banks and fifteen private banks are working collaboratively with mobile phone service operators. Recently remittance could be sent in Bangladesh by banking channel through account transfer (normally takes 5 working days) or in the form of instance cash (takes 24 hours). Foreign resident people can send their money and PIN (personnel identification number) through mobile phone. As a result money transfer becomes relatively easy, quick and hassle free. But this system also superseded by m-Remittance system. According to a Ahemd (15th April, 2010) in a revolutionary step on April 13, mobile remittance service or m-Remittance was introduced in the country opening doors to millions migrants workers to help transfer their hard – earned money easily, effectively and most importantly ,swiftly. The first ever remittance service for Bangladesh was jointly launched by two local banks –Dhaka Bank ltd. and Eastern Bank ltd. – and the country’s second largest mobile operator, Banglalink.

Credit card facility fully can not be extended in the country, as common gateway between financial institutions can not be established. Pricing mechanism of the products of country is not competitive, rater it is very much volatile. This creates a negative impact on the customers’.

To eradicate digital divide process has been started very slowly. Bogora, Kushtia, Barisal and Modhupur village of Tangil was bringing under preview of internet banking is a complete virtual bank which started on 2nd May of 2000. This will gradually give following services: e-marketing, e-shopping mall, e-marriage scheme, e-mail, e-tender, evoking / polling, search engine, chat, e-commerce, e-stamp, e-cash, e-music, e-entertainment, e-treatment, e-advocacy etc. E-governance can help us to achieve good governance of the country.

If Govt. doesn’t take proper incentives to spread the computerization process then there will be no benefit. The parliamentary members of the country must be aware of the benefits of Information and Communication Technology (ICT), otherwise it can not be successful. It won’t bring any dramatic changes in the economy. Entrepreneurship Development Fund (EDF) of Bangladesh Bank is should be utilized properly. Only a few companies can avail the fund. ICT related companies are trying to develop e-business processes but their activities are limited. If proper procedure of e-business can be developed in the agri-business sector especially in the rural areas through utilizing e-technology then it will be beneficial for the producers of the agricultural commodities.

Acute shortages of human resources interested to do online banking business are also one of the main reasons for lagging behind. However, as law and order situation is deteriorating so there is a positive impact on the online banking considering the safety of the people.

From the field visit, it reveals that banking sector requires rapid modification and adaptation to keep harmony with the world business. It becomes more obvious by observing the increased number of customers in some modern banks while others are losing them. In the context of Bangladesh, a country of more than 150 million people, it is to be realized that there is no other option for us than to join the current trend

According to news report published in the new Nation on 28th August 2009 the government has formulated a policy on the national information and communication technology as part of its announced plan for digitization of the nation. The policy has earmarked activities in three phases in the short, medium and long-term plans to be implemented within 2021.The government aims at doubling the Gross Domestic Products (GDP) during this time to achieve the goal. The policy details suggest a number of activities including spreading the use of keyboard by functionaries at different levels, encouraging the use of standard code by software sellers, developing a national web-portal and popularizing the use of e- citizen services, paying service charge through mobile phones or ticketing etc. Land registration, passport renewal, digitization of police case dairy and case position in the court, spreading the use of broadband internet throughout the country and such other essential services may also be brought under the scheme. The new policy will be the common property of all departments and organs of the state targeted to develop a digitized nation within the stipulated time.

Most of the existing banking system in the country outside Dhaka and Chittagong city is manual (paper based) that’s why is awkward, slow and error-prone. It, in one hand, fails to meet the customers’ demand and, on the other hand, it causes some significant losses both for the banking authority and traders. Electronic banking, on the other hand, solves the above problems. Furthermore, it opens up some other salient aspects such as increased foreign trade and foreign investment. At present weekly bank holiday in Bangladesh is in Friday and Saturday where as in rest of the world it is in Sunday. As such Bangladesh has only 4 banking days for foreign exchange transactions. With preliminary stage e- business facilities and this limited time period (banks’ transaction days) how long we can survive- is a debate. Bangladesh government should consider this case carefully.

According to a report on “Bangladesh is developing electronic payment infrastructure” (May 20,2008) the Securities and Exchange Commission (SEC) in Bangladesh proposed IT Consultants Limited (ITC), a manager of Q-cash brand of ATM and different cards, to raise their paid-up capital up to Tk 500 million if the company is to proceed to initial public offerings. The Securities and Exchange Commission (SEC) has asked us to raise the company’s paid-up capital Tk 50 crore from the current Tk 37 crore. In case the company fails to comply with the SEC requirements to increase the paid-up capital within the time specified, it will have to gain the approval of the SEC again. This measure is believed to extend the sphere of the company’s influence. The company began as a private limited business in 2001. But now it is the local leader in electronic payment systems which are developing in the country with increased speed. ITC possesses necessary tools to process transactions for banks and retailers. It has the largest independent network of more than 100 ATMs in the country. There is also a wide network of point-of-sales (POS) centers operated by the company. (Source: http://www.ecommercejournal. com/news/bangladesh_is_developing_electronic_payment_infrastructure_0?drgn=1)

According to the report published in The Financial Express (3rd November,2009) Bangladesh Bank gave the ground breaking directives to commercial banks through a circular issued on 2nd Novemebr,2009, saying that from now on their clients can pay power, water, gas and phone bills from bank accounts and transfer funds within a bank or to other banks. The central bank said that online payments will be treated like any other cash transaction although it reminded the banks that these money transfers would be regulated by the country’s strict Anti-Money Laundering Act. The country had only about 400,000 credit card holders at the end of June last year, according to Bangladesh Bank Payments and transactions by credit cards were nearly Tk11 billion in June 2008 — one of the lowest in the world. However, banks still need massive ICT backbone to ensure that online transaction can not be misused. Meanwhile, Bangladesh bank started Automated Clearing House on trail basis from 8th November, 2009.Bangladesh Bank also declared that the clearing house won’t accept any cheque from 1st April 2010 if size of the cheque is not as per the guideline of the MICR system. However, in Bangladesh digital divide among the Dhaka city and rest of the country is conspicuous. E-business as a whole is confined among very few business organizations and on line banking business is expediting process of the e-business of the country.

Prospect of e banking:

The Bangladesh Railway owns a high-speed optical fiber network (1,800 km) parallel to the railway path that covers most of the important parts of Bangladesh. This optical fiber network can be used as the backbone network of e-banking in Bangladesh. For example, mobile phone operators such as Grameen Phone and Ranks ITT of Bangladesh use this optical fiber network through which they reach even in rural areas with their services (Islam 2005). It is encouraging that some of the FCBs and PCBs are already using this optical fiber network for conducting online transactions, ATM and POS services. Digital telephone exchanges have been established in 389 upazilas and 17 growth centers. Work is underway to cover the rest of the upazilas under digital exchange system. Meanwhile, Bangladesh has joined the information super-highway by connecting itself with international submarine cable system in2006. A total of 159 Internet Service Providers (ISPs) have now been connected with this system of which 64 are actively providing services. Internet connection is slow with bandwidth range 32 kbps to 56kbps for dial up and 64 kbps to 8 mbps for broadband. Under this scenario, as a part of government  decision of building digital Bangladesh, the existing capabilities of ICT sector is likely to increase rapidly in bringing all upazilas under internet services and this will contribute in widening the scope of e-banking throughout the country. The overall computer density in the banking sector is 1.64. For foreign commercial banks (FCBs) the computer density is 45.34, where as for NCBs the ratio is only 0.41. The specialized bank scenario is almost same as the NCBs, 0.43. On the other hand, private commercial banks have comparatively higher ratio, 4.94. As a whole 81.81 percent bank does not have any local area network (LAN), 30 percent have WAN (Wide Area Network) but for some banks many branches are outside of WAN connectivity. At present, all foreign banks of our country are using online banking system; they are invested a lot for their automation banking services. They are the pioneer of implementing electronic banking systems in Bangladesh, but now most of the private banks of our country are using electronic banking systems. In our country different banks are offering electronic banking services in different ways, some are offering ATM (Automatic Teller Machine) services, some are tale-banking and some are electronic fund transfer, debit card, credit card etc.

Recently, the government’s emphasis on building a digital Bangladesh, setting up ICT park, raising allocation for developing ICT infrastructure, waiving taxes on computer peripherals and other measures including the automation program of banking sector led by the Bangladesh Bank and competition among the scheduled banks in improving customer services have accelerated the prospects of e-banking in Bangladesh

First Stage Machine:

At first, National City Bank of Newyork started effectively electronic transferable deposit certificate in 1961. Through this technology Banks purchased fund & solved liability system. Electronic Fund Transfer (EFT) system is the first step of Electronic Banking System. The main elements of EFT are Automated Teller Machine (ATM), Point of Sale (PST) &Automated Clearing House (ACHs). The bank of “Barclays” was situated on June, 1967. The working system of this machine is different from that of present machine. Bank gave voucher to her customers & entering into machine of that voucher & came out pound. But the voucher stayed into machine. After some days, Bank provided plastic card instead of paper voucher. The customers made transaction entering into machine of the provided card. After making every transaction, the card stayed into machine. Bank sent the card of the customer by postage so that the customer could use again. After one year, Sweden, Franch & Switzerland started “National Cash Dispenser Network. In 1969, Japan & America started their own produced machine. At first it was off-line machine. It was not connected to banking computer.

 Second Stage Machine:

In 1972, “Lioyd’s Bank” of UK established online “Cash Point” machine. They provided card to their customers. It was established Magnetic Stripe on the card. As a result, customer or account number was identified easily. Through this online technology, each machine was connected to central computer of the bank. If the machine was not connected to the central computer, it did not work. Through this online system the customers were returned of the Magnetic Stripe card after transaction for next time used.

Present Stage Machine:

During thirty years research, the present machines are invented. The present machines are “Full Graphics Screen Monitor” like color computer & is made transaction different currency through the decreasing with developing of technology. The present price of a machine is about 50-60 lac taka.  The machine is found in each developed & under developed countries. The highest market of the machines is Asia & the least market is Africa.

The last ten years of twenty century is electronic banking age. But it has started in Bangladesh primarily. Now-a-days in developed countries, it is started “Virtual Banking System (VBS). VBS means “No Man Banks”.

E banking:

The term Internet Banking or E-Banking or both are used as supplement. E-Banking is the one of the major part of E-Financing. E-Banking is web-based Banking. In other words E-Banking refers to the banking operations, which is done over World Wide Web (WWW). However, more comprehensive and well-established definition is given by the United Nations Conference on Trade and Development (UNCTAD).This definition covers almost all area of E-Banking. Internet banking refers to the deployment over the Internet of retail and wholesale banking services. It involves individual and corporate clients, and includes bank transfers, payments and settlements, documentary collections and credits, corporate and household lending, card business and some others (UNCTAD, 2002). E-Banking information architecture is modeled as client-server architecture. A client operating through a PC linked to internet opens the special E-Banking site of his bank and then using a set of special secure numbers, gets access to his bank accounts and has the opportunity to consult them, as well as to make all necessary payments and transfers from his personal accounts. When the transaction number is exhausted the bank sends him a new set of numbers for his individual transfer sessions. In some cases the bank provides customized software. The bank software program can also be utilized offline, for example for preparing the payment orders offline and then making the actual order online. The client receives all numbers separately, mainly by mail. The bank also provide clients with similar facilities in its premises so that clients can use the bank equipment such as an ATM or a special facility linked to the main terminal facility called MultiMate, permitting them to effect the same account examination payment and transfer operations without consulting the bank staff. Now a day due to emerging global economy, e-commerce and e-business have increasingly become an accessory component of business strategy and a strong catalyst for economic development. The new information technology is becoming an important factor in the future development of financial service industry, and especially banking industry. Abul Kashem Md. Shirin & Nusrat Tahmina Prianka have written in their book, Information Technology in Financial Services (The Institute of Bankers, Bangladesh-IBB) that Internet banking is also known as i-banking or online banking. Internet banking is a system which the customers can access from his home, office or anywhere in the world through internet. To avail this service, the customer needs to get an user ID & password from his bank & he needs to have access to a computer with internet.

Online Banking or Internet Banking or E-Banking allows customers of a financial institution to conduct financial transactions on a secure website operated by the institution, which can be a retail or virtual bank, credit union or building society. It may include of any transactions related to online usage.

To access a financial institution’s online banking facility, a customer having personal internet access must register with the institution for the service & set up some password (under various names) for customer verification. The password for online banking is normally not the same as for telephone banking. Financial institutions now routinely allocate customer numbers (also under various names), whether or not customers intend to access their online banking facility. Customer numbers are normally not the same as account numbers, become a number of accounts can be linked to the one customer. The customer will link to the customer number any of those accounts which the customer controls, which may be cheque, savings, loan, credit card & other accounts.

To access online banking, the customer would go to the financial institution’s website, and enter the online banking facility using the customer number & password. Some financial institutions have set up additional security steps for access, but there is no consistency to the approach adopted.

Internet Banking in Bangladesh:

Internet Banking is growing popular day by day in Bangladesh. A number of private as well as local banks are going online now considering the demand and necessity of fast banking. Internet banking not only provides banking facility round the clock but also helps a country to get attached to the international economy as well as business. People throughout the world are now getting engaged with more activity and business and hence need the fast and anytime access to his/her bank account. Internet banking also facilitates buying and selling various products which varies country to country.

In Bangladesh many banks have launched Internet Banking. Amongst those HSBC, City Bank, BRAC Bank, Bank Asia, Jamuna Bank, Janata Bank, Southeast Bank, AB Bank, First Security Bank, Mercantile Bank, Premier Bank, Agrani Bank Limited etc are in action already. Some are known as online banking, some are Internet Banking, providing various facilities. Like City Bank has the facility of account check and statement print including query about cheque book information. Bank Asia has almost same facilities but with addition they have internal fund transfer facility along with bill payment and mobile phone recharge which are, in fact quite handy.

Mercantile bank has a schedule for internet banking. It is Sunday to Thursday, 9am-3pm. They have the facility of money transaction, deposit and withdrawal though they charge a particular amount for each transaction according to their policy, it is a relief if you don’t have to go to bank for depositing and drawing money, isn’t it?

HSBC and BRAC Bank are clearly not satisfied with the transaction thing only in internet banking. They thought of something more and desiring and customized the service to its best for their clients and getting better day by day. HSBC has a whole lot of features in their online banking that includes 24/7 account access, loan account information, net- worth information, transaction amongst accounts, bill pay, personal information update, demand draft,  ATM info or PIN replacement request, cheque book order and lot more.

BRAC bank is one step ahead because for the first time they have introduced online shopping in Bangladesh. With exclusive features and facility BRAC bank also provides general online facility like the other banks. BRAC bank’s online shopping facilitates merchants to buy any product as they need online, they can customize the offers as well. Those who may have BRAC Bank VISA card or any VISA card can be a part of this online shopping service.

As the world economy is growing faster and banking sector is making mark each and every day, online banking is very important and effective to be a part of it. Bangladesh just started its journey in internet banking and banks are coming forward to make it a success. Online banking is clearly a huge benefit for the customers and saves a lot of time and things get done so easily. A developing country like Bangladesh can make the best out of Internet Banking and banks are completely into it

Function of online banking in ABL:

The customers can perform almost all types of banking activities through online banking from any branch.

(1)   Account Summary: The customer will be able to view the list of current, savings, term deposit & retail loan accounts held & the current balances in each account in the account currency. An indicative valuation of the account balances can be performed in the customer’s preferred currency.

(2)   Account Details: The customer can choose a particular account (savings, checking account, term deposit or loan account) & see the account details such as date of opening, date of maturity, outstanding balance, interest accrued, interest paid, limit amount etc.

(3)   Account Activity: The customer can see transaction activity in a given account for a range of dates specified by the customer.

(4)   Transfer Funds: The customer can transfer funds from his one account to his another account with the bank.

(5)   Open Term Deposit (TD): The customer can modify a term deposit by transferring funds from one of his current or savings accounts with the bank.

(6)   Modify Term Deposit: The customer can modify the maturity & interest instruction details of the existing term deposit accounts.

(7)   Close Term Deposit: The customer can close a TD account prematurely in part or in full. He will be shown the penalty applicable as per the product definition.

(8)   Loans Repayment: The customer can make payment of the loan instalement or any amount by specifying the amount. The amount will be transferred from his deposit account.

(9)   Early & Final Settlement: The customer can make an early payment of the entire loan amount due. The amount will be transferred from his deposit account.

(10)                       Standing Instruction: The customer can set up standing instructions for transferring a fixed amount of funds from his deposit account to another deposit (self or third party) or loan account in the bank in a fixed date of every week/month/quarter/year. He can specify the start date & the final date for execution of the standing instruction. The users can set up multiple instructions for each account & define the priority in which they can be executed. The instructions can be set up for one-time transfer or recurring transfers at a predefine frequency.

(11)                       Payee Maintenance: The customer can set up templates for use in “Third Party Fund Transfer” mentioning account number & other details of the “Third Party”. The Third Party means an individual who has account with the same bank. However an educational institute or utility company is not a “Third Party”. To be effective & available in the list during the “Third Party Transfers”, such entries need to be approved by a bank officer.

(12)                       Third Party Transfers: The customer can transfer funds from one of his accounts to another “Third Party” account within the bank. The Third Party account must be pre-recorded in the system using ‘Payee Maintenance’ and authorized by a Bank Officer for making this available in the list.

(13)                       Statement Request: The customer can make a request for account statement for a required period. The bank will manually service this request.

(14)                       Cheque Book Request: The customer can make a request for a cheque book for an account choosing the number of leaves desired from the set that the bank officer.

(15)                       Stop Cheque Request: The customer can choose an account & enter the cheque number/range of cheque for which the cheque encashment should be stopped. He can also specify the reason for stopping the encashment.

(16)                       Cheque Status Inquiry: The customer can choose an account & enter the cheque number for which the status should be viewed. In case the cheque is returned or stopped, the reason for rejection will also be shown.

(17)                       FX Rates Inquiry: The customer can query on the FX rates that the bank officers using function. The rates displayed are the TT, cash & DD rates.

(18)                       Interest Rates Inquiry: The customer can query on the interest rates offered on savings & term deposit products offered by the bank.

(19)                       Change Password: The customer can voluntarily change the internet password using this function. In addition the user is forced to change the password by the system at first Logon & defined intervals. In both cases the password needs to confirm to the policy defined by the bank.

Online-banking Product Available in ABL:

Online banking product and services can include wholesale products for corporate customers as well as retail and fiduciary products for individual customers. Ultimately the product and services obtained through internet banking may mirror product and services offered through other bank delivery channels. A brief description of e-banking products is described below:

 Automated teller machine:

An automated teller machine (ATM) is a computerized telecommunication device that provides a

financial institution’s customers with a method of financial transaction in a public space without a need for a human clerk or a bank teller.

Debit card:

A debit card is a plastic card which provides an alternative payment method to cash. While making purchases the amount of a transaction is typically displayed on a card reader, after which the customer swipes the card and enters the pin number. There is usually a short delay while the EFTPOS (electronic fund transfer at point of sale) terminal contact the computer network (over a phone line and mobile connection) to verify the authorize the transaction.

 Credit card:

A credit card is a system of payment named after the small plastic card issued to users of the system. A credit card is different from a debit card in that it does not remove money from the user’s account after every transaction. In the case of credit card the issuer lends money to the customer. It is also different from a charge card though this name is sometimes used by the public to describe credit cards. This requires the balance to be paid in full each month. In contrast the credit card allows the customer to revolve their balance at the cost of having interest charged. Credit card facility fully can not be extended in the country, as common gateway between financial institutions can not be established. Pricing mechanism of the products of country is not competitive, rater it is very much volatile. This creates a negative impact on the customers’.

Point of Sale (POS):

This means a retail shop or a checkout counter in a shop or a variable location where a transaction occurs in this type of environment. Additionally point of sale sometimes refers to the electronic cash register system being used in an establishment. Point of sale system are used in restaurants, hotels and stadiums as well as retail environment in short , if something can be sold, it can be sold where a point of sale system is in use.

Check Truncation:

This is such a service in which a financial institution doesn’t return the rejected checks with the monthly statement to their customer, rather they provide statement of rejected checks with their monthly statements. The banks store the rejected checks for a certain time period (usually 90 days). During this time period a customer can adjust /rectify the account if any imbalance is found between his own record and the bank statement provided by the bank. After the expiration of the stipulated period the rejected checks are spoiled and the bank maintains a micro film copy for a period.

Check Truncation: This is such a service in which a financial institution doesn’t return the rejected checks with the monthly statement to their customer, rather they provide statement of rejected checks with their monthly statements. The banks store the rejected checks for a certain time period (usually 90 days). During this time period a customer can adjust /rectify the account if any imbalance is found between his own record and the bank statement provided by the bank. After the expiration of the stipulated period the rejected checks are spoiled and the bank maintains a micro film copy for a period.

Home banking:

At first bank introduced telephone bill payment (TBP) so that customer could be able to do their banking activities from their home. The next version for the home banking was Video Home Banking (VHB). The internet is expected to be a major factor for home banking.

Retail Automated Clearing House Service:

It is an electronic network for financial transaction. ACH process large volume of both credit and debit transactions which are originated in batches. ACH credit transfers including direct deposit, payroll payment and payments to contractors and vendors. ACH debit transfers including customer payment of insurance premiums, mortgage loans and other kinds of bills. Businesses are also increasingly using ACH to collect the customers’ online rather than accepting credit or debit cards.

Wire transfer:

Wire transfer is a process which ensures fast and appropriate timing of fund transfer from the sender to the recipient. This kind of transfer of money could be either within the country or abroad. Funds are transferred under the following network: FED wire (federal reserve communication system) Bank wire CHIPS (clearing house inter-bank payment service)SWIFT ( the society for worldwide inter-bank financial telecommunication).

M-remittance:

For sending foreign remittance four nationalized banks and fifteen private banks are working collaboratively with mobile phone service operators. Recently remittance could be sent in Bangladesh by banking channel through account transfer (normally takes 3 working days) or in the form of instance cash (takes 24 hours). Foreign resident people can send their money and PIN (personnel identification number) through mobile phone. As a result money transfer becomes relatively easy, quick and hassle-free. But this system also superseded by m-Remittance system. Mobile remittance service or m-Remittance was introduced in the country opening doors to millions migrants workers to help transfer their hard earned money easily, effectively and most importantly, swiftly. The first ever remittance 15 service for Bangladesh was jointly launched by two local banks Dhaka Bank ltd. and Eastern Bank ltd. and the country’s second largest mobile operator, Banglalink.

Security measures of e-banking:

The security of a system is the extent of protection against some unwanted occurrence such as the invasion of privacy, theft and the corruption of information or physical damage. At this system is developed through the internet there is a big chance of hacking through our system. Current browsers counter security threats with a network communication protocol called secured sockets layer (SSL). SSL is a set of rules that tells computers the step to take to improve the security level of the communication.

Corporate automated clearing house:

 The automated clearing house (ACH) is an electronic network for financial transaction. ACH processes large volumes of both credit and debit transactions. Which are originated in batches other retail and fiduciary products and services may include balance inquiry, funds transfer, downloading transaction information, bill presentment and payment, loan application, investment activity and other value added services. Other Online banking services available in Bangladesh: Core Banking, Cluster Banking, Phone Banking, SMS Banking, Various Cards, ATM Shared (VISA/MASTER), ATM own (VISA/MASTER), PC Banking, Banking KIOSK, Offline Branch Computerization E-payment. The credit card is available from VISA, Master Card and VANIK. Agrani Bank limited provides electronic fund transfer (EFT) services. It is at an early stage and used on a very limited scale. Micro chips embedded Smart Card is also becoming popular in the country, particularly for utility bill payment. Automated Teller Machine (ATM) is expanding rapidly in major cities. A group of domestic and foreign banks operate shared ATM network, which drastically increase access to this type of electronic banking service. The network will gradually be extended to other parts of the country.

Customers’ Response:

Out of five hundred customers’ who have been using online banking system, following results have been gathered from the questionnaire through using snowball sampling technique. In following table customers’ Response who have been using on line banking system (% of Respondents who expressed “Yes” comment) is presented.

CommentDhaka in percentageCittagong in percentage
On line Banking services is relatively good than manual system79%65%
On line banking provides good Customer service72%61%
Just in time services in Banking can be provided56%48%
Bank Personnel behave properly52%56%
Dealing officer is well conversant about their respective Desk work48%47%
Technologically improved but quality of banking services worsen off51%44%
Better E-business environment67%61%

The emerging characteristics of online banking in Agrani Bank Limited

Main Characteristics

  24/7 processing of large transaction volumes, with high availability

 Multiple delivery channel support, including branches, ATMs, point-of-sale terminals, call centers, mobile devices, and internet banking

 An XML Web-based user interface with context-sensitive help

 Security management covering application and role-based access

 Online validations and automated exception processing

 Centralized, decentralized, and combination deployments

 Ease of integration with existing systems using flexible Java Platform, Enterprise Edition technology

Up gradation of Switching Software

A remarkable percentage of transactions of ABL are performed using the most popular delivery channel online. As such, it is equally important to have strong switching software to handle different types of transactions as well as high volume of transactions. Considering this, the bank is upgrading its switching software too. The upgraded software will not only ensure better and quick response to the requested transactions, it will also be capable to handle EMV transactions.

EMV Issuing & Acquiring

All the Online and POS terminals of ABL are EMV-compliant. The EMV security policy has been introduced by Europe, Master Card and VISA jointly to protect capturing card data and duplication of a card. We are the first Bank in Bangladesh to ensure such security to our valued customers. ABL has introduced EMV compliant chip based Master cards and VISA Cards for the first time in Bangladesh which is the most secure card in the world. EMV complaints and accepts the following cards:

• EMV compliant chip cards of all the banks in the world;

• Non-EMV Visa & MasterCard cards of all the banks in the world;

• ABL’s proprietary cards (Nexus). It took 3 years for ABL to implement what Visa and Master Card both deem as the future card standard. It encompasses the digital age and the new technologies that have emerged in the electronic age. Visa and Master Card both realized that the normal card is 40 years old and the amount of fraudulent transactions was loosing customers billions. North America will be having Nexus PRO card compliant by 2016. ABL’s entire infrastructure (including ATMs) have had a costly upgrade to enable Nexus PRO to Bangladesh.

Mobile ATM Booth

ABL has put its level of innovation and standard of customer support to a new height by setting another milestone in the history of banking sector by adding two units of Mobile Banking  ABL has become the first bank in the country to provide such unique serviceand convenience to the customers. The DBBL Mobile ATM Booth, which is outfitted in a custom-madevan, is available anywhere anytime and allow customers to deposit cash / cheque, withdraw cash, inquire account balance, print mini statement, pay utility bills and to access all other services offered by a standard ATM.

Mobile Banking

Around 87% of the total population of Bangladesh is un-banked. To bring such a huge population into the banking channel, ABL is implementing a system to launch mobile banking soon. The project is in its final stage now. With this facility any person having a mobile number will be able to use his number as a bank account. In this mobile account they will be able to do the following:

 Cash deposit to any Agent of ABL

 Cash withdrawal from any Agent of ABL

 Cash withdrawal from ABL ATMs

 Funds transfer to another mobile account

 Utility bill payment, Tuition fee payment, Air time top-up.

 Receive remittance from home and abroad

 Salary disbursement

 Disbursement of Govt. allowances

 Merchant Payment

 Balance Inquiry

Automated Teller Machine (ATM)

Customers get various types of services in these ATM booths like:

  1. Cash Withdrawal

2.  Balance Inquiry

3. PIN change

4. Fund Transfer (within Accounts)

5. Mini Statement

6. Cheque Book Request

7. Statement Request

8. Various bill Payment

Fast Track (FT):

To provide uninterrupted quick and faster service, the bank has introduced Fast Tracks (FT) in the country. These FTs are comprised of several ATMs, Deposit Kiosks and Customer Service helpdesk officers. The customers have the facility to deposit cash or cheque withdraw,  cash pay utility bills etc. at the FT. ABL has setup 50 FTs within 6 months of introducing it. The activities of FT are summarized below:

1. Cash Withdrawal:

2. Cash Deposit.

3. Account Opening

4. Customer Request Form A list of such services is given below:

I. Customer’s request form for Account Transfer

II. Card holder’s request form for a new Debit Card (MasterCard Debit / Maestro / Visa Debit/Visa Electron) or Credit Card (MasterCard / Visa)

III. Request form for Replacement of a Card (Debit/Credit) for any of the following reasons:

IV. Request for re-issue of PIN. Re-issue of PIN may be requested by a customer who have forgotten his PIN or in the fear that his PIN may be compromised to another person.

V. Request for Account Linkage Auto debit

VI. Request form for refund of Cash not dispenses from ATM but account debited.

VII. Application form for availing Internet, SMS & Alert facility on bank account

Delivery of Captured Card

Electronic banking for businesses:

Agrani Bank offers a complete electronic banking facility for companies around the clock. Most multi-nationals use this service because it is advanced, secure and affordable. ABL creates a custom banking service to suit any business of any size. The services have a wide range that includes cash flow services, distribution banking and salary accounts. If a company knows what type of custom and tailored banking service they need, ABL can provide it instantly and at minimal cost (usually free of charge). ABL has created Employee Banking program which allows

 Seamless and error free distribution of salaries

 Providing employees with timely salary payments

 Lower manpower needed

 Reduces cash theft and misappropriation

 Transactions are properly logged for your easy reference

 Highly secure way of distributing money

 No cash at hand in the office, all cash finally distributed through the largest ATM network in Bangladesh

Electronic Student Booth (ESB):

This is another innovative banking offered by ABL. The booths will mainly be setup in educational institution campus or nearby locations. The booths will contain ATM and deposit kiosks where the customers & students can withdraw & deposit money and pay tuition fee for the institute. In addition to these, there are multiple computers with internet connectivity which can be used by the students for accessing ABL internet Banking facility. Many ESB are in the pipeline.

Internet Payment Gateway (IPG):

ABL again has been the first bank in the country to have an Internet Payment Gateway. With the help of this, any person in home or abroad can do financial transactions using ABL’s proprietary cards/ MasterCard/ Visa credit. They can purchase goods and services from e-commerce web sites, called e-merchants and pay bills online sitting at their office or home using a card.

 Call center:

Considering the growing number of customers, card holders & transactions, ABL has setup a Call center. It is a world renowned Cisco hardware-based call center comprising of all the services call center can provide, e.g., Interactive Voice Response (IVR) by virtue of which the customer will be able to choose his options using the keypads of a cell phone and listen to the responses related to his account or card or transactions from the system or though live agent. The customers can dial at16216 from any land or mobile phone and go to IVR or Live agent, and get desired services.

Human Resource Management System & Remittance Management System:

ABL has developed a number of in-house software for its own requirements. The Information Technology Division has successfully developed and implemented two such systems namely Human Resources Management System (HRMS) and Remittance Management Systems (RMS).The HRMS helps in maintaining all information of employees of ABL while RMS helps in managing and monitoring local and foreign remittances.

Implementation of Multi-factor Authentication for Internet Banking:

ABL is considering to offer some transactions through Internet banking which were not possible due to security reasons. To cope with world’s latest technology to provide transaction security, ABL is considering multi-factor authentication for some of such transactions like Third Party Funds Transfer using Internet, e-commerce transactions and foreign remittance transfer from overseas remittance houses to ABL.

Green IT:

Agrani Bank Limited has always been careful about environment. ABL has taken initiatives to make its IT infrastructure as “Green IT”. Environment friendly options like virtualization, power management and proper recycling habits towards certifying our data centers as “Green” are under our active consideration.

 New Data Center and DRS:

ABL has set up its new data center and DRS to accommodate all the above setups. The ABL’s data center is one of the most sophisticated data centers of the country equipped with state-of-the art design, security and sophistication.

Internet banking facilities:

 Account Summary:

 The Customer will be able to view the list of Current, Saving, Term Deposit and Loan accounts with the current balance.

 Account Details:

 The Customer can choose a particular account and see the account details including unclear fund, limit, interest accrued etc.

 Account Activity:

 The customer can see or print his transaction activity in a given account for a particular period.

 Transfer Funds:

The customer can transfer funds from one of his accounts to another of his accounts within the bank.

 Pay Bills:

 The customer can pay his utility bill (like Electricity, WASA, GAS, Telephone, Mobile, ISP etc.)

 Standing Instructions:

The customer can setup, modify or delete standing instructions for transferring fund from one of his account to another account (his account or 3rd party).

 Open/Modify Term Deposit:

The customer can open a term deposit by transferring funds from one of his current or savings accounts with the bank. He can also modify the TD and redeem / part-redeem it.

 Loan Repayments:

 The customer can make payment of the loan installment from his CASA account

 Statement Request:

 The customer can make a request for account statement for a required period. The bank will manually service this request.

 Cheque Book Request:

The customer can make a request for a Cheque book.

 Cheque Status Inquiry:

 The customer can choose an account and enter the Cheque number for which the status should be viewed.

 Stop Payment Cheque:

 The customer can mark his Cheque leaf as stop payment.

 Interest Rate Inquiry:

 The customer can query on the interest rates on CASA & Term Deposit Products.

 Foreign Exchange Rate Inquiry:

The customer can query on the Foreign Exchange (FX) Rates using this function.

 Refill Pre-Paid Card:

The customer can buy a refill number for his pre-paid mobile phone or ISP link.

 Change Password:

 The customer can change his Internet Banking Password using this function. Additional Internet Banking Features for Corporate Banking

Letter of Credit:

The customer can initiate the LC application through Internet Banking.

Bank Guarantee:

The customer can initiate the Bank Guarantee through Internet Banking.

Limits Query:

The customer can view his Loan Limits and Limits Utilization through Internet Banking

The Prospectness / effectiveness of online banking in Agrani Bank Limited
As empirical evidence here a SWOT analysis can be an effective measure. For analyzing the performance of the Internet Banking in Bangladesh the following SWOT Analysis is considered:

Internet Banking is still to grow more in Bangladesh; most of the banks are providing several services of E- Banking. Thus, this product will enjoy the benefit of first mover.

It is cheap for both banks and customers; banks will be able to lower overhead costs and make more profit out of it. Moreover, this requires less man power for banks; customers can save time and avoid hassles.

E- Banking is convenient as the service is available all the tome at just a click away.

The system may have a problem of security breakdown which refers to the problem of identification of customers who’s initiating transaction. As in Bangladesh

The transaction can only be cancelled via Internet while the Internet infrastructure in our country is not satisfactory and supportive to provide all time access to web. So, there comes the problem in executing service with its full functionality.

Non- Branch Banking is becoming popular in Bangladesh; thus many banks are offering non- branch banking facilities. A person is able to withdraw or deposit money in any branch of the bank he has account with. Moving to E- Banking gives an edge in such cases.

All types of internet services are being appreciated and applied by people of different walks as this eases the activities. So, such unattractive offer package provided by online- banking will be popular everywhere very soon.

People have concern about security & privacy; they like to fell money with their hand; they actually don’t believe in virtual money transfer.

In the field of IT new technology is coming everyday. The one which is very popular today might get obsolete tomorrow. So to have a competitive edge over competitors the banks must always update their services.

Despite the presence of online internet service in Bangladesh, its scopes underutilized. The reasons include high service charges, lack of awareness, poor telecommunication systems, government policy, low buying power of potential clients and lack of institutional support.

Growth of National Economy Through

Online Banking 

Managers at various levels of organizations especially in underdeveloped country like Bangladesh will have to play vital roles to successfully implement on-line banking. They may act as strategic leaders at different stages of managerial capabilities. They are the key forces to initiate dedicated strategy to change from the traditional business processes to the technology driven business processes. This is not involving only huge costs as a transition period of organizations but adaptability of the human being in the new processes to adding values are required. Due to global changing environment, to succeed in the global arena as well as domestic business, organizations often forced to do business in the electronic ways.

Moreover, to succeed over the competitors’ organizations needs to be changed their strategy and they are gradually become bound to adopt e-business. At these stages successful implementations depends on all the stages of the Hierarchy of the Management i.e. starting from the Top Management level to the lower level management. On line banking system works as a complementary factor of electronic business. Though electronic business has a greater set of field but on line banking can work as a subset of the e-business .Benefits derived form the e-business largely depends on successful implementation of the business process.

Managing external pressure as well as internal pressure should be coordinated by the management so that e-business can supersede traditional business processes of organizations .Moreover, transformation process requires huge cost especially organizations of Bangladesh. Greater and cautious resource management especially financial capability should be handled by the management of the organizations. Flexible innovative changes processed by the management of the organizations are required for the organizations to succeed in the transformation process. Changing processes should consider socio-economic and cultural environment as well as labor surplus country. Business process reengineering may be designed with the aim that personnel of the organizations will use the technological functionalities which will lead to further enhancement of the organizations. As such strong motivations by the management towards all level of personnel of the organizations are required. Managers’ functionality to implement e-business is a stressful task for which their mindset should be strong and they should consider not only global considerations but also consider domestic situations.

Online can add value through knowledge management as it helps to attain new services to the customers. Successful online banking depends on sharing of strategic knowledge for which dissemination of the information and free flow of knowledge around the globe is required. On line banking can provide twenty four hours banking facilities. Through electronic data interchange customers are able to draw money from one branch to another. Letter of credits can be sent through SWIFT or electronic fund transfer from one country to another can be feasible. Actually on line banking provides faster, reliable services. Encryption and decryption can be used to send money from one place to another. As such on line bank management handles customers in a far better way.

In Bangladesh decision makers are generally reluctant about advancement of technology. It is difficult for people who do not have much technical knowledge to understand the necessity of adoption of new technology. So the pace of computerization in various offices, business enterprises and sectors are low. Another problem of initiating E- business is that in our country policy makers, managements are generally reluctant to accept something new. As such management prefers to maintain current business model and that’s why they are reluctant to introduce some thing new. To avail the advantage of E- business, organizations including banks have to invest for software, hardware, infrastructure development etc. The owners are uncertain about the positive return on investment as transformation from manual system to electronic transaction involves huge cost. This is a great drawback to implement E-business at a full swing. But the organizations are not interested to invest because they consider huge expenses.

In Bangladesh most of the business organizations are running centralized manner. As such visions, missions, goals of the top management of various organizations are very important. Top management should change their mindset and like Bangladesh Bank, they should encourage e-business process. Top management views are reflected to the mid level management and lower level management. Unfortunately most e-business efforts fail for non-performing visions, missions, goals and tactics at the business processes of the organization.

Limitation and Constraint Of Online Banking System In Bangladesh

Lack of awareness and human capital:

On-Banking is still not very much progressed in Bangladesh. Mass awareness is not feasible. The country faces problem of developing human-ware. Without preparing human capital at the level of international standard, we cannot be able to compete in global market and successful e-business cannot be feasible.

 Unsatisfying services and customer relationship:

Nationalized commercial banks and specialized banks are lagging behind of on line banking services. Moreover, customers are not satisfied with the quality of the services. They are not also very happy with the behavior of the bank personnel. However, it reveals that e-business especially with the help of online banking can manage economy of Bangladesh in a far better way as customer relationship management increases.

Unavailability of locally produced software:

Local Banking software should be developed properly and must have greater accessibility within the country and outside the country. Moreover, to produce hardware especially computer and its accessories, local entrepreneurs are not taking any sort of strategic planning.

Erstwhile technology:

Bangladesh Bank should adopt latest technology but due to lack of vision they are adopting old technology i.e. introduction of MICR for Bangladesh Bank automation procedure. MICR system should be substituted by cheque truncation system. Numerous problems have been identified from the field survey on line banking system in Bangladesh. Some of them are in the followings:

 Inefficiency and inadequate knowledge of the bank management about the on line-banking.

 Lack of proper Strategic plan to gain and retain market share of the indigenous banks.

 Lack of international standard communication channel.

 High cost of establishing on line banking system.

 Inadequate back and front office man agreement.

 Lack of integrated plan among the banks and the Central Bank authority.

 Inefficient Clearing House Facilities.

 Inappropriate software and less trust by the Bank authorities on local software

 Biased-ness of the management of bank towards foreign software.

 Legal barriers and appropriate policy framework.

 Limited number of online customer due to high cost:

The number of customers taking banking services does not capable to bear the cost of additional equipments like computer, computer accessories, Internet etc. from their own organization or at home. Biometrics should be more strengthened. Using Internet facility still very costly and people has little knowledge in operating computers. A few numbers of cyber café is available but for banking purpose customers do not feel safe to use these facilities. As a result, total numbers of customers who are habituated in on line banking systems are limited. In these circumstances investment for establishing on -banking facilities seems profitless.

Financial risks:

Although on line banking has bright prospects, it involves some financial risks as well. The major risk of on line banking includes operational risks (e.g. security risks, system design, implementation and maintenance risks); customer misuse of products and services risks; legal risks (e.g. without proper legal support, money laundering may be influenced); strategic risks; reputation risks (e.g. in case the bank fails to provide secure and trouble free e-banking services, this will cause reputation risk); credit risks; market risks; and liquidity risks. Therefore, identification of relevant risks, and formulation and implementation of proper risk management policies and strategy formulations and implementations are important for the scheduled banks while performing on line banking system.

Recommendations:

To implement online banking successfully in Bangladesh following recommendations are given below:

. • Digital Bangladesh may be activated by 2021 to develop the economy of Bangladesh. Successful team building with a coherent manner for developing human ware, hardware, software and web ware are required to increase online banking process in a systematic way. Moreover, greater emphasis should be given on security system and to prevent fraud so that any sort of financial transactions including on line banking payment or any other electronic fund transfer can be properly handled

• Career path of hardware and software engineers should be properly designed. Otherwise professionals will be de-motivated and they won’t work with job satisfaction.

• In Bangladesh, on line banking systems are yet at a take off stage. The Clearing House operation in Bangladesh should be fully automated system. Banks and business organizations especially corporate houses should have adequate research, skilled manpower and technology driven strategies in this regard.

• Initiatives to develop integrated e – banking software through in house built may be taken. Preference should be given by the bank authority to use local software over foreign software. Common gateway is required so that inter bank transactions can be feasible. Bank can charge normal profit to enlarge the market size on the on line banking products. Banks should have their own strategic plans to implement on line banking system. Creating awareness and consciousness among the clients of the banks are also required.

• The country needs to develop e-business with the help of ICT facilities. ICT application and development of software are very much dependent on the quality of the workforce, and supportive infrastructure and environment. Upzilla level may be considered as the base unit which may be connected with district and then connectivity with the capital of the country can be done. However, more stress should be given on wire free connectivity for which priority should be given on WIMAX technology.

• Public and private participation (PPP) for e-business should be encouraged for economic development. Spread of on line banking is a very good initiative. But it is not only sufficient. Business sector as a whole should be focused on using E-business. It should be accompanied with e-governance system and should be moved towards other areas of the “ e ”to“e” system like e-tender, e-trafficking, e-ticket, e-learning etc. More stress should be given to the wireless transactions and working environment due to rapid technological advancement.

• E-business should be used both for agricultural sector and industrial sector. Equal importance should be given so that domestic trade and international trade can be effective. Distortion from the market should be driven out and information should be passes systematically.

• E-business can help to improve total quality management. This can also ensure quality assurance of the business sector. As such business policy formulation and strategies are required and this should be properly implemented. Adequate training and technological support will be developed so that trained manpower and technology driven organizations can be created with the help of partnership between Govt. and non –Govt. organizations.

• Quality maintenance of local software should be arranged. Initiatives should be taken to set up hardware industry so that computer and computer accessories can be prepared in the country and easily purchasable for the lower and lower middle class people. Quality education and training in the field of ICT to develop human resources are essential. Moreover, entrepreneurship should be developed for developing hardware and computer peripherals.

• More high-speed fiber optical data communication infrastructures should be well established for speedy data communication for domestic and global high speed communication system. This will help to attain better e-business including on line banking system. Competitive situation should be arranged so that e-business management can be improved through efficiency and effectiveness of customer services.

 BTRC as a regulatory body should work with long term vision, mission and fulfillment of goal oriented strategies. They should work as a facilitator rather not creating hindrance. VOIP should be legalized after examining and finalizing proper rules and regulations in the country.

Discussions and Conclusions:

Due to advent of e-business especially on line banking system, the distribution channel is also changing. But quality of banking services should be international standard. To attain more effective and efficient business procedure, Bangladesh has to produce commodities of global standards. Dilshad  and Shawon ( 2004) observation may be followed to attain e-business efforts through information dissemination, knowledge transfer, and technical assistances. However, Bangladesh’s global Network Readiness Index should be improved from present situation.

From the respondents’ opinion in the area of DhakaCity and Chittagong city of the on-line banking user customers we observed that null hypothesis is accepted while alternative hypothesis is rejected. It indicates that on line banking can provide better customer relationship management. As per findings behavior pattern of the bank personnel should be improved. Not only technological improvement is desirable but also banking service as a whole should be better off. Chandrasekhar and Sonar’s (2008) comment should be considered as not only technological progress but efficiency of the banking services are required as on line banking customers’ are not still fully satisfied with the services. Study on customers’ feedback is partially supported by the findings of Nyangosi , Arora , Singh (2009) as they argued that banking through electronic channels has gained increasing popularity in recent years. However, policy makers should consider Shah and Clarke (2009) observation. Because from the customers’ feedback, the study observes that paying attention on human, operational, managerial, and strategic organizational concern in e-banking is required. Moreover, bank personnel should be well conversant about their respective desk work. This is also applicable to other organizations which are implementing e-business in the country. Otherwise customer relationship management cannot be improved. Buffam’s (2000) comment is more practical for the companies of Bangladesh as e-business will lead to attain competitive advantage as will they can outperform their competitors.

The study also done to observe different types of services and use of software’s by the banks. From the field level study we observe that Core Banking, Cluster Banking, Phone Banking, SMS Banking, Internet Banking, Various Cards, ATM ,SWIFT,PC Banking, POS Terminal, Banking KIOSK, Offline Branch Computerization are being provided. From the point of view of on line banking, still foreign banks are providing more on line banking services than private commercial banks. Then nationalized commercial banks and last being on line banking services are being provided by specialized banks. Ahshan’s(2009) observation is important for Bangladesh as it will help to enhance economic development. Creation of appropriate personnel/professional can improve the economic condition of the country. As such stress should be given to develop human ware. E-business can play important role to reduce poverty only when it can be effectively utilized for spreading the business both in rural and urban areas, creation of job opportunities, removing middlemen in the business process and one to one direct selling process and increasing both income and saving.

Internet accessibility should be used for poverty reduction. Following should keep more emphasis on e-business: IT firm; Export/Import traders; Export oriented/Potential export business; Facility provided ISP/Internet; Infrastructure development- Govt.; Ministry of Commerce, Ministry of Law, Ministry of Science & ICT, Export promotion bureau; Telecommunication / Infrastructure ;Awareness on IT benefits among the mass. In this regard Governor of Bangladesh Bank Rahman (2010) rightly points out that a holistic approach needs to be taken by all the stakeholders to reach the ICT facilities to the doorstop of the common people. Actually e-technology can be utilized with other computer peripherals to enhance communication, skill ness and understanding and provide a sound basis for implementing e-business. It can be helpful to accelerate the learning process, including the acceleration of the development and application of knowledge and technology. This includes development of the system and infrastructural development and support where followings are required: (a) E-procedure, (b) Browser based system development, (c) Web enable of legacy and/or client server systems, (d) Enterprise application integration, (e) Implementation or use of application server technology. Ahmed and Islam’s (2008) observation should be cautiously taken so that adopting on line banking services for which banks in Bangladesh can develop strategies for expediting not only banking business but also providing customers’ satisfaction. Business sector should be encouraged that make their own investment in the application of ICT in production, trade and services. Procurement and utilization of funds from national sources, both public and private should be pursued. International development and donor agencies should be approached to provide funds to set up necessary infrastructure and development of human resources, confirming to the objectives of ICT policy. Shah and Clarke (2009) observation about the e-banking can be transformed for successful e-business policy formulation as it depends on human, operational, managerial, and strategic organizational issues. Islam and Yang(2009) rightly observed that service satisfaction and information trust can play positive role to attain e-CRM and balance score card model which is not only valid for the financial institutions but in a large extent i.e. business process of the country. Economy of Bangladesh is still underdeveloped and one of the main reasons is banking system is not properly developed. Technology is one part but personnel should be well conversant with their respective desk work and behavior pattern should be improved. Government as well as different international organizations have also identified that underdeveloped banking causes some costly obstacles on the way of even economic progress of the country. Investors are frequently scared in invest because of its sluggish banking system. Hence the task of making the banking system of Bangladesh at per international standard deserves the highest priority. Business processes should be reengineered. Banks will have to face stiff competition in the world market with increasing of impact of globalization and the banks will be forced to offer twenty –four hours banking services online. Regulatory issues relating to security measures of electronic banking can be improved through the following ways:

a) Analyzing the potential risks in the electronic payments systems;

b) Existence of tradeoff between the efficiency of the financial system and the amount of risk incurred;

c) Competitive pressures that may encourage the banks to engage in competitive deregulation;

d) Effective provision and arrangement for cryptography and its applications;

e) More customers’ are willing to accept e-business as psychological patterns of the customers’ have been changing.

Global financial system has getting stronger day by day and it is strengthening by the e-business. Around the globe, consumer market has greater potentialities and producers must be active otherwise they may lose their share in the marketing strategies. Customer retention is feasible through arranging e-business otherwise if switching cost is low and other factors in between two companies are similar then customer will switch from one company to another where technological advancement is relatively higher. Moreover, rate of call charge of cell phone should be lowered. Hidden cost in cell phone should be removed. However, on line banking as well as electronic fund transfer and electronic data interchange is not free from risk. Not only security risk, but cost of transactions may also be raised .In this regard Rahman’s (2001-2002) observation regarding risk should be cautiously handled. The country can be benefited through successful utilization of e-business .This will help to enhance productivity and customers will be satisfied. Producers will also be benefited and monetary gain can be attained. E-business especially with the help of on line banking can manage economy of Bangladesh in a better way as customers’ satisfaction can be increased.

General Discussion & Findings

Filed level study:

 From the filed survey we observe that following banking services are being provided by different banks:

• Core Banking

• Cluster Banking

• Phone Banking

• SMS Banking

• Internet Banking

• Various Cards

• ATM Shared (VISA/MASTER)

• ATM own (VISA/MASTER)

• EFT

• SWIFT

• PC Banking

• POS Terminal

• Banking KIOSK

• Offline Branch Computerization

Detail of the field survey regarding software uses’, vendor’s name and services are given in the appendix in Table: A. However, from the field survey it is evident that foreign commercial banks and private commercial banks are relatively in a better position to provide on line banking services. Moreover, when contacted with Bangladesh Bank then it was informed that BACH (Bangladesh Automated Clearing House) is yet working in SIT (System Integration Testing) phase. SIT is expected to be completed within first half of January 2010. In the first phase, only Dhaka will be under this umbrella and all bank branches in Dhaka region must be part of BACH. Bangladesh Bank (BB) in its Dhaka office is using 7 inch * 3.50 inch MICR encoded cheques in BACH. Cheque truncation will be done, some banks will truncate fully (meaning at branch level) while some partially (meaning at a central point). BB will also provide bureau service, if needed by any bank initially. Clearing is for interbank transaction. It will be settled by BB after t+1 day.

Customers’ Response:

Out of five hundred customers’ who have been using on line banking system, following results have been gathered from the questionnaire through using table sampling technique.

Table:Customers’ Response who have been using on line banking system (% of

Respondents who expressed “Yes” comment)

CommentDhaka(In

percentage)

Chittagong(In

percentage)

On line Banking services is relatively good than manual system79%65%
On line banking provides good Customer service72%61%
Just in time services in Banking can be provided56%48%
Bank Personnel behave properly52%56%
Dealing officer is well conversant about their respective Desk work48%47%
Technologically improved but quality of banking services worsen off51%44%
Better E-business environment67%61%

(Source: Compiled on the basis of Customers’ response)

Analysis of the Findings:

Online-Banking is still not very much progressed in Bangladesh. Mass awareness is not feasible. The country faces problem of developing human-ware. Without preparing human capital at the level of international standard, we cannot be able to compete in global market and successful online banking cannot be feasible.

 From the filed level study we observe that still nationalized commercial banks and specialized banks are lagging behind of on line banking services. Moreover, customers are not satisfied with the quality of the services. They are not also very happy with the behavior of the bank personnel. However, it reveals that e-business especially with the help of on line banking can manage economy of Bangladesh in a far better way as customer relationship management increases.

Local Banking software should be developed properly and must have greater accessibility within the country and outside the country. Moreover, to produce hardware especially computer and its accessories, local entrepreneurs are not taking any sort of strategic planning. Bangladesh Bank should adopt latest technology but due to lack of vision they are adopting old technology i.e. introduction of MICR for Bangladesh Bank automation procedure. MICR system should be substituted by cheque truncation system.

The shortage of technology-based human resources and poor telecommunication infrastructure needs to be overcome to break low equilibrium trap. Bridging the digital divide would provide technology-based human resources, who can contribute to raise gross domestic product (GDP), national savings ,investment ,creation of employment and moving out from the vicious circle of underdevelopment. .

Numerous problems have been identified from the field survey on line banking system in Bangladesh. Some of them are in the followings:

• Inefficiency and inadequate knowledge of the bank management about the on line banking.

• Lack of proper Strategic plan to gain and retain market share of the indigenous banks.

• Lack of international standard communication channel.

• High cost of establishing on line banking system.

• Inadequate back and front office management.

• Lack of integrated plan among the banks and the Central Bank authority.

• Inefficient Clearing House Facilities.

• Inappropriate software and less trust by the Bank authorities on local software.

• Biased-ness of the management of bank towards foreign software.

• Legal barriers and appropriate policy framework.

The number of customers taking banking services does not capable to bear the cost of additional equipments like computer, computer accessories , Internet etc. from their own organization or at home. Biometrics should be more strengthened. Using Internet facility still very costly and people has little knowledge in operating computers. A few numbers of cyber café is available but for banking purpose customers do not feel safe to use these facilities. As a result total numbers of customers who are habituated in on line banking systems are limited. In these circumstances investment for establishing e -banking facilities seems profitless.

Although on line banking has bright prospects, it involves some financial risks as well. The major risk of on line banking includes operational risks (e.g. security risks, system design, implementation and maintenance risks); customer misuse of products and services risks; legal risks (e.g. without proper legal support, money laundering may be influenced); strategic risks; reputation risks (e.g. in case the bank fails to provide secure and trouble free e-banking services, this will cause reputation risk); credit risks; market risks; and liquidity risks. Therefore, identification of relevant risks, and formulation and implementation of proper risk management policies and strategy formulations and implementations are important for the scheduled banks while performing on line banking system. Ramakrishnan’s(2001) suggestion may be followed for risk management.

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