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The purposes of this report were to gather practical knowledge about corporate online
banking as well as personal online banking system. It also gave us an opportunity to know about
the experts who are leading and making strategic decisions to enhance the expansion of online
banking in our country. With the set guidelines and proposal by our faculty and with the friendly
cooperation of the staffs of HSBC, this report comprise of an organization and project part.


The scope of this report is limited to the overall description of the company, its services
and its organizational setup, technology, technical support. The report will mainly focus on the
overview of Online Banking of HSBC Bangladesh and its strategies.


Both the primary as well as the secondary form of information was used to prepare the
report. The details of these sources are highlighted below.

Primary Sources

 Major sources of primary information were interviews with members of the staff of

Secondary Sources

 Internal Sources

• HSBC Bank's Annual Report

• Online Banking Manual

 External Sources

• Website information
• Journal Published in newspaper

One of the main barriers in writing this report was the confidentiality of data.

Executive Summary
Online banking is a new dimension in this era of revolution of information technology and
the Internet technology has added a new ripple in the wave of automation of the service delivery
system. Banking is a service-oriented industry and all the banks are endeavoring to bring
qualitative change in their service delivery system by adopting the most up-to-date version of
technology to keep sharpen the competitive edge with other competitors in the banking industry.
The challenge for the banking industry has been to design this new service channel in such a
way that its customers will readily learn to use and trust it. After all, banks have spent
generations earning our trust; they aren't about to risk that on a Web site that is frustrating,
confusing or less than secure.
HSBC (Hong Kong and Shanghai Banking Corporation) is surely using their Internet
banking facility as a sheer strength for their business to become the world’s leading financial
services company. There Internet banking is also taking part in the advance ways of banking in
our country.
Internet Banking
The number of customers who choose Internet banking as their preferred method of dealing with
their finances is growing rapidly. Online banking (or Internet banking) is a term used for
performing transactions, payments etc. over the Internet through a bank's secure website. First-
ever online Banking system was introduced in the American Bank namely Wells Fargo Bank of
California back in the year 1990 and within a few years of launching, this banking system got
momentum worldwide. Now almost all the big-size banks in Europe, America and in other parts
of the world introduced on-line banking to provide 24-hour automated services to their
constituents. In Bangladesh Standard Chattered (2000) first introduced online banking service.
This can be very useful, especially for banking outside bank hours (which tend to be very short)

and banking from anywhere where Internet access is available. Online banking isn't out to
change the usual money habits. Instead, it uses today's computer technology to give the option
of bypassing the time-consuming, paper-based aspects of traditional banking in order to manage
our finances more quickly and efficiently.

The advent of the Internet and the popularity of personal computers presented both an
opportunity and a challenge for the banking industry. For years, financial institutions have used
powerful computer networks to automate millions of daily transactions. Today, often the only
paper record is the customer's receipt at the point of sale. Now that its customers are connected
to the Internet via personal computers, banks envision similar economic advantages by adapting
those same internal electronic processes to home use. The challenge for the banking industry has
been to design this new service channel in such a way that its customers will readily learn to use
and trust it. After all, banks have spent generations earning our trust; they aren't about to risk
that on a Web site that is frustrating, confusing or less than secure. Today, most large national
banks, many regional banks and even smaller banks and credit unions offer some form of online
banking, variously known as PC banking, home banking, electronic banking or Internet banking.
Those that do are sometimes referred to as "brick-to-click" banks, both to distinguish them from
brick-and-mortar banks that have yet to offer online banking. Banks view online banking as a
powerful "value added" tool to attract and retain new customers while helping to eliminate
costly paper handling and teller interactions in an increasingly competitive banking
In this project we will talk about the Online Banking System of Hong Kong and Shanghai
Banking Corporation (HSBC) Ltd. in Bangladesh. It will also include the possibility of the
growth of online banking system in our country.

HSBC Today

The HSBC Group is named after its founding member, The Hongkong and Shanghai
Banking Corporation Limited, which was established in 1865 in Hong Kong and Shanghai. It is
one of the largest banking and financial services organizations in the world, with well-
established businesses in Europe, the Asia-Pacific region, the Americas, the Middle East and

The skyline of Sydney, featuring the top of

HSBC Bank Australia’s head office in George
Street. HSBC Bank Australia was established
as a subsidiary

Head office HSBC Holdings plc is incorporated in England, with its head office in
International brand The establishment in 1999 of HSBC as a uniform, international brand
name ensured that the Group’s corporate symbol has become an
increasingly familiar sight across the world. HSBC differentiates its
brand from those of its competitors by describing the unique
characteristics that distinguish HSBC, summarized by the words ‘The
world’s local bank’.
Assets US$1,154 billion (£636 billion, HK$9,001 billion) at 30 June 2004
Profit (pre-tax) US$10,251 million (£5,628 million, HK$79,825 million) for the first
six months of 2004 (excluding goodwill amortization).
Capital strength Tier 1 capital ratio: 9.3%}at 30 June 2004.Total capital ratio:12.4%
International reach About 10,000 offices worldwide.
Staff 232,000 employees in 76 countries and territories.
Customers Over 110 million worldwide, with a total e-customer base of more
than 16.5 million

HSBC Group Vision:

• To become the world’s leading financial services company.

• Balance group earnings between the OECD and the Emerging markets

HSBC in Bangladesh
The HSBC Group is represented in Bangladesh by its Head Office in Dhaka (Sonargaon
Road), a second full-service branch in Chittagong (Agrabad) and two booths in Gulshan and
Motijheel with a vision to satisfy its customer with high quality service that reflects its global
image as the premier International Bank. The Bank has recently opened another branch in
Dhanmondi. The Bank has been serving customers in Bangladesh since 1996. It has also an
Offshore Banking Unit, which provides banking services for foreign companies based in the
Export Processing Zones in Dhaka and Chittagong. HSBC has been offering Internet banking
service from 2001 in Bangladesh.

HSBC Bangladesh Overview

Name of the The Hong Kong Shanghai Banking Corporation

Organization Bangladesh LTD
Year of Establishment 1996
Head Office Anchor Tower, 1/1-B Sonargaon Road Dhaka 1205,
Nature of the Multinational company with subsidiary group in
organization Bangladesh
Shareholders HSBC group shareholders
Products Internet Banking
Savings & deposit services
Loan products
Corporate and Institutional services
Trade services
Management Mr. David C. Griffith
Chief Executive Officer
Mr. Mamoon Mahmood Shah
Head of Personal Financial Services
Mr. Adil Islam
Head of Corporate Banking
Mr. Syed Akhtar Hossain Uddin
Human Resource Manager
Mr. Munir Hussain
Marketing Manager
Mr. Wasim Adnan Wahed
Chief Operating Officer
Number of Offices 5 (Dhaka, Motijheel, Gulshan, Dhanmondi &
Number of ATM’s 10
Online Address
Number of employees 200
Technology Offers full online banking from branch to branch and
also from Dhaka to Chittagong.
Service Coverage & Serves individual and corporate customers within
Dhaka & Chittagong.
HSBC Bangladesh- Mission Statement

HSBC in Bangladesh is committed to being the country’s leading international financial

services organization, a leader in chosen markets. They also want to be recognized by its clients
as proactive, responsive, competitive and secure.


• To deliver service excellence to all the customers, both internal and external.
• To constantly challenge the systems, procedures and training to maintain a cohesive and
professional team in order to achieve service excellence.
• To create an enabling environment and embrace a team based culture where people will
excel and also to ensure to maximize shareholder's value
Functional Departments of HSBC Bangladesh

HSBC activities are performed through functional departmentalization. So, the

departments are separated according to the functions. There are 6 major functional
departments at HSBC. All the departments will continuously liaise with IT and IB(Internet
banking) operations unit and supply required information to them through proper channel.
Respective departments will always update IT regarding any changes and development which
need to be reflected in the web site departments will be responsible for clarity and accuracy
of the information in the web site related to them. Brief functional descriptions of these
departments are discussed below:

Chief Executive
Officer (CEO)

Human Financial Personal Corporate

Services Marketing
Resources Control Banking Banking

Administration Administration Foreign DAK Branch Trade Services Direct Sales


Development IT Payment Chittagong Institutional Promotion

Branch Banking

Internal Treasury Dhanmondi Hexagon Marketing

Control (IC) Branch Administration

Network Motijheel
Service Booth


Bond, ATM &


Figure: Functional Departments of HSBC

HSBC Bangladesh carries out all traditional functions, which a commercial Bank
performs such as mobilization of deposit, disbursement of loan, investment of funds, financing
export & import business, trade & commerce & so on. Besides it also offers some specialized
services to its customers. These services are also offered in online. Products & services offered
by HSBC can be categorized according to the customers they serve. The summary of all the
products and services of HSBC Bangladesh is displayed in the following page.

Service Offered Over Online

Internet Banking service is a great way to save a trip to the high street, it's secure and best
of all it's free – customer only pay for the cost of accessing the internet.

With HSBC Banking Account, it is no longer necessary to call the Bank or go to any of the
branches/ATMs. Just need logon from HSBC web page from ANY appropriate Internet enabled

• View balances and transactions

• Make payments to other HSBC accounts
• Manage your standing orders and Direct Debits
• Statements can be downloaded
• Transfer money between your accounts
• Update personal details, including mailing address and email address
• Thoose the frequency of paper statements or stop them all together
• All 24 hours a day.

Paying bills any time of day and night is as easy and accessible than ever before with HSBC
online services.

Bangladesh Telephone & Telegraph Board.

Dhaka Electric Supply Company Ltd.

Dhaka WASA
Grameenphone Ltd.

American Life Insurance Co Ltd.
Eligibility for Using Internet Banking Service

Any individual customer can apply for using Internet Banking service. Both retail and
corporate customer must have these following eligibilities to use online service.

1. Customer must have a Current and Savings account with HSBC.

2. Customer submits filled in Internet Banking Application Form
3. Customer agrees (through signing) that he read and understood the terms and
conditions of Online Banking and agrees to follow those.

After fulfilling these terms user is given a User ID and Password to log on in the bank’s
secure website and do online banking. This ID and Password are unique secret words/characters
to each user to ensure confidentiality. A customer needs both of them to login into the web page.

Requirements For The

Pentium Processor - 500 MHz (min) / 600 MHz and above
Main Memory (RAM) - 256 MB (min) / 512 MB and above
Disk Space (virtual memory) - 384 MB (min) / 768 MB and above
Temporary Internet files folder - +-50MB (min) / +-500MB
IE 5.5 - Recommended - only with Microsoft JVM 3805 or higher. Service Pack 2 is

Windows 98/98SE/ME
Windows NT 4.0 (SP6)
Windows 2000 Pro (SP2 and above)
Windows XP Professional or Home edition (SP2 recommended)
Technological Setup for Online Banking Systems

Online banking is possible only if the concerned branches are linked through Wide Area
Network (WAN). Although most of the branches in Bangladesh have introduced
computerization, the software is not yet, in most cases, centralized. Centralized software ensures
better security, strong monitoring system and easy accessibility of data at Head Office level of a
bank. In case of HSBC, they strictly maintain a central database in regional Head office of Hong
Kong as well as in Dhaka. Thus, they always have a backup database to use in case of
emergency and unavoidable circumstances. Unfortunately the indigenously developed software,
which is currently in use in the local banks, is not in a position to respond to the ever-increasing
demand of the clients.
Apart from this, for connecting the individual branches HSBC has a centralized communications
system with the help of HUB (HSBC Universal Banking System). HUB is developed by the
programmers who extensively work for HSBC. These highly skilled programmers are devoted to
overall HSBC software and networking system throughout the world (United Kingdom, USA
Mainland, China and Hong Kong, Africa, Middle East). HSBC networking system has
already cope up with our concurrent communication infrastructure. Therefore, they have already
synchronized their setup with all available connectivity.
A few years back, we got an opportunity to have Fiber Optics connectivity, which could provide
a range of multifarious communication facilities in information and Communications
Technology (ICT) including worldwide Internet faster accessibility. Because of our folly, we
could not take advantage of the Fiber Optics system, which we could probably get free of cost if
we decide in favor of it a few years back. Although we have finally agreed to go for Fiber Optics
communication system, we have to fairly a high price for the service now and the whole thing
has been delayed by a couple of years. So, in the absence of Fiber Optics communication system
HSBC currently using radio link, DSL for connectivity between short distanced local HSBC
banks and VSAT(Very Small Apertures Terminal) for long distanced branches like
Chittagong to Dhaka. But VSAT is expensive and not fully proof from security point of view.
For Real-Time Online system which will allow the clients to hit their accounts with the bank, we
need centralized ISO standard world class computer software, which is again rather expensive
and only a few banks in our country have so far been able to afford such highly efficient
software and HSBC is one of the leading pioneer in this regard. Many of the local banks are

currently in the process of procuring such world-class software.

Banks in Bangladesh are in a transition period. Only a few banks, which could by now acquire
world-class centralized computer software, are in position to provide real-time online facilities
to the clients. Most of the other banks are on offline banking system, which implies that the
clients can still draw cash from a branch having an account in some other branch with or without
an arrangement with the bank. Only after procuring world-class centralized software all the
banks will be able to provide real-time online banking facilities to the clients.

HSBC Network Function

Internet offers the Banking industry a global inexpensive delivery mechanism for online
banking. The rapid growth of Internet banking driving the need for scaleable, reliable, and
flexible e-Banking systems. To meet performance and scalability requirements of growing user
populations Banks are forced to find alternative systems that meet current needs and can scale to
meet anticipated user growth over the next 3 to 5 years without disruption.

From the stand point of HSBC, the picture remains the same. But relying on internet has never
been easy for security reason and HSBC is adequately concerned about this factor. Keeping this
key factor HSBC has organized its’ whole network system accordingly.

From the major financial centers of the world to the remote branch locations, we use one
hardware platform family from a single vendor,” said Cureton (Head of telecommunications
group of HSBC) “Using one architecture and being able to control the network from a single
point, we can dramatically reduce the network management resources required. Thus it helps to
concentrate on solving problems with network management resources. They concentrate on
solving problems with carriers and maximizing the use of their bandwidth. The HSBC Group
Wideband Network (GWN) offers an integrated suite of services that supports the primary
communications requirements of HSBC’s regional and local subsidiaries, including Hong Kong
The GWN employs a variety of different types of digital circuits from over 30
international and domestic carriers, including fractional T1/E1 services. The GWN uses General
DataComm’s Transport Management System (TMS) 3000 and Office Communications Manager
(OCM) internetworking platforms for its core technology. The GDC products integrate and
manage each office’s voice, fax and data applications. Each Group subsidiary has very different
telecommunications needs, which HSBC has integrated using a single family of products from
GDC. By standardizing on the GDC OCM platform, the HSBC Group is consolidating all voice
and data traffic onto common high-speed digital links and bringing the sophistication of the
network backbone down to the branches, regardless of their location.

Using the OCM, HSBC can extend the network anywhere in the world, interconnect
buildings at T1 and E1 transmission rates, and offer seamless integration between computer
enters, head office buildings and branches. This can offer in-house T1 or N x 64 Kbps lines
within a building.

About The OCM

The GDC Office Communications Manager is an internetworking platform that integrates
voice, fax, data, fractional channels, LAN and Frame Relay onto one common hardware and
management platform. The OCM is available in several versions (each either standalone or rack
mountable), and in either point-to-point configuration or as a multi-aggregate feeder platform
feeding services to a TMS 3000.

Centralized Management
The GWN is centrally managed, using GDC’s PC-based network management
software, from the Global Data Network Control Center (GDNCC) in Hong Kong Bank’s
radically-designed Head Office at 1 Queen’s Road Central in Hong Kong. In the event of a
disaster, the entire network can be administered, using the same corporate procedures, from
Buffalo, London or Hong Kong, within minutes.
“In Asia things move rapidly,” said Cureton. “We’re using GDC’s TMS and OCM products
on top of national carrier, alternative carrier and our own private VSAT service to provide a
reliable and highly managed network to deliver banking products to our customers. We’ve been
in Asia for well over a century and are very familiar with the way business is conducted here.
Rapid and reliable service is a must. The GDC OCM makes it easier to deliver such service in a
controlled fashion.”

Apart from this, for connecting the local branches with Hong Kong and Shanghai Banking
Corporation, there is a centralized communications system with the help of HUB (HSBC
Universal Banking System), which is developed by the programmers who extensively works
for HSBC. These highly skilled programmers are devoted to overall HSBC software and
networking system throughout the world (United Kingdom, USA Mainland, China and Hong
Kong, Africa, Middle East). In HSBC Bangladesh Head office, there is a central database, which
is synchronized to Hong Kong and Shanghai Bank through VSAT. Besides, Hong Kong Head
Office can maintain monitoring through VSAT in different time shift. As we know VSAT has
efficient bandwidth for online transaction therefore, it makes the transmission smoothly. HSBC
networking system has already coped up with our concurrent communication infrastructure.
Therefore, they have already synchronized their setup with all available connectivity.

At individual level HSBC provide Hexagon software (now its’ distribution is limited) for
users to access their server. User is given a range of number through which he/she can get access
to the HSBC account for necessary information and action. Users have to have the following
components to login into HSBC server. Although logging from HSBC online server is also
possible. Using a unique Internet Banking ID with First, Fourth and Last security number
any online account holder can log in to his account. Users are instructed through proper
guidelines provided by HSBC to make sure privacy is well kept. They maintain this commitment
to data security by implementing appropriate physical, electronic and managerial measures to
safeguard and secure the personal data. The secure area of the website of HSBC supports the use
of Secure Socket Layer (SSL) protocol and 128-encryption technology – an industry standard
for encryption over the Internet to protect data. When customer provides sensitive information
such as credit card details, it will be automatically converted into codes before being securely
dispatched over the Internet. Besides SSL there are constantly active firewalls to prevent
unauthorized access.
Although we have finally agreed to go for Fiber Optics communication system, we have to
fairly a high price for the service now and the whole thing has been delayed by a couple of
years. So, in the absence of Fiber Optics communication system HSBC currently using radio
link, DSL for connectivity between short distanced local HSBC banks and VSAT(Very Small
Apertures Terminal) for long distanced branches like Chittagong to Dhaka. Though usage of
VSAT is expensive but keeping the integrity of valuable data is even more important.

The following system diagram represents a typical large-bank Internet banking

implementation. The firewalls, routers, and network hubs can be whatever the financial
institution prefers.
The following diagram also illustrates how the platform stores bill payment and

presentment data as well as external data that supplement the data from back-end systems. The

database includes session activity information in an audit log for review by the financial

institution. The personalization database stores personalized customer preference settings within
the platform. This permits the bank to define look-and-feel for various customer segments, and

allows the customer to create additional personalization settings.

HSBC Web Interface

Online Banking is a new concept for Bangladeshi people. Besides, average people don’t
want to use online banking because of complex procedure. Therefore, HSBC has developed a
user friendly web interface to make Online banking more interactive and easy going. They even
included a Demo Tour for novice users, which is as follows:

Step-1 (Logging in)

Step-2 (Security assurance)

Step-3 (Logged in)

Checking Account statement, Standing orders and Direct orders
Privacy and Security
HSBC's Privacy Principles:

Business is built on trust between the customers and the company. To preserve the
confidentiality of all information that the customer provide to HSBC, they maintain the
following privacy principles:

1. HSBC only collect personal information that they believe to be relevant and required to
understand one’s financial needs and to conduct their business.
2. They use the personal information to provide better customer services and products. If
they ask to provide personal information, they will always specify the purpose for which
such personal information is collected and ensure that it is only used for the purpose
specified at the time of collection.
3. They may pass the personal information to other HSBC Group companies or agents, as
permitted by law.
4. They will not disclose any personal information to any external organization unless they
have the consent or are required by law or have previously informed the customer.
5. They may be required from time to time to disclose any personal information to
Governmental or judicial bodies or agencies or our regulators, but they will only do so
under proper authority.
6. They aim to keep customer’s personal information on their records accurate and up-to-
7. They maintain strict security systems designed to prevent unauthorized access to any
personal information by anyone, including their staff.
8. All HSBC Group companies, all their staff and all third parties with permitted access to
the information are specifically required to observe the confidentiality obligations of

By maintaining the commitment to these principles, HSBC will ensure that they respect the
inherent trust that people place in them.
Security Technology

 Security is the top priority. The Hong Kong and Shanghai Banking Corporation
Limited ('the Bank') will strive at all times to ensure that personal data will be
protected against unauthorized or accidental access, processing or erasure. They
maintain this commitment to data security by implementing appropriate physical,
electronic and managerial measures to safeguard and secure the personal data. The
secure area of the website of HSBC supports the use of Secure Socket Layer (SSL)
protocol and 128-encryption technology – an industry standard for encryption over
the Internet to protect data. When customer provides sensitive information such as
credit card details, it will be automatically converted into codes before being securely
dispatched over the Internet. Besides SSL there are constantly active firewalls to
prevent unauthorized access.

 21 layers of security system protect their web servers and the systems are constantly
monitored to prevent any unwanted access. HSBC will not send personal information
to any of the customers by ordinary email.

All practical steps will be taken to ensure that personal data will not be kept longer than
necessary and that the Bank will comply with all statutory and regulatory requirements
concerning the retention of personally identifiable information.

Security Assurance

 Both the customer and HSBC play an important role in protecting against online
fraud. Any person who is using the online banking system should be careful that the
bank account details including the User ID and/or Password are not compromised by
ensuring that the customer do not knowingly or accidentally share, provide or
facilitate unauthorized use of it. User ID and/or password should not be shared with
others and allow access or use of it by others should be forbidden. They endeavor to
put in place high standards of security to protect customer’s interests. If, in the
unlikely event, unauthorized transactions have been conducted through one’s account
through no fraud, fault or negligence on one’s part, they will see that s/he is covered
for the direct loss up to the full amount of the unauthorized transaction.
 Customer should safeguard his/her unique User ID and Password by keeping it secret
confidential. It should not be written down or share the details with anyone. HSBC
will never ask for the Internet Banking Password, in order to ensure that the customer
is the only person who knows this information. When choosing the unique User ID
and Password for the first time, it should not created by using easily identifiable
information such as birthday, telephone number or a recognizable part of the name. If
the customer thinks that the User ID and/or password has been disclosed to a third
party, is lost or stolen and unauthorized transactions may have been conducted, s/he
should inform them immediately.

Security Steps

Ensuring safe and secure online transactions

As a bank HSBC is used to think about security. The internet brings new risks that must also be
recognized and guarded against. Therefore, HSBC use industry standard security technology and
practices, focusing on three key areas – privacy, technology and identification so they can
safeguard accounts from any unauthorized access.

• Privacy

• Technology

• Identification


We use industry standard encryption within our Internet banking services

Secure sessions

When you log in to Internet Banking you are said to be in a “secure session”. You know you are
in a secure session if the URL address begins with https:// or a padlock symbol appears in the
lower right hand corner of your browser.

Secure Socket Layer (SSL) technology is used within your Internet Banking session to encrypt
information before it leaves the computer. This ensures that no one else can read it. Depending
on your browser settings, a pop-up window may appear to tell you that you are entering a secure

Encryption converts your data into an encoded form before it's sent over the Internet. This stops
any unauthorized users from reading the information. At HSBC, we use 128-bit SSL Encryption,
which is accepted as the industry standard.

Session Time-out

If user forget to log-off after banking online, or if user’s computer remains inactive for a period
of time during a session, then the systems automatically log off the user. Pages viewed during a
secure session are not recorded in user’s PC's temporary files.


HSBC use many layers of security – for obvious reasons they cannot disclose all of them, but
the following are typically used:

• All the operating systems are updated with the latest security patches
• Anti-virus software is kept updated
• They use firewalls to prevent unauthorized intruders
• Digital certificates are used


A log on process with passwords and digital certificates is used to be sure that HSBC is dealing
with its clients. Online access to the account is only possible once user has authenticated himself
by using the correct user name, password and digital certificate.
Automatic Lock-out

After a number of incorrect attempts to log on, online access to that account is disabled. To re-
activate the account, user can use the online password reset function of HSBC. Although HSBC
maintains security at high priority, precautious steps at individual level are also highly
recommended. Therefore, HSBC recommends five important factors.

The Five Golden Rules for both Personal and Business Online Banking

• Usage of latest security updates & patches.

Helpful information about vulnerabilities in programs and how to find the fixes.
• Install anti-virus software.
Learn about commercial and free anti virus protection products.
• Use of personal firewalls
A firewall is a program that helps protect your computer from internet-borne threats, such
as potential hackers and offensive websites.
• Read our password advice
Passwords are the key to the Internet account information so it’s important to keep them
• Use an anti-spy ware program
This will help to prevent information about online activities being collected by third
Customer Response
In this era of globalization, customers of the bank in our country want to have similar
facilities as available in developed countries. Due to sharp increase in mobility which enables
them to come in contact with latest banking facilities of developed countries, clients of HSBC
banks also desire that similar banking facilities as available in Europe and America should be
made available here in Bangladesh. Online banking is popular among non resident Bangladeshis
and students (both foreign and local students). Though there are some obstacles and unreliability
people are moving forward to online banking and the growth is increasing at a significant rate.

Advantages of Internet Banking

Here some of the advantages of online banking system are listed below:

Convenience: Unlike brick bank, online banking sites never close; they're available 24 hours a
day, seven days a week and they're only a mouse click away.

Ubiquity: Online banking service is only a mouse click away even when one is out of the country
and wants to do business through one’s bank. What is needed is to securely log on to one’s
account and stakes care of business.

Transaction speed: Online bank sites generally execute and confirm transactions at or quicker than
ATM processing speeds.

Efficiency: One can access and manage all of one’s bank accounts from one’s secure site.

Effectiveness: Many online banking sites now offer sophisticated tools, including account
aggregation, stock quotes, rate alerts and portfolio managing programs to help one to manage all
of one’s assets more effectively. Most are also compatible with money managing programs such
as Quicken and Microsoft Money. I a word customer requests can be handled more efficiently
than in a conventional way.

Empowering: One of the major advent of the Internet is the way it empowers the consumer. In
pre-Internet times, consumers were largely powerless when they became victims of corporate
arrogance. Now, they can at least make their voices heard.
Evidence of Payment: User can have transaction evidence online with a unique reference number,
which can be stored in user’s computer for any future use.

Disadvantages of Internet Banking

Here an attempt has been made to enumerate the disadvantages of the online banking system in a
following manner.

Expensive setup: The setup expense for online banking is tremendous and all banks can’t cope up
with such expense.

Learning curve: Banking sites can be difficult to navigate at first. So, planning to invest some time
on reading the tutorials in order to become comfortable in user’s virtual lobby.

Bank site changes: Even the largest banks periodically upgrade their online programs, adding new
features in unfamiliar places. In some cases, user may have to re-enter account information.

The trust thing: For many people, the biggest hurdle to online banking is learning to trust it. Did
the transaction go through? Did the push the transfer button once or twice? Best bet: always print
the transaction receipt and keep it with user’s bank records until it shows up on user’s personal
site or bank statement.

Economic Impact of Online Banking

People of Bangladesh recently adopted the Online Banking system to some extent though
there are some obstacles. In era of internet age Online banking system has significantly
occupying our domestic economy as well as international economy but with all the limiting
factors there has been a change in our business environment characterized by increasing demand
for automated online banking services. The rate at which consumers are adopting online banking
and bill payment services ranks these two activities among the fastest growing on the Internet
both in individual level and corporate level. However, individual banks are achieving varying
degrees of success in bringing customers online

SWOT Analysis of Internet Banking System of HSBC


Strong corporate Identity: HSBC is the leading provider of financial services worldwide. With its
strong corporate image and identity, it can better position in the minds of customers. This image
has helped HSBC grab the personal banking sector of Bangladesh very rapidly.
Distinct operating procedures: HSBC in known worldwide for its distinct operating procedure. The
company is managing for Value strategy had better satisfy customers needs and keeps the firm
profitable time.
Secured security system: HSBC has a 21 layers of security system. So it is fully safe to do online
banking with HSBC.
Efficient Performance: HSBC provides hassle free customer service to its client base comparing to
the other financial institutions of Bangladesh. Personalized approach to the needs of customers
is its motto.
No communication barriers: HSBC has tried hard to avoid communication barriers & structural
bureaucracies. It is very important for the function of online banking system as all departments
are responsible for giving right information that are posted in the website. The little existence of
authoritative barriers among the different level of management stimulates a feeling of
importance as their work get priority over the position.
Modern Equipment & technology: HSBC owns the best banking and information technology
equipments in Bangladesh. It ultra modern banking systems starting from terminal pc’s to
HUB’s are based on the international HSBC group standards and are the latest.


Narrow operating span: HSBC has a very narrow operating span in Bangladesh. It has only
two full service branches in Bangladesh situated only at Dhaka and Chittagong.
Absence of strong Marketing Activities: HSBC currently do not have any strong marketing activities
through mass media e.g. Television. TV ads play a vital role in awareness building. HSBC has
no such TV ad campaign about online banking of HSBC.So people don’t know much about the
facilities off online banking of HSBC.
Lack of customer confidence: As HSBC is fairly new to the banking industry of Bangladesh
average customers lack the confidence in HSBC and judge the bank as a foreign bank.

Countrywide Network: The ultimate goal of HSBC is to expand its operations to whole
Bangladesh. Nurturing this type of vision & mission & to act as required, will not only increase
HSBC’s profitability but also will secure its existence in the log run. As a result, more people
will know about their Internet banking service and will use it for their convenience.
Credit Cards: This is one of the most popular and emerging products in Bangladesh, which offers
customers total financial mobility. Various other banks and institutions are currently offering
this product. HSBC can also take advantage of this product and grab the market share. HSBC is
going to offer credit cards very soon


Upcoming Banks: The upcoming private local & multinational banks posses a serious threat to
the existing banking networks of HSBC. Some local private banks like Eastern bank Ltd, Dutch
Bangla Bank, Dhaka Bank is truly offering good Internet banking to their customers. It is
expected that in the next few years more commercial banks will emerge. If that happens the
intensity of competition will rise further and banks will have to develop strategies to compete
against and win the battle of banks.
Hackers: Hackers are the main threat for any bank that is serving Internet banking service. It is
the main reason of the customers for not being interested to use Internet banking.
Losing Customers: Absence of various products such as credit card, housing loans are causing
various customers to detract from HSBC. This is a serious threat for HSBC Bangladesh.

HSBC Future plan:

• HSBC will use the Dig pass of Vasco Data Security International across the entire Asia
Pacific region for secure internet banking. HSBC Hong Kong started using Dig pass
during Q2 of 2005 and has currently rolled out some 900,000 Dig pass GO3
authenticators. HSBC has initiated Dig pass use in mainland China, Singapore,
Indonesia, South Korea, Malaysia, Sri Lanka, Brunei, Thailand, New Zealand and
Australia. HSBC is using Dig pass for retail, commercial, corporate and private banking
applications. The Dig pass GO3 is being promoted as a lightweight, low cost strong user
authentication token, especially designed for the large volume banking market. The GO3
generates unique one-time passwords for user authentication. The Dig pass 260 is a
portable PIN-protected device, which offers one-time password and e-signature

Automated clearing House for faster transaction is already under progress and full
implementation is expected at the end of 2007.

Government Policy
Governmental policy and plan in developing Internet banking sector in the Bangladesh are
not sufficient. Necessary steps should be taken to develop this fast, safe and available service as
soon as possible. If government cannot do it alone then at least they should consult with the
leading banks that are offering good online banking service. Foreign banks that are serving this
service for a long time through out the world can give valuable advice regarding this. At present
there is a comity of the government with the representatives of the banks that are offering
Internet Banking. Communication system, which is one of the main requirements of setting up a
good Internet banking service, should be developed. Government should take necessary steps to
do so. To monitor the transactions that are taking place in the Internet, government has made a
new money-laundering rule. They are also drafting some laws to ensure that Internet banking
service is not being used for any illegal or criminal purpose. Government should understand that
using Internet banking would make our business work faster. So they must not ignore this sector.

Achievement for Internet banking

HSBC Bank has won three awards from the Institute of Financial Services (IFS) for
innovations in technology for business customers, including the overall Grand Prix ‘Winner-of-
Winners’ prize for Business Internet Banking on 19 January 2004

As well as taking the top prize in the IFS Financial Innovation Awards, HSBC won two
individual categories - Best Internet Banking Service, for Business Internet Banking.

• These accolades complete a successful “Oscars” year for HSBC’s business banking service,
both online and offline
• Business Money facts named the bank the Best Computer Banking Provider at its 2003
awards ceremony in March
• HSBC is the Chartered Institute of Management Accountants (CIMA) Best Small Business
Bank 2003
• HSBC Driver Quote won the Fleet Week Innovation Gold Award in January 2003;
• HSBC Invoice Finance is the Best Factoring House according to readers of Trade Finance

Alan Kier, General Manager, UK Commercial Banking, HSBC Bank, said: “We call ourselves
‘The world’s local bank’ and these results show that we are being recognized as such in the
business market. We are the only major bank using the community banking model, retaining
senior management with local knowledge in branches across the UK and making 90% of
decisions locally, both for personal and business customers.

“We are delivering sophisticated, easy-to-use and useful technology to our customers’ desktops
through our online service, which gives them access to the full breadth and depth of HSBC’s0
international expertise”.

General Recommendations
Some valuable issues regarding the online banking are discussed in this part of
recommendations. These were the aspects that came out while working for the report. Such
general recommendations are discussed below:

• Use of Marketing Research: The management of HSBC should regularly administer

marketing research activities in order to keep a regular track of consumer satisfaction
levels with the online banking.

• Complaint Management: HSBC should actively manage the complaints of various

customers and encourage customers to give feedback about the services. Research
showed that this strategy will radically improve the overall online banking.

• Individual Attention & Care: Individual attention should be given to customers in order
to understand their needs properly. When customers come with their problems they
should be well focused.

• New Branches should be introduced: As HSBC provides services from only 5 branches
throughout Bangladesh new branches should be constructed to serve more geographic

 Mr.Faizur Rahman

o Ph: 9660536 Ext.564 (Off)

 M. Sami Hafiz

o Ph: 9660536 (Off)

 HSBC Bank's Annual Report

 Group Business Principal manual
 Website: