Chapter 1

INTRODUCTION OF ATM

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1.1 Background

A bank is a financial institution licensed by a government. Its primary activities include

borrowing and lending money.Banks are important players in financial markets and offers
financial services such as investment funds. Banks provide the way for people to deposit their
money and withdraw that money whenever needed. In past, people used to deposit and withdraw
their money by going to their respective bank. They have to stand in queue for a long time to
perform such activities. Due to this,they have to spend a lot of their valuable time for merely to
perform such things.With the advent of new technology in the banking field,there is radical
change in the process of aforementioned stuffs.Among of recent technologies used in banking
sector,Automated Teller Machine(ATM) is playing a relevant role to ease the life of people.
Through this, they have option for deposit and withdraw the money without standing the queue
in bank office.

1.2 Introduction:

An Automated Teller Machine is computerized telecommunication device that provides a

financial institution’s customers a secure method of performing financial transactions in a public
space without the need for a human clerk or bank teller. An Electronic Funds Transfer(EFT)
terminal that allows customers using a pin-based debit(ATM) card to initiate transactions (e.g.
deposits, withdrawls, account balance inquiries). Computer controlled terminal located on the
premises of financial institutions or elsewhere, through which customers may take deposits,
withdrawals or other transaction as they would through a bank teller. Other terms sometimes
used to describe such terminals are customer-bank communications terminal (CBCT) and remote
services unit (RSU). Groups of banks sometimes share ATM networks located throughout a
region of the country that may include portions of several states. A machine, activated by a
magnetically encoded card or other medium that can process a variety of banking transactions.
This includes accepting deposits and loan payments, providing withdrawals and transferring
funds between accounts. Using an ATM, customers can access their bank accounts in order to
make cash withdrawals and check their account balances. Many ATMs also allow people to
deposit cash, transfer money between their bank account, pay bills or purchases goods and
services.

1.3 History

A mechanical cash dispenser, arguably an ATM was developed and built by Luther George
Simjian and installed 1939 in New York by the city Bank of New York, but recovered after 6
months due to lack of customers acceptance. Thereafter, the history of ATMs paused for over 25
years until De La Rue developed the first electronic ATM which was installed first in Enfield
Town in North London on June 27,1967 by Barclays Bank. Shepherd Barron was awarded an

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OBE in the 2005 New Year’s Honors List. The first ATMs accepted only a single use token or
voucher which was retained by the machine. ATMs first came into wide use during the early to
mid 1980s.

1.3.1 History in Nepal

First of all the credits Cards were introduced by the Nepal Arab Bank (now NABIL bank) in
early 1990’s.Then the automated teller machine (ATM) was first introduced by another Joint
Venture Bank. Himalayan Bank Ltd in 1995. Then, the uses of ATM machines were popular
and demand was high because of its reliable services and fast cash technology. And many
other commercial Banks introduced their ATM cards and ATM machines. Eventually, now
many commercial as well as development banks have providing this services through many
ATM machines. Even the Banks owned by Governments have started this service due to its
demand by the customers. Such as VISA and Master Cards, there was development of a
smart card in Nepal which was called the SCT card.

1.4 TYPES

Types by Physical characteristics

There are two main types of ATMs that have developed over time.

a.Mono-functions devices:
Those devices that are only able to perform one type of mechanism for financial
transactions. These machines are able to do only one specific functions such as cash
dispensing or statement printing, They can’t perform more than one operations. Most of
them are only used for printing the statement or dispensing cash only but not both.

b.Multi-function devices

Those devices which incorporate multiple mechanisms to perform multiple services. These
devices are able to more than one operation and these machines are becoming more popular
as they provide many functions within the same devices rather than different devices. These
machines can perform operations such as accepting deposits, dispensing cash, printing
statements,etc all within a single footprint.

1.5 Components of ATM

The different components of ATM has been shown in figure-1.Generally, an ATM has two
input device and four output devices. Here,input device act as interface which is able to
communicate with ATM for taking input from user such as PIN number and card reader.
Similarly, an ATM has four output device such as display screen and receipt printer. The
different components of ATM has significant role in interacting with the ATM customers.

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 Figure-1: Components of ATM

a. Card reader - The card reader captures the account information stored on the magnetic
stripe on the back of an ATM/debit or credit card. The host processor uses this information
to route the transaction to the cardholder's bank.

b. Keypad - The keypad lets the cardholder tell the bank what kind of transaction is
required (cash withdrawal, balance inquiry, etc.) and for what amount. Also, the bank
requires the cardholder's personal identification number (PIN) for verification. Federal law
requires that the PIN block be sent to the host processor in encrypted form.

And an ATM has four output devices:

c. Speaker - The speaker provides the cardholder with auditory feedback when a key is
pressed.

d. Display screen - The display screen prompts the cardholder through each step of the
transaction process. Leased-line machines commonly use a monochrome or color CRT
(cathode ray tube) display. Dial-up machines commonly use a monochrome or color LCD.

e. Receipt printer - The receipt printer provides the cardholder with a paper receipt of the
transaction.

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 f. Cash dispenser - The heart of an ATM is the safe and cash-dispensing mechanism. The
entire bottom portion of most small ATMs is a safe that contains the cash.

1.6 Working Mechanism of ATM

An ATM is simply a data terminal with two input and four output devices. Like any other data
terminal, the ATM has to connect to, and communicate through, a host processor. The host
processor is analogous to an Internet service provider (ISP) in that it is the gateway through
which all the various ATM networks become available to the cardholder (the person wanting the
cash).
Most host processors can support either leased-line or dial-up machines. Leased-line machines
connect directly to the host processor through a four-wire, point-to-point, dedicated telephone
line. Dial-up ATMs connect to the host processor through a normal phone line using a modem
and a toll-free number, or through an Internet service provider using a local access number dialed
by modem.

Leased-line ATMs are preferred for very high-volume locations because of their thru-put
capability, and dial-up ATMs are preferred for retail merchant locations where cost is a greater
factor than thru-put. The initial cost for a dial-up machine is less than half that for a leased-line
machine. The monthly operating costs for dial-up are only a fraction of the costs for leased-line.

The host processor may be owned by a bank or financial institution, or it may be owned by an
independent service provider. Bank-owned processors normally support only bank-owned
machines, whereas the independent processors support merchant-owned machines.

1.7 Transaction Mechanism in ATM

Figure-2: Transaction mechanism in ATM

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When a cardholder wants to do an ATM transaction, he or she provides the necessary
information by means of the card reader and keypad. The ATM forwards this information to the
host processor, which routes the transaction request to the cardholder's bank or the institution
that issued the card. If the cardholder is requesting cash, the host processor causes an electronic
funds transfer to take place from the customer's bank account to the host processor's account.
Once the funds are transferred to the host processor's bank account, the processor sends an
approval code to the ATM authorizing the machine to dispense the cash. The processor then
ACHs the cardholder's funds into the merchant's bank account, usually the next bank business
day. In this way, the merchant is reimbursed for all funds dispensed by the ATM. An
independent ATM host can access any bank. It also supports a large number of ATMs placed
with different merchants.

1.8 Access issues or Barriers:

People with disabilities experience a range of access issues when attempting to interact with
automatic teller machines. These may vary depending upon the nature of the disability, but the
overall outcome is lack of comfortable and effective use of ATM facilities. This may lead to
over-the-counter surcharges or even denial of access to funds.
This section of the report will briefly mention some issues of accessibility for a variety of groups
of people with disabilities.

i) Access issues for people who are blind:

Accessibility to ATMs for people who are blind is that the screen cannot be read and
some or all of the keyboard functions are unclear or unlabelled. Older machines are
better suited to people who are totally blind.
Finding an ATM, and being sure it accepts the users card is another common barrier.
To better understand how difficult it is for a blind person to independently use an
ATM, you might imagine yourself approaching an ATM which has a broken screen
and faded or meaningless key labels. If you tried to get some money out, you would
most likely get lost or confused with all the steps involved, because you would not be
getting any feedback about your progress.
If you had a really good memory, maybe you would be successful, but you would be
very uncertain about whether you would be able to get the funds without assistance.
Memorizing the full sequence to withdraw cash was the main strategy employed by
blind ATM users.

ii) Access issues for lower vision people:

For people with low vision, the problem is the difficulty encountered reading the ATM
signage, screen, key labels and receipts. Newer ATMs with larger clearer screens are
preferred by people with some residual vision.
Most people with low vision learn the basic sequence required for ATM transactions
and their residual vision is often sufficient for them to carry out the transaction
assuming everything goes as planned.

iii) Access issues for hearing impaired user:

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 For people who are deaf or hearing impaired, use of ATMs in many cases doesn't
present major problems, but if the machine uses beeps to indicate errors or key-
presses, then these probably won't be heard. Because (for many people who are deaf or
hard of hearing) English is not a first language, it is important that the messages and
instructions appearing on ATM screens are in clear, easy-to-read language.

iv) Access issues for deaf-blind user:

Access to ATMs for people who are both deaf and blind is particularly difficult. There
are often subtle audio cues used by blind ATM users (such as beeps, clicks, thermal
printer and so on) which partially compensates for not being able to read the ATM
screen. People who are both deaf and blind would have no such cues to assist them.
Braille output for important screen information would be the only option available to
this group.

v) Access issues for people with learning disabilities:

ATMs can cause difficulties for people with cognitive or learning disabilities when the
steps in the transaction are not consistent, logical and focused on the result. This group
needs consistency of steps in transactions, without distractions and a limited number of
potentially distracting choices.
If additional advertising messages or unexpected questions are inserted into the
already complicated and differing sequences, this situation will become worse.
A spoken audio equivalent of the ATM screen information (through speaker or
headphones) would most likely assist some people in this group through
reinforcement, and also accommodate those who cannot read effectively.
A more iconic (pictorial) set of screen prompts may be better suited to some people
since it relies less on a good knowledge of English and reading ability. However, if
this were offered as an alternative user interface, it would be necessary to identify
which users wish to use the pictorial version and which users preferred text or audio
modes of interaction. Web-based ATM technologies would lend themselves better to
such alternatives, and the use of alt-text could make such screens more accessible to
people with vision impairments.

vi) Dyslexia, NESB and people who can’t read:

For people who are dyslexic (for whom letters and numbers regularly get transposed or
out of order) a voice enabled ATM would result in less confusing and error-prone
ATM interactions.
People from a non English speaking background (NESB) would similarly benefit from
voice guidance in addition to the screen display, particularly when many can speak
simple English, but have difficulties reading it comfortably.
The percentage of Australians who are unable to read is substantial, so voice output for
ATMs would also benefit this segment of the community.
It is commonly recognised that everyone has a preference for either audio, visual or
tactile modes of learning and communication.

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1.9 Advantage of Automated Teller Machine
1.9.1 Withdraw cash
The first and foremost advantage that ATMs are providing us is that it allows to withdraw
the cash from machine whenever money needed.An individual would make its cash
withdrawn without having queue just like in the bank.

1.9.2 View balances

The second benefit which customers gets through ATM is that it allow customer to know
about th balances by checking the balance in machine.We need not to go bank for balance
inquiry. Thus,a customers can savers his/her valuable time and effort.

1.9.3 Deposit Cash

Some of the ATM machine provides deposit facilty to deposit the cash through the
machine.Using this facility, a customer need not to go bank for merely deposit the money
in his/her account.

1.10 FRAUD

As with any devices containing objects of value,ATM and the systems they depend on to
function are the targets of frauds.
1.10.1 Fake ATMs
The first known instance of a fake ATM was installed at shopping mall in
Manchester,Connecticut in 1993.By modifying the inner workings of a Fujitsu model
7020,a criminal gang known as The Bucklands Boys was able to steal information
from cards inserted into machines by customers.

1.10.2 Operational Fraud

In some cases, bank fraud could occur at ATMs whereby the bank accidently stocks
the ATM with bills in the wrong denominations,therefore giving the customer more
money than should be dispensed.In a variation of this,WAVY-TV reported an
incident in Virginia Beach of September2006 where hacker who had an admin
password for a gas station’s white label ATM caused the unit to assume it was loaded
with $5 USD bills instead of $20s,enabling himself and many subsequent customers
to walk away with four times the money they said they wanted to withdraw. ATM
behavior can change during what is called “stand-in” time where the Bank’s cash
dispensing network is unable to access databases that contain account
information(possibly for database maintainance.

1.10.3 ATM card fraud

1.10.3.1 Theft
For a low tech form of fraud, the simplest is to simply steal a customer’s card.
A later variant of this approach is to trap the card inside of the ATM’s card
reader with a device often referred to as Lebanese loop.

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 1.10.3.2 Cloning
The concept and various methods of a copying the contents of an ATM card’s
magnetic stripe on to a duplicate card to access the other peoples financial
information was well known in the hacking communities by late 1990. In the
1996, Abdrew Stone, a computer Security consultant from Hampshire in the
Uk was convicted of stealing in excess of 1 million UK pound(at the time that
was US$1.6 million) by pointing high definitionvideo cameras at ATMs from
a considerable distance, and by recording the card numbers,expiry
dates,etc.By contrast,a newer high techmodus operand involves the
installation of a magnetic card readr over the real ATM’s card slot and the
user of a wireless surveillance camera or a modified digital camera to observe
the user’s PIN.

1.10.3.3 Combating stolen cards and information

In an attempt to stop these practices,countermeasures against card showing
card cloning have been developed by the banking industry, in particular by the
use of smart cards which can not easily be copied or spoofed by an
unathourized devices, and by attempting to make the outside of their ATMs
tamper evident.EMV is widely used in the UK (Chip and PIN) and parts of
Europe but when it is not available in a specific area,ATMs must fallback to
using the easy to copy magnetic stripe to perform transaction.

1.11 Security

Security, as it relates to ATMs has several dimensions.ATMs also provide a practical

demonstrations of a number of security systems and concepts operating together and how
various security concerns are dealt with.
1.11.1 Physical
Early ATM security focused on making the ATMs invulnerable to physical
attack;A number of attacks on ATMs resulted,with thieves attempting to steal
entire ATMs by ram-raiding.Another attack method is to seal all openings of the
ATM with silicon and fill the vault with a combustible gas or to place an
explosive inside, attached or near the ATM. Modern ATM physical security, per
other modern money-handling security, concentrates on denying the use of money
inside the machines to a thief, by means of techniques such as dye markers and
smoke canisters.

1.11.2 Transactional secrecy and customer identity integrity

The security of ATM transaction relies mostly on the integrity of the secure
cryptoprocessors:the ATM often uses commodity components that are not
considered to be “trusted systems”. Encryption of personal information, required
by the law in the many jurisdictions, is used to prevent fraud. Sensitive data in
ATM transaction are usually encrypted with DES, but transaction processors now
usually require the use of Triple DES.Remote Key Loading Techniques may be
used to ensure the secrecy of the initialization of the encryptions keys in the
ATM. Message Authentication Code(MAC) or partial MAC may also be used to

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 ensure messages have not been tampered with while in transit between ATM and
the financial network.

1.11.3 Device operation Integrity

Opening on the customer side of ATMs are often covered by mechanical shutters
to prevent tampering with the mechanism whey they are not in use. Alarm sensors
are placed inside the ATM and in ATM servicing areas to alert their operators
when doors have been opened by unauthorized personnel. Rules are usually set by
the government or ATM operating body that dictate what happens when integrity
systems fail. Depending on the jurisdiction, a bank may or may be liable when an
attempt is made to dispense a customer’s money from an ATM and the money
either gets outside of the ATMs vault or was exposed in a non secure fashion or
they are unable to determine the state of the money after a failed transaction.

1.11.4 Customer security while using ATMs

In some areas, multiple security cameras and security guards are an ubiquitous
ATM feature. Critics of ATM operators assert that the issue of customer security
appears to have been abandoned by the banking industry;At least as far back as
July 30,1986 critics of the industry have called for the adoption of an emergency
PIN system for ATMs, where the user is able to send a silent alarm in response to
a threat.

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 Chapter 2
FIELD VISIT
AND
INTRODUCTION OF ORGANIZATION

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2.1 Field Selection

2.1.1 Field selection Criteria

We have used various methodologies to select the organization for our case study of ATM.
Some of the methodologies considerations used for selection are cited below:
i. The quality of ATM services provided by the organization
ii. The response time taken by the organization to the customer problems about
ATM services,
iii. The ATM services provided by the organization in the remote areas
iv. Total number of ATM operated by the organization
v. Special ATM services for the Handicapped and impaired user
Keeping above consideration in our mind, we have select two organizations for our case
study of ATM. The organizations are:
i. KIST Bank
ii. Standard chartered Bank

2.1.2 List of Activities

We have performed different activities in above listed organization to garner information

from our case study of client server architecture of ATM. The activities which are done in
the organization are:
i. Interview with Technical personnel
a. Rishi Neupane (IT department manager, KIST Bank, Anamnagar)
b. Spikenard Chaudhary (ATM technician, Standard chartered Bank,
Baneshwor)
ii. Use of questionnaire
iii. Taking photos and videos
iv. View of database server and running application

2.2 Introduction of Organization

2.2.1 KIST Bank

2.2.2.1 Methodology of study

The methodology used to gain information was interview and field visit. Field visit had been
to KIST bank main office at Anamnagar,kathmandu. There we had interviewed Mr. Rishi
Neupane, Manager of IT department. He was our mentor who provided the details of how
KIST bank operating ATM service throughout Nepal.

2.2.1.2 Introduction to Kist Bank:

Kist Bank Ltd. was initially incorporated in 2002 as a ‘C’ class financial institution with a
paid up capital of NPR 30 Million, the Kist Merchant Banking and Finance Limited and has
been upgraded to ‘A’ class commercial bank on May, 2009, the Authorized Capital of the

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Bank is Rupees 5 billion and the Issued & Paid-Up Capital is Rupees 2 billion. 60 percent of
the Paid-Up Capital is held by the promoter and remaining 40% is held by the general
public.

The professional team along with dedicated employees is always looking forward to serve
the customers, understanding the needs and designing the tailored products. The bank
operates in a highly automated environment in terms of information technology and
communication systems, which enables to offer prompt services. The bank has put in
substantial effort and investment in acquiring the best technology available to build its
infrastructure to make fast access for its valued customers. The company is driven by the
values of efficiency in operations, integrity, and a strong focus on catering the needs of
every customer by offering high quality and cost effective product and services.

The Bank has been providing its service to its customers through its own office building at
Anamnagar in the capital, as well as in other different parts of country. We are available
with 44 branches spread throughout the country with the eagerness to serve the customers.
Kist bank stands for the customers’ convenience, support and providing Power to Succeed.

2.2.1.3 Branches of Kist Bank

Main branch, Anamnagar Koteshwor Birgunj

Bagar hairaini Bhainsepati
Banepa Lalitpur Jorpati
Bhairahawa Manigram Khichapokhari
Bhaktapur hairaini Janakpur
Biratnagar Lalitpur Mahendranagar
Birtamod Manigram Dhangadi
Butwal Narayanghad Amarpath
Dharan Nepalgunj Kalimati
Damauli New Road Thamel
Damak Pokhara Kalanki
Dolakha Sinamangal Tulsipur
Durbar Marg Sukedhara Ghorahi
Gulariya Mangal Bazar Gongabu
Itahari Palpa Maharajgunj
Hetauda Dhangadi

2.2.1.4 ATM Services provided by KIST Bank

KIST is providing self service banking (SSB) to its esteem customers through Kist SSB
Card in collaboration with Smart Choice Technologies (SCT). Till date KIST bank has 25
ATM outlets and it has planned a total of 78 ATM outlets by this year. The customer can
transact from its terminal free of cost. In additional to this customers can use any other SCT
member banks' terminal paying charges.

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The customers can now have access to 24 hours banking service through our 20 ATM
locations which have been listed here below:

SN. Location
01 Anamnagar ATM, Anamnagar
02 Tripureshwor ATM, Tripureshwor
03 Jawalakhel ATM, Jawalakhel
04 Newroad ATM, Newroad
05 Sukedhara ATM, Sukedhara
06 Butwal ATM, Butwal
07 Manigram ATM, Rupandehi
08 Bhairahawa ATM, Bhairahawa, Rupandehi
09 Nepalgunj ATM, Nepalgunj
10 Infront of Jaljala Hall, Biratnagar
11 Biratnagar Chowk, Itahari
11 Hikkola Chowk, Birtamode
12 Chata Chowk, Dharan
13 Buspark Road, Narayanghad
14 Sabhagriha Chowk, Pokhara
15 Bagar, Pokhara
16 Damauli, Tanahu
17 Buspark Chowk, Banepa
18 Sinamangal, Kathmandu
19 Koteshwor, Kathmandu
20 Bagbazar, Kathmandu
21 Damak -10, Jhapa
22 Suryabinayak, Bhaktapur

2.2.1.5 Future Plan

As the Kist Bank has set its vision to be the best bank in terms of operational
excellence and superior financial performance, it has action plan in place in order to
accomplish it. The Bank has given prime focus in physical infrastructure and human
resources development, acquiring of state of art information technology to equip the
Bank in order to make it competitive, satisfy customers and have the most secured
transactions, enhance the distribution outlet so that the Bank could reach to the un-
banked area and serve the needy people and contribute to the economic development
of the country. A few key future plans, which the Bank has, are:

1. Have own Bank buildings at possible Branch locations. Currently, the Bank has been
providing services to customers from its own buildings located at Anamnagar,
Birtamod, Damak, Biratnagar and Narayangarh. The Bank has planned to construct
own multi storey building equipped with modern technology within Kathmandu

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 valley for its main Branch and Head Office. The dream building should be spacious
for more than 500 employees.
2. Develop own man power to take the higher responsibilities. Due to increase in
number of players, lack of quality human resources has been felt in the market. The
Bank has therefore planned to hire qualified individuals in large quantity and train the
staffs, in Kist Culture, both theoretically and practically and prepare them to take the
responsibilities. For this, the Bank has established Training and Development
Department at Head Office.
3. Increase the branch outlets to at least 50 by the end of Fiscal Year 2066/67 (2009/10),
from existing 26 across the country. Once the regulator allows Nepalese banks to
open branches outside the country, the Bank plans to open the branches in overseas
where large numbers of Nepalese are residing. To provide banking services to people
belonging to un-banked areas, the Bank plans to commence Banking Haat
Operations after taking approval from Nepal Rastra Bank.
4. Increase customer base from existing 1,00,000 to 3,00,000 by Fiscal Year 2066/67
(2009/10).
5. Launch international Debit and Credit Cards like Visa, Master and others.
6. Expand the remittance business making accessible to the large strata of people.
7. Develop and launch innovative and customer friendly products to meet the actual
needs of the people who are deprived of banking services. For this, the Bank has
established Research and Development Department to carry out research and develop
market oriented products and services.
8. Support the investors to start large infrastructure development projects in the country.
The bank also plans to promote micro finances to develop self sustainable enterprises
and self reliant people to up lift the economic development of the country.

2.2.2 Standard Chartered Bank Limited

2.2.2.1 Methodology of Study

The methodology used to gain information was interview and field visit. Field visit
had been to Standard Chartered Bank Limited main office at Anamnagar,kathmandu.
There we had interviewed Mr. Sikendra Chaudhary, ATM technician of Standard
Chartered Bank Limited. He was our mentor who provided the details of how Standard
Chartered Bank Limited operating ATM service throughout Nepal

2.2.2.2 Introduction of Standard chartered Bank Limited

Standard Chartered Bank Nepal Limited has been in operation in Nepal since 1987
when it was initially registered as a joint-venture operation. Today the Bank is an
integral part of Standard Chartered Group who has 75% ownership in the company
with 25% shares owned by the Nepalese public. The Bank enjoys the status of the
largest international bank currently operating in Nepal.
Standard Chartered Group employs almost 60,000 people, representing over 100
nationalities in over 50 countries in the Asia Pacific Region, South Asia, the Middle
East, Africa, the United Kingdom and the Americas. This diversity lies at the heart of

15
 the Bank's values and supports the Bank's growth as the world increasingly becomes
one market.
With strong organic growth supported by strategic alliances and acquisitions and
driven by its strengths in the balance and diversity of its business, products, geography
and people, Standard Chartered is well positioned in the emerging trade corridors of
Asia, Africa and the Middle East.
An integral part of the only international banking Group currently operating in Nepal,
the Bank enjoys an impeccable reputation of a leading financial institution in the
country. With 15 points of representation and 13 ATMs across the Kingdom and with
around 350 local staff, Standard Chartered Bank Nepal Ltd. is in a position to serve its
customers through a large domestic network. In addition to which the global network
of Standard Chartered Group gives the Bank a unique opportunity to provide truly
international banking in Nepal.
Standard Chartered Bank Nepal Limited offers a full range of banking products and
services in Wholesale and Consumer banking, catering to a wide range of customers
encompassing individuals, mid-market local corporate, multinationals, large public
sector companies, government corporations, airlines, hotels as well as the DO segment
comprising of embassies, aid agencies, NGOs and INGOs.
The Bank has been the pioneer in introducing 'customer focused' products and services
in the country and aspires to continue to be a leader in introducing new products in
delivering superior services. It is the first Bank in Nepal that has implemented the
Anti-Money Laundering policy and applied the 'Know Your Customer' procedure on
all the customer account.

2.2.2.3 Branches of Standard Chartered Bank Limited

1. Bhairahawa Branch
2. Biratnagar Branch
3. Birgunj Branch
4. Butwal Branch
5. Dharan Branch
6. Hetauda Branch
7. Lalitpur Branch
8. Lazimpat Branch
9. Lakeside Branch
10. Narayangarh Branch
11. Naya Baneshwore Branch
12. Nepalgunj Branch
13. New Road Branch
14. UN Counter
15. B.P.Koirala Institute of Health Sciences,Dharan
16. British Gurkhas, PPO Pokhara
17. Manipal Counter

2.2.2.4 ATM services Provided by Standard Chartered Bank Limited

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 Standard chartered Bank Limited has been playing significant role in providing the
ATM services to its customers across different zone of Nepal. This bank provides
withdrawing as well as depositing facilities through which its client can withdraw and
deposit the money. There are all together 20 ATMs across Nepal in which five of them
are providing deposit option to its clients.

Maharajgunj, Kathmandu Boudha, Kathmandu

Kamaladi, Kathmandu Naya Baneshwor,Kathmandu
UN Building, Kathmandu New Road, Kathmandu
World Trade Center, Kathmandu Thamel, Kathmandu
Lazimpat, Kathmandu Jawalakhel, Lalitpur
Pulchowk, Lalitpur Mangal Bazaar, Lalitpur
BPKIHS, Dharan Lakeside, Pulchowk
New Road, Pokhara Bhairawa
Ithari Narayanghat
Lakeside, Pokhara Thamel, Kathmandu

Those ATM which provides deposit option as well are located in following place

ATMs Location
ATM-Thamel, Kathmandu Kathmandu Arcadia Building, Near Yin Yang
Restaurant, Thamel, Kathmandu
ATM-Thamel, Kathmandu Kathmandu Guest House, Thamel, Kathmandu
ATM-Lazimpat, Kathmandu Standard Chartered Bank Nepal Ltd. Lazimpat,
Kathmandu
ATM-Naya Baneshwor, Kathmandu Standard Chartered Bank Nepal Ltd.Naya
Baneshwor, Kathmandu
ATM-Lakeside, Pokhara Standard Chartered Bank Nepal Ltd. Pokhara,

17
 Chapter 3
TECHNICAL ASPECTS AND WORKING ARCHITECTURE OF ATM

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 3.1 Architecture of ATM in KIST bank

The client server architecture of ATM in KIST bank reveals only for the process of withdrawing
since there is deposit option in its ATM. Therefore, below figure demonstrate the withdrawing
mechanism with the support of client server architecture.

Bank Host

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4. Acknowledgement for communication

in a

s
ac
3.Send Request to communicate
F
7.

tio
n
Automated Teller Machine(ATM)

Database
1.Insert a card

2.
BIN
3. Nu
Ac mb
kn er
ow
leg
em
en
t

Smart Card Technology(SCT)

switch

Figure-3: Client-Server Architecture of ATM in KIST Bank

The client server architecture has been shown in above figure. In this figure, the sequence of
process has been labeled in number from 1 to 7.

Process 1. In first step, the client or customer insert the card in ATM machine

Process 2. The Bank Information Number (BIN) is transferred to the Smart card
Technology (SCT) switch. After getting BIN number, the SCT switch compares
that BIN number with other different bank BIN number. Since, each bank has 6
digit unique BIN number, the SCT switch makes reorganization of the bank.

Process 3. The SCT switch send request to the Bank host to communicate with the ATM
machine and also send the acknowledgement of receiving BIN number to the ATM
machine simultaneously.

Process 4. The Bank host acknowledges the request of SCT switch for communication.

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Process 5. Bank host check the Account number of that ATM card holder and make
transaction.

Process 6. In this step, there is updation of that client account according to transaction
made before.

Process 7. The Bank host sends the final updation in receipt to its card holder.

3.2 Architecture of ATM in Standard Chartered Bank Limited

3.2.1 Steps followed to deposit the money through ATM

As standard chartered Bank Limited provides deposit facilities in its five ATM resides in
various part of Nepal, the simple process of how to deposit the money is listed below.

step 1. Enter your ATM card and password and then follow the instructions as directs
you

step 2. Press the deposit button to start the process of depositing your money.

step 3. Enter the total amount of money you want to deposit and must be in figures

step 4. Press continue and ask for an envelope

step 5. Count your money and put them in the envelope

step 6. Seal your envelope properly and then put it back

step 7. Press continue and wait while processing.

step 8. Get your receipt and finally remove your card

3.2.2 Architecture of ATM for deposit operation in standard chartered Bank Ltd.

The client server architecture for deposit operation of ATM followed by Standard Chartered
Bank Limited is shown below

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 Inside ATM
Database
Internal
n
ctio
n sa
tra t
o rd en
rec em
4. dg
owle
ckn
5. A

Automated Teller Machine(ATM)

1. Insert a card

2.
Ve
r ify
Ac
3. co
Ac un
kn tN
4. ow um
re leg be
co r
rd em
t ra e
ns nt
ac
t io
n

Centralized
Database

Figure-4: Architecture for deposit operation of ATM in Standard Chartered

Bank Ltd.

step 1. In first step, the user inserts card into ATM machine

step 2. In this step, ATM machine sends the pin information to the centralized server to
verify the account

step 3. In this step, the centralized server sends the account confirmation

step 4. In this step, the transaction made is stored only on the internal database and at the
same time, transaction is updated in Centralized database.

step 5. In this step, the internal db sends acknowledgement of the record made to the
machine

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 Chapter 4
CONCLUSION, RECOMMENDATION AND ANALYSIS OF ATM

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 4.1 Conclusion and Recommendation of ATM Services of KIST Bank
4.1.1 Conclusion
As going through the field visit of KIST bank, we came to know about the different client
server aspects of ATM services operating there. KIST bank is providing quality ATM
services to its clients. Some of the drawbacks which we have encountered during our field
visit on ATM are cited below.

4.1.1.1 Drawbacks

Though ATM provides significant services to the people, some people are still
reluctant to use this service. Some of the reasons behind this reluctance are cited below
i. As it is advanced technology, the illiterate people are getting problem
while using this machine. They have difficulty to get acquainted with the
system.
ii. The deposit facilities through the ATM machine are not available in most
of bank.
iii. The abundant use of ATM machine is only centralized i.e. they are only
giving more focus on urban areas and neglect the rural areas so that the
remote denizens will able to access such services.
iv. The security option used in the system sometimes gets weak and weedy so
that other unauthorized person have may commit illegal crime through
authorized person card.
v. Sometime, while using this service, system get down due to over traffic
congestion.

4.1.2 Recommendation

i. The ATM services should be decentralized .i.e. such services should access to the
remote people.
ii. The deposit facilities should be implemented so that people can do depositing and
withdrawing process though a single machine.
iii. The security used in the system must be well designed and integrated.
iv. The Graphical user interface used in the ATM should be well understandable by
illiterate people.
v. The annual charge which is charged by bank should be discounted to the poor
people.

4.2 Conclusion and Recommendation of ATM services in Standard Chartered Bank

Limited

4.2.1 Conclusion

Through our case study of ATM in Standard chartered Bank Limited, we give more
emphasis on the working principle of deposit operation through ATM. It can be cleared that
ATM has benefited not only individuals but the entire society through its services. It has

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upgraded the living standards of individuals through its efficient and secure services.
Through such ATM services, it made possible for the entire nation to competitor in global
financial market.

Some of the limitation which plays the negative role and affecting the efficient running of
ATM services cited below.

4.2.1.1 Limitation.

i. Lack of skilled manpower to troubleshoot the problem which makes its

customer to have less credulity in such advanced technology.

ii. There is always exist problem in compatibility between hardware(ATM

machine) and software.The hardware parts such as ATM machine is
developed by one vendor and its software is developed by another vendor
which often creates the problem of incompatibility.

iii. There is no extra functions and facilities in ATM for impaired and
disabled people.

iv. Deposit operation is partially computerized.After having deposit operation

by customers, the technical personnel must involve in the end of day to
reconcile different things.So,still they have to rely on manual operation.

4.2.2 Recommendation

From our case study, we came to know about different things of ATM operated by standard
chartered Bank Limited. Thus, we recommend some suggestion to standard chartered Bank
Limited to ameliorate the services of ATM.

i. Deposit operation should be totally computerized.If the deposit operation is

totally computerized ,then there will be no need of any manual work for reconcile
different thing needed to do the operation.

ii. There should be complete compatibility between hardware(ATM machines) and

software.The Vendor which developing ATM machine should make compatible
software so that it demolish the problem of incompatibility.

iii. There should be focus on ATM services for impaired and disabled people.

4.3Comparative analysis

Here we present a comparative analysis between KIST bank and Standard Chartered
Bank LTD’s ATM operation which we have encountered during our case study.

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 KIST bank Standard Chartered Bank

It is a National bank It is an International bank

It only supports withdraw operation It supports both withdraw and deposit

from ATM operation from ATM

It uses SCT network It uses VISA-electron

It Uses fiber optics for transferring It uses VSAT for transferring information.
information.

Compatibility between hardware and Not much compatibility between hardware

software and software.

Focus on national network Focus on international network.

Appendix

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1. Smart Choice Technologies(SCT)

SmartChoice Technologies P. Ltd. is a company registered in Nepal and promoted by

well-established entrepreneurs. The company was established in 2001.
The company has deployed a first-of-its-kind initiative in Nepal creating an integrated
shared services network (SCT-Network) for Automated Teller machines (ATMs) and
Point-of-sale (POS) Terminals, managed through a national switch. The SCT-Network is
a fully integrated network supporting multiple device types and card acquiring standards.
This network has been made available, on a subscription basis (pay-per-use), to banks
and financial institutions across the country. Besides the network, this national switch
will also operate and manage domestic & international gateways and settlement systems.
For inter-bank settlement, the company has appointed a settlement bank, which is
responsible for the daily settlement of all ATM transactions on the network.
The company has also launched a local debit card program (branded as SCT™) to enable
banks to issue cards to customers at a fraction of the costs typically associated with
international card schemes. The local debit card program offers a first-time opportunity
for banks to issue and manage a local debit card program, with wide acceptability (due to
the ATM & POS Network in Nepal and India and regional countries at a subsequent
date).
In addition, the company also provides a secure facility for Card and PIN production &
management, customized for each bank. This facility is equipped with world standard
Hardware Based Encryption (RACAL-HSM) supporting the latest (e.g. 3DES)
encryption standards.
The project also includes integration of ATMs and POS banks may have already invested
in, and enable them to recover their investments on a significantly accelerated basis. The
technology used in this project is tried and tested in many sites overseas and consequently
mitigates the risk of technology failure that is typically associated with new technologies.

2. VISA Electron

Visa Electron is a debit or credit card available across most of the world, with the
exception of Canada, Australia, Ireland and the United States. The card was introduced
by VISA in the 1980s and is a sister card to the Visa Debit card. The difference between
Visa Electron and Visa Debit is that payments with Visa Electron require that all the
funds be available at the time of transfer, i.e., Visa Electron card accounts may not be
overdrawn. Visa Debit cards, on the other hand, allow transfers exceeding available funds
up to a certain limit. Some online stores and all offline terminals (like on trains and
aircraft) do not support Visa Electron because their systems cannot check for the
availability of funds.

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3. VSAT

A Very Small Aperture Terminal (VSAT), is a two-way satellite ground station antenna with a dish
antenna that is smaller than 3 meters. The majority of VSAT antennas range from 75 cm to 1.2 m.
Data rates typically range from 56 Kbit/s up to 4 Mbit/s. VSATs access satellites in geosynchronous
orbit to relay data from small remote earth stations (terminals) to other terminals
(in mesh configurations) or master earth station "hubs" (in star configurations).

4. Data Encryption Standard(DES)

The Data Encryption Standard (DES) is a block cipher (a form of shared secret encryption)
that was selected by the National Bureau of Standards as an official Federal Information
Processing Standard (FIPS) for the United States in 1976 and which has subsequently
enjoyed widespread use internationally. It is based on a symmetric-key algorithm that uses a
56-bit key. The algorithm was initially controversial with classified design elements, a
relatively short key length, and suspicions about a National Security
Agency (NSA) backdoor. DES consequently came under intense academic scrutiny which
motivated the modern understanding of block ciphers and their cryptanalysis.

DES is now considered to be insecure for many applications. This is chiefly due to the 56-bit
key size being too small; in January, 1999, distributed.net and the Electronic Frontier
Foundation collaborated to publicly break a DES key in 22 hours and 15 minutes. There are
also some analytical results which demonstrate theoretical weaknesses in the cipher, although
they are infeasible to mount in practice. The algorithm is believed to be practically secure in
the form of Triple DES, although there are theoretical attacks. In recent years, the cipher has
been superseded by the Advanced Encryption Standard (AES). Furthermore, DES has been
withdrawn as a standard by the National Institute of Standards and Technology (formerly the
National Bureau of Standards).

5. Electronic Fund Transfer(EFT)

Electronic funds transfer or EFT refers to the computer-based systems used to

perform financial transactions electronically. An EFT is the electronic exchange or transfer
of money from one account to another, either within the same financial institution or across
multiple institutions.

References

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 • http://www.kistbank.com/

• http://www.standardchartered.com/np/

• http://en.wikipedia.org/wiki/Automated teller machine

Bibliography
• Suraj bhattrai and group “Report on Automated Teller Machine of Nepal Investment
Bank Ltd"

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