TERM PAPER ON:

Electronic Banking in Bangladesh-Problems and Prospects

Submitted To:
Dr. Md. Akhtar Uddin Professor of IBA University of Rajshahi

Submitted B : !roup - " Submission #ate: $%th April& $%'(

Name Fatima Tujjahan Tasmim Nusrat Ahmed Nadia Nowrin Md.Mahmudul Haque Ullash Shabbir Ahmad Chowdhury Tanmoy Saha ID (B050006) (B050004) (B050019) (B050030) (B050032) (B050041)

20th April, 201

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Dr.Md. Akthar Uddin, !"MA Professor of IBA, University of Rajshahi.

Sub: Permission for submitting the Group Term Paper Dear #ir, $e are pleased to s%&'it o%r (ro%p ter' paper on ) Electronic Banking in BangladeshProblems and Prospects. *%r report fo+%sed on the "%rrents stat%s of ,-&ankin. in Ban.ladesh. /here are several pro&le's related in ,-&ankin. and find o%t so'e f%t%re prospe+ts that +reates h%.e possi&ility in Bankin. se+tor. $e have .athered infor'ation as '%+h as possi&le. /his report is 'ainly &ased on se+ondary data. Most of o%r se+ondary data +a'e fro' different &ooks and different 0e&sites. $e enjoyed 0orkin. on this ter' paper and hope yo% 0ill find it effe+tive and effi+ient.

#in+erely yo%rs,
Name Fatima Tujjahan Tasmim Nusrat Ahmed Nadia Nowrin Md.Mahmudul Haque Ullash Shabbir Ahmad Chowdhury Tanmoy Saha ID (B050006) (B050004) (B050019) (B050030) (B050032) (B050041) Si nature

Acknowledgement
2

At the very &e.innin., 0e 0o%ld like to e1press o%r deepest .ratit%de to A !"G#T$ for .ivin. %s the stren.th and the +o'pos%re to finish the ter' paper 0ithin the ti'e. $e are .ratef%l to o%r honora&le #ir %r. !d. Akhtar &ddin, Professor of IBA, University of Rajshahi, for providin. %s the opport%nity to 0ork on a topi+ like ),le+troni+ Bankin. in Ban.ladesh- Pro&le's and Prospe+ts2 as /er' Paper. $e are fort%nate for the aid and en+o%ra.e'ent that 0e re+eived fro' all of o%r tea+hers and friends and st%dents of Instit%te of B%siness Ad'inistration-IBA, University of Rajshahi.

3ast &%t not the least4 0e are thankf%l to o%r lovin. parents for their s%pport in every step of o%r life.

Executive Summary
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,-Bankin. is 0e&-&ased Bankin.. 5o0 a day d%e to e'er.in. .lo&al e+ono'y, e+o''er+e and e-&%siness have in+reasin.ly &e+o'e a ne+essary +o'ponent of &%siness strate.y and a stron. +atalyst for e+ono'i+ develop'ent. As a third 0orld developin. +o%ntry, Ban.ladesh is far &ehind to rea+h the e1pe+ted level of .lo&al &ankin. syste'. At present the &anks in Ban.ladesh are %sin. the li'ited ele+troni+ &ankin. servi+es. ,&ankin. prod%+t and servi+es in+l%de 0holesale prod%+ts for +orporate +%sto'ers as 0ell as retail and fid%+iary prod%+ts for individ%al +%sto'ers. !orei.n +o''er+ial &anks and private +o''er+ial &anks are relatively in a &etter position to provide on line &ankin. servi+es. "%sto'ers 0ho are ha&it%ated 0ith online &ankin. thinks that online &ankin. servi+es are relatively .ood then 'an%al syste', &%t they not satisfied 0ith the 6%ality of servi+es and &ank personnel &ehavior to that e1tent. Altho%.h , &ankin. a+tivities are e1perien+in. lots of li'itation and +onstraints s%+h as la+k of a0areness and h%'an +apital, inade6%ate infrastr%+t%re, this se+tor has a hi.h prospe+tive. People are no0 .ettin. interested in online transa+tion and .overn'ent has laid o%t so'e plans for developin. I"/ infrastr%+t%re. Ban.ladesh &ank takes so'e 'ajor initiative in this re.ard and nationali7ed &ank sho%ld +on+entrate in i'provin. their online servi+es spread and 6%ality.

Table of content
Serial Number

To!i"

#a e Number
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'hapter-(
$.$ $.& $.' $.( &.$ &.& &.' &.( &.) &.+ &., &.. &.'.$ '.& '.' '.( '.) (.$ (.& (.'

Abstract )b*ecti+es !ethodolog, Scope and limitation 'hapter-"ntroduction .hat is E-banking )b*ecti+e of E Banking Structure of E-Banking Basic 'omponent of Electronic Banking Present status of e-banking in Bangladesh %ifferent form of Electronic banking T,pes of E-banking in B% /isk of E-banking in B% 'hapter- 0 S.)T anal,sis 'omparati+e anal,sis of 1i+e Bank in Bangladesh Problem of E-banking in Bangladesh 'onstraints of E-banking in Bangladesh Prospects of E-banking in Bangladesh 'hapter-2 1indings of the stud, /ecommendations 'onclusions

%$ %$ %& %& %' %( %)*%+ %+ %,*%%-*$( $)*$, $,*$&%*&& &'*&( &)*&. &-*'$ '& '&*', '. '-*(% (%

(.(

Abstract:

In Ban.ladesh, Bankin. ind%stry is 'at%re to a .reat e1tent than earlier period. It has developed s%per& i'a.e in their vario%s a+tivities in+l%din. ele+troni+ &ankin.. 5o0 'odern &ankin. servi+es have la%n+hed &y so'e '%ltinationals and ne0 lo+al private +o''er+ial &anks. ,le+troni+ &ankin. is one of the 'ost de'anded and latest te+hnolo.ies in &ankin. se+tor. /his paper tried to %nearth the present stat%s of ele+troni+ &ankin. in &ankin. se+tor in Ban.ladesh. ),-&ankin.2 refers to syste's that ena&le &ank +%sto'ers to a++ess a++o%nts and .eneral infor'ation on &ank prod%+ts and servi+es thro%.h a personal +o'p%ter 8P"9 or other intelli.ent devi+e. /he 'ain fo+%s of this st%dy is to e1a'ine the perfor'an+e, pro&le's and prospe+ts of ,-&ankin. in Ban.ladesh. /he st%dy is des+riptive in nat%re. 5o0 a day d%e to e'er.in. .lo&al e+ono'y, e-+o''er+e and e-&%siness have in+reasin.ly &e+o'e a ne+essary +o'ponent of &%siness strate.y and a stron. +atalyst for e+ono'i+ develop'ent. /he ne0 infor'ation te+hnolo.y is &e+o'in. an i'portant fa+tor in the f%t%re develop'ent of finan+ial servi+e ind%stry, and espe+ially &ankin. ind%stry.

(.-

)b*ecti+es of the stud,:

There are se+eral ob*ecti+es to conduct the stud,. These are: /o f%lfill the partial re6%ire'ent of the 3Electronic Banking in BangladeshProblem and Prospects +o%rse offered of Bank Mana.e'ent in MBA pro.ra' in :th &at+h.

/o .ather ade6%ate kno0led.e a&o%t present stat%s, pro&le's and prospe+t of , &ankin. in Ban.ladesh.
/o +on+ept%ali7e the evol%tion of ele+troni+ &ankin. pra+ti+e in Ban.ladesh and forei.n +o''er+ial &anks in Ban.ladesh. /o identify the operational pro+ess and the perfor'an+e of ,-&ankin. in Ban.ladesh. /o identifyin. the 'a+ro level &enefits of ele+troni+ &ankin. operations in Ban.ladesh.

/o e1plore the #tr%+t%re of ele+troni+ &ankin. in Ban.ladesh /o e1plore the ele+troni+ servi+es offered &y vario%s &ank in Ban.ladesh /o find o%t the +o''on feat%res of ele+troni+ &ankin. in Ban.ladesh ,nhan+e individ%al perfor'an+e. /o 'eet the +%riosity in this stated s%&je+t.
6

(.0

!ethodolog,:

The information for the report 4as collected from secondar, sources. #e+ondary data has &een +olle+ted fro' vario%s p%&li+ations and s%rvey reports. $e %se sa'plin. for analy7in. +%rrent stat%s of , &ankin. in Ban.ladesh. !or this p%rpose 0e %se stratified sa'plin.. *%r sa'plin. +onsists of five &ank fro' three different se+tors of private +o''er+ial &ank, forei.n &ank and nationali7ed &ank. ;ario%s se'inar papers and s%''ary of dis+%ssions in those se'inars, taskfor+e report of resear+h or.ani7ations and so'e periodi+als, national and international jo%rnals, ne0spapers, Books, 'a.a7ines, Ban.ladesh Bank p%&li+ations have &een s%rveyed.

(.2

imitation of the Stud,:

/here has no plethora resear+h 0ork in Ban.ladesh perspe+tive parti+%larly. /he st%dy +overed a very li'ited n%'&er of area and other &ankin. se+tors in Ban.ladesh. ,very st%dy has so'e li'itations. $e fa+ed so'e %s%al +onstraints d%rin. the +o'pletion of o%r report. /he 'ajor li'itations are< 3a+k of e1perien+e a+ted as +onstraints in the 0ay of +aref%l e1ploration on the topi+. B%sy 0orkin. +onditions. /i'e d%ration for preparin. report. 5o field 0ork to &e re6%ired. 3a+k of availa&ility of related infor'ation.

-.( "ntroduction:
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In Ban.ladesh, '%ltinational &anks are operatin. for lon. &esides o%r nationali7ed, private and spe+iali7ed &anks. ,-Bankin. is the one of the 'ajor part of ,-!inan+in.. ,Bankin. is 0e&-&ased Bankin.. In other 0ords ,-Bankin. refers to the &ankin. operations, 0hi+h is done over $orld $ide $e&. Besides, the &ankin. servi+es of nationali7ed, private, and '%ltinationals are different &y 6%ality of their servi+es. M%ltinational &anks are offerin. &etter servi+es than others. /hey offer &etter +%sto'er servi+es, personal finan+ial servi+es, +orporate fa+ilities, trade servi+es 0ith the help of effi+ient operational depart'ent, +redit depart'ent, infor'ation te+hnolo.y depart'ent and the 'ost i'portant depart'ent is the 'arketin. depart'ent. Presently they are thinkin. to offer door-to-door servi+es, 2 ho%rs &ankin. servi+es 0ith ele+troni+ &ankin., pay and +ash 'ana.e'ent thro%.h ,-Bankin.. Infor'ation te+hnolo.y is &e+o'in. an i'portant fa+tor in the f%t%re develop'ent of finan+ial servi+es ind%stry, espe+ially the &ankin. ind%stry. /he &ankin. se+tor is &ased on sharin. of infor'ation, 0hi+h itself heavily relies on infor'ation and +o''%ni+ation te+hnolo.y 8I"/9 in order to a+6%ire, analy7e and deliver data to all relevant %sers. It also provides safe and +onfidential servi+es 0hi+h &est s%it +%sto'ers= needs. /he +%sto'er 0ants 'ore fle1i&ility 0itho%t payin. 'ore, and his de'ands are +lear< Make transa+tions 0herever, 0henever, and ho0ever he 0ants. Under this +ondition, the transition to ),-&ankin.2 has &e+o'e a ne+essity for &anks4 it offers the 'ajor opport%nities in ter's of +o'petitive advanta.es. *n the other hand, it i'proves effi+ien+y and operational effe+tiveness 0ithin the +o'pany and develops a stron.er and 'ore d%ra&le &%siness relationship 0ith its +%sto'ers.

-.- .hat is E-banking5

,le+troni+ &ankin. 8e-&ankin.9 is the ne0est delivery +hannel for &ankin. servi+es. /he definition of e-&ankin. varies a'on. the resear+hes partially &e+a%se ele+troni+ &ankin. refers to several types of servi+es thro%.h 0hi+h &ank +%sto'ers +an re6%est for infor'ation and +arry o%t 'ost retail &ankin. servi+es via +o'p%ter, television or 'o&ile phone des+ri&es ,-&ankin. is an ele+troni+ +onne+tion &et0een &ank and +%sto'er in order to prepare, 'ana.e and +ontrol finan+ial transa+tions.
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,-&ankin. is +onsidered to &e a se.'ent of e-&%siness to the e1tent that &anks are involved in the +ond%+t of &%siness transa+tions via ele+troni+ 'edia4 other non&ankin. finan+ial prod%+ts and servi+es 8e... ins%ran+e9, not to 'ention prod%+ts and servi+es fro' other se+tors of &%siness 'ay &e sold ele+troni+ally as 0ell. ,-&ankin. in+l%des the syste's that ena&le finan+ial instit%tion +%sto'ers, individ%als or &%sinesses, to a++ess a++o%nts, transa+t &%siness, or o&tain infor'ation on finan+ial prod%+ts and servi+es thro%.h a p%&li+ or private net0ork, in+l%din. the Internet. ,-&ankin. or internet &ankin. or online &ankin. are analo.o%s and defined as the +ond%+t of &ankin. servi+es &y %sin. ele+troni+ delivery +hannels s%+h as A/M, tele&ankin. and P" &ankin.. Under this &ankin. pro+ess, the &ran+hes of a &ank are +onne+ted ele+troni+ally in s%+h a 0ay so that a +lient or a +%sto'er of a parti+%lar &ank +an dra0 the 'oney or 'ake deposits anyti'e any0here of the +o%ntry or the 0orld. Banks and others finan+ial instit%tions advertise fre6%ently on the si.nifi+an+e and +onvenien+e of the e-&ankin. fa+ilities. Banks are en+o%ra.in. their +ons%'ers to &e &enefited fro' e-&ankin. servi+es. /he follo0in. ter's refers to one for' of ele+troni+ &ankin.< Personal +o'p%ter 8P"9 &ankin., Internet &ankin., ;irt%al &ankin., *nline &ankin., >o'e &ankin., Re'ote ele+troni+ &ankin., And Phone &ankin.. P" &ankin. and Internet or online &ankin. is the 'ost fre6%ently %sed desi.nations. It sho%ld &e noted, ho0ever, that the ter's %sed to des+ri&e the vario%s types of ele+troni+ &ankin. are often %sed inter+han.ea&ly.

-.0 )b*ecti+e of E-Banking:

10

 Benefits from the banks6 point of +ie4:

!ro' the &anks= vie0 point, the first &enefits for the &anks offerin. e-&ankin. servi+es is &etter &randin. and &etter responsiveness to the 'arket. /he other &enefits are possi&le to 'eas%re in 'onetary ter's. /he 'ain .oal of every +o'pany is to 'a1i'i7e profits for its o0ners and &anks are not any e1+eption. A%to'ated e-&ankin. servi+es offer a perfe+t opport%nity for 'a1i'i7in. profits.

Benefits from the customers6 point of +ie4:

/he 'ain &enefit fro' the &ank +%sto'ers= point of vie0 is si.nifi+ant savin. of ti'e &y the a%to'ation of &ankin. servi+es pro+essin. and introd%+tion of an easy 'aintenan+e tools for 'ana.in. +%sto'er=s 'oney. /he 'ain &enefits of e-&ankin. are as follo0s< In+reased +o'fort and ti'esavin.-transa+tions +an &e 'ade 2 ho%rs a day, 0itho%t re6%irin. the physi+al intera+tion 0ith the &ank. ?%i+k and +ontin%o%s a++ess to infor'ation< "orporations 0ill have easier a++ess to infor'ation as, they +an +he+k on '%ltiple a++o%nts at the +li+k of a &%tton. Better +ash 'ana.e'ent< ,-&ankin. fa+ilities speed %p +ash +y+le and in+reases effi+ien+y of &%siness pro+esses as lar.e variety of +ash 'ana.e'ent instr%'ents is availa&le on Internet sites of &anks. Private +%sto'ers seek sli.htly different kind of &enefits fro' e-&ankin.. Red%+ed +osts< /his is in ter's of the +ost of availin. and %sin. the vario%s &ankin. prod%+ts and servi+es. "onvenien+e< All the &ankin. transa+tions +an &e perfor'ed fro' the +o'fort of the ho'e or offi+e or fro' the pla+e a +%sto'er 0ants to. #peed< /he response of the 'edi%' is very fast4 therefore +%sto'ers +an a+t%ally 0ait till the last 'in%te &efore +on+l%din. a f%nd transfer. !%nd=s 'ana.e'ent< "%sto'ers +an do0nload their history of different a++o%nts and do a )0hat-if2 analysis on their o0n P" &efore affe+tin. any transa+tion on the 0e&.
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-.2 Structure of E-Banking:

,-&ankin. is a .eneral ter' referrin. to vario%s +o'p%ter-&ased te+hnolo.ies for deliverin. &ankin. servi+es. ,le+troni+ &ankin. syste's +an &e divided into t0o +ate.ories &y the f%n+tional +hara+teristi+s, vi7. &a+k-offi+e ele+troni+ &ankin., and ele+troni+ finan+ial instr%'ents or front-offi+e ele+troni+ servi+es. Ba+k-offi+e ele+troni+ &ankin. provides infor'ation 'ana.e'ent servi+es, and 6%i+k f%nd transfer fa+ilities &oth for traditional &ankin. and finan+ial instr%'ents and ele+troni+ finan+ial instr%'ents. #+ien+e in+eption of pri'ary for's of ele+troni+ &ankin. it has &een passed thro%.h a +o'prehensive evol%tion pro+ess. ,le+troni+ &ankin. servi+es +an &e .ro%ped into three .enerations of evol%tion<

'ategori7ation of electronic banking ser+ices:

-.8 Basic 'omponents of Electronic Banking:

,-&ankin. syste's rely on a n%'&er of +o''on +o'ponents or pro+esses. /he follo0in. list in+l%des 'any of the potential +o'ponents and pro+esses seen in a typi+al instit%tion<

$e&site desi.n and hostin., !ire0all +onfi.%ration and 'ana.e'ent,

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Intr%sion dete+tion syste' or ID# 8net0ork and host-&ased9, 5et0ork ad'inistration, #e+%rity 'ana.e'ent, Internet &ankin. server, ,-+o''er+e appli+ations 8e..., &ill pay'ent, lendin., &rokera.e9, Internal net0ork servers, "ore pro+essin. syste', Pro.ra''in. s%pport, and A%to'ated de+ision s%pport syste's.

/hese +o'ponents 0ork to.ether to deliver e-&ankin. servi+es. ,a+h +o'ponent represents a +ontrol point to +onsider. /hro%.h a +o'&ination of internal and o%tso%r+ed sol%tions, 'ana.e'ent has 'any alternatives 0hen deter'inin. the overall syste' +onfi.%ration for the vario%s +o'ponents of an e-&ankin. syste'. >o0ever, for the sake of si'pli+ity, this &ooklet presents only t0o &asi+ variations. !irst, one or 'ore te+hnolo.y servi+e providers +an host the e-&ankin. appli+ation and n%'ero%s net0ork +o'ponents as ill%strated in the follo0in. dia.ra'. In this +onfi.%ration, the instit%tion@s servi+e provider hosts the instit%tion@s 0e&site, Internet &ankin. server, fire0all, and intr%sion dete+tion syste'. $hile the instit%tion does not have to 'ana.e the daily ad'inistration of these +o'ponent syste's, its 'ana.e'ent and &oard re'ain responsi&le for the +ontent, perfor'an+e, and se+%rity of the e-&ankin. syste'.

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Figure 1: Third-Party Provider

o!ted E-"anking #iagram

Figure $: %n- ou!e E-"anking #iagram

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-.9 Present status of E-banking in Bangladesh:

As a third 0orld developin. +o%ntry, Ban.ladesh is far &ehind to rea+h the e1pe+ted level of .lo&al &ankin. syste'. A++ordin. to a report p%&lished in /he Daily #tar 8 th April, 20109 Ban.ladesh ranked 11Ath in the .lo&al 5et0ork Readiness Inde1 in 200B-10 %p fro' 1C0th a year a.o, sho0in. an %p0ard trend in the infor'ation and +o''%ni+ation te+hnolo.y se+tor.

-.9.( Banking industr, in Bangladesh:

/otal n%'&ers of Banks in Ban.ladesh are forty seven. Bankin. se+tor in Ban.ladesh on the &asis of %tili7ation of ele+troni+ devi+es +an &e s%&divided into three .ro%ps I. !orei.n "o''er+ial Banks and Private "o''er+ial &anks espe+ially 2nd8e1+ept fe0 &anks9 and Crd .eneration Private Banks <1ull, )nline banking II. 1st .eneration private &anks and so'e 2nd .eneration Private "o''er+ial Banks< !edium range )nline banking s,stem

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III.

5ationali7ed "o''er+ial Banks, #pe+iali7ed Banks and !e0 forei.n Bank &ran+hes of this s%&+ontinent< 3o0 grade online banking s,stem.

At present the &anks in Ban.ladesh are %sin. the li'ited ele+troni+ &ankin. servi+es. It is e1pe+ted that &ank +an attain 'ore profit and offer &etter servi+es to its +%sto'ers &y, introd%+in. on line &ankin. fa+ilities.

-.9.- 'urrent scenario of e-banking in Bangladesh:

,le+troni+ &ankin. is relatively ne0 +on+ept in Ban.ladesh. !or'erly only the forei.n &anks operatin. in Ban.ladesh like #tandard "hartered Bank, >#B", et+ provided it. /hese forei.n &anks 'ana.ed to .ain +o'petitive advanta.e 0ith the introd%+tion of ele+troni+ &ankin. for the first ti'e in Ban.ladesh. As res%lt the lo+al +o''er+ial &anks started to lose their 'arket to these forei.n +o''er+ial &anks. #o they rea+ted very 6%i+kly. !irst ti'e it 0as +o'&ined, no0 so'e of the &anks are offerin. ,le+troni+&ankin. servi+es even solely. ,astern Bank 3td. is the leadin. lo+al +o''er+ial &anks in Ban.ladesh to offer 0orld-+lass ele+troni+ &ankin. servi+es. In ter's of adoption of ,-Bankin. 0e +an divide o%r &ankin. se+tor in to three &asi+ +ate.ories< (. 'lassical Banks. -. !odern Banks. C. Electronic Banks.

(. 'lassical banks:
"lassi+al &ank in+l%des those +o''er+ial &anks, 0hi+h don=t provide or provide very little ,-&ankin. fa+ilities. In o%r +o%ntry these +ate.ory 'ainly in+l%des 'ainly D E :ationali7ed 'ommercial banks: I. II. III. I;. I. II. III. I;. #onali Bank FanataBank A.rani&ank R%pali Bank

E Speciali7ed banks Ban.ladesh #hilpa Bank8B#B9 Rajshai Grishi Unnayan Bank Bank of #'all Ind%striesand "o''er+e Ban.ladesh3td. Ban.ladesh #hilpa Rin #an.stha8B#R#9
16

;.

Ban.ladesh Grishi Bank 8BGB9

E ocal pri+ate commercial banks1. /he *riental &ank ltd. 2. !irst se+%rity &ank ltd. C. #o+ial invest'ent &ank ltd. . Al Arafah &ank :. /he #tandard Bank 3td. H. Ban.ladesh "o''er+e Bank 3td.et+ /hese &anks are ter'ed as +lassi+al &e+a%se this Ban.ladeshi &ank still no0 'ainly follo0s the 'an%al pro+ed%re for se+%rin. the val%a&le infor'ation and assets of +%sto'ers. ,1+ept A.rani &ank and Fanata &ank these &anks are still in infant level a%to'ation. Both of these t0o &anks has la%n+hed A/M +ard sharin. 0ith other &anks and ,!/# like Ready +ash, ?-"ash other than these t0o fa+ilities, these &anks has no other ,-Bankin. fa+ilities like *nline &ankin., >o'e &ankin., Internet Bankin.. All the 5"Bs in Ban.ladesh %se the soft0are na'ed as Be1i&ank. Besides this they also %se t0o 'ost 0idely %sed soft0are na'ed P" &ank and 5IGA#> developed &y the Ban.ladesh Bank. /hese +lassi+al &anks have no +entrali7ed data&ase syste'. As a res%lt they al0ays la+k the re6%ired effe+tive +oordination a'on. different %nits, re6%ired infor'ation to 'ake ri.ht de+ision at ri.ht ti'e, in+%rs hi.h overhead +osts. /he &ran+hes of these +lassi+al &anks are not +onne+ted thro%.h 3A5 or $A5 or MA5. In spite of the short+o'in.s all these &anks in the +lassi+al sta.e are tryin. to +onvert the'selves into the 'odern ele+troni+ &anks and 'ake the' a&le to +o'pete 0ith other +o''er+ial &anks

-. !odern banks:
"%rrently so'e of the &anks of Ban.ladesh are providin. ele+troni+ servi+es to their +%sto'ers 0e +annot say they are +o'pletely follo0in. ele+troni+ 0ay. Be+a%se they offer so'e of the f%n+tionalities of the +o'plete ele+troni+ &ankin. like intra-&ank transa+tions, 3etter of "redit 83"9 and forei.n e1+han.e et+. In +ase of inter-&ank transa+tions, +entral &ank a%thority handles the pro+ed%re all the &anks are ter'ed as 'odern &anks this is the lar.est se.'ent of +o''er+ial &anks a'on. the three.

17

All these modern banks ha+e some4hat common features likeE /ryin. to la%n+h or at least have planned to initiate online &ankin. /ele &ankin. et+ in near f%t%re. E /ryin. to follo0 'arketin. strate.ies of others E Providin. A/M +ard and in so'e +ases +redit +ard fa+ilities E Initiatin. 'odern &ankin. +on+epts like one-stop servi+es, servin. the %nderserved 'arket, and +ontin%o%sly %pdatin. their servi+e and prod%+t portfolio. E Providin. 6%i+k transfer of re'ittan+es 0ith the help of international 'oney transfer %nions like $estern Union, ,1press Money and Money (ra'. 1ollo4ing are some of those commercial banks; 4hich fall 4ith in modern banks categor, in our countr,; 4hich pro+ide AT! ser+ices on shared basis and planning to pro+ide online banking and an, branch banking. I. II. III. I;. ;. ;I. ;II. ;III. II. I. II. III. IIII. II;. I;. I;I. P%&ali Bank 3td. Mer+antile Bank 3td. 5ational Bank of Pakistan 5ational Bank 3td. International !inan+e Invest'ent and "o''er+e &ank 3td United "o''er+ial Bank 3td. Uttara Bank 3td. 5ational "redit and "o''er+e Bank 3td. Pri'e Bank 3td. /he M%t%al /r%st Bank 3td. 5ational Bank of Pakistan #tate Bank of India >a&i& Bank 3td Ara& Ban.ladesh Bank 3td. 5ational Bank of Pakistan #o%theast Bank 3td.

#o'e of the ele+troni+ &ankin. servi+es provided &y these 'odern +o''er+ial &anks are des+ri&ed &elo0< E Electronic fund transfer ser+ices: I!I" &ank ltd. Mer+antile &ank ltd. P%&ali &ank ltd. AB &ank ltd A.rani &ank is providin. ele+troni+ f%nd transfer servi+es on shared &asis in the na'e of ?-+ash.
18

E '"B /eport Generation: Ban.ladesh Bank has the a++ess to all other &anks so it is very easy task to 'aintain an inte.rated data&ase of all +%sto'ers spe+ifyin. their +redit and de&it infor'ation 0ith ea+h &ank E AT! 'ard: M%t%al tr%st &ank, Pri'e Bank ltd. /he Pre'ier &ank ltd. is +%rrently providin. individ%ally de&it +ard fa+ilities %nder the &rand na'e of ;I#A. Besides the "ity &ank ltd. is providin. another de&it +ard 0hi+h offers d%al +%rren+ies 0ithdra0al fa+ilities. B%t the +ard pro+essin. period of these &anks is relatively len.thy than that of #tandard "hard Bank. Soft4are used:

All the 'odern &anks %ses t0o +o''on soft0are developed &y Ban.ladesh &ank na'ed 5IGA#> for +he+k +learin. p%rposes and P" &ank for 'aintainin. the led.er of +lients. Besides Dhaka Bank ltd. and ,astern &ank ltd. %ses !3,I"UB,, Mer+antile &ank ltd. and M%t%al /r%st Bank ltd. %ses !3*RA Bank, the "ity &ank ltd. and Ara& Ban.ladesh Bank ltd. %ses !I5A"3,.

0. Electronic Banks:
,le+troni+ &ankin. as a se.'ent of ele+troni+ &%siness, 0hi+h, in t%rn, en+o'passes all types of &%siness perfor'ed thro%.h ele+troni+ net0orks. Banks in this +ate.ory are 'ore ele+troni+ally servi+e oriented than the a&ove-'entioned +o''er+ial &anks. ,le+troni+ &ank in+l%de those +o''er+ial &anks, 0hi+h %ses sophisti+ated +o'p%ter and net0orkin. te+hnolo.y to +arry on their day-to-day &ankin. &%siness. All of their &%siness pro+ess in 'aintained and e1e+%ted ele+troni+ally. !ollo0in. are those &anks, 0hi+h fall in the +lass of ,le+troni+ Banks /0o f%nda'ental aspe+ts of ele+troni+ &ankin. are the nat%re of the delivery +hannel thro%.h 0hi+h a+tivities are perfor'ed, and the 'eans for +%sto'ers to .ain a++ess to those +hannels. "o''only delivery +hannels in+l%de J+losed= and Jopen= net0orks devi+es thro%.h 0hi+h e-&ankin. prod%+ts and servi+es +an &e provided to +%sto'ers in+l%de point of sale ter'inals, a%to'ati+ teller 'a+hines, telephones, P"s. >ere 0e divide the ele+troni+ &anks in to t0o +ate.ories.

19

a. ocal Electronic 'ommercial banks: 1. ,astern Bank 3td. 2. BRA" Bank 3td. C. Bank Asia ltd . D%t+h Ban.la Bank 3td :. Fa'%na Bank H. Isla'i Bank Ban.ladesh 3td. &. 1oreign Electronic 'ommercial banks: 1. #tandard "hartered Bank ltd. 8#"B9 2. >#B" C. "iti &ank 5A . "o''er+ial Bank of "eylon 3td. :. $oori Bank H. Bank Alfalah et+.

-.<.2 Gro4th in E-Banking Banking:

5%'ero%s fa+tors in+l%din. +o'petitive +ost, +%sto'er servi+e, and de'o.raphi+ +onsiderations are 'otivatin. &anks to eval%ate their te+hnolo.y and assess their ele+troni+ +o''er+e and Internet &ankin. strate.ies. Many resear+hers e1pe+t rapid .ro0th in +%sto'ers %sin. online &ankin. prod%+ts and servi+es. ,val%atin. a &ank=s data on the %se of their $e& sites, 'ay help e1a'iners deter'ine the &ank=s strate.i+ o&je+tives, ho0 0ell the &ank is 'eetin. its Internet &ankin. prod%+t plan, and 0hether the &%siness is e1pe+ted to &e profita&le #t%dies sho0 that +o'petitive press%re is the +hief drivin. for+e &ehind in+reasin. %se of Internet &ankin. te+hnolo.y, rankin. ahead of +ost red%+tion and reven%e enhan+e'ent, in se+ond and third pla+e respe+tively.

Present Status of =arious forms of E-Banking in Bangladesh: Total 2> banks ?both public and P+t. 'ommercial banks@ 4ere sur+e,ed and the results are summari7ed as belo4:
20

-.A %ifferent 1orms of E-banking:

/he ter's JP" &ankin.=, Jonline &ankin.=, JInternet &ankin.=, J/elephone &ankin.= or J'o&ile &ankin.= refer to a n%'&er of 0ays in 0hi+h +%sto'ers +an a++ess their &anks a++o%nt 0itho%t havin. to &e physi+ally present at the &ran+h of a &ank. ,-&ankin. 'ay &e %nderstood as the ter' that +overs all the 0ays of &ankin. &%siness ele+troni+ally. (. Tele-banking /ele-&ankin. servi+e is provided &y phone. /o a++ess an a++o%nt it is re6%ired to dial a parti+%lar telephone n%'&er and there are several options of servi+es. *ptions in+l%ded "he+kin. a++o%nt &alan+e !%nds transfer &et0een +%rrent, savin.s and +redit +ard a++o%nts Bill pay'ents #to+k e1+han.e transa+tion Re+eive state'ent via fa1 3oan pay'ent infor'ation

-. P' Banking

21

/he in+reasin. a0areness of the i'portan+e of litera+y of +o'p%ter has res%lted in in+reasin. %se of personal +o'p%ters thro%.h the entire 0orld. !%rther'ore, in+redi&le pl%''et of +ost of 'i+ropro+essor has a++elerated the %se of +o'p%ter. /he ter' JP" &ankin.= is %sed for &ankin. &%siness transa+ted fro' a +%sto'er=s P". Usin. the P" &ankin. or ho'e &ankin. no0 +%sto'ers +an %se their personal +o'p%ters at ho'e or at their offi+e to a++ess their a++o%nts for transa+tions. !or s%&s+ri&in. to and dialin. into the &anks= Intranet proprietary soft0are syste' is %se for pass0ord. Basi+ally, there are t0o types of P" &ankin.. /he first type is online banking, in 0hi+h &ank transa+tions are +ond%+ted 0ithin +losed net0orks. /he +%sto'er needs spe+iali7ed soft0are provided &y his &ank. /he se+ond type is "nternet banking, 0hi+h (er'an &anks have &een offerin. sin+e the 'id-nineties, altho%.h the only prod%+t they 0ere offerin. at the ti'e of infor'ation. Unlike +losed net0orks, Internet &ankin. per'its the +%sto'er to +ond%+t transa+tions fro' any ter'inal 0ith a++ess to the Internet.

!i.%re 1< /ypes of ,-&ankin. 0. "nternet Banking Internet &ankin. 0o%ld free &oth &ankers and +%sto'ers of the need for proprietary soft0are to +arry on 0ith their online &ankin. transa+tions. "%sto'er &ehavior is +han.in. rapidly. 5o0 the finan+ial servi+e is +hara+teri7ed &y individ%ality, independen+e of ti'e, pla+e and fle1i&ility. /hese fa+ts represent h%.e +hallen.es for the finan+ial servi+e providers. #o the Internet is no0 +onsidered to &e a Jstrate.i+ 0eapon= to satisfy the ever-+han.in. +%sto'ers= de'and and innovative &%siness needs.

2. !obile Banking
22

A+t%ally 'o&ile &ankin. is a variation of Internet &ankin.. Mo&ile &ankin. is a .ood e1a'ple of ho0 the lines &et0een the vario%s for's of e-&ankin. are &e+o'in. .rad%ally &l%rred. D%e to the ne0 trans'ission te+hnolo.ies s%+h as $AP 8$ireless Appli+ation Proto+ol9, porta&le ter'inal like 'o&ile phones personal di.ital assistant 8PDA9 or s'all hand-held P"s are providin. &ank +%sto'ers 0ith a++ess to the Internet and th%s pavin. the 0ay to Internet &ankin.. >o0ever, the %se of 'o&ile &ankin. is still in a nas+ent state. /he slo0er trans'ission speed of the $AP standard and the li'ited a'o%nt of infor'ation availa&le are j%st t0o of the fa+tors inhi&itin. the %se of those ter'inals.

-.< Electronic banking product a+ailable in Bangladesh or T,pes of E-banking:

,-&ankin. prod%+t and servi+es +an in+l%de 0holesale prod%+ts for +orporate +%sto'ers as 0ell as retail and fid%+iary prod%+ts for individ%al +%sto'ers. Ulti'ately the prod%+t and servi+es o&tained thro%.h internet &ankin. 'ay 'irror prod%+t and servi+es offered thro%.h other &ank delivery +hannels. A &rief des+ription of ,-&ankin. prod%+ts 0hi+h are des+ri&ed &elo0<

K /etail Electronic Banking Ser+ice:

1.

Automated teller machine: An a%to'ated teller 'a+hine 8A/M9 is a

+o'p%teri7ed tele+o''%ni+ation devi+e that provides a finan+ial instit%tion=s +%sto'ers 0ith a 'ethod of finan+ial transa+tion in a p%&li+ spa+e 0itho%t a need for a h%'an +lerk or a &ank teller.

2.

%ebit card: A de&it +ard is a plasti+ +ard 0hi+h provides an alternative pay'ent
'ethod to +ash 0hile 'akin. p%r+hases. /he a'o%nt of a transa+tion is typi+ally displayed on a +ard reader, after 0hi+h the +%sto'er s0ipes the +ard and enters the pin n%'&er. /here is %s%ally a short delay 0hile the ,!/P*# 8ele+troni+ f%nd transfer at point of sale9 ter'inal +onta+t the +o'p%ter net0ork 8over a phone line and 'o&ile +onne+tion9 to verify the a%thori7ed the transa+tion.

C.

'redit card: A +redit +ard is a syste' of pay'ent na'ed after the s'all plasti+
+ard iss%ed to %sers of the syste'. A +redit +ard is different fro' a de&it +ard in that it does not re'ove 'oney fro' the %ser=s a++o%nt after every transa+tion. In
23

the +ase of +redit +ard the iss%er lends 'oney to the +%sto'er. It is also different fro' a +har.e +ard tho%.h this na'e is so'eti'es %sed &y the p%&li+ to des+ri&e +redit +ards. /his re6%ires the &alan+e to &e paid in f%ll ea+h 'onth.
.

Point of sale ?P)S@: /his 'eans a retail shop or a +he+ko%t +o%nter in a shop
or a varia&le lo+ation 0here a transa+tion o++%rs in this type of environ'ent. Additionally point of sale so'eti'es refers to the ele+troni+ +ash re.ister syste' &ein. %sed in an esta&lish'ent. Point of sale syste' are %sed in resta%rants, hotels and stadi%'s as 0ell as retail environ'ent in short , if so'ethin. +an &e sold, it +an &e sold 0here a point of sale syste' is in %se.

:.

'heck Truncation: /his is s%+h a servi+e in 0hi+h a finan+ial instit%tion

doesn=t ret%rn the reje+ted +he+ks 0ith the 'onthly state'ent to their +%sto'er, rather they provide state'ent of reje+ted +he+ks 0ith their 'onthly state'ents. /he &anks store the reje+ted +he+ks for a +ertain ti'e period 8%s%ally B0 days9. D%rin. this ti'e period a +%sto'er +an adj%st Lre+tify the a++o%nt if any i'&alan+e is fo%nd &et0een his o0n re+ord and the &ank state'ent provided &y the &ank.

H.

#ome banking: At first &ank introd%+ed telephone &ill pay'ent 8/BP9 so that
+%sto'er +o%ld &e a&le to do their &ankin. a+tivities fro' their ho'e. /he ne1t version for the ho'e &ankin. 0as ;ideo >o'e Bankin. 8;>B9. /he internet is e1pe+ted to &e a 'ajor fa+tor for ho'e &ankin..

M.

/etail Automated 'learing #ouse Ser+ice: It is an ele+troni+ net0ork

for finan+ial transa+tion. A"> pro+ess lar.e vol%'e of &oth +redit and de&it transa+tions 0hi+h are ori.inated in &at+hes. A"> +redit transfers in+l%din. dire+t deposit, payroll pay'ent and pay'ents to +ontra+tors and vendors. A"> de&it transfers in+l%din. +%sto'er pay'ent of ins%ran+e pre'i%'s, 'ort.a.e loans and other kinds of &ills. B%sinesses are also in+reasin.ly %sin. A"> to +olle+t the +%sto'ers= online rather than a++eptin. +redit or de&it +ards.

K .holesale Electronic Banking: (. .ire transfer:

24

$ire transfer is a pro+ess 0hi+h ens%res fast and appropriate ti'in. of f%nd transfer fro' the sender to the re+ipient. /his kind of transfer of 'oney +o%ld &e either 0ithin the +o%ntry or a&road. !%nds are transferred %nder the follo0in. net0ork< !,D 0ire 8 federal reserve +o''%ni+ation syste'9 Bank 0ire ">IP# 8+learin. ho%se inter&ank pay'ent servi+e9 #$I!/ 8 the so+iety for 0orld0ide inter&ank finan+ial tele+o''%ni+ation9 <

-. !obile remittance:
!or sendin. forei.n re'ittan+e fo%r nationali7ed &anks and fifteen private &anks are 0orkin. +olla&oratively 0ith 'o&ile phone servi+e operators. Re+ently re'ittan+e +o%ld &e sent in Ban.ladesh &y &ankin. +hannel thro%.h a++o%nt transfer 8nor'ally takes C 0orkin. days9 or in the for' of instan+e +ash 8takes 2 ho%rs9. !orei.n resident people +an send their 'oney and PI5 8personnel identifi+ation n%'&er9 thro%.h 'o&ile phone. As a res%lt 'oney transfer &e+o'es relatively easy, 6%i+k and hassle free. B%t this syste' also s%perseded &y re'ittan+e syste'. /he first ever re'ittan+e servi+e for Ban.ladesh 0as jointly la%n+hed &y t0o lo+al &anks DDhaka Bank ltd. and ,astern Bank ltd. D and the +o%ntry=s se+ond lar.est 'o&ile operator is Ban.lalink.

0. 'orporate automated clearing house:

/he a%to'ated +learin. ho%se 8A">9 is an ele+troni+ net0ork for finan+ial transa+tion. A"> pro+esses lar.e vol%'es of &oth +redit and de&it transa+tions. $hi+h are ori.inated in &at+hes other retail and fid%+iary prod%+ts and servi+es 'ay in+l%de &alan+e in6%iry, f%nds transfer, do0nloadin. transa+tion infor'ation, &ill present'ent and pay'ent, loan appli+ation, invest'ent a+tivity and other val%e added servi+es.

-.B The common features of Electronic Banking of Bangladesh:

25

The common features of electronic banking in Bangladesh are as follo4s: ,le+troni+ &ankin. idea developed in Ban.ladesh sin+e 1BB2 thro%.h several '%ltinational &anks. B%t 'ost of the lo+al and forei.n &anks are 'aintained ele+troni+ &ankin. in their all &ran+hes. >ere the resear+her fined so'e +o''on feat%res of ele+troni+ &ankin. in Ban.ladesh. 1. 2 - ho%rs +ash deposit N 0ithdra0al fa+ility 2. ?%i+k +ash 0ithdra0al 0itho%t havin. 6%e%e C. A++o%nt a+tivities en6%iry in any 'o'ent . #tate'ent re6%est thro%.h A/MLDe&itL"redit "ard :. /ransfer o0n f%nds to other a++o%nt n%'&er in sa'e &ank H. Present Balan+e en6%iry M. More than1H- ho%rs shoppin. fa+ilities A. Deposit or Mail +ash or +he6%e 8s9 8"ross +he6%e9 thro%.h 'e+hani+al devi+e. B. "han.in. Personal Identity 5%'&er 10. "ash deposit 0hi+h 0ill ori.inally deposit very ne1t day of deposit that 'eans do not need to .o to the &ran+h for every o++asion. 11. Mini state'ent 0hi+h +ontain A-10 previo%s transa+tion re+ords 12. "an a&le to pay %tilities &ill 1C. $ithdra0 'oney &y %sin. ;I#A, P3U#, MA#/,R, MA,#/R* and other +redit +ard 1 . $ithdra0 'oney fro' dollar a++o%nt 0hi+h .ives taka &y +onvertin. forei.n +%rren+y

-.(> The /isk !anagement of Electronic Banking:

$ith the rise of internet and ne0 te+hnolo.ies ne0 threats have arisen. 5e0 +hallen.es are +reated for the &anks senior 'ana.e'ent. /he different types of risk of internet &ankin. are as follo0s<

(. Securit, 'ontrols /isk : $hile the Board of Dire+tors has the responsi&ility for ens%rin. that appropriate se+%rity +ontrol pro+esses are in pla+e for e-&ankin., the s%&stan+e of these pro+esses needs spe+ial 'ana.e'ent attention &e+a%se of the enhan+ed se+%rity +hallen.es posed &y e26

&ankin.. /his sho%ld in+l%de esta&lishin. appropriate a%thori7ation privile.es and a%thenti+ation 'eas%res, lo.i+al and physi+al a++ess +ontrols, ade6%ate infrastr%+t%re se+%rity to 'aintain appropriate &o%ndaries and restri+tions on &oth internal and e1ternal %ser a+tivities and data inte.rity of transa+tions, re+ords and infor'ation. -. egal and /eputational /isk !anagement: /o prote+t &anks a.ainst &%siness, le.al and rep%tation risk, e-&ankin. servi+es '%st &e delivered on a +onsistent and ti'ely &asis in a++ordan+e 0ith hi.h +%sto'er e1pe+tations for +onstant and rapid availa&ility and potentially hi.h transa+tion de'and. /he &ank '%st have the a&ility to deliver e-&ankin. servi+es to all end-%sers and &e a&le to 'aintain s%+h availa&ility in all +ir+%'stan+es. ,ffe+tive in+ident response 'e+hanis's are also +riti+al to 'ini'i7e operational, le.al and rep%tational risks arisin. fro' %ne1pe+ted events, in+l%din. internal and e1ternal atta+ks that 'ay affe+t the provision of e-&ankin. syste's and servi+es. /o 'eet +%sto'ers@ e1pe+tations, &anks sho%ld therefore have effe+tive +apa+ity, &%siness +ontin%ity and +ontin.en+y plannin.. 0. Traditional /isk: I. "nterest /ate /isk< *ne of the risks of internet &ankin. is the risk to earnin.s or +apital arisin. fro' 'ove'ents in interest rates. Internet &ankin. +an attra+t a lar.e pool of deposits and loans. /he internet +an allo0 +%sto'ers to +o'pare interest rates of different &anks fro' the 0e&sites. /he differen+es &et0een the ti'in. of rate +han.es and the ti'in. of the different +ash flo0s +an also affe+t the interest risk. II. iCuidit, /isk< #o'eti'es &anks fa+e a diffi+%lty of failin. to 'eet its o&li.ations. Internet &ankin. in+reases asset and deposit volatility. #o'e +%sto'ers si'ply 'aintain their deposit a++o%nts solely on the &asis of favora&le interest rates, and they often &rin. +ash o%t and deposit in other &anks if a 'ore favora&le rate is offered. III. Transactions risk: /his risk to earnin.s and +apital that arises fro' fra%d, error, and the ina&ility to deliver servi+es or prod%+ts, or to 'aintain a +o'petitive position or to 'ana.e infor'ation. /ransa+tion risk that 'ay e1ist 0ith internet &ankin. prod%+ts if these are not properly planned, not properly i'ple'ented and not properly 'onitored.
27

I;.

'ompliance /isk: /he risks to earnin.s or +apital that arises fro' the violations of, non+onfor'an+e 0ith the la0s, r%les, re.%lations, the pres+ri&ed pra+ti+es ethi+al standards of a +o%ntry. /his risk +an affe+t the rep%tation of a &ank, &%siness opport%nities and positionin. in the 'inds of its +%sto'ers. Banks sho%ld &e +aref%l in %nderstandin. and interpretin. the la0s of different +o%ntries. Banks sho%ld also &e +aref%l in the priva+y of +%sto'er and takin. +%sto'er +onsent 0herever ne+essary.

;.

Strategic /isk: /his is risk of earnin.s or +apital that arises fro' ade6%ate &%siness de+isions and the i'proper i'ple'entation of &%siness de+isions. Many &ank 'ana.ers and senior offi+ers do not %nderstand ho0 to i'ple'ent the strate.i+ and te+hni+al aspe+ts of internet &ankin.. A proper +ost-&enefit analysis is re6%ired for this p%rpose.

0.( S.)T anal,sis of Electronic Banking:

As e'piri+al eviden+e here a #$*/ Analysis +an &e an effe+tive 'eas%re. !or analy7in. the perfor'an+e of the Internet Bankin. in Ban.ladesh the follo0in. #$*/ Analysis is +onsidered<

Strength

28

Weakness

Opportunity

29

Threat

0.- 'omparati+e anal,sis among fi+e banks:

!or o%r analyti+al p%rpose 0e pi+k : &anks fro' three different se.'ents. *ne of the &anks is DBB3 0hi+h is pioneer in online &ankin. in Ban.ladesh. !ro' other lo+al +o''er+ial &anks in Ban.ladesh 0e pi+k eastern &ank li'ited and Dhaka &ank. !ro'
30

forei.n &anks 0e +hose #tandard "hartered Bank 3i'ited and #onali Bank 3i'ited fro' the p%&li+ &anks. %BB EB %haka Bank Standard 'hartered Bank imited A 2: 1M Sonali imited Bank

:umber of AT! :umber of branches :umber of branches ha+ing S."1T code 'ore banking soft4are Phone banking S!S banking "nternet banking =arious cards

12B: BH 12

M B 2C

2 : 1B

22 11B1 C1

!le1+%&e "I#"* #yste' !le1+%&e !le1+%&e "ard #%ite8AII, *ra+le9

*ra+le !le1+%&e UB#

!le1+%&e

eBB# I;R

!le1+%&e !le1+%&e /rans Master for Prepaid "redit and De&it "ard

!le1+%&e !le1+%&e iBankin.

*L# $AP

"ARDPR* e"AP#

Shared AT!

/ran70are,"o'pass Pl%s

K 'ards and others:

%BB EB %haka Bank Standard 'hartered Bank imited O Sonali Bank imited

%ebit card

O
31

'redit card O =isa and O master card Tra+el card I

O O O

O O I

O O O

I I I

K )thers:
%%B EB %haka Bank imited O I I Standard 'hartered Bank imited O O I Sonali Bank imited

!obile banking 1ast Track Electronic Student Booth ?ESB@ "nternet Pa,ment Gate4a, ?"PG@ 'all center :e4 %ata 'enter and %/S Green "T )nline remittance transfer Emplo,ee banking program

O O O

I O O

O I I

O O O O O

32

ocation of AT!:

Basis of comparison< !etro political areas< (overned &y "ity "orporations, these are the +ities of Ban.ladesh. #%+h as< Dhaka "hitta.on. Gh%lna Rajshahi #hylhet Borishal

Ran.p%r !unicipal areas: (overned &y, M%ni+ipal "orporations, these are the to0ns in Ban.ladesh.

33

34

0.0 Problems of Electronic Banking in Bangladesh:

/he pro&le's prevailin. as 0ell as to &e en+o%ntered in Ban.ladeshi perspe+tive +an &e analy7ed %nder the follo0in. headin.s< ". !ass "lliterac, e+el:

/he 'ajority portion of people in Ban.ladesh is illiterate in .eneral ed%+ation. >avin. &een %na&le to read and 0rite in ,n.lish, it is the 'ost i'portant pro&le' for &ankers to i'ple'ent online &ankin. servi+es. As e-&ankin. servi+es .ets s%&je+t to fra%d%lent a+tivities d%e to la+k of a&ility of people fro' different 0alks of life to 'aintain a++o%nt a+tivities re6%irin. handlin. sophisti+ated soft0are tools to &e provided &y different &anks for online p%rpose, it is al'ost i'possi&le for different &anks espe+ially +overin. 'ass +%sto'er &ase even fro' r%ral areas. "". ack of "'T Dno4ledge and Skills:

/e+hnolo.y litera+y is still very li'ited in 'ost developin. +o%ntries. /here is a shorta.e of skilled 0orkers a'on. &anks, a key iss%e in 'ovin. for0ard 0ith %sin. infor'ation te+hnolo.y in &%siness. B%t, in order to offer and 'aintain e-&ankin. servi+es 0itho%t any fa%lt, &anks need skilled 'anpo0er. B%t in Ban.ladesh, the &anks are s%fferin. d%e to inade6%ate skilled 'anpo0er. /hey have to hire 'anpo0er fro' forei.n +o%ntries to over+o'e this pro&le'. """. "nfrastructure:

/he other +hallen.e for e-&ankin. is 0ell developed infrastr%+t%re. Infor'ation and "o''%ni+ation /e+hnolo.y 8I"/9 infrastr%+t%re is prior 'ost to offer and to i'ple'ent e-&ankin. servi+es. "o''%ni+ation infrastr%+t%re s%+h as Internet, $A5, /elephone lines '%st &e ade6%ate for e-&ankin.. In Ban.ladesh, d%e to %navaila&ility of +o'p%ter syste's and Internet infrastr%+t%re &y the 'ajority of people, &ankin. se+tor is fa+in. lot
35

of pro&le's or +hallen.es. ,spe+ially, Internet is the 'ajor pro&le' &e+a%se of 3o0 &and0idth and lo0 speed for &anks intendin. to .o online.

"=.

Po4er %isruption:

Another 'ajor pro&le' is fre6%ent ,le+tri+ Po0er disr%ption. /his 0ill +reate lot of pro&le's in e-&ankin. a+tivities 0hi+h are &asi+ally dependin. on po0er s%pply. It 0ill for+e the &anks to depend on .enerators 2 ho%rs M day res%ltin. in hi.h operational +ost. Besides, +%sto'ers transa+tin. fro' ho'e 0ill fa+e pro&le' d%e to disr%ption 0hile +ond%+tin. e-&ankin. a+tivities. =. Establishment EEpenses:

Initially, &anks have to invest h%.e a'o%nt of 'oney in order to provide e-&ankin. servi+es. /hey have to &%y and install the re6%ired syste's and fa+ilities 0hi+h lead in+reased esta&lish'ent e1pense. /hey have to in+%r heavy 'aintenan+e +osts also. !or 0ell-esta&lished &anks +o''er+ial &anks of Ban.ladesh, the esta&lish'ent +ost 'ay not &e a pro&le'. =". ack of A4areness and &nderstanding of the =alue of E-Banking:

Most indi.eno%s &anks in Ban.ladesh have not taken %p the %se of the Internet as their &ankin. 0ay &e+a%se they fail to see the val%e of e-&ankin. to their &%sinesses. Many think e-&ankin. needs an additional +ost that 0ill not &rin. any 'ajor ret%rns on invest'ent. ="". &na+ailabilit, of E-Business Practices:

>avin. a $e& site, 0hi+h is a pre-re6%isatories for online operation, is not e6%ivalent to havin. a 0ell-visited $e& site. *ne reason is that there 'ay &e no +riti+al 'ass of %sers in Ban.ladesh for %navaila&ility of Internet fa+ilities &y people. *ther reason 'ay &e that 'ass people are not a++%sto'ed 0ith %sin. Internet platfor' for day-to-day shoppin., &ankin. and so on. =""". egal 1rame4ork:

36

3e.al fra'e0ork is plyin. a +r%+ial role in fa+ilitatin. e-&ankin. syste' and in its .ro0th. Instead of stri+t re.%lation, a +o%ntry sho%ld 'ake so'e a'end'ents in order to +oin+ide 0ith the e-&ankin. pra+ti+es. Ban.ladesh has not yet set a +o'prehensive le.al fra'e0ork for e-+o''er+e in .eneral and e-&ankin. in parti+%lar. B%t 'ostly in developed +o%ntries, they have developed a +o'prehensive le.al fra'e0ork for e+o''er+e 0hi+h in+l%des e-&ankin.. /he "entral Bank of Ban.ladesh has not +learly 'entioned yet its role in re.%latin. the e&ankin. syste' in its .overnin. le.islation. "F. Securit,:

#e+%rity is another fore'ost re6%ire'ent of e-&ankin. as the internet is inherently %nse+%red. #e+%rin. the pro+ess in e-&ankin. involves a%thenti+atin. &oth +%sto'er and &anker and prote+tin. the infor'ation to &e trans'itted fro' inter+eption. /his a%thenti+ation +an &e done %sin. %ser ID and pass0ords. Banks sho%ld take effe+tive steps for the interests of +%sto'ers fro' data ta'perin. and ha+kin.. F. Standardi7ation of Soft4are:

*ne of the 'ajor iss%es in ,-&ankin. is the standardi7ation of soft0are 0hi+h is ne+essary to offer e-&ankin. servi+es. Proven hi.h 6%ality soft0are is a '%st for hi.hte+h &ankin. servi+es. !or the sophisti+ated servi+es, the standardi7ation of operatin. syste's, syste's soft0are and appli+ation soft0are thro%.ho%t the &ankin. ind%stry is a ne+essary +ondition, 0hi+h 'ay have to &e p%rs%ed. /he %navaila&ility and skill needed to operate s%+h soft0are are also i'pedin. the .ro0th of e-&ankin. in Ban.ladesh. F". ack of "nitiati+e from 'entral Bank:

All &anks are in need of s'ooth +learin.. $hile 0e see, In India, Reserve Bank of India initially took step to inter+onne+t all &anks operatin. in India for s'ooth transa+tion and +he+k tr%n+ation p%rposes. B%t in Ban.ladesh, in this a.e of 21 st +ent%ry, all &anks are re6%ired to +ond%+t +learin. ho%se 'e+hanis' and +he6%e settle'ent till today 'an%ally. B%t it +an &e said that 0itho%t online +he6%e settle'ent and other +learin. 'e+hanis', it 0o%ld &e totally i'possi&le for &anks to transa+t online. F"". ack of AT!:

37

/ho%.h a fe0 &anks in Ban.ladesh are providin. initially A/M fa+ility &%t this fa+ility is rare in distan+e areas even not availa&le in distri+t to0n. *nly +%sto'ers livin. in fo%r +ity +orporation areas avail to rea+h s%+h A/M fa+ility. $itho%t this type of &asi+ re6%ire'ent &anks and its +%sto'ers are hardly a&le to +apitali7e on e-&ankin. fa+ilities.

0.2 'onstraints to E-Banking in Bangladesh:

!orei.n and private &anks offered a &road ran.e of servi+es over the internet. P%&li+ se+tor &anks la. &ehind in offerin. 0ider ran.e of internet &ankin. servi+es and prod%+ts. K At present, there is no proper infrastr%+t%re for perfor'in. ,le+troni+ &ankin. a+tivities in Ban.ladesh. K #lo0 %ptake of internet a++ess and P"s. K Poor tele+o''%ni+ation net0ork poli+ies and slo0 pa+ed re.%latory initiatives. K ;ery 'ini'%' n%'&er of %sers of internet. K /he &ankin. infrastr%+t%re in ter's of ele+troni+ pay'ents and inter&ank +onne+tivity is poor. K 3i'itations of s%pportive le.al syste'. K 3a+k of skilled I/ 0orkfor+e. K A&sen+e of +y&er la0. K A&sen+e of ,!/ 8,le+troni+ !%nd /ransfer9 le.islation. K A&sen+e of need &ased &%siness plan for online &ankin. K A/Ms 'ay have net0ork pro&le's, %navaila&ility and shorta.e of 'oney. K >i.h pri+e of +o'p%ter, +o'p%ter hard0are and &ankin. soft0are. K 3a+k of a0areness at .overn'ent level of e-&ankin. iss%e. K 3a+k of a0areness at +%sto'er level of e-&ankin. iss%e. G $eather has a dire+t effe+t to0ards e-&ankin.. If +reate heavy rain, flood or +y+lone then the entire net0ork is do0n.

0.8 Prospects of Electronic Banking in Bangladesh:

38

/he Ban.ladesh Rail0ay o0ns a hi.h-speed opti+al fi&er net0ork 81,A00 k'9 parallel to the rail0ay path that +overs 'ost of the i'portant parts of Ban.ladesh. /his opti+al fi&er net0ork +an &e %sed as the &a+k&one net0ork of e-&ankin. in Ban.ladesh. !or e1a'ple, 'o&ile phone operators s%+h as (ra'een Phone and Ranks I// of Ban.ladesh %se this opti+al fi&er net0ork thro%.h 0hi+h they rea+h even in r%ral areas 0ith their servi+es 8Isla' 200:9. It is en+o%ra.in. that so'e of the !"Bs and P"Bs are already %sin. this opti+al fi&er net0ork for +ond%+tin. online transa+tions, A/M and P*# servi+es.

Di.ital telephone e1+han.es have &een esta&lished in CAB %pa7ilas and 1M .ro0th +entres. $ork is %nder0ay to +over the rest of the %pa7ilas %nder di.ital e1+han.e syste'. Mean0hile, Ban.ladesh has joined the infor'ation s%per-hi.h0ay &y +onne+tin. itself 0ith international s%&'arine +a&le syste' in 200H. A total of 1:B Internet #ervi+e Providers 8I#Ps9 have no0 &een +onne+ted 0ith this syste' of 0hi+h H are a+tively providin. servi+es. Internet +onne+tion is slo0 0ith &and0idth ran.e C2 k&ps to :H k&ps for dial %p and H k&ps to A '&ps for &road&and. Under this s+enario, as a part of .overn'ent de+ision of &%ildin. di.ital Ban.ladesh, the e1istin. +apa&ilities of I"/ se+tor is likely to in+rease rapidly in &rin.in. all %pa7ilas %nder internet servi+es and this 0ill +ontri&%te in 0idenin. the s+ope of e-&ankin. thro%.ho%t the +o%ntry.

/he overall +o'p%ter density in the &ankin. se+tor is 1.H . !or forei.n +o''er+ial &anks 8!"Bs9 the +o'p%ter density is :.C , 0here as for 5"Bs the ratio is only 0. 1. /he spe+iali7ed &ank s+enario is al'ost sa'e as the 5"Bs, 0. C. *n the other hand, private +o''er+ial &anks have +o'paratively hi.her ratio, .B . As a 0hole A1.A1 per+ent &ank does not have any lo+al area net0ork 83A59, C0 per+ent have $A5 8$ide Area 5et0ork9 &%t for so'e &anks 'any &ran+hes are o%tside of $A5 +onne+tivity. At present, all forei.n &anks of o%r +o%ntry are %sin. online &ankin. syste'4 they are invested a lot for their a%to'ation &ankin. servi+es. /hey are the pioneer of i'ple'entin. ele+troni+ &ankin. syste's in Ban.ladesh, &%t no0 'ost of the private &anks of o%r +o%ntry are %sin. ele+troni+ &ankin. syste's. In o%r +o%ntry different &anks are offerin. ele+troni+ &ankin. servi+es in different 0ays, so'e are offerin. A/M 8A%to'ati+ /eller Ma+hine9 servi+es, so'e are /ele-&ankin. and so'e are ele+troni+ f%nd transfer, de&it +ard, +redit +ard et+.
39

Re+ently, the .overn'ent=s e'phasis on &%ildin. a di.ital Ban.ladesh, settin. %p I"/ park, raisin. allo+ation for developin. I"/ infrastr%+t%re, 0aivin. ta1es on +o'p%ter peripherals and other 'eas%res in+l%din. the a%to'ation pro.ra' of &ankin. se+tor led &y the Ban.ladesh Bank and +o'petition a'on. the s+hed%led &anks in i'provin. +%sto'er servi+es have a++elerated the prospe+ts of e-&ankin. in Ban.ladesh. ,-&ankin. in developin. +o%ntries is in the early sta.es of develop'ent. Most &ankin. in developin. +o%ntries is still done the +onventional 0ay. Ban.ladeshi &anks are still rel%+tant to %se f%ll internet &ase &ankin. a+tivities. "o'pared to private and forei.n &anks, nationali7ed +o''er+ial &anks are far &ehind i'ple'entin. internet &ankin. syste' in &ankin. transa+tions. >o0ever, the prospe+ts re.ardin. e-&ankin. in Ban.ladesh +an &e dis+%ssed %nder the follo0in. headin.s<D

(. Sound Banking Sector:

!inan+ial se+tor of Ban.ladesh, like 'ost developin. +o%ntries, is do'inated &y &ankin. enterprises. Private 0ere allo0ed to enter the 'arket and t0o nationali7ed +o''er+ial &anks 85"Bs9 0ere de+entrali7ed and another nationali7ed &ank 0as +onverted into a li'ited lia&ility +o'pany and partially privati7ed. "%rrently, the &ankin. se+tor +o'prises of fo%r 5"Bs, five .overn'ent-o0ned spe+iali7ed &anks dealin. 0ith develop'ent finan+e in spe+iali7ed se+tors, C0 private +o''er+ial &anks 8P"Bs9 and ten forei.n +o''er+ial &anks 8!"Bs9. /his infrastr%+t%re +an easily +ope 0ith the dyna'is' of e&ankin. 'e+hanis'.

-. "nformation "nfrastructure ?Telecommunications@: Mo&ile net0ork in Ban.ladesh is e1pandin. 0ith an e1ponential .ro0th rate. ,1pansion of 'o&ile net0ork thro%.ho%t the +o%ntry +reates s+ope for $AP-&ased &%siness appli+ations. #o'e 'o&ile +o'panies already provide 'o&ile internet servi+es in the +o%ntry. All the 'ajor I#Ps of Ban.ladesh are providin. the internet servi+e %sin. the satellite links very s'all apert%re ter'inal 8;#A/s9. *0in. to de-re.%lation of ;#A/ poli+y &y
40

the .overn'ent in !e&r%ary 2000, the n%'&er of I#Ps has .ro0n to 1B: 0ith individ%al &and0idth ran.in. fro' H k&ps to 2 M&ps, offerin. &road&and internet servi+es thro%.h D#3L>D#3 'ode's. All H distri+ts and C: per+ent %pa7illas 8s%&-distri+ts9 in Ban.ladesh has &een &ro%.ht %nder internet +overa.e &y B//B thro%.h dial-%p +onne+tions. /his esta&lished Internet infrastr%+t%re +an easily deploy and a++elerate e&ankin. servi+es in Ban.ladesh providin. &anks as 0ell as .overn'ent take initiative properly.

0. "'T Penetration in 1inancial Sector:

/he finan+ial se+tor of Ban.ladesh is do'inated &y the &ankin. syste'. /he overall pi+t%re of +o'p%teri7ation in the &ankin. se+tor is presented in the follo0in. /a&le< D *ther than !"Bs, the +o'p%teri7ation stat%s is +on+entrated only in li'ited n%'&er of &ran+hes 'ainly in 'ajor +ities. *nly 1,1C1 &ran+hes have at least one +o'p%ter net0orked-&ased syste' is very li'ited in the 5"Bs and P"Bs. *nly C0 per+ent of &anks have inter-&ran+h +onne+tivity thoro%.h I"/ net0ork 8$A59. 5"Bs is the %ni6%e 'arket player 0ith 'ore than :0 per+ent of 'arket share, so I"/ penetration is 'ore +r%+ial for this +ate.ory of &anks. 5"Bs are tryin. to i'prove the I"/ penetration thro%.h inte.ratin. re.ional offi+es %sin. hi.h-ran.e 'ainfra'e syste's. At the head offi+e level, B:. : per+ent of &anks %se &ankin. soft0are, 2 types of &ankin. soft0are are %sed. A'on. the &ankin. soft0are %sed in the &anks :1. M per+ent have &een developed in ho%se, M.0H per+ent are off-the-shelf 8*/#9, only 1. M per+ent are %sin. */# and in ho%se soft0are. Most of the &anks have 'ana.e'ent infor'ation syste'. >o0ever, only CA per+ent MI# are inte.rated to the transa+tion pro+essin. syste'. Re+ently, a n%'&er of +o''er+ial &anks of Ban.ladesh have &e+o'e the 'e'&er of Bel.i%'-&ased #o+iety for $orld0ide Inter-&ank !inan+ial /ele+o''%ni+ation 8#$I!/9. !or international pay'ent settle'ent, CC per+ent of &anks are %sin. no0 #$I!/. $ith the a+tivation of the #$I!/ syste' &ank enjoy instant, lo0-+ost, speedy and relia&le +onne+tivity for 3L" transa+tion, f%nd transfers, 'essa.e +o''%ni+ation and
41

0orld0ide finan+ial a+tivities. ,arlier, only forei.n &anks of this +o%ntry 0ere availin. the fa+ility.

2. Electronic Banking in Bangladesh:

/he forei.n &anks are the pioneers in adoptin. ele+troni+ &ankin. in Ban.ladesh. Most of the forei.n &anks are %sin. the +o'p%teri7ed transa+tion syste' and takin. advanta.e of the s%perior te+hnolo.y &y attra+tin. +%sto'ers and providin. inter-&ran+h and inter-&ank linka.e. !orei.n &anks thro%.h s%++essf%l %se of a .lo&al net0ork have in+reased the ti'eliness and a++%ra+y of infor'ation, &enefitin. its +%sto'ers, e'ployees and also 'ana.e'ent. A &road spe+tr%' of internet &ankin. servi+es, a s%&set of ele+troni+ finan+e, is availa&le in Ban.ladesh 0ith different de.ree of penetration. /he +redit +ard is availa&le fro' ;I#A, Master"ard and ;A5IG. #o'e forei.n &anks provide ele+troni+ f%nd transfer 8,!/9 servi+es. It is at an early sta.e and %sed on a very li'ited s+ale. Mi+ro+hips e'&edded #'art "ard is also &e+o'in. pop%lar in the +o%ntry, parti+%larly for %tility &ill pay'ent. A%to'ated /eller Ma+hine 8A/M9 is e1pandin. rapidly in 'ajor +ities. A .ro%p of do'esti+ and forei.n &anks operate shared A/M net0ork, 0hi+h drasti+ally in+rease a++ess to this type of ele+troni+ &ankin. servi+e. /he net0ork 0ill .rad%ally &e e1tended to other parts of the +o%ntry. *nline +orporate &ankin. 8M.M per+ent9, ,!/ 81:. per+ent9, A/M 8C1. per+ent9, de&it +ard 8C. per+ent9, internet &ankin. 8M.M per+ent9, and any &ran+h &ankin. 82C.1 per+ent9 are the 'ajor internet &ankin. servi+es provided &y the &ankin. se+tors in Ban.ladesh 8"PD, 20019.

8. egal and /egulator, Prospect to E-Banking:

/he iss%es of infor'ation prote+tion and .%arantee of relia&ility and se+%rity is i'portant. /he la+ks of intelle+tion property prote+tion, data se+%rity and interopera&ility have ne.ative i'pa+t on &oth the %se of I/ and in+entive to introd%+e I/ prod%+ts into the 'arket. "o'p%ter +ri'es s%+h as soft0are pira+y, %na%thori7ed %seL+opyin. of soft0are +o'p%ter fra%d, &a+kin. and da'a.e to pro.ra's and data and introd%+in.Lspreadin. +o'p%ter vir%ses sho%ld &e +overed &y appropriate penal +odes.
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"ertain re.%lations 8s%+h as the IPR &ill, the ,viden+e A+t9 have the +apa&ility of fa+ilitatin. the s+ope of internet &ankin.. /he ne0 IPR &ill of Ban.ladesh +on+entrates 'ainly on soft0are +opyri.ht prote+tion. >o0ever, the internet &ankin.-related +opyri.ht prote+tion is not +overed in the ne0 IPR. An initiative for in+l%din. these iss%es into the IPR is needed for the advan+e'ent of internet &ankin..

9. )+erall Prospects:
/he overvie0 of the le.al and re.%latory stat%tes s%..ests that Ban.ladesh have 'ade si.nifi+ant pro.ress in fa+in. the +hallen.es of .lo&ali7ation and +on+%rrently, e'&ra+in. internet in the &ankin. servi+es in d%e +o%rse. /e+hnolo.i+al and infrastr%+t%ral +onstraints to internet &ankin. +an &e over+o'e if e1istin. la0s and re.%lations are i'ple'ented. A &etter %nderstandin. of the potential &enefits of internet &ankin. &y the poli+y 'akers and &%rea%+rats is essential for a speedy i'ple'entation and f%rther refor's.

A. Go+ernment Polic,:
In order to e1pansion of internet &ankin., in A%.%st 2001, "enter for Poli+y Dialo.%e 8"PD9 arti+%lated several prin+iples that +o%ld &e the fo%ndation for .overn'ent poli+y in Ban.ladesh, in+l%des<

Pro'otin. and preservin. +o'petition &y introd%+in. +o'petition to 'onopoly phone 'arkets, and ens%rin. inter+onne+tion at fair pri+es. (%aranteein. open a++ess to net0orks on a dis+ri'inatory &asis, so that %sers have a++ess to the &roadest ran.e of infor'ation and servi+es. "entral &ank sho%ld provide so'e 'arket in+entive for the &anks to i'ple'ent I"/ in the finan+ial se+tor. /here sho%ld &e a +o'prehensive plan to 'oderni7e the operation of the +entral &ank to s%pport a%to'ated +learin. servi+e and %pdate s%pervisory and re.%latory r%les for a&sor&in. I"/-&ased &ankin..

!or attra+tin. forei.n +%rren+y thro%.h e-+o''er+e and internet &ankin. Ban.ladesh Bank sho%ld %ndertake a pilot proje+t to e1peri'ent the +ross+%ttin. iss%es.

2.(1indings of the stud,:

43

,le+troni+ &ankin. 8,-&ankin.9 is still .ro0in. in Ban.ladesh. /he 'ajor o%t+o'es of internet &ankin. in Ban.ladesh 8fro' o%r point of vie0 +onsiderin. the report9 are< Private +o''er+ial &anks and forei.n &anks offer a &roader ,-&ankin. servi+es then state o0ned &anks. 5ationali7ed &anks operate 'ore &ran+hes havin. #$I!/ +ode then forei.n and private +o''er+ial &anks. Private +o''er+ial &anks and forei.n &anks %se 'ore %pdated &ankin. soft0are then nationali7ed &anks. All of the &anks in o%r sa'ple tend to have and esta&lish 'ore A/M &ooth in 'etropolitan areas 0here pop%lation density is hi.her. ,le+troni+ &ankin. 8,-&ankin.9 is s%pportive for &%ildin. a )Di.ital Ban.ladesh2. $ith the help of internet &ankin. +lients +an .et 'oney 6%i+kly fro' a&road +o%ntry. ,le+troni+ Bankin. syste' is spreadin. 6%i+kly in Ban.ladesh. People feel se+%re the ,le+troni+ transa+tion in Ban.ladesh and ,le+troni+ &ankin. 8,-&ankin.9 red%+es the 0asta.e of ti'e. $ith the help of internet &ankin. it is easy for Bankers to provide de+ent servi+es to their +lients. /hro%.h the 0eaknesses of se+%rities of so'e &anks it is easy for ha+kers to +ond%+t their ha+kin. a+tivities 0hi+h are %ne1pe+ted to the %sers of the syste'.

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2.-/ecommendations:
In addition, several steps 'ay &e +onte'plated in order to a++elerate the adoption of ,le+troni+ &ankin.< K The Bangladesh Bank ma, consider the follo4ing steps: /ake steps to orient &ank offi+ials on &enefits of internet &ankin.. !or instan+e, BB 'ay offer short +o%rses. Provide ade6%ate trainin. and te+hnolo.i+al s%pport to develop the 'anpo0er. /o avoid risks involved in ,le+troni+ &ankin., risk 'iti.ation poli+ies and strate.ies need to &e adopted as a part of the pa+ka.e approa+h to i'ple'entin. ,-&ankin.. Banks sho%ld have ade6%ate resear+h and te+hnolo.i+al &a+k.ro%nd in this re.ard. K 1or the scheduled banks; it is important to: Revie0 their &%siness strate.y and +reate the re6%ired spa+e for adoptin. ,&ankin. servi+es in order to re'ain +o'petitive and attra+t ne0 +%sto'ers. #tren.then I"/ depart'ent thro%.h providin. trainin. to I/ personnel and pro+%rin. re6%ired hard0are and soft0are. "reate separate %nit in ea+h &ran+h for renderin. I"/ related operational a+tivities %nder the s%pervision of the I"/ depart'ent.

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 /rain all staff in &asi+ I"/ related 'atters in phases. Provide ade6%ate trainin. and te+hnolo.i+al s%pport to develop the 'anpo0er. Bank +an +har.e nor'al profit to enlar.e the 'arket si7e on the ele+troni+ &ankin. prod%+ts. As e-&ank %sers 'ostly %se A/Ms and P*# in 'ost +ases, the &anks sho%ld e'phasi7e on providin. %ninterr%pti&le servi+e. K 1or the Go+ernment; it is important to: (overn'ent sho%ld i'ple'ent the +y&er la0s to ens%re proper se+%rity a&o%t +%sto'ers infor'ation 8i.e. "redit +ard n%'&er9 (overn'ent sho%ld esta&lish proper ed%+ational instit%tion to +reate effi+ient I/ professionals to s%pport e-&ankin. in Ban.ladesh. (overn'ent, in +olla&oration 0ith the &anks, sho%ld ed%+ate and infor' its +iti7ens and +%sto'ers on the 0orka&ility and effe+tiveness of ,-&ankin.. /his 0ill in+rease the +onfiden+e level of +%sto'ers. /he +learin. ho%se operation in Ban.ladesh sho%ld &e f%lly a%to'ated syste'. Politi+al +o''it'ent to i'prove .overnan+e and instit%tional stren.th is essential for s%++essf%l appli+ation of e-&ankin.. (overn'ent sho%ld +o'pel the &ankin. se+tors to a%to'ate their operation and .oin. online &y a spe+ifi+ period.

2.0 'onclusions:
,-&ankin. as a vehi+le to &oost %p trade, espe+ially international trade has already &een re+o.ni7ed &y international &%siness +o''%nity, espe+ially in ,%ropean Union, 5orth A'eri+an and so'e of the other developed nation like Fapan, #in.apore, and >on. Gon. et+. >o0ever e-&ankin. and its related te+hnolo.ies are still in its infan+y sta.e in Ban.ladesh. #in+e the 0orld is 'ovin. to0ards e-everythin., so 0e sho%ld try to over+o'e all the &arriers and also try to develop s%+h environ'ent that is favora&le for the develop'ent of ,-&ankin.. In order for ,-&ankin. to +ontin%e to .ro0, the se+%rity and the priva+y aspe+ts need to &e i'proved. $ith the se+%rity and priva+y iss%es resolved, the f%t%re of ,-&ankin. +an &e very prospero%s. /he f%t%re of ele+troni+
46

&ankin. 0ill &e a syste' 0here %sers are a&le to intera+t 0ith their &anks P0orry-freeP and &anks are operated %nder one +o''on standard. A 0ell-f%n+tionin. internet &ankin. net0ork is dependent on availa&ility of a &a+k&one net0ork +onne+tin. the 0hole +o%ntry4 relia&le and se+%re infor'ation infrastr%+t%re in+l%din. tele+o''%ni+ation infrastr%+t%re4 I"/ penetration in the &ankin. se+tor4 skilled operational personnel4 and le.al and re.%latory fra'e0ork. /he .overn'ent, Ban.ladesh Bank and s+hed%led &anks are related to these iss%es. /herefore, &oth individ%al and joint efforts are needed to over+o'e the +onstraints in pro'otin. internet &ankin. in the +o%ntry.

Bibliograph,:
I. Moha''ad A7i7%l Baten, PhD, ,-Bankin. of ,+ono'i+al Prospe+ts in Ban.ladesh, Fo%rnal of Internet Bankin. and "o''er+e, A%.%st 2010, vol. 1:, no.2 Md. A&d%l >annan Mia, Moha''ad Anis%r Rah'an, Md. Main Uddin ,Bankin.< ,vol%tion, #tat%s and Prospe+ts Moha''ad Mi7an%r Rah'an, ),-Bankin. in Ban.ladesh< #o'e Poli+y I'pli+ations2 $e&sites of +on+erned &ank Isa&elle /.D. #7'i.in et al, ),le+troni+ +ash< a 6%alitative assess'ent of its adoption2, International Fo%rnal of Bank Marketin., 1ML Q1BBBR 1B2S202, T M"B University Press.
,le+troni+ &ankin. fro' a pr%dential s%pervisory perspe+tive.82000,De+e'&er9. De%ts+he B%ndes&ank Monthly Report. ,-&ankin., UR3< 8http<LL000.a'eri+an.ed%Linite&Lr0B2:MaL&ankin..ht'9

II. III. I;. ;.

;I. ;II.

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