Table of Contents

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.

1
Introduction
Internet banking in Bangladesh was not available at a time but now it has a great
contribution in the banking sector as well as in the economic condition. Also there were
several constraints on the bank. There were also many technical limitations. E-Banking
or Internet Banking or online banking is the common banking activity using the Internet.
On-Government commercial banks has launched e-banking rapidly. But, Government
banks are still lagging behind. Because of the popularity of e-banking, public
commercial banks are now taking approaches of starting their appearance in e-banking
sector. In this regard, when a customer enters his bank account through the bank's
specified secured website, joining the internet. To get access in the account, the bank
has some necessary information generally: an ID and password. But all banking
activities cannot be done through internet so far. By using internet banking, an account
holder can easily access to their account 24 hours, 365 days account access, account
balance inquiry. Money transfer in multiple accounts, utility bill payments (e.g. electricity,
water, gas, phone, mobile, internet etc.), interest rate inquiry, exchange rate for foreign
exchange, inquiry report, request for check book, cancellation of check payment
Opening of different deposit schemes and so on.

Some features of online banking in the perspective of Bangladesh

The idea of Electronic banking developed in Bangladesh since 1992 through several
multinational banks. Here the analyst got some common features of online banking in
Bangladesh.

1. An account holder can easily deposit and withdraw money at any time.

2. No need of waiting in sequence.

3. Account activities can be easily managed.

4. Account processing through electronic modes.

5. Transferring of money from one branch to another branch very easily and shortly.

2
6. Above 16-hours shopping facilities.

7. Taking new ID Number is very easy.

8. Accounts statement of 8-10 previous transaction records.

9. Different types of bills (Utility bill) can be easily paid.

Approaches towards E-Banking

The atmosphere of Information systems, situation is changing quickly. Internet users in

Bangladesh has been enhanced in a recent years and will be enhanced more rapidly in
future. May be in future, branches of a bank will be decreased and transactions will be
done by using various e-banking channels. Bangladesh can usually expect rapid growth
in banking sector through this system.

Literature Review
Preparatory:
At first, e-banking means accomplishing banking activities through electronic device. E-
banking proliferations computerization process, decreases operation cost, gratifies
clients and benefits to achieve competitive advantages. Moreover, some drawbacks are
also prevailing there. Now-a-days, security is a big concern in e-banking because of
online scam. Majority of the people feel concerned transaction over internet. Mainly
People are concerned for the safety of money deal with through the online banking and
all transaction are not automated. Absence of face-to-face conversation in online
banking is also a complication. There are many difficult transactions which need face-to-
face conversation and customers want to know information about these transactions.

Operation and Updating System:

Internet connection and maintenance of PCs in e-banking are very costly. Extra experts
and employees are needed for maintenance of online banking. Huge initial investment

3
is required for e-banking. Lack of experts IT workforces causes a great difficult for e-
banking organism. Customers can apply for credit from anyplace in the world and banks
find more difficulties to authenticate the identity of the customer. Continuous changing
of currency rates and lower standards of transparency can cause difficulties in e-
banking. Many banks having not enough security protection for their websites and
mobile banking platform. Status can be gone astray due to poorly provided e-banking
services such as inadequate accessibility, hacked, altered official websites and other
security problems. It is indispensable to ensure customer deposit and safe their
essentials. Counterfeit have been stated in e-banking.

Threats for Information:

A hacker can have access to information such as, account number, credit card number,
pin and password, specimen signature, transaction history, credit card bills. So it can
arise a great problem for customer. Verification of transaction that whether it is
successful or not, is imprecise. Sometimes customer get wrong message about their
withdrawal of money but the customer do not get money. Occasionally upgrade
programs and add new-fangled features to their banking services and it causes
problems for customer because they have to re-submission their account information.
Hardware problems are also prevail in e-banking facilities. If a customer’s computer
crashes, he has to be depended on his branch. Many people scarcely trust a machine,
especially money transferring. They are always anxious about their money, its security
and procedure through Internet Banking. Scam and hacking of information and money
is a great concern. Difficulty, exertion and time ingesting of opening an E-Bank account.

Engaging with all People:

There are many illiterate customers even educated customers can face these problems.
An erroneous click can cause financial damages. Technical problems may cause
suspension of transaction. Providing underprivileged services and time consuming are
also major issues. Problems of ATM machine can bother customers. Server down also
trouble customers a lot. Many people avoid e-banking because they do not understand

4
how it works. Book-keeping and processes of registration such as documentation and
power of attorney can origin problems of customers. A new e-bank faces a lot difficulties
to include all of the previous documents to the database. Constant technological
transformation may lead to face complications for the both customers and employees.
Continuous training is needed to cope with the technology.
Summary
As the virtual network is playing a key role in changing how we interact and we do
business, electronic commerce has emerged. Banking industry is rapidly using this new
and automated communication channel to reach its customers. It addresses several
types of trends: meeting customers’ demand anytime, providing proper service, product
time-to-market imperatives. Maintaining security and privacy of information are the
major concerns of E-banking. Transferring information on the session layer protocols
and the flaws in end-to-end computing is the current focus of information security. A
secured network to communicate over distrusted channels is needed for secured and
safe communication. Enterprise resource system or Software-based systems or
hardware-based systems or a hybrid of the two can be the best solutions to security.
Example- Encryption of algorithms, private and public keys, Kerberos and digital
signatures used by Master card etc. are used as software-based or nerve based
solutions. Hardware-based solutions are-Smartcard and the Me Chip. These provide a
better protection for the security of personal and vital information.

History of E-Banking

The Online-banking theory has come first in 1980’s. It gained popularity at the end of
1980’s and was implemented in the use of keyboard, TV to access the system by a
phone line or virtual network. Stanford federal credit union first introduced internet
banking services in 1994.After that, other banks snapped E-banking up.

Types of E-Banking

5
 There are three types of Internet banking:

• Provides basic information about its products and services.

Informational • This is meant for marketing purposes only.

• Allows communication between the patron and bank.

Communicative
• Connects with the bank's main computer systems.

• Most popular online banking

• Offers all of the benefits of a traditional brick-and-mortar
Transactional institution

Distribution Channels

The modes of distributions are:

Plastic • ATM cards, debit cards and credit cards

Money • withdrawal of funds, account balance , value added service

Internet • Web Banking or PC Banking

• Accessible to internet facility
Banking • E-banking services to the clients

Phone • Tele- Banking or Mobile- Banking or M-Banking.

Banking • Customers can avail information by sending a SMS

6
Points of entrance to the System

Electronic Transactional
System

Electronic Bill Presentment

and Payment

Electronic Information
Transfer System

Modes of money transaction

Automated Teller
Machine (ATM)

Credit Cards/Debit
Smart Cards
Cards

Significance of MIS in Electronic-Banking sector

The MIS in banking takes the responsibility to this aspect. Management Information
System provides information for making managerial decision. To avoid the

7
inconvenience of going to some places for payment of small amounts, customers need
service at the counter to pay electricity bills, telephone bills, taxes and duties to the local
bodies and the Government. Hence, the MIS is to be designed properly. Here are these:

Information
collection

Classification
Decision of the
information

Analysis Storage

Retrieval

Determinations

• MIS helps to collate into coherent reports.

• The MIS provide various time saving benefits to the workforce.
• MIS becomes absolutely essential for a bank for maintaining
• An accurate record of all transactions for the banks which have multi-branches
spread over a large area.
• It’s related to our theoretical knowledge.
• Proper understanding of a renowned company/organization.

8
Belongings of e-banking on traditional service

 E-banking transactions are much cheaper than branch or even phone

transactions. It undercuts bricks-and-mortar banks.

 It can be easily set up so lots of new entrants can easily enter.

 E-banking will grind down the ‘endowment effect’.

Reimbursements

 Minimizing time consumption.

 Proper safety and security.

 Quick transfer of money.

 Easy to use.

 Easy & permanent access.

 Transaction at a low cost.

 Access anywhere across the world.

Challenges of E- Banking are as follows:

 Strategic risk
 Business risk
 Operations risk
 Identity theft
 Phishing disguising as a reliable body.
 Acceptance of customer
 Costly technology.
 Security issues.
 Legal factors.

9
  Business related barriers.
 Transparency in offering
 Establishing proper organizational structure.
 Hijacking of session.
 Service denial

Outcomes

Security & Legal Barriers

There is a lack and limitation of regulation of law in our country. It is hinder to e -

banking. Here frauds cause a negative result in e-banking sector. On the other hand,
electronic document is not value as proper evidence by our court. For why, people do
not want high risk of e-banking. Hacking is a great threat to us.

Socio-cultural and Economic Barriers

Most of our people are not literate. So, they prefer conventional banking. On the other
hand, they prefer paper money and receipts. For providing e-banking services, it
needs huge finance. In our country, internet cost high and people do not have the
affordability to buy the communication device.
Infrastructural Problem

There is not proper infrastructural strength to provide efficient e-banking services. In

our country, telecommunication service is weak, bandwidth needed in communication
is weak, software is not available in the country and the establishment of ATM booth
is costly.

Knowledge Barriers

E-business is still not lagging behind in Bangladesh. Providing training for the
development of human resources is not so easy here. Managers do not have proper
technological knowledge.

10
Lack of Awareness and Human Capital

Mass awareness cannot be accurately possible. There is huge need of human-

capital. Without proper human, we cannot enter into global market and cannot do
successful e-business.

Customer Relationship

Here, specialized banks are lagging behind of online banking services. The quality of
the services is very poor. The behavior of the bank personnel is not warm.

Lack of Software Availability

The development of locally made software should be ensured.

Erstwhile Technology

Most of the banks do not have proper vision. That’s why they are using adopting old
technology instead of modern technology

Limited Number of Online Customer

Most of the people are too poor to have equipment like computer, computer
accessories, Internet etc. And, they have very little knowledge of operating
computers. Though, cyber café is available but customers do not feel safe to use it for
e-banking. That’s why total numbers of users are in online banking systems are very
little.

Financial Risks

Online banking includes operational risks, legal risks, strategic risks, reputation risks,
credit risks, market risks, and liquidity risks.

Problems to e-banking in Agrani Bank Limited

11
  Fewer number of IT expert working in Agrani Bank.
 Most of the customers are illiterate or unable to use technology.
 Agrani bank doesn’t issue credit card.
 ATM booths of Agrani bank are limited (about 30 booths only).
 Agrani bank is unable to start SMS banking still now.
 Many branches of agrani bank is situated in rural area.
 Agrani bank is unable to start internet banking still now.

Problems to e-banking in One Bank Limited

 ATM machines do not support cash depositing facility.

 Cheque book is not allowed here.
 One cannot withdraw more than 50000 tk on a date.
 Bankers have lack proper knowledge over the e-banking.
 Sometimes, the server do not work properly and software went slow down.
 Sometimes of ATM Booths fail to meet the requirement of the customers and
electricity failure is a common problem in the ATM Booths.
 Money cannot be transferred from one bank to another bank.
 The percentage of female participants’ involvement is poor.
 Maximum people are concerned about online baking but actually they have
little knowledge about how it works.

Recommendations
In order to ensure a successful practice of e-banking in Bangladesh, we recommend the
following

 E-banking systems should be simple to use, fast, robust and user friendly.
 E-banking services should be standardized so that wherever the solution is used
the customer is familiar with the procedure followed.
 Government should compel the banking sectors to automate their operation and
going online by a specific period.

12
 Provide adequate training and technological support to develop the manpower.
 Building appropriate legal framework.
 Proper infrastructure development.
 Government should implement the cyber laws to ensure proper security about
customers information (i.e. Credit card number)
 Government should establish proper educational institution to create efficient IT
professionals to support e-banking in Bangladesh.
 Developing of integrated e-banking software.
 Government, in collaboration with the banks, should educate and inform its
citizens and customers on the workability and effectiveness of E-banking. This
will increase the confidence level of customers.
 The clearing house operation in Bangladesh should be fully automated system.
 Banks should have adequate research and technological background in this
regard.
 Bank can charge normal profit to enlarge the market size on the electronic
banking products.
 Political commitment to improve governance and institutional strength is essential
for
 Successful application of e-banking. As e-bank users mostly use ATMs and
POS in most cases, the banks should emphasize on providing uninterruptible
service.

• The systems should be kept simple so that the user can use it easily, quickly
and can accept it user friendly

• A standard E-banking system should be established so that the customers can

easily understand each and every sections of e-commerce.

• All the banking sectors must have to be brought under online system and
compelled by the government.

• Proper training and technological supports should be provided.

13
• A proper legal system must be established.

• Infrastructural development should implemented.

• For more security Cyber Law must be established and implemented by the
government.

• Investment on IT sector should be increased.

• Development of e-banking software.

• Awareness on the workability and effectiveness of E-banking will be increased

among citizens

• The establishment of fully automated clearing house.

• Research and development project should be taken in this regard.

• Uninterrupted service must be given priority.

Conclusion
E-banking gears up trade and it is agreed by international trade communities.
However, in Bangladesh, IT and e-banking are still in primary level. As, the world is
running very fast. So, we should cope with the change. We should overcome the
obstacles and also progress. E-banking should be given topmost importance.
Security and privacy issues regarding e-commerce has to be certified. If we can do
this, e-banking sector will be very prosperous. Therefore, users will not be
concerned and e-banking sectors will have a common standard to operate.

Reference

14
15