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Technology Perspective on Performance in United Commercial Bank Ltd. .

Chapter One - Overview of United Commercial Bank Ltd

Technology Perspective on Performance in United Commercial Bank Ltd. .

1.1 Introduction
The usage of information technology (IT), broadly referring to computers and peripheral equipment, has seen tremendous growth in service industries in the recent past. The most obvious example is perhaps the banking industry, where through the introduction of IT related products in internet banking, electronic payments, security investments, information exchanges, banks now can provide more diverse services to customers with less manpower. Seeing this pattern of growth, it seems obvious that IT can bring about equivalent contribution to profits. In most countries, but essentially in emerging ones, there are two types of banks: stateowned, private domestic and private foreign. The roles of these banks are important for the development of the economy but it is widely observed that private owned banks perform much better that their government counterparts. For instance, United Commercial Bank Ltd., the first generation private bank, has relatively poor IT infrastructure than other private banks in Bangladesh. Though the bank has taken initiations to upgrade their IT system to keep up with the industry trend, still lack in execution. However, competitive pressures have emerged as more and more foreign banks entering domestic markets. Consumers have become more astute in their buying, less loyal to a particular bank, and more demanding of products and services that fit their specific financial needs and time schedules. Consequently, they have attained the position to dictate where, how, and when they will conduct their financial affairs. To respond to consumer and market demands, local private bankers must provide greater convenience, increase accessibility of financial services and products, and deliver at a faster pace new and better targeted products and services. At the same time, total costs of operations and development must be maintained or reduced. All of this must be done to acquire or maintain a significant percentage of the consumers financial transactions and establish an acceptable profit margin. And this is possible through Information technology giving necessary competitive advantage.

The western world has continued to dominate the world of IT and set the pace in the transformation of the world economy. Likewise, the banking industry has in the last decade been characterised by increasing investment in IT.

Technology Perspective on Performance in United Commercial Bank Ltd. .

1.2 Historical Background of the United Commercial Bank Limited

Sponsored by some dynamic and reputed entrepreneurs and eminent industrialists of the country and also participated by the Government, UCBL started its operation in mid 1983 and has since been able to establish one of the largest networks of 108 branches among the first generation banks in the private sector. With its firm commitment to the economic development of the country, the Bank has already made a distinct mark in the realm of Private Sector Banking through personalized service, innovative practices, dynamic approach and efficient Management. The Bank, aiming to play a leading role in the economic activities of the country, is firmly engaged in the development of trade, commerce and industry thorough a creative credit policy. The Bank has in its Management a combination of highly skilled and eminent bankers of the country of varied experience and expertise successfully led by Mr. M. Shahjahan Bhuiyan, a dynamic banker, as its Managing Director and well educated young, energetic and dedicated officers working with missionary zeal for the growth and progress of the institution. From the very inception it is the firm determination of UCBL to play a vital role in the national economy. They are determined to bring back the long forgotten taste a banking services and flavors. They want to serve each promptly and with a sense of dedication and dignity. UCBL has its prosperous past, glorious present, prospective future and under processing projects and activities. UCBL is fully Bangladeshi entrepreneurs owned private bank. The members of the board of directors are creative business men and leading industrialist of the country. To keep rate of knots with time and in synchronization with national and international economic activities and for rendering all modern services, UCBL, as a financial institution automated all its branches with computer network in accordance with the competitive commercial demand time. Moreover, considering its forth-coming future the infrastructure of the bank is rearranging. The expectation of all class businessman, entrepreneurs and general public is much more to UCB.

Technology Perspective on Performance in United Commercial Bank Ltd. .

1.3. Objectives of United the Commercial Bank Limited

The objectives of United Commercial Bank are as follows: y y y To provide best quality service among the others Bank To provide quick and superior service by applying modern information technology. By improving congenial relationship between the bank and the customers, come closer to play a vital role in national development. y By investing the income generating projects, giving shareholders maximum dividend. y In the competitive market, the bank is to provide new innovative banking services to its valued customers and build up its own image. y To ensure the improvement of professional quality of manpower by increasing the work efficiency and technological knowledge.

1.4. Mission of United the Commercial Bank Limited To offer financial salutations that create, manage and increase our clients wealth while improving the quality of life in the communities we serve. And To assist in bringing high quality service to our customers and to participate in the growth and expansion of our national economy. 1.5. Vision of United the Commercial Bank Limited :

UCBLs vision is to have poverty free Bangladesh in course of a generation in the new millennium, reflecting the national dream. Building a society where human dignity and human rights receive the highest consideration along with reduction of poverty to set high standards of integrity and bring total satisfaction to our clients, shareholders and employees. To become the most sought after bank in the country, rendering technology driven innovative services by our dedicated team of professionals. The main vision of UCBL is to be the first choice through maximizing value for our client, shareholders & employee and contributing to the national economy with social commitments.

Technology Perspective on Performance in United Commercial Bank Ltd. .

1.6 Values United Commercial Bank Limited y y y y y We put our customer first We emphasize on professional ethics We maintain quality at all levels We say what we believe in We foster participate management

1.7. Business Motto of United the Commercial Bank Limited United we achieve

1.8. Special Features of the United Commercial Bank Limited 1) The Bank has introduce the duel credit card system for clients benefit so that they can make transaction anywhere of the world 2) The UCBL has introduced monthly saving scheme and educational saving scheme to encourage the limited and fixed income group of people. 3) The Bank is committed to continuous research and development to match with modern banking. 4) The operations of the Bank are computerized oriented to ensure efficient services to the customers. 5) The Bank has introduced camera surveillance system (CCTV) to strengthen the security services inside the Bank premises. 6) The United Commercial Bank has introduced customer relations management system to resolve client problem and also provided Online Banking facility at low charge.

Technology Perspective on Performance in United Commercial Bank Ltd. .

1.9. Organizational Development of the United Commercial Bank Limited

In the 1450s and 1960s a new integrated type of training originated knows was organizational development. Organizational development is an intervention strategy that uses group processes to focus on the whole culture of an organization in order to bring about planned change, it seeks to change belief attitudes, values structure and practices so that organization can better adapt to technology and live with the fast pace of change. The general objective of organization development is to change all parts of the organization in order to make humanly responsive, more effective, and more capable of self-renewal. The organizational development process does not preclude the use of conventional training method, which is useful for some purpose. The management of United Commercial Bank is also concern about the training for its development. They believe that if the employees will be trained enough they would contribute more for the development of the banking business that is why; they send some employee in every batch.

1.10. Organizational Structure of United Commercial Bank Limited The development of on organization depends on the management style of their organizations the same the development if the bank is being occurred only for the good management team. Management of the UCBL controlling of all the resources of the organization. To achieve the ultimate objective of making UCBL the finest banking of the country, the workforce will be futuristic in outlook, professional in attitude and honest in reputation. The board of directors wants to repose in the management all executive powers to run this service industry administration and credit portfolio independently without any undue influence from outside. The board formulates policy and gives policy directives to the management. Transparency and accountability are strictly ensured at all leaves of the bank. Bank operate with integrity, competence and farsightedness abiding by all the principals and provisions laid down in the bank company act 1991, 1994 and the guidelines of Bangladesh Bank. The bank is committed to pursue a straight forward, upright legitimate banking business, never be tempted by the abnormal prospect of large returns to do anything. It will only do what may be done under the national policy.

Technology Perspective on Performance in United Commercial Bank Ltd. .

1.11. Customer Services and Automation of UCBL To error human and forgiveness divines a proverb, the bank believes but the customers will not accept. Because for a service they pay for they want it 100% defect free. So improvement of the customer service should always be their motto altered expectations of the customer have shifted the focus from resource base productivity. To operate in the globalize environment, the banks future plan is to equip all the units of the bank with the modern technology, such as online computer network telex, fax, e-mail etc. for the service of the customer round the clock, it has ATMs service in different places in Dhaka and other cities of the country. The Bank has also contract with DBBL to use their ATMs without any charge for better service of the customer and UCBL provides Western Union Money Service as well.

1.12. Social Commitment of United Commercial Bank Limited The purpose of the banking business is, obviously, to earn profit, but the promoters and the equity holders of United Commercial Bank Ltd are aware of their commitment to the society to which they belong. A chunk of the profit is kept aside and/or spent for socio-economic development through trustee and in patronization of art; culture and sports of the country and the bank want to make a substantive contribution to the society where we operate, to the extent of our separable resources 1.13. Corporate Culture of United Commercial Bank Limited

This bank is one of the most disciplined Banks with a distinctive corporate culture. Here we believe in shared meaning, shared understanding and shared sense making. Our people can see and understand events, activities, objects and situation in a distinctive way. They mould their manners and etiquette, character individually to suit the purpose of the Bank and the needs of the customers who are of paramount importance to us. The people in the Bank see themselves as a tight knit team/family that believes in working together for growth. The corporate culture they belong has not been imposed; it has rather been achieved through their corporate conduct. The Bank achievement has been possible because of the able leadership;

Technology Perspective on Performance in United Commercial Bank Ltd. . dedicated and committed services provided by all levels of management and staff which all possible because of a good and quality full corporate culture.

1.14. Main Services & Product Offerings

1.14.1. Consumer Banking: UCB provide Mortgages, Credit Cards, Personal Loans, Auto Loans, and Wealth Management products. In order to maximize customer convenience, they offer 24hour Phone Banking, eStatements, SMS Banking, ATM Cards and VISA Debit Cards, as well as Online Banking and state of the art branches. 1.14.2. Wholesale Banking: Wholesale banking provides Transactional banking, Debt Capital Markets, Corporate Finance, Derivatives & Fx Options, Commodity Finance and deposit products.

1.15. Customer

One of the most important tasks UCB has is to serve its customers as specifically as possible in terms of consultancy, sales and additional services, and, at the same time, to operate efficiently. The optimisation of costs in relation to income, or cost-income ratio, is crucial for UCB if they are to reap market success. Where it seems sensible, UCB also orientate their strategy towards the development of new product and service areas. However, the prospects for rapid growth are limited, since there are few growth areas in the Technology field.

Technology Perspective on Performance in United Commercial Bank Ltd. .

Chapter Two-Competitor Analysis

Technology Perspective on Performance in United Commercial Bank Ltd. .

2.0 Competitors
2.1. CitiDirect To gain more control over ones cash positions, one needs easy access to accounts and information in real time. One needs an application that is easily customized by individual users and streamlines day-to-day operations. One will need the convenience of local banking and the global solutions of an industry leader. The solution is CitiDirect Online Banking. The motto of CitiDirect is Money isnt everything but it can be everywhere.

2.2. Eastern Bank Limited Eastern Bank Limited Internet banking application addresses the needs of small, individual and corporate account holders of the bank. This application provides a comprehensive range of banking services that enable the customer to meet most of their banking requirements over the net. The transactions that are supported by the internet banking provided by Eastern Bank Limited are Account operations and Inquiries, Fund Transfers and Payments, Utility Bill Payments, Deposits, Loans, Session Summary etc.

2.3. Bank Asia Bank Asia symbolizes modern banking with innovative services in Bangladesh. It has centralized Database with online ATM, SMS and Internet query service. The significant delivery channel of Bank Asia is the shared ATM Network. Bank Asia has 21 ATMs as a member of ETN along with eleven other banks. Bank Asia is maintaining its competitiveness by leveraging on its Online Banking Software and modern IT infrastructure. It is the pioneer amongst the local banks in introducing innovative products like SMS banking, and under the ATM Network the Stellar Online Banking software enables direct linking of a clients account, without the requirement for a separate account.

2.4. BRAC Bank BRAC Bank deployed a layer of security system for its Internet Banking. These measures extend from data encryption to firewalls. BRAC Bank uses the most advanced commercially

Technology Perspective on Performance in United Commercial Bank Ltd. . available Secure Socket Layer (SSL) encryption technology to ensure that the information exchange between the customers Computer and BRACBank.com over the internet is secure and cannot be accessed by any third party. SSL has been universally accepted on the World Wide Web for authenticated and encrypted communication between customers computers and servers.

2.5. Arab Bangladesh Bank Ltd. The first private bank of Bangladesh with a long standing experience in domestic and international banking. Its 153 branches in all the major commercial centers of the country and 152 correspondents worldwide provide proficient banking services to its customers.

2.6. HSBC Business Banking Account enables a person to receive credit of all the cash or cheque deposits along with inward remittance and make all local payments and provide access to the wide range of services for the business requirements. A person may deposit upto BDT50,000 cash per transaction and any BDT amount in cheque 24 hours a day, 7 days a week through the ATM Machines, conveniently located Sales and Service Centers. EasyPay Machines are also available for deposit of BDT 50,000 cash per transaction and any BDT amount in cheque to the Business Banking Account. With EasyPay Machines both HSBC and Non-HSBC customers can make deposits and pay their utility bills, credit card payments and etc.

2.7. SCB Standard Chartered offers the client a comprehensive range of Cash Management services. Whether it is a financial institution, a multi-national corporation or a domestic company, Electronic Banking application has the capability to support full range of Cash Management reporting and transaction initiation needs. It provides the secure, reliable and effective link between the client and clients accounts anywhere across the Standard Chartered network. Electronic Banking provides various types of support through a wide range of operating systems, sweeping transaction accessories with the provision of reporting features or other special functions. There are 10 offices and 50 employees under this division, which operates in 26 countries.


Technology Perspective on Performance in United Commercial Bank Ltd. .

2.8. Competitive Position of UCB UCB has been rated A+ in long term and ST-2 in the short term by credit rating information and services limited based on the financials up to December 31, 2010 and other relevant qualitative and quantitative information up to the date of rating. Currently UCB is holding 10th position in the banking industry. 2.8.1. Rating Strengths y y y y y Commendable improvement of asset quality in the recent years Steady growth in business (funded and non funded) Efficient top management team Management focus on implementation of modern risk management practices Strong liquidity profile

2.8.2. Rating Concerns y y MIS & IT infrastructure require further improvement Inability to hold annual general meetings and pay dividends


Technology Perspective on Performance in United Commercial Bank Ltd. .

Chapter Three- Information System in UCB


Technology Perspective on Performance in United Commercial Bank Ltd. .

3.0. Information System in United Commercial Bank Ltd.

United Commercial Bank is one of the private commercial bank in Bangladesh which was more like other public banks that are technically unsound. By evolving IT into the system, the bank has positioned itself as a brand competing with other foreign banks. Now, one can send money from abroad using systems like Western Union, Moneygram etc. Previously UCB had to maintain data manually which is now auto generated through customized software. However, the bank still lack in various fields of operation which can be resolved by IT solutions. As Time is money, and due to IS, UCB make thousands of transactions per day. In fact, IS makes whole process much more quick, simple and reliable. Due to IS employees can easily connect with other branches, customer service gets improved, online banking emerged and lot of others benefits. UCB Online is an innovative Online Banking service that one can tailor to suit ones precise banking needs. It gives one convenient, round-the-clock banking services ranging from dayto-day account transfer transactions to real-time valuable financial information. Now one can manage ones finances anytime, anywhere. 3.1. Organization Transaction Processing System

A Transaction Processing System (TPS) is a type of information system. TPSs collect, store, modify, and retrieve the transactions of an organization. A transaction is an event that generates or modifies data that is eventually stored in an information system. From a technical perspective, a Transaction Processing System (or Transaction Processing Monitor) monitors transaction programs, a special kind of programs. The essence of a transaction program is that it manages data that must be left in a consistent state. 3.1.1. TPS in UCB: Effective transaction processing system is working in UCB that offer enterprise the means to rapidly process transactions to ensure the smooth flow of data and the progression of processes throughout the enterprise.


Technology Perspective on Performance in United Commercial Bank Ltd. . 3.1.2. Payroll TPS In UCB payroll TPS is designed to get information and record of the employ and then to calculate his/her annual earning. It get information about the employee from the employees department and from general ledger and send it to payroll TPS from where it links that information with the previous record and prepare a report which is forwarded to management. Management takes notice the LN record of the employees efficiency to work and may declare added bonus or other incentive. This report is checked and approved by the branch manager after which check is issued to the employee. And when that check is cashed, the record is updated in the general ledger as well as the master payroll (HUB).

Employee Data Check Passes by Manager

Payroll TPS General Ledger

Management Reports

Payroll Master File (HUB)

Check Issued to Employee General Ledger

3.1.3. Customer Identification In UCB there is their own information management named software Virses is working which is connected to NADRA. So if any new client wants to open an account in the bank the system automatically send a request to NADRA to check and verify the customer ID number. Which helps the management to identify whether he/she is using his original ID card or not.


Technology Perspective on Performance in United Commercial Bank Ltd. .

Input (ID #)

Virses HUB

NADRA (Customer identification)


3.1.4. Employees Record All employees are supposed to login when they enter the bank and logout on leaving, by tracing their thumb impressions on biometric device. This device is connected with the HUB which continuously makes record of their hours spent in the bank. Moreover, the bank has their own setup named LN which makes records of all the transactions made by an employee. This would help management to monitor the working efficiency of an employee.

Employee Job Login Biometric Device & LN Employee Job Logout HUB


Technology Perspective on Performance in United Commercial Bank Ltd. .

3.1.5. Online Complains: UCB allows the customer the option of online complains. The customer submits the online complain which is then processed by Customer Service TPS which is linked by management and after the problem identification it is send to the concerned department.

Customer Queries

Customer Service TPS

Identify Problem

Send to Concerned Dept.

3.1.6. Advices: As all of the record of the customers are stored in main server (HUB) of UCB, so incase if someone account balance is getting near to zero the system automatically alert the management about that. Then manager take manual action and send him/her the advice (a letter, mail or phone call) to check the account balance.

Account Customer Service TPS Alert Advices Send to Customer HUB Management


Technology Perspective on Performance in United Commercial Bank Ltd. .

3.1.7. Account Opening This TPS is designed for opening a new account in the bank. Input: Give bio data, NIC no., income, city name. Process: Information sends to the virses. Output: new account opened in the bank.




Customer Service

New A/C Opened

A/C Dept.


3.1.8. Online Activity Purpose: Transfer funds with the organization. Input: Concerned Branch code, city name, account title, amount & the transaction. Process: The information will send to organization server (HUB). Output: Transfer of fund to the concerned branch.


Customer Service TPS

A/C Dept

Fund Trnsfer to Concerned Branch HUB


Technology Perspective on Performance in United Commercial Bank Ltd. .

3.1.9. ATM Card Purpose: Easy with draw of cash. Input: Give bio data, income summary, company name, NIC. Process: NIC no. and bio data send to virses which directly linked to NADRA. If information is correct then it is forward to customer service centre. Output: Issue of credit card.




Customer Service TPS

New A/C Opened

A/C Dept. HUB

ATM Issued

Nevertheless, a management information system is a system or process that provides the information necessary to manage an organization effectively. MIS and the information it generates are generally considered essential components of prudent and reasonable business decisions.


Technology Perspective on Performance in United Commercial Bank Ltd. .

Chapter Four- Business process model


Technology Perspective on Performance in United Commercial Bank Ltd. .

4.0 Business process model:

The business process model of United Commercial Bank Ltd. Shows how different activities take place in different division along with the process of the whole business. However, UCB business process model includes the Secondary activity and Primary activity which generates the ultimate value of the organization. The primary activity includes the primary functioning of the bank, like-General Banking, Credit/Advance, Foreign Exchange, Retail Banking, Priority Banking, and Foreign Remittance and so on. On the other hand the secondary activities includes the administrative work of a bank, like HRM, IT, Accounts etc.

Administration and Management

R & D System

Secondary Activities Workforce Planning System

Technology Development
Computerized Ordering System General Banking Credit/ Advance Foreign Exchange Retail Division Foreign Remittance

Organization Value Chain



Technology Perspective on Performance in United Commercial Bank Ltd. .

Chapter Five-Softwares used in Different Business Process


Technology Perspective on Performance in United Commercial Bank Ltd. .

5.0 Softwares used in different business process:

5.1. PCBank2000

5.1.1 Deposit: All institutional and individual deposit services, including account opening, deposit/withdrawal, account closing, lose reporting and account management etc. 5.1.2 Loan: All round support to the bank credit business, such as advance, interest deduction, renewal, collection, automatic payment etc. Flexibly support individual institutional loan and


commission loan, acceptance bill, packing loan, Bill advance etc. 5.1.3 Discount: Including the disposal of ordinary discount,


Technology Perspective on Performance in United Commercial Bank Ltd. . inter-bank discount, rediscount, discount withdrawal etc. 5.1.4 Borrowing: Including the disposal of internal borrowing in the system and exterior borrowing beyond the system. 5.1.5 Investment business: Short term investment, long term investment; arrange accounts according to the bonds type, and set up registration book for inquiry and management.




Including deposit and loan interest deduction, profit calculation income allocation, and transfer, tax

calculation etc. 5.1.7 Client management:

Including client information management, client accounts management, management etc client credit

5.2 Western Union Its a software program with 2 features which can be used separately for your needs. 5.2.1 MTCN scanner: is searching for active transactions which correspond with clients criteria (country and amount) or through MTCN which can lead to the next feature. 5.2.2 MTCN tracking: MTCN or the name of sender / beneficiary, will find all the details which correspond searching, this would track the full list about a specific transaction (full name and country of sender and beneficiary, amount and MTCN).


Technology Perspective on Performance in United Commercial Bank Ltd. .

5.3. UCB Remit 5.3.1. Remit Out Form:  Save senders Name address and ID checked and date of ID Checked.  Reminds instantly for date for ID Check  Save Receivers names for each sender  Allow to send transfer through any network  Saves collection points address for each network  Generate security code at random


Technology Perspective on Performance in United Commercial Bank Ltd. . 5.3.2. Receipt for Customer:  Pints Duplicate Receipt on normal paper and normal printer one for customer and other for office copy.  Shows Sender Account No and details  Shows Calculation and Outstanding amount if any  Show Address of Collection Point or Bank Brach address  Show Receivers details

5.3.3. Instruction for Payments  Generates report instruction for money transfer payments abroad  Different styles with respect to orientation and columns to be included  Can be exported to MS Excel Format or MS Word Format  Can be email with one click


Technology Perspective on Performance in United Commercial Bank Ltd. . 5.4. Credit Card Bill Collection System Credit Card billing system includes:
y y y y y

Interest calculations Processing of bill payments and cash withdrawal using card cheque Processing of cheques, card etc. Customer management Customer account management


Technology Perspective on Performance in United Commercial Bank Ltd. .

5.5. BACPS (Bangladesh Automated Cheque Processing System)

5.5.1. Payment interface: The direct connection with macro/micro payment system realizes remittance and cashing, inter-bank transaction, real time transfer. 5.5.2. Internal clearing: Regulate and manage the cash position in a real time way; realize inter-bank settlement, cash pooling and borrowing; and support automatic settlement and clearing.


Technology Perspective on Performance in United Commercial Bank Ltd. .

Chapter Six- Growth in Internet Banking


Technology Perspective on Performance in United Commercial Bank Ltd. . 6.0 Growth in Internet Banking

Numerous factors including competitive cost, customer service, and demographic considerations are motivating banks to evaluate their technology and assess their electronic commerce and Internet banking strategies. The challenge is to make sure the savings from internet banking technology more than offset the costs and risks associated with conducting business in cyberspace. Some of the market factors that may drive a banks strategy towards internet banking include the following: 6.1. Competition: The competitive pressure is the chief driving force behind increasing use of internet banking technology, ranking ahead of cost reduction and revenue enhancement. Banks see internet banking as a way to keep existing customers and attract new ones to the bank. 6.2. Cost-efficiencies: Banks can deliver banking services on the internet at transaction costs far lower than traditional ways. The actual costs to execute a transaction will vary depending on the delivery channel used. These costs are expected to continue to decline. 6.3. Geographical Reach: Internet Banking allows expanded customer contact through increased geographical reach and lower cost of delivery channels. In fact some banks are doing business exclusively via the internet they do not have traditional banking offices and only reach their customers online. 6.4. Branding: Relationship building is a strategic priority for most banks. Internet banking technology and products can provide a means for banks to develop and maintain an ongoing relationship with their customers by offering easy access to a broad array of products and services. By capitalizing on brand identification and by providing a broad array of financial services, banks hope to build customer loyalty, and enhance repeat businesses. 6.5. Customer Demographics: Internet banking allows banks to offer a wide array of options to their banking customers. Some customers will rely on traditional branches to conduct their banking business. Other customers are early adopters of new technologies that arrive in the marketplace. The challenge to banks is to understand


Technology Perspective on Performance in United Commercial Bank Ltd. . their customer base and find the right mix of delivery channels to deliver products and services profitably to their various market segments. As use of the internet continues to expand, more banks are using the web to offer products and services or otherwise enhance communications with consumers. The internet offers the potential for safe, fast, and convenient new ways to shop for financial services and conduct banking business, any day, any time.


Technology Perspective on Performance in United Commercial Bank Ltd. .

Chapter Seven- SWOT Analysis


Technology Perspective on Performance in United Commercial Bank Ltd. .

7.0 SWOT Analysis:

7.1. Strength y y In UCB online banking is fully automated. Although first generation bank, keeping pace with the modern industry trend than others. y Prompt service, hence percentage of customers waiting is less than a given fixed time.

7.2. Weakness y y y Limited skilled human resources Employee base has low-level of computer literacy Less investment in Information Technology and looking for last mile solution. IT employment was done partly because of lack of fund and knowledge

7.3. Opportunities y The internet services are becoming very common to us. So a service offered through the internet will be widely accepted in the near future. Hence the overhead costs would decrease and increse profit of the bank. y Better and improved IT solutions that would ease banking transaction even more.

7.4. Threat y y High cost associated with IT deployment 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 the competitors UCB must always update their services.


Technology Perspective on Performance in United Commercial Bank Ltd. .

Chapter Eight- Proposed Changes: Technology in Business


Technology Perspective on Performance in United Commercial Bank Ltd. .

8.0. Proposed Changes: Technology in Business

United Commercial Bank Ltd

Competencies: Use of technology Cost effectiveness Technical Capability Technology



Competencies: Hierarchy Flexibility Employee selection

Politics and corruption, Organizational Culture

Performance Affects

Technology in the business will give the general idea about technology in the banking sector, why it is used and how to produce it.

8.1. Only Electrons move in the Bank Although banks still use paper and fax a lot to make work happen efforts are now afoot to reduce this. Paper is currently still used to pass work in progress from one department or building to another. Many of the documents that are faxed / moved are produced by systems internal to the bank. Printing, manual handling and thenre-keying data is high cost and banks are enhancing their use of email and intranets, already universally available to bank staff, to drive this cost out. Documentation required from a source external to the bank from what we can see, will be captured as an image at the first point of entry to the bank and then filed with either a customer or account record. Apart from eradicating manual handling, the use of images

Technology Perspective on Performance in United Commercial Bank Ltd. . allows multiple departments to see the entire file (e.g. for a loan application) at the same time, hence speeding up processing by allowing activities that previously had to be serial, to run in parallel.

8.2. Simple CRM for Customer Contact Customer Relationship Management (CRM) as a phrase ended up covering a vast plethora of business ideas from sales pipeline management through to complex analytics on call routing. Given the very large customer bases that banks have, with significant variations in customer behaviours and preferences it is inevitable that a given service proposition will have to be supported through a number of delivery channels. As a consequence many banks are seeking to maintain a record of customer interactions, particularly for service, that is independent of delivery channel; i.e. outside the branch, call centre, and product processing centre.

8.3. All Forms will be filled in Electronically, Preferably by the customer Much of the documentation that moves within a bank and between a bank and its customers are paper forms. The ambition for many banks is to see every customer form available on the Internet. If a customer fills in a form via the internet/Email there are great benefits. Software can sift the customer keyed data and input it into core systems (A/C opening, credit applications) and so avoid bank staff having to key data; and the customer should never get faced with an out of date form. Customer signatures would still is required in many cases (although digital certificates might alleviate this) and the customer would have to print and sign a version of the form, which would get mailed to the bank as follow up (and probably scanned in as an image). UCB can also apply the same ideas to internal forms. The aim is for bank staff to retrieve them from the intranet, key them and Email them.

8.4. Legacy Software will be an Important Design Point We have not heard of anyone in a branch based bank saying lets design our processes as if branches dont exist, and the reason is that it is such a large part of the current state of the


Technology Perspective on Performance in United Commercial Bank Ltd. . bank that it has to be a major consideration. In many respects, the legacy software base is as large an investment as the branch network.

8.5. Web Browser to bring together lots of systems on the desktop Currently a member of staff in a branch or call centre can only access a limited number of the banks product engines. For example they might be able to logon to the Bank Customer Accounting system to access current and savings account details but not be able to access the groups mortgage, credit cards or insurance systems. The principal reason for this is the technical incompatibility of the different product engine systems. Banks are increasingly standardising on web browser interfaces to all systems and hence opening up the opportunity to allow staff to carry out work (e.g. customer service work) across a wider range of products than was hitherto possible.


Technology Perspective on Performance in United Commercial Bank Ltd. .

Chapter Nine- Information Communication Technology (ICT) Policies


Technology Perspective on Performance in United Commercial Bank Ltd. . 9.0 Information Communication Technology (ICT) Policies

In Bangladesh decision makers are generally reluctant about advancement of technology. If Govt. doesnt 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 wont bring any dramatic changes in the economy. Entrepreneurship Development fund (EDF) of Bangladesh bank is should be utilized properly. However, 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 first step towards automation started with the launching of the Bangladesh Automated Clearing House (BACH) in 2010. Funded by UK Department for International Development, BACH replaced the physical movement of cheques to the clearing house through image based transfer of cheques to the central bank. This shows the intention of Bangladesh Bank to the betterment of the services. This will eventually lead to internet banking to a requirement for all banks in the near future. With all the strategies we have set for us we can enter into a new world of internet banking. The Ministry of Science, Information and Communication Technology has given out the policy for the development in the IT sector. The ministry has concentrated on the following sections: y y y y y y y Human Resources Development through Education and Training ICT Infrastructure development Research and Development in ICT Development of ICT Industry Development of E-Commerce E-Government / E-Governance establishment Establishment of Legal Issues


Technology Perspective on Performance in United Commercial Bank Ltd. .

The Government spending in ICT is going to increase by at least 2% of ADP in coming years. The new budget provision encouraged the investment in the application of ICT in trade and finance. The ICT companies will get preferential terms which will be able to meet up 20% of its revenue expenditure. BCC has created a centralized fund for R&D which would encourage contributing 1% of all profits from ICT-enabled services to the HRD fund. This will greatly help the development if ICT in Bangladesh. The software support for internet banking, i.e. FLEXCUBE is available in Bangladesh. Again Bangladesh Government is working on the copyright law and the preservation of intellectual property act. After the successful implementation of all these policies and strategies we are expecting that more than 50% of the banks will be offering internet banking facilities which is now 12% only. Another important issue in extending the internet banking services throughout the country is gaining popularity. The sense of security is of great importance 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.


Technology Perspective on Performance in United Commercial Bank Ltd. .

Chapter Ten- The Supporting IT Infrastructure


Technology Perspective on Performance in United Commercial Bank Ltd. .

10.0 The Supporting IT Infrastructure

Bangladesh has a nationwide fiber-optic network established by Bangladesh Railway. Hardly 8% of this fiber-optic capacity was ever used during the years of its existence. This facility can provide excellent backbone for nationwide voice and data communication.

As we have no direct access to the information super highway the only option is to communicate through satellite. Satellite communication is costlier than fiber optic.

To avoid satellite communication and its high cost, we can establish the missing link to the information super highway if the nation-wide fiber-optic network is allowed to link up with the high speed fiber-optic backbone in India.

Availability of telephone lines and reduction in service fee will attract many professionals into internet arena.

Young generation should play a vital role in developing IT industry in Bangladesh.


Technology Perspective on Performance in United Commercial Bank Ltd. .

Chapter Eleven- The Proposed IS model in UCB


Technology Perspective on Performance in United Commercial Bank Ltd. . 11.0 The Proposed IS model in UCB: Long-Term Decision Manking


The IS model

11.1 System description The proposed system is a modular system. Individual modules can be freely combined according to the specifi c needs of the bank or payment provider. Additional modulesncan be added gradually as needed by the client or when the client becomes ready for implementation. This flexibility makes it possible to start with a set of key modules and to continue step-by-step up to the complete coverage of company processes. All modules share a common central database. All data is kept in the database in singular form with no duplication or replication necessary. This ensures data consistency and effi ciency.


Technology Perspective on Performance in United Commercial Bank Ltd. . 11.2. CORE The core module is the main building block providing the functionality for accounts, transactions and the audit trail. The module defines the core data structures used by all other modules. The core module is required in all implementation scenarios except when a bank wants to use its own legacy system and use just the Internet and Mobile Banking modules. 11.3. WebOffice The system weboffice allows remote mode of work using the light-weight intra/internet application. The application is optimized for high performance even on slower connection lines which makes it ideal for external users like third-party outsourcing partners (call centers, bank agent networks), or other business partners. As security is a big concern, the authentication of users adheres to the highest security requirements and all communication is encrypted 11.4. Module for Term Deposits and Loans The module administering term deposits and loans automates the lifecycle of various types of term deposits and loans and projects the fi nancial aspects of term deposits and loans into the G/L. 11.5. Module for Payment Card Administration The payment card administration module administers communication with payment card production and the processing company. The card branches and the types of the payment cards are fully customizable. The module exports in batches all requests for new plastic cards and provides support for the export of payment card balances and limits and the import of card authorizations and settled transactions. All information concerning card authorizations and transactions becomes an integral part of the core transactions, which enables the incorporation of it into the consolidated account statements and a detailed overview of payment card history. 11.6. Statements and Reports Module The reporting module allows for the defining of complex consolidated account statements and virtually any reports from the data kept in the central database.


Technology Perspective on Performance in United Commercial Bank Ltd. .

11.7. e-Commerce Module The e-Commerce module provides B2C and B2B functionality. The module exposes automated secured Internet XML interfaces allowingm eShops to automate ePayments for their tangible and non-tangible goods and services. The interface allows both single individual payments and combined payments stemming from microPayments. 11.8. Communication Modules The module provides a versatile communication allowing the defi nition of formats and contents for the import and export of any data from the central database. Once configured, the communication via batch data files can be fully automated or manually controlled. The rich operation reports allow the monitoring of the smooth processing and provide prompt notification of potential problems. 11.9. Internet Banking Module The Internet Banking provides bank clients with a secure, efficient, flexible and fully confi gurable interface to all banking products and services. The graphic design, menu structure, supported languages and integration with the core banking system is fully customizable. The products and services exposed by the Internet Banking module range from a standard banking portfolio to state-of-the-art electronic payment or microPayment tools. 11.10. Multi-Generation Mobile Banking The system comes with a wide range of mobile banking technologies using a broad set of GSM technologies allowing clients to communicate with the bank anytime from anywhere in their preferred manner. All information exposed via ARBES OBS Mobile Banking comes directly from the core database; the active operations are sent directly to the core banking system for immediate processing.


Technology Perspective on Performance in United Commercial Bank Ltd. .

Chapter Twelve- Investment Forecast & Return on Investment


Technology Perspective on Performance in United Commercial Bank Ltd. .

12.0 Investment Forecast & Return: NOPAT

Cash flows from investing activities Payments for purchase of securities Investment in IT Acquisition of Other Fixed Assets Proceeds from sale of fixed assets Net cash ouflow from investing activities NOPAT Net interest Income Investment income Other operating income Total operating income (A) Total operating expenses (B) Net income before provision (C) = (A-B) Total Provision (D) Net income before Tax (C-D) Provision for Tax Net profit after tax (NOPAT)

2011 (893,752,343) (258,954,622) (539,494,343) 1,780,052 (1,690,421,256) 2011 3,835,360,138 1,972,538,276 5,807,898,414 7,854,634,893 (3,122,306,942) 4,732,327,951 (1,100,529,879) 3,631,798,072 (1,450,162,647) 2,181,635,425

2010 124,808,388 393,731,611 2,109,821 (516,430,178) 2010 2,617,086,773 963,452,759 3,580,539,532 5,192,054,616 (2,066,885,136) 3,125,169,480 (1,583,304,987) 1,541,864,493 (608,966,603) 932,897,890


Technology Perspective on Performance in United Commercial Bank Ltd. .

Chapter Thirteen- Decision Analysis


Technology Perspective on Performance in United Commercial Bank Ltd. .

13.0 Decision Analysis

The use of appropriate software systems constitutes an important pillar of banking operations. Besides the use of suitable software, what is critical for banks commercial success is that different applications and processes should be well integrated, and that users should actually accept and deploy them in practice. Naturally, good software systems cannot guarantee success on their own. But they are able to make a significant contribution. 13.1. Increase Employee Confidence and Motivation Using a new banking system can be scary and intimidating for employees at a financial institution, as they are directly responsible for using it on a daily basis. In order to properly use the system and accurately process transactions, employees must first have an introduction to what it is and a clear understanding of how to use it. By receiving proper training, associates will practice and learn all aspects of the system in a self- paced, safe and non-threatening learning environment that looks and feels like the real system. Through the use of motivating, challenging and interactive content, activities, exercises and hands-on practice of system functionality, employees will be more confident about using the new system. These interactive exercises will enable employees to gain a new understanding of their job responsibilities and will equip them with the knowledge and skills that they need to excel in performing their tasks every day. Providing training that is customized to each job position at the bank will also help employees to feel confident about using the new system on a daily basis. Targeted, comprehensive and customized training will help employees in every area of the bank to confidently and efficiently use any system out there.

13.2. Maintain Customer Experience During the conversion to a new system, it is important to keep every customer's banking experience consistent. Financial institutions should conduct a seamless transfer to a new system while maintaining an optimal customer experience. Customers should not be able to


Technology Perspective on Performance in United Commercial Bank Ltd. . sense that a transition at their bank is even occurring, or be able to notice any bumps in the road during the transfer. System Simulation Training produces knowledgeable, proficient employees who provide reassurance to customers who will return based on their positive experiences at the bank. If customers are continually satisfied with their banking experience they will likely tell their family and friends, resulting in even more business for the bank.

13.3. Reduce Risk Training for employees on the new banking system provides numerous benefits, including reducing risk at the bank. Knowledgeable and confident employees will make fewer mistakes and costly errors. And unlike classroom training, each session is identical so you can be confident in the consistency of the training. A team of employees who are all receiving consistent, quality training will help to make the conversion to a new system seamless and risk-free.


Technology Perspective on Performance in United Commercial Bank Ltd. .

Chapter Fourteen- Cost-Benefit Analysis:


Technology Perspective on Performance in United Commercial Bank Ltd. .

14.0. Cost-Benefit Analysis:

Information Technology (IT) is important to reduce the long-term cost and save time when dealing with services. It also helps to drive the countrys economy because banking sectors development has a relation with economic development. Few traditional business companies philosophy about IT is a pressure of implementation and investment. It also problem about managing and allocation of the responsibility when change management system required by the organization. Traditional bank management psychologically feel burden to organize IT as a strategy.

Though the solution will require a higher initial investment, the operating expenses will be much lower However, IT reduces the companys long-term cost; again customers will be satisfied through fast, accurate, easy-to-use, comprehensive delivery of the services. So a complete IS solution will be much more beneficial to UCB as well as customers.


Technology Perspective on Performance in United Commercial Bank Ltd. .

Chapter Fifteen- Conclusion


Technology Perspective on Performance in United Commercial Bank Ltd. .

15.0. Concluding Remarks

United Commercial Bank Ltd is under pressure from the forces of globalisation to adopt IT in order to fit into the evolving global banking system. So the motivation is principally that of survival. The current level of investment in and implementation of IT is not impressive, and very few banks can claim to have realised some of their expectations in investing in IT. However, in order to offer its customers the best services available, banks and financial institutions need to stay up-to-date on the newest technologies available, no matter what the cost. However, regardless of how advanced, high-tech or costly these systems are, they will fail without proper training for employees. In order for a financial institution to get its money's worth and reap the many long-term benefits that these systems can provide, Systems Simulation Training is the obvious choice.


Technology Perspective on Performance in United Commercial Bank Ltd. .

y Andersen, T. J., (2001) Information Technology, Strategic decision making approaches and organizational performance in different industrial settings, journal of strategic information system, Vol. 10, pp. 101-119 y Alexander, D. & Chistropher, N (2010) Financial Accounting: An international introduction, pp.1-477, 4ht Edition, Pearson Education, UK y Asian Development Bank, (2009) Restructuring state own financial institutions: lessons from Bank Rakyat Indonesia, Philippines, pp. 1-35 y Bauman, P., Bauman, C. & Hasley, R. F., (2000) Do Firms Use the Deferred Tax AssetValuation Allowance to Manage Earnings?, Working Paper Series, JEL Classifications: M41, M43, M44, K22, pp.1-41,Available at SSRN: http://ssrn.com/abstract=239054 ordoi:10.2139/ssrn.239054, USA y Banker, R. D. & Kauffman, R. J. (1988) Strategic Contributions of Information Technology (IT): an empirical study of ATM networks, Center for Research on Information Systems, pp. 1-22, New York y Basel Committee on Banking Supervision (BCBS) (1999) Enhancing Corporate Governance for y Banking, Risk Management Group of Basel committee on Banking Supervision, pp. 1-11 y Performance: An International Comparison, Office of the Comptroller of the Currencyn Economics Working Paper Beck, T, Demirgu Kunt, A., & Levine, R.(2006) Bank concentration, competition and crises: First results , Journal of Banking & Finance 30 , pp.15811603 y Berger, A. & Hannan,T.,1998.The efficiency cost of market power in the banking industry: A test of the quiet life and related hypotheses. The Review of Economics and Statistics 80,pp. 454465. y Berger and Humphrey (1997) provide a detailed review of the literature on banking efficiency, which is also updated by Bergerand Mester (2003).

Technology Perspective on Performance in United Commercial Bank Ltd. . y Binter, M. J., Ostrom, A.L., &Meuter, M. L. (2002) Implementing successful selfservice technologies, Journal of Academy of Management Executive, Vol.16, No. 4 Blumberg, B., Cooper, D. R., & Schindler, P. S., (2008) Business research Method, 2ndede. Uk y y y y y y y y http://h71028.www7.hp.com/enterprise/downloads/iflex_sb.pdf http://www.bccbd.org/html/itpolicy.htm http://www.bttb.net/bttb_home_ddn_rate.htm). http://www.theage.com.au/news/Breaking/Bangladesh-net-users-cross1m/2005/04/29/1114635721380.html?from=moreStories&oneclick=true) http://www.fnc.gov/Internet_res.html http://www.it.iitb.ernet.in/~sri http://info.isoc.org/internet/history/brief.html


Technology Perspective on Performance in United Commercial Bank Ltd. .