Assignment on Electronic Banking Of One Bank Course Name: Electronic Banking Course code: FIN-611

Submitted To: M M Mustafiz Munir Guest Faculty Faculty of Business ASA University Bangladesh.

Submitted By: Md. Abdulla All Shafi ID: 12-3-14-0017 Program: MBA (R) Batch: 17th, Section: D Department of Business Administration ASA University Bangladesh

Date of submission: April 27, 2013.

Electronic Banking (e-Banking)

The concept of e-banking includes all types of banking activities performed through electronic networks. It is the most recent delivery channel of banking services which is used for both businessto-business (B2B) and business-to-customer (B2C) transactions. However, in true sense, e-banking includes activities like payment of bills and invoices, transfer of funds between accounts, applying for a loan, payment of loan installments, sending funds to third parties via e-mails or internet connections regardless of where the client is located. The definition of e-banking varies amongst researchers partially because electronic banking refers to several types of services through which a bank customer can request information and carry out most retail banking services via computer, television or mobile phone. On the other hand, e-banking can also be described as an electronic connection between the bank and customer in order to prepare, manage and control financial transactions. In brief, e-banking is not a banking product or service; rather it explains the way transactions are conducted. We can state that the terms PC banking, online banking, Internet banking, telephone banking or mobile banking refers to a number of ways in which customer can access their banks without having to be physically present at the bank branch. Therefore, e-banking covers all these ways of banking business electronically. Online banking (or Internet banking or E-banking) allows customers of a financial institution to conduct financial transactions on a secure website operated by the institution, which can be a retail or virtual bank, credit union or building society. To access a financial institution's online banking facility, a customer having personal Internet access must register with the institution for the service, and set up some password (under various names) for customer verification. The password for online banking is normally not the same as for telephone banking. Financial institutions now routinely allocate customer numbers (also under various names), whether or not customers intend to access their online banking facility. Customer numbers are normally not the same as account numbers, because a number of accounts can be linked to the one customer number. The customer will link to the customer number any of those accounts which the customer controls, which may be cheque, savings, loan, credit card and other accounts. Customer numbers will also not be the same as any debit or credit card issued by the financial institution to the customer. To access online banking, the customer would go to the financial institution's website, and enter the online banking facility using the customer number and password. Some financial institutions have set up additional security steps for access, but there is no consistency to the approach adopted.

Online banking facilities offered by various financial institutions have many features and capabilities in common, but also have some that are application specific. The common features fall broadly into several categories

A bank customer can perform some non-transactional tasks through online banking, including o o o o o o o

viewing account balances viewing recent transactions downloading bank statements, for example in PDF format viewing images of paid cheques ordering cheque books download periodic account statements Downloading applications for M-banking, E-banking etc.

Bank customers can transact banking tasks through online banking, including o o

Funds transfers between the customer's linked accounts Paying third parties, including bill payments (see, e.g., BPAY) and telegraphic/wire transfers

o o o

Investment purchase or sale Loan applications and transactions, such as repayments of enrollments Register utility billers and make bill payments

Financial institution administration Management of multiple users having varying levels of authority Transaction approval process

Electronic Bank (e-Banking) of Bangladesh

Bangladesh is still lagging behind to avail the opportunity of e-business. However, banking sector as a whole has been introducing on line banking system which plays complementary role to spread of ebusiness. Internet has opened a new horizon of e-business, creating immense opportunities for marketing products as well as managing organizations banking internationally. Gradually wireless Internet system has been creating a new model and electronic fund transfer can have a suitable formation.

Despite huge demand from the business community as well as the retail customers particularly the urban customers, electronic banking (e-banking) in Bangladesh is still at a budding state due mainly to a number of constraints such as unavailability of a backbone network connecting the whole country; inadequacy of reliable and secure information infrastructure especially telecommunication infrastructure; sluggish ICT penetration in banking sector; insufficient legal and regulatory support for adopting e-banking and so on. In Bangladesh, telephone connectivity is inadequate, cost of PCs are still beyond purchasing capacity of most people, internet connection is costly, IT literacy is yet to reach satisfactory level, banking sector lacks skilled IT personnel, and huge investment requirement for establishing technology based banking services are prime drawbacks. In this backdrop, with high potential of e-banking,

Bangladesh Bank as the regulator of banking and financial sector, government of Bangladesh, and the scheduled banks together need to come forward with necessary initiatives for successful introduction of e-banking in Bangladesh. Bangladeshi commercial banks are implementing the online banking gradually, though it cannot be said it is real time online banking. In this case the private commercial banks are playing the pioneering role. Through the existing system of online banking the branches are linked together with one another which facilitate smooth coordination among the branches and also with the head office. In Bangladesh, except very few banks, online banking is limited to the extent - any branch banking, which enables a customer to operate his/her account in any of the branch if he/she has a account in respective bank. It enhances the mobility of account transaction. Few Bangladeshi banks are now introducing real time online banking and Internet banking. It is basically in true sense the online banking, which is practiced in much developed banking system. The Bangladeshi commercial banks, which are introducing the real time online banking, have made a breakthrough in traditional online banking. They interpret this paradigm shift in terms of benefits such as centralized system, EOD at data center, centralized MIS, improved control reports, anywhere 24 hours x 7 days banking, internet banking, tele-banking, and ATM/POS, one stop shop for all banking needs, sophisticated customer information, online interbranch transfer any branch pay order system, digital signature/photo image while transacting display customer balance-transaction-statement online, automatic Sweep in and out, bill payment (utility service bill, tuition fees, mobile phone bills), etc.

Therefore, from the introduction of real time online banking the customers of those banks will be able to enjoy the high quality customer oriented banking service. Besides the PCBs, Foreign Commercial Banks (FCBs) operating in Bangladesh are offering world class banking services using the improved banking technologies since their operation started in this country. The widely used banking software in Bangladeshi commercial banks at present are PC Bank (12 banks), BEXIBank (7 banks), Flora Bank (7 banks), Infinity Banking Solutions (4 banks), Micro Banker (2 banks), and Flexcube (2 banks).

Moreover, some commercial banks are using Kurnel, KPATI, A2Z, IBBS, Finacle Core, EAGLE, Stellar, Millennium Banking System (MBS), and EBBS etc. Now most of the commercial banks are using ATMs including foreign commercial banks. The banks are planning to install more ATMs in different locations, which are commercially important. Some banks are using shared ATM facilities to minimize the installation cost of ATMs.

Constraints of Internet Growth

Lack of adequate and knowledgeable technical skill Lack of adequate govt. support Lack of software copyright protection act High preliminary cost Lack of adequate physical facilities Less investment and looking for short term return in the last mile solution Lack of long term planning Poor telecommunication infrastructure Low level of computer literacy Widespread poverty Limited point of presence of ISPs Lack of software and content in Bengali

E Banking: Present scenario of Bangladesh

E-banking at per international standard is yet to develop in Bangladesh. At present, several private commercial banks (PCBs) and foreign commercial banks (FCBs) offer limited services of tele banking, internet banking, and online banking facilities working within the branches of individual bank in a closed network environment. As a part of stepping towards e-banking, the FCBs have played the pioneering role with adoption of modern technology in retail banking during the early 1990s whereas the state-owned commercial banks (SCBs) and PCBs came forward with such services in a limited scale during the late 1990s. According to Bangladesh Bank (BB) data, out of 47 scheduled banks 43 are now engaged more or less in electronic operations. The four banks that are yet to adopt electronic banking are: Bangladesh Krishi Bank, Bangladesh Development Bank, Rajshahi Krishi Unnayan Bank and Rupali Bank. All these are state-owned. BB data shows 38 banks were providing online banking facilities and 18 banks internet banking. On the other hand, nearly 40 banks have now ATM or debit card services and 26 banks offer credit cardfacilities.

Transactions through ATMs increased by more than 50 percent to around Tk 35,000 crore in 2011. Credit card transactions also rose more than 50 percent to nearly Tk 5,000 crore. The central bank also took steps to make automated cheque processing system and mobile banking more effective. The BB issued guidelines for mobile-based banking services in the same year in a bid to ensure financial inclusion of the non-banked population.

Moreover, the banking industry as a whole, except for the four specialized banks (SBs), rushed to offer technology based banking services during the middle of the current decade. The existing form of e-banking that satisfies customer demand in banking activities electronically throughout the world are PC banking or PC home banking that include online banking, internet banking, mobile banking, and tele-Banking. The governments emphasis on building a digital Bangladesh, setting up ICT park, raising allocation for developing ICT infrastructure, waiving taxes on computer peripherals and other measures including the automation program of banking sector led by the Bangladesh Bank and competition among the scheduled banks in improving customer services have accelerated the prospects of ebanking in Bangladesh.

The Bangladesh Railway owns a high-speed optical fiber network (1,800 km) parallel to the railway path that covers most of the important parts of Bangladesh. This optical fiber network can be used as the backbone network of e-banking in Bangladesh. For example, mobile phone operators such as Grameen Phone and Ranks ITT of Bangladesh use this optical fiber network through which they reach even in rural areas with their services (Islam 2005). It is encouraging that some of the FCBs and PCBs are already using this optical fiber network for conducting online transactions, ATM and POS services. In addition, Bangladesh Bank is implementing the RPP project for modernizing national payment and settlement system. It is expected that the BACH including BACPS and BEFTN would start functioning from September 2009 followed by the development of inter-bank online network. The project plans to go for real time gross settlement (RTGS) by 2012. It has been made mandatory for all head offices of the scheduled banks to be connected with Bangladesh Bank for satisfying BACH and BEFTN. These efforts would allow the scheduled banks to be connected to each other for conducting inter-bank online transactions in near future and this would smoothen the introduction of e banking in Bangladesh.

Current Status of Electronic Bank (e-Banking) in One Bank

One Bank open e-Banking in three phases From November last year. Three kinds of new products of bank under the e-Banking would extend the banking services to the clients. As part of the move, the

bank will firstly open one of the world class internet banking services known as Flexcube Direct Banking. ONE Bank also provides the Mobile Financial Service and Visa Money Transfer products through Visa Card. The bank will introduce the bank-led mobile banking system for extending financial services to the population who are deprived of getting banking facilities. Visa Money Transfer that is the first time in Bangladesh would allow clients to transfer money from bank account to any other Visa Card, anytime, anywhere both at home and abroad.

As a account holder of One bank, any one use e-banking services. But account holder need to registration first and Bank will give a user ID and password that use for sign-in. Balance Inquire: You can inquire your balance by simply sign-in and see. Fund Transfer: One Bank offer online fund transfer from other account. Statement: One bank provides Account statement by e-mail. Getting Information: E-banking valid user also see more information like date of account opening, mailing address, own picture etc.

Products & Services of One Bank The product and services of One bank have three kinds. That are Retail Banking Corporate Banking and SME Banking. Retail Banking of One Bank: With 65 outlets, over 29 own ATMs and others MasterCard accepted ATMs and over 500,000 plastics in the market, One Bank offers you a wide range of financial solutions to meet your everyday need. You need an account or loan collect account opening from and file up it and for loan simply drop an application and bank shall do the rest while you enjoy life. Deposit Products
Pensave Scheme Edusave Scheme Marrysave Scheme One-Two-Three Scheme School Banking Monthly Money Maker Corporate Deposit Scheme Gold Savings Account

Silver Savings Account Money Rotator

Loan Products
Home Loan Car Loan Student Loan Consumer Loan Doctor's Loan Professional Loan Agri Loan

Card

ONE Bank Credit Cards are widely accepted at department stores, shops, restaurants, hotels, airlines, travel agencies, hospitals, diagnostic centers etc. across the country wherever the MasterCard logo is displayed. One Bank issue two versions of MasterCard: Gold MasterCard Silver MasterCard One bank also provides exclusive MasterCard for ladies.

Inward Remittance
Inward Remittance plays a significant role in Bangladesh Economy. The foreign Exchange that the expatriate Bangladeshis send home is the second largest source of much needed foreign exchange for our economic development. Over 7 million Bangladeshis work abroad and remit more than US$ 11 billion in a fiscal year. To assist and make it simple for the remitter to remit hard earned money to Bangladesh, ONE Bank Limited started providing remittance services through its local & foreign correspondents in 2003. It has 58 branches in major metropolitan cities and areas of Bangladesh. Features of OBL one-stop remittance delivery services are as follows: Deliver money without any charges Assure confidentiality in transactions On line account credit facilities to those who have accounts with OBL Account credit facility to those who do not have accounts with OBL through Bangladesh Electronic Fund Transfer Network( BEFTN) EFT/TT Services Assist in opening Wage Earners Accounts Assist in opening accounts under different types of Savings Schemes.

Corporate Banking:-

Corporate banking include Corporate Deposit Account and Corporate Salary Account and also One bank provide Overdraft, Short Term Loan, Lease,

Finance Loan Against Trust Receipt Work Order, Finance Emerging Business Term Loan, Project Finance, Bill Purchase, Bank Guarantees etc.

SME Banking:SME Products & Services : Objectives: To assist SMEs (Industry/Trading/Service) access to finance. To meet the need for Financing SMEs towards overall growth of the economy & employment. To expand bank's exposure in SME Segment. To make self-reliant SMEs and to habituate them in banking.

E- Banking: Risk perception

Although e-banking has bright prospects, it involves some financial risks as well. The major risk of e-banking includes operational risks (e.g. security risks, system design, implementation and maintenance risks); customer misuse of products and services risks; legal risks (e.g. without proper legal support, money laundering may be influenced); strategic risks; reputation risks (e.g. in case the bank fails to provide secure and trouble free e-banking services, this will cause reputation risk); credit risks; market risks; and liquidity risks. Therefore, identification of relevant risks, and formulation and implementation of proper risk mitigation policies and strategies are important for the scheduled banks while performing ebanking.

Recommendations:A well functioning e-banking network is dependent on availability of a backbone network connecting the whole country; reliable and secure information infrastructure including telecommunication infrastructure; ICT penetration in the banking sector; skilled operational personnel; and legal and regulatory framework. The government, Bangladesh Bank and scheduled banks are related to these issues. Therefore, both individual and joint efforts are needed to overcome the constraints in promoting e-banking in the country.

Generally, these steps should be taken to improve e-Banking:

 In respect to technology adoption, the PCBs and FCBs have attained greater success relative to other bank categories but their coverage is concentrated mainly in urban and semi-urban areas. The rural parts of Bangladesh still remain outside of their services. Internet penetration is a key factor for the growth of e-banking. Moreover, since Internet penetration alone is not adequate for online banking expansion, the government may provide subsidy for surfing cost, organize training facilities with private partnership, widen multiple access facilities like web, telephone, ATM etc., and initiate motivation programs for the users and the target population. Moreover, adequate legal framework and security are essential for flourishing internet banking. New ISPs should be attracted into the business for promoting greater competition in the industry. The policies relating to long distance and international voice traffic need review to remove impediments to growth of e-commerce that relates e-banking as well. As a part of building digital Bangladesh, measures are needed to improve existing ICT infrastructure and address relevant issues including governance and institutional strengthening. A package of required rules, acts, laws, and regulations pertinent to e-banking adoption and development may be formulated. In this respect, lessons and experience of countries that have already expanded e-banking can act as useful guides.

Conclusion:
E- Banking is a whole new sphere in Banking Sector of Bangladesh. This is the banking system of new century. So, if we want to sustain and earn global reputation, we must expand our E-Banking operations to the fullest extent. We must find out our strengths and weaknesses and use the strengths to overcome weaknesses so that E-Banking can flourish. This is obvious that we can reach to the ultimate tip of efficiency through E-Banking if we just ensure necessary care for this sector.